Lock Haven questions tax exemption sought by UPMC Susquehanna

LOCK HAVEN — The City of Lock Haven is looking at a possible loss of approximately $72,000 in tax revenue if UPMC Susquehanna of Lock Haven receives tax exemption status from the Clinton County Board of Assessment.

“UPMC Susquehanna Lock Haven, acquired from for-profit Quorum Health in 2017, joined UPMC, a non-profit health care exemption from paying property tax,” said Tyler Wagner, Communications Manager at UPMC Susquehanna.

This is the first year that UPMC has filed for tax exemption status for UPMC Susquehanna Lock Haven, Wagner said.

The hospital makes up 3 percent of the city’s total budget and is the largest taxable body of real estate in the city limits, with Fairview Inn and Suites being the second largest, City Manager Gregory Wilson said.

The possible exemption will leave the city’s already tight budget in an even more difficult position, Wilson said.

“I do the budget based on the assumption that the people making these requests will get it. If they don’t, then I insert the money back into the budget,” he said.

UPMC Susquehanna did not comment on the city’s possible loss of tax revenue.

The city submitted a letter to the county’s board of assessment, made up of the county commissioners, requesting more detailed information from UPMC Susquehanna.

The letter incorporated a test articulated by the Pennsylvania Supreme Court Case of “Hospital Utilization Project v. Commonwealth” in regards to its request.

The city’s solicitor Justin Houser of Coploff, Ryan, Welch & Houser, provided comment on the matter after reviewing the information UPMC Susquehanna submitted to be considered for tax exemption.

It is the city’s opinion that UPMC Susquehanna does pass the test for some but not all of the tests the case requires.

“It is the city’s position that the documentation provided does not adequately enable a determination as to whether test No. 2 subtest 2, and test No. 2 subtest 3, and test No. 3 have been met,” the letter reads.

Test No. 2 subtest 2 requires that the institution prove that it “applies or reserves all revenue, including contributions, in excess of expenses in furtherance of its charitable purposes or to funding of other institutions which meet the provisions of this subsection and subsections (b).”

Test No. 2 subtest 3 requires “compensation, including benefits of any director, officer or employee is not based primarily upon the financial performances of the institution.”

The final test, test No. 3, requires that the institution “Donates and Renders Gratuitously a Substantial Portion of Services.”

The city has requested that UPMC Susquehanna submit further documentation to prove that they meet the requirements for all three sections of the “Hospital Utilization Project v. Commonwealth” tests.

The city also feels that UPMC Susquehanna has not met all the qualifications to be considered a “purely public charity” under the constitutional analysis set forth by “Hospital Utilization Project v. Commonwealth.”

To be considered a “purely public charity” an organization must incorporate the following elements: Advance a charitable purpose; donate or render gratuitously a substantial portion of its services; benefit a substantial and indefinite class of persons who are legitimate subjects of charity; relieve the government of some burden; and operate entirely free from private motive.

“For the reasons stated above, the city believes that the applicant has failed to provide sufficient evidence to determine whether it ‘donates or renders gratuitously a substantial portion of its services’ or ‘operates entirely free from private profit motive’,” the letter reads.

The city also said UPMC Susquehanna must provide additional information to prove the hospital qualifies under a provision of the General County Assessment Law.

The section reads:

“All … institutions of learning, benevolence, or charity… with the grounds thereto annexed and necessary for the occupancy and enjoyment of the same, founded, endowed, and maintained by public or private charity: Provided, that the entire revenue derived by the same be applied to the support and to increase the efficiency and facilities thereof, the repair and the necessary increase of grounds and building thereof, and for no other purpose.

“For the reasons set forth above, the city believes that the applicant has not sufficiently demonstrated that its entire revenue is applied ‘to the support and to increase the efficiency and facilities thereof, the repair and the necessary increase of grounds and buildings thereof,’ “ the letter said.

UPMC Susquehanna has as early as 10 days to respond to the city’s letter of request.


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