Assessor appeals hospital’s tax-exempt status ruling, JPs say they won’t pay legal fees

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Boone County Assessor Karen Hardesty has filed notice of appeal of a circuit court decision regarding North Arkansas Regional Medical Center’s tax-exempt status on seven property parcels. However, Boone County Quorum Court justices say they don’t plan to pay for the appeal.

The Harrison Daily Times reports at the court’s meeting Tuesday, JP Fred Woehl said he had been told the appeal was coming, and it could cost $50,000 or more.

But Boone County Attorney Ron Kincade of Mountain Home, who has represented Hardesty at two hearings, says the cost will be much less, and Hardesty said the money for the appeal is in her existing budget.

North Arkansas Medical Services, Inc. appealed Hardesty’s decision to deny tax-exempt status for the Millennium Building on North Spring Street, which was formerly owned by Dr. Roy Lee and Dr. Gordon Patterson, saying the building did not meet the qualifications of a charitable exemption.

In making her decision, Hardesty also cited the Arkansas Constitution. Though the hospital had been designated a 501(c)(3), that designation did not automatically exempt it from property taxes.

Hardesty wrote property used for a commercial purpose is not exempt, even though proceeds derived from it are devoted entirely to the operation of the charity.

NAMS appealed Hardesty’s decision to Boone County Court, where Lonoke County Judge Doug Erwin was appointed to hear the case and ruled in Hardesty’s favor.

Hardesty had argued when the hospital bought the Millennium Building from the two doctors, the function of the business didn’t change even though the non-profit hospital operated it.

In his ruling, Erwin agreed with that position, saying simply changing the name of the business didn’t qualify it as a charity.

That decision was then appealed to Boone County Circuit Court, where retired Circuit Judge Russell Rogers was appointed to hear the case tried in June.

In hearings, Hardesty and county attorney Kincade argued even though the hospital does offer some charity care, it still bills patients if it’s determined they have any means to pay for services.

NARMC CEO Vince Leist testified earlier the hospital has a policy to determine whether a patient can pay, and the patient has to participate by providing information about his/her status.

In his ruling, Rogers sided with the non-profit corporation, saying the standard used by Hardesty that a facility must provide at least half of care given for free to be considered a charity isn’t supported by law or standards in place.

In all, NAMS applied for tax-exempt status on seven property parcels it purchased for hospital use.

Rogers ruled those seven parcels are used by NARMC to increase clinic space for its doctors and the provide medical care for the community.

John Baker, Little Rock lawyer representing NAMS, told the Daily Times after the county court hearing in August 2017 if the circuit court decision was still in Hardesty’s favor, NAMS would appeal to the state Supreme Court, where a decision on constitutional issues could set case law for the future.

Late last week, Kincade filed the notice of appeal.

At Tuesday night’s meeting, JP Woehl said he didn’t like the idea of an elected official committing tax payer dollars to pay for legal fees.

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