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City wants hospital appraisal

With potential tax windfall at stake, evaluation of MGH sought

October 29, 2012
By KYLE WHITNEY - Journal Staff Writer ( , The Mining Journal

MARQUETTE - The Marquette City Commission is expected to request an appraisal of Marquette General Hospital during tonight's regular meeting.

The meeting is at 7 p.m. in commission chambers at city hall.

The appraisal will serve as a baseline allowing the city to levy taxes on the hospital, which should boost the city's tax revenues dramatically.

Article Photos

The exterior of Marquette General Hospital is seen in this file photo. (Journal file photo)

This spring, Duke LifePoint Healthcare entered into an agreement to purchase MGH. The deal was finalized in September and the hospital - a previously tax-exempt facility - will be put on the city tax rolls Dec. 31.

"Whatever this increase is - it's going to be a pretty sizable increase - I would like to see a millage rollback to a degree," Marquette Mayor John Kivela said this morning. "For decades our residents have been paying higher taxes so MGH could be (tax free)."

Though Kivela will no longer be on the commission following the November election, he said he would like to see half of the revenue increase used to pay down long-term city debt, with the other half used to reduce the millage rate. He said taxes on property in the city haven't been raised in more than six years.

Other commissioners have voiced support in the past for using the increased city revenues to lower residential taxes.

Due to the hospital's previous tax-exempt status, the city has not completed a full valuation in the past.

City Assessor Susan Bovan said she will suggest the commission enter into an agreement with MR Valuation Consulting LLC, a New Jersey-based company that she said has specific experience with hospital assessments.

Under the agreement, the company would complete an appraisal of MGH's real and personal property by mid-December for about $72,500.

After reviewing a number of documents - including Michigan Attorney General Bill Schuette's review of the transaction - Bovan said she expects the valuation to come in at between $120 million and $150 million. That would place the taxable value of MGH at somewhere between $60 million and $75 million.

For comparison, Bovan said the 2012 taxable value for We Energies - owner of the Presque Isle Power Plant and the city's largest taxpayer - is slightly more than $101.8 million.

Annually, the city receives $1.5 million in tax revenue - which is levied from the city operating and senior millages - from We Energies.

Kivela said the city had wanted to have an outside firm complete the valuation because the process is complicated and very in-depth. In addition, the city was looking for a firm with past success defending its valuations against legal challenges, he said.

"We want it to be fair," he said of the valuation. "We don't want to overtax and we don't want to undertax."

Bovan said she is required to finalize the valuation information for all city properties by the end of February. The city will realize an MGH-related increase in tax revenue on the summer tax bill, issued July 1.

In addition to the hospital complex in Marquette, MGH owns a piece of land in Ishpeming and controls a number of regional clinics.

Kyle Whitney can be reached at 906-228-2500, ext. 250.



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