Luzerne County taxing bodies could lose more than $1.9 million in real estate tax revenue from hospital sale

Luzerne County taxing bodies risk losing more than $1.9 million in real estate tax revenue annually due to the nonprofit WoodBridge Healthcare Inc.’s planned purchase of the for-profit Commonwealth Health, which includes the Wilkes-Barre General Hospital, officials said.

The opposite occurred in 2009, when the properties were added to the tax rolls with Commonwealth Health’s purchase of the hospital network from the nonprofit Wyoming Valley Health Care System.

The Wilkes-Barre Area School District currently receives approximately $800,000 in real estate taxes from Commonwealth Health, said district Solicitor Raymond P. Wendolowski.

Luzerne County receives approximately $328,000 in taxes annually from Commonwealth Health properties, records show.

Wilkes-Barre receives $774,583 in real estate tax revenue annually from Commonwealth Health properties.

But even though WoodBridge is a nonprofit, Wendolowski said the exemption of its acquisitions from real estate taxes is not automatic and likely will be challenged.

The county assessment appeals board makes the initial determination on exemption requests, and its decisions are subject to appeal to the county Court of Common Pleas and, if desired, to higher courts.

Decisions about exemption are largely based on standards established by the state Supreme Court in a case against the state filed by the Hospital Utilization Project — now called the HUP test, officials have said.

These standards set the following mandates to receive exemption: advances a charitable purpose; donates or renders gratuitously a substantial portion of its services; benefits a substantial and indefinite class of persons who are legitimate subjects of charity; relieves the government of some burden; and operates entirely free from private profit motive.

County Assessment Director Kristin L. Montgomery said exemption requirements also are extensively spelled out in state law.

An exemption request already has been filed for many of the properties involved in the hospital network, she said.

Wendolowski said there have been a number of recent Pennsylvania Supreme Court and Commonwealth Court cases addressing the nonprofit aspects of hospitals.

“I am certain that they’re not entitled to exemption simply because they are a 501(c)(3),” Wendolowski said. “It wouldn’t surprise me if we get actively involved in any attempt to declare this property tax exempt.”

Wendolowski said he will be addressing the matter with the school board and already has reached out to attorneys handling hospital tax exemption cases in Pennsylvania.

Wilkes-Barre Mayor George Brown said the loss of $774,583 in real estate tax revenue would hurt the city. The hospital network also is a major employer in the city, which generates earned income tax revenue for the city, the mayor said.

“I’m hoping the new owner retains all employees,” Brown said.

He is working to schedule a meeting with WoodBridge next week to discuss these matters.

WoodBridge Healthcare announced earlier this week it has signed an asset purchase agreement to acquire Commonwealth Health in Northeastern Pennsylvania, indicating the acquisition will enhance health care services for growing communities in the region.

The sale is scheduled to be complete in the fourth quarter this year, it said.

Commonwealth Health consists of three main hospitals — Wilkes-Barre General Hospital, Regional Hospital of Scranton and Moses Taylor Hospital in Scranton. The agreement also includes the acquisition of Commonwealth Health’s ambulatory surgery centers, emergency departments, imaging centers, laboratories, outpatient rehabilitation, sleep care centers, walk-in clinics, wound care centers and physician network.

In a statement released Tuesday, WoodBridge Healthcare said it “aims to further the system’s mission of meeting the region’s evolving health needs in a compassionate, collaborative and cost-effective manner. WoodBridge will work to enhance community health, partner with local groups to address care gaps, and use hospital resources to provide consistent, tailored care directly to the people who need it. This approach reflects WoodBridge Healthcare’s ‘Mission Project’ — an innovative perspective on healthcare that takes a holistic view of individuals’ social needs as a foundation of good health.”