The Tribune Democrat, Johnstown, PA

Local News

October 2, 2013

Why Conemaugh Health System could soon pay more taxes

EBENSBURG — Cambria County, the city of Johnstown and Greater Johnstown School District are asking Conemaugh Health System to increase the amount it pays in lieu of taxes on properties considered part of the system’s not-for-profit holdings.

As the talks continue, the Conemaugh organization is looking for a reduction in the tax bill it pays on property on its for-profit side.

Conemaugh is seeking a reduction in the assessment it pays on the Conemaugh Medical Park, at 1 Tech Park Drive, Johnstown.

In appeal papers filed in the office of Cambria County Chief Assessor Tamra Forgan, Conemaugh says that because the tenant count is down at the park, revenue has dropped and the tax bill should follow suit.  

Real estate specialists representing Conemaugh will attempt to convince the Cambria County Board of Appeals Thursday to reduce the property’s assessment, a move that, if successful, would reduce the $270,000 annually paid to the three taxing entities.

“They’ve lost tenants and it’s not an unusual request for any commercial entity,” Forgan said.

Conemaugh representatives will return to the courthouse next week seeking a renewal for the payment in lieu of taxes agreement hammered out several years ago.

An upcoming end to the current agreement has prompted the county, city and school district to approach Conemaugh seeking an increase in the $500,000 annual payment it pays as a payment in lieu of taxes (PILOT) on more than 100 properties considered non taxable.

Both sides are tight-lipped about the status of the negotiations, but President Commissioner Douglas Lengenfelder said it’s time for Conemaugh to start carrying more of the load.

“You’re looking at a considerable amount of taxes and what would be a considerable amount of taxes,” he said. “We have asked for more than $500,000.

How much more, no one is saying.

Lengenfelder said the half-million dollars Conemaugh is paying is less than amounts paid when the system was three independent hospitals.

John Zahorchak, business manager for the school district, said there have been discussions on increasing the PILOT, but it’s too early for public discussion.

“It’s in negotiations and right now we’re just trying to relay all things to the board,” he said.

Johnstown Finance Director Carlos Gunby confirmed that the city is a part of the talks with Conemaugh, which are being handled primarily by lawyers.

“We are part of the negotiations, that’s about as much as I’m aware of,” he said.

Attorney James Walsh, solicitor for Conemaugh Health System, said in an email that the actions of the county, city and school district runs the risk of jeopardizing the half-million they already share annually.

Conemaugh already provides over $8 million annually in uncompensated and charitable care to the residents of the Greater Johnstown region, he said.

“We believe Conemaugh Health System has offered a fair and reasonable proposal, particularly considering CHS is the only nonprofit in the region that is routinely relied upon to provide PILOT dollars,” he said in the statement.

Walsh said Conemaugh’s “decision to donate” money to the three taxing bodies covers more than Conemaugh’s fair share for services. This is especially true, he said, with the recent donation of the Walnut Street Plaza to Alternative Community Resources Program.

“With the recent donation of the Walnut building, our square footage has decreased and yet we still are offering to continue to pay the same amount,” he said.

ACRP is one example cited as a nonprofit the three taxing bodies do not seek payments from in lieu of taxes. The other is the Cambria County Association for the Blind & Handicapped on the 200 block of Central Avenue.  

But seeking PILOT payments from these two would not be in the best interest of the county, Lengenfelder said.

The county supports the blind association using taxpayer dollars, while Cambria contracts with the ACRP for social services.

“There is a different relationship with those you brought up,” he said. “You’re asking us to collect taxes from someone we give tax dollars to.”

When the hospitals started paying in 1995, it involved Conemaugh, Good Samaritan and Lee, with the three paying a combined $625,000 annually in lieu of taxes, according to figures provided by the county.

That amount would be more than $950,000 using today’s dollars, Lengenfelder said.

In the early 2000s, Conemaugh and Good Samaritan paid a total of $400,000 and the past five years the PILOT agreement called for Conemaugh to pay $500,000, he said.

The taxing bodies are doing nothing more than has been done by Allegheny County, where officials are looking at all PILOT programs, Lengenfelder said.

“I’m not looking to create a great big battle, but Johnstown is struggling, the school district has a huge budget,” he said.

“The county is struggling. We’re not in great shape.”

Kathy Mellott covers the Cambria County courthouse for The Tribune-Democrat. Follow her on Twitter at twitter.com/kathymellotttd.

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