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Reimbursement to Tampa General Hospital for Overpayment of Payment In Lieu of Taxes (PILOT) Payment Due to Non-profit Status
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BRIEF OVERVIEW
In October of 2024, Hernando County sent an invoice to Tampa General Hospital Hernando, LLC (TGH) totaling $502,973.50 for FY 25 payment In lieu of taxes (PILOT).
Per the Amended and Restated Lease Agreement, Article III, § 3.3(B), “Additional Payment for County Services,” requires TGH to pay a PILOT to the County annually. The PILOT is to be calculated as the sum of the following:
1) The amount of ad valorem (i.e., property) taxes that the County would have levied on the leased properties if they were owned not by the County (i.e., the General Fund, Transportation Trust, and County Health levies), but instead, by a not-for-profit, tax-exempt entity; and,
2) The total amount of ad valorem taxes that government entities other than the County would have levied on the leased properties; and,
3) The total amount of all special assessments that the County would have levied on the leased properties through its MSBU’s; and,
4) The total amount of ad valorem taxes that the County would have levied on the leased properties through its MSTU’s.
The change in the invoice, associated with the list above, is component (1) needs to be updated to $0. Per Legal, pursuant to Fla. Stat. § 196.197, hospitals are exempt from ad valorem taxation to the extent that they meet the following criteria:
The owner must be a Florida not for profit corporation that is exempt, as of January 1 of the year for which exemption from ad valorem property taxes is requested, from federal income taxation as a 501(c)(3)-qualified exempt organization. See § 196.197(1), Fla. Stat., referring to 26 U.S.C.A. § 501(c)(3).
In determining the extent of exemption to be granted to a hospital, portions of the property leased as parking lots or garages operated by private enterprise will not be deemed to be serving an exempt purpose and will not be exempt from taxation. See § 196.197(2), Fla. Stat.
Property or facilities which are leased to a nonprofit corporation which provides direct medical services to patients in a nonprofit or public hospital and qualifies under the provision pertaining to the determination of whether property is entitled to a charitable, religious, scientific, or literary exemption are excluded and will be exempt from taxation. § 196.197(2), Fla. Stat.
If a portion of a hospital is rented to doctors engaged in private practice, rather than to a nonprofit corporation, then the property is not exempt. See Underhill v. Edwards, 400 So. 2d 129 (Fla. 5th DCA 1981). Thus, a hospital's exemption does not extend to a medical office building on its grounds where it is predominantly used as offices rented to private physicians, and it makes no difference that the presence of the physicians on those premises confer some incidental benefit on the hospital or that a small portion of the building is directly used for hospital purposes. See North Shore Medical Center, Inc. v. Bystrom, 461 So. 2d 167 (Fla. 3rd DCA 1984).
The invoiced amount included all applicable taxes and payments, including the General Fund portion, as if the property wasn’t owned by the County. Per the agreement between the County and TGH, and the update from Legal above, the millage rate for the General Fund should have been excluded. Staff is requesting consent for reimbursement in the amount of $386,520.53 for Tampa General Hospital, which is the General Fund portion, as summarized below:
Amount Paid: $502,973.50
Current Assessment: $116,452.97 (excludes GF portion)
Difference: $386,520.53
Refund: $386,520.53
Location: Multiple
Parcel ID: Multiple
Parcel Key: Multiple
Lessee: Tampa General Hospital Hernando, LLC
FINANCIAL IMPACT
Page 4 of the attached document shows the summary of the journal entry associated with this transaction. Please note the credit amount to:
Fund: 0011 - General Fund, Account: 3620032 - Lease-Hospital - Lieu Tax in the amount of $386,520.53 that is also highlighted on the attached financial.
Upon completing the reimbursement, that journal entry would reverse to zero it out. The FY26 budget has already been updated to reflect this change.
LEGAL NOTE
The Board has the authority to act on this matter pursuant to Chapters 125 and 129, Florida Statutes.
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RECOMMENDATION
It is recommended that the Board approve the reimbursement to Tampa General Hospital Hernando, LLC.