Oak Park taxes could rise if hospital sold to nonprofit

Berwyn loses $3.5 million over Loyola's purchase of MacNeal


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By Timothy Inklebarger

Staff Reporter

The recent purchase of MacNeal Hospital by Loyola Medicine is projected to leave a $3.5 million hole in Berwyn's tax base, and West Suburban Medical Center in Oak Park could be next.

Berwyn's total equalized assessed value (EAV) – the value of all taxpaying properties in the city – takes a hit from the sale, because for-profit Tenet Healthcare sold the hospital to nonprofit Loyola, making the property tax exempt.

Texas-based Tenet, which also owns West Suburban, along with Westlake Hospital in Melrose Park and Weiss Memorial Hospital on the city's North Side, is expected to sell all three hospitals.

Oak Park Township Assessor Ali ElSaffar said taxpayers in the village also will take a hit if West Suburban is sold to a nonprofit like Loyola, but not as bad as Berwyn's.

ElSaffar said that West Suburban is valued at $16.1 million and paid $2.3 million in taxes in 2017. Removing that from Oak Park's total EAV of $1.386 billion would have increased Oak Park's tax rate by 1.2 percent.

That means a homeowner who paid $10,000 in property taxes that year would have paid an extra $120, ElSaffar said. Berwyn is hit harder because Tenet paid approximately $3.5 million in taxes annually, ElSaffar said.

Oak Park has enjoyed the tax boost from West Suburban since 2010, when the hospital was sold from nonprofit Resurrection Health Care to for-profit Vanguard. Vanguard sold the hospital three years later to Tenet.

The sale of MacNeal was opposed by the Service Employees International Union Healthcare Illinois, Indiana, Missouri, Kansas, which argued that although Loyola Medicine is a nonprofit, it operates like a corporation and should not be tax exempt.

The union said in a Feb. 22 press release that the sale of MacNeal would have increased a Berwyn property tax bill of $5,000 a year by $185 – substantially more than the estimated $60 extra a similar Oak Park property owner would have paid if West Suburban were owned by Loyola.

"We're here to send a message to the Illinois Hospital Association that workers and communities won't be run over by big, rich hospitals and their lobbyists," Anne Igoe, vice president of hospitals and health systems for SEIU said in a press release prior to the sale.

Joe Ottolino, CEO of West Suburban who is a former vice president at MacNeal, declined to say whether the hospital was on the market in an interview last year, but he noted that it is one of Tenet's profitable hospitals.

West Suburban would not be the only nonprofit hospital in the village if sold to Loyola; Rush Oak Park Hospital also is partially tax exempt. The hospital paid $1.47 million in taxes in 2017 for its medical office building just south of the hospital.

 Although the potential sale of West Suburban might not drive homeowners from the village by itself, ElSaffar noted that with increased tax assessments, it just adds to the pain felt by taxpayers.

He said potential tax burden, along with increased assessments and other fees is "death by 1,000 cuts."

"It's not like things were cheap [in Oak Park] in the first place," he said.

* This story was updated to correct a reference to West Suburban as a nonprofit. 

CONTACT: tim@oakpark.com

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Bruce Kline  

Posted: March 6th, 2018 11:43 PM

The article makes a factual error. West Sub is not a "non profit hospital" as it is owned by a "for profit" corporation: Tenet. As such it pays property taxes. CEO Ottolino won't comment, because it is an open secret to anyone in the profession: Tenet wants out of Illinois. And what ever Chairman Joe says about West Sub's profitability, the fact remains that it has a "unattractive" case mix; perhaps making a sale difficult. Whether gigantic "not for profit" corporations - like Northwestern Memorial Health Care - which otherwise make huge profits, can be exempt from the standard and customary property taxes otherwise borne by "for profit" corporations is a matter for the courts and is still being litigated - although the "non profits" won round one: https://nonprofitquarterly.org/2017/03/24/illinois-supreme-court-maintains-tax-exemption-illinois-hospitals-now/ Of course comparing West Sub to Northwestern Memorial Health Care is akin to comparing an elephant to a flea.

Jack Davidson  

Posted: March 6th, 2018 9:20 PM

I agree with Bridgett. It's high time that we, the community, get some relief by our levying boards from the tax fatigue that is weighing heavily on our residents. But the spending-more-than-we-have mentality just continues carry on with an aire of arrogance that suggests business as usual is completely acceptable whether we like it or not.

Bridgett Baron  

Posted: March 6th, 2018 5:31 PM

Hey! Here's an idea: Why don't we cut some spending to make up for the $2.3MM? I know, it's a C-R-A-Z-Y idea, but let's give it a whirl. In fact, why wait for this sale to possibly happen? How about all the taxing bodies do a little exercise, and each create a budget for next fiscal year that is 5% LESS than this current year. Wouldn't that be wacky!?

Jeff Schroeder from Oak Park  

Posted: March 6th, 2018 4:02 PM

This is all the more reason that local governments need to get smarter about how they are spending our tax dollars. As a tax preparer, I get to see the incredible divide between what Oak Parkers pay in taxes and both Chicago and surrounding communities. Our real estate tax bills are off the charts compared to similarly valued properties in other communities.

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