Commissioners add support for taxing independent living units

Harvey County officials who came to visit the Marion County Commission Monday were granted Marion County support in their struggle to have the Kansas Legislature overturn property tax exemption for independent living units owned by non-profit entities such as nursing homes.

Harvey County Commissioner Ken Meier said adult care homes and nursing homes are lobbying the Legislature in a misleading way, contending that counties involved want all of their facilities taxed. Meier said this isn’t true.

“It’s an issue of fairness, not of just getting in more money,” he said. Care homes and nursing homes should remain tax exempt as good public policy, he said.

But, he pointed out, a typical elderly widow living in a $30,000 home shouldn’t be asked to pay taxes “that subsidize” her wealthier peers. Such peers pay no taxes but live in much more expensive independent living units sold to them by nonprofit care homes under specifications that they be allowed to buy them back at discounts to resell later.

According to figures compiled by Craig Simons, Harvey County administrator, and Craig Clough, Harvey County appraiser, an elderly person in Newton who owned a home appraised at $29,420 in 2002 paid $413.18 in 2001 property taxes.

At the same time, Simons and Clough said, elderly persons who owned an independent living unit valued at $126,500 in 2002 paid nothing in 2001 taxes.

Yet, said Simons, both sets of people expected to receive the same county and city services such as fire and police protection paid for by only one of them.

Clough said the same was true of 461 elderly residential units throughout Harvey County with a total valuation of $34,324,330, resulting taxes lost of $461,200, and zero in taxes paid.

The tax loss to Marion County from such units might be closer to something like $100,000 or less since it is less populated than Harvey County, Meier estimated.

Meier said potential independent living unit buyers usually are asked to pay up to $2,000 in application fees, which immediately cuts out poorer persons.

Simons said this fee process also has been used for illegal racial screening.

Meier said independent living unit owners in Harvey County pay $80,000 and on up to nearly a quarter-million dollars for their homes. Then, he said, they are restricted to selling their homes that may be under lease-ownership agreements when they leave them back to the care homes-at discount totals usually of 50 to 75 percent of the original purchase price.

The care home isn’t restricted to that original purchase price, though, he said, and may mark the price for resale even higher.

Meier said, “This isn’t charity. It’s asking less affluent people to subsidize those who live in the units when they can still go vote on bond and tax issues.”

Simons said Harvey County is in a Property Tax Coalition for Fairness Commission with Reno and McPherson counties to lobby for change in the Legislature. Harvey County, Reno County, and the cities of Inman and Hesston pay financial support while McPherson County is a non-financial supporter.

Meier asked that Marion County also join as a non-financial supporter.

Marion County Commissioner Leroy Wetta said he would have no trouble doing so if it was not a “money grabbing” plan by counties to raise more tax money, but only a “fairness issue” that could lower mill levies for everybody if implemented by the Legislature.

Simons said that there could be a built-in protection against rapid tax money gains because the counties support the change to taxation only when lease-ownership of independent living units changes hands or when new ones are built.

He added that the Harvey County group will be going to the more urban counties of Shawnee, Douglas and Johnson soon to try to gain more potent support.

According to state figures for last year provided by the Harvey County group, the estimated tax loss in Marion County totaled $62,661.80 on independent living units with an appraised valuation totaling $9,912,310.

These included 18 units at Bethesda Home in Goessel, 11 units at Hillsboro Community Medical Center and 71 units at Parkside Homes Inc. at Hillsboro.

The total appraised valuation of independent living units in Kansas was more than $384 million with an estimated tax loss of more than $2.5 million because of exemption under KSA 79-201b.

The Marion County commissioners voted 3-0 to join Harvey County and the others in the coalition.

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