HCA, Buncombe mediation over Mission property leads to $1.2M tax hit

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Mission Hospital, at 509 Biltmore Avenue.

ASHEVILLE – Property value negotiations in June between Buncombe County and HCA Healthcare resulted in an agreement that will see the for-profit hospital giant pay $1.2 million less in taxes this season, including more than $131,000 to Asheville City Schools.

HCA in 2020 and 2021 appealed Buncombe County property tax valuations for its 28-acre Mission Hospital property in Asheville at 509 Biltmore Ave., alleging the county was appraising the property millions of dollars above its actual value. Mission Hospital was a nonprofit entity until it was purchased by HCA in 2019 for $1.5 billion.

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According to a Sept. 1 email from Buncombe County Tax Assessor Keith Miller to the Board of Commissioners, the county manager’s office and city of Asheville officials, these are the county’s 2020 assessed Mission Hospital property values compared to HCA’s valuation along with the valuation Buncombe now agrees to:

2020 Buncombe County assessment: $527.8 million
2020 HCA requested value: $426.4 million
2020 valued agreed upon by the county: $475 million

These are the county’s 2021 assessed Mission hospital property values compared to HCA’s valuation along with the valuation Buncombe now agrees to:

2021 Buncombe County assessment: $559.5 million
2021 HCA requested value: $351.9 million
2021 value agreed upon by the county: $499 million

Currently, the property is valued at $499 million, according to the email.

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Because Buncombe agreed to lower valuations than it initially assessed, the amount of taxes HCA owes for those two years has been retroactively lowered.

Buncombe now will give a credit of more than $1.2 million to HCA because, according to the new agreement, it overpaid its tax bill for two years. That credit will decrease the amount of taxes the county, the city of Asheville and Asheville City Schools would have received from the Mission property tax bill.

Buncombe will get $590,110 less.
The city of Asheville will get $483,028 less.
Asheville City Schools will get $131,055 less.

HCA hasn’t paid its 2022 tax bill yet, because, Miller said, it is waiting for the credit to be applied. The current plan is to apply the credit on Oct. 5, he said.

8 hours of mediation

Miller confirmed these numbers in a Sept. 28 interview.

They are the result of a yearslong process in which Mission had two pending appeals on its property tax that would have gone to the State Board of Equalization and Review, also known as the Property Tax Commission.

Instead, HCA and Buncombe decided to go into mediation. In June they met for eight hours in Raleigh and by conference call, a time much longer than the average mediation, Miller said.

Miller, Buncombe County Attorney Curt Euler and contracted attorney Bart Mclean were there in person. Luke Woodruff, a hospital appraiser with OHC Hospital Appraisers, County Manager Avril Pinder and Assistant County Manager Sybil Tate were on standby via phone. MH Mission Health LLLP’s senior tax manager and tax director Nicholas Ruiz and Michelle Coleburn also were present along with Mission attorney Reed Hollander and mediators Charles Neely and Nancy Rendleman.

MH Mission Health LLLP is the Indianapolis, Indiana-based company that owns the hospital land, according to property records.

“The team feels the mediation was a success for both parties,” Miller said in the email. “The settlement minimized the risk associated with a State Property Tax Commission hearing. The State Property Tax Commission is similar to a jury trial in that it is very difficult to predict the outcome. Our contracted attorney has many years of experience with the State Property Tax Commission and felt it was best to come to a settlement and not risk a lower valuation from the Commission.”

When asked why there was such a large deficit between the county’s valuation of the hospital property and HCA’s own assessment, Miller said he would have to talk to Euler about commenting further.

The Citizen Times put the same question to HCA and Mission Hospital, asking why the hospital system contested the valuation.

“Mission Health worked closely with Buncombe County to resolve any questions or differences in opinion either party had and agreed to a value that reflects the appropriate fair market value for the real estate,” spokesperson Nancy Lindell said.

“Mission Health has maintained a good working relationship with the Buncombe County property assessor’s office and appeals of this type are common for commercial property owners. We have always been privileged to contribute to the health and wellness of our communities throughout Western North Carolina, and welcome the opportunity to extend those contributions through the taxes we pay.”

Asheville City Schools Superintendent Jim Causby explained the $131,000 reduction during a Sept. 19 Board of Education meeting.

“This probably will not have a lot of effect in the future because of other growth in the tax base, but it is a one-time hit on us,” he told the board. “It could have been worse, but it’s still significant.”

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He reiterated that sentiment in an email Sept. 28.

“While we hate to take a $131,000 hit to our budget revenues, it is a minimal amount of our total revenues and should not cause any major financial issues for the school system,” Causby said.

The city of Asheville did not immediately reply when asked about how the credit would affect the municipality.

‘Minimized risk’

Though HCA likely will get $1.2 million back from Buncombe before 2022 is out, it will be a minute portion of the company’s bottom line.

HCA’s revenue in 2021 was more than $58.7 billion, according to company reports, which included profits of nearly $7 billion.

But Miller said the company’s profits don’t play a part in how much it pays in property taxes.

“That’s sort of irrelevant to us,” he said. “That’s what their business made in revenue and necessarily does not affect their real estate value.”

Ultimately, both HCA and Buncombe were trying to find ways to save money in relation to the hospital property. The matter was set to go to the state Property Tax Commission, but the two parties were able to settle the matter in mediation.

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Roberto Martins

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HCA, Buncombe mediation over Mission property leads to $1.2M tax hit –

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