If you like corporate welfare in the form of tax-increment-financing (TIF) schemes, you ought to love this.
Unity Health, the area's second-largest hospital chain, has been awarded 100 percent tax-free status for its new $40 million corporate Taj Mahal -- uh, headquarters complex -- near Manchester and I-270 in Town & Country. The St. Louis County Council reluctantly OK'd the tax-exempt status earlier this month.
Once again, the biggest victim of government largesse was the Kirkwood School District, already reeling from the ludicrous "blighting" of the West County Center shopping mall in Des Peres ("Commentary," "Des Peres Has Gone Mad. But Don't Take My Word for It.", RFT, Oct. 6) and a few other TIF projects. School officials estimate they'll lose a staggering $405,000 annually in foregone property-tax revenues, based on the property's assessed valuation of nearly $10 million.
Unity Health, a "not-for-profit" corporation with $850 million in revenues, 12,000 employees and 2,800 physicians, will pay zero in taxes on a prime-time piece of commercial property offering more than 200,000 square feet of office space. Zero. To the schools, to the county, to the sewer district, to the junior- college district, to the special schools, to anyone.
Unity itself is owned by the Sisters of Mercy, who apparently operate a fairly robust nonbusiness, but the company chooses to disclose neither its net "nonprofits" nor its healthy executive salaries.
Something tells me that Unity is bringing home the Sisters of Mercy a pretty fair collection plate. But in the eyes of the state, the lavish corporate offices might as well be a little convent in the basement of a tenement, for tax purposes. Now, don't accuse me of dragging some poor nuns into this story. Unity CEO James B. Hardman did that himself, in a letter to outraged Kirkwood School Superintendent David Damerall, who fought hard against the exemption.
"The Sisters of Mercy, through Unity Health in St. Louis, and in other communities, has devoted considerable resources to the fulfillment of Christ's mission to serve all, including the poor and indigent, by providing health care, education and other services to all, regardless of their ability to pay, for over 100 years," Hardman wrote. "For fiscal 1998, Unity Health alone provided more than $61 million in charity care in the St. Louis community."
Hardman didn't say how the fancy fountains and other opulent trappings of the headquarters building would square with "the fulfillment of Christ's mission to serve all." And something tells me he wouldn't have wanted to have Jesus on his compensation committee.
But this isn't about Bible study, it's about business. And in that context, one can hardly blame Unity and its lawyers from taking full advantage of a state law that started out as a means of exempting not-for-profit hospitals from paying taxes but has now mutated -- thanks to recent court decisions -- to the point where luxurious corporate pads enjoy the same special status.
It worked. After the county Board of Equalization found that Unity met all the legal requirements to have its home deemed tax-free, County Counselor John Ross told the County Council that if it rejected Unity's request (as Kirkwood urged) it would be bucking a recent Court of Appeals decision in which Abbott Ambulance was exempted for its offices and warehouses in the city of St. Louis.
"I advised that the law supported granting the tax exemption, no matter how distasteful they might find it to be," Ross told me.
The Council voted 6-1 to approve Unity's exemption, with only Councilman Charles Dooley finding it distasteful enough to make a test case of the project.
"I think we need to send a message to the community that some of these nonprofits, which really aren't nonprofits, ought to be paying taxes to the school district," Dooley told me. "I don't know where their money is going -- maybe higher CEO salaries or nice offices or whatever -- but it's not going to the community."
Even the councilmen who backed Unity didn't seem happy about it; witness their unanimous vote afterward urging the state legislature to reconsider the notion of exempting "property marginally affiliated with tax-exempt institutions." Unity's "supporters" on the council weren't cooing.
"I would have liked nothing more than to have denied the exemption," Councilman Kurt Odenwald said. "But in light of the court's ruling on the Abbott Ambulance case, in which they told the city of St. Louis it had to grant an exemption, the council felt its hands were tied."
Odenwald added that it was harder to protect taxing districts in a not-for-profit case like Unity's than in a TIF case. In a TIF, the governmental entities have discretion as to whether to grant an exemption, but in a not-for-profit's case, if the state's requirements are met, tax-free status is "an entitlement," he said.
The distinction offers no solace to Kirkwood Superintendent Damerall, who used "opulent" and "posh" to describe Unity's offices before the council. And though he publicly decried the exemption as "just a huge, staggering loss" to the Kirkwood schools, he seemed equally unhappy about how the deal was done.
"I was most bothered that when I spoke to their CEO, he expressed to me that his major loyalty was toward his board of directors, and I questioned whether there wasn't also a loyalty to the community they serve," Damerall said. "About one-quarter of the children we serve are poor and about 15 percent need special education services. Where's the concern for them?"
Damerall said the Kirkwood schools fared better even in the outrageous West County Center TIF in Des Peres than in Unity's case. The schools will receive 25 percent of new property taxes generated from that project, plus some other allowances, he said. But from Unity Health?
"I thought they'd be generous enough to pay something to the school district," Damerall said. "The thing that was so harsh about Unity is that the answer from James Hardman was no, zero, that they were going to take every bit of what they could get."
I couldn't reach Hardman, but Unity spokeswoman Regina DeLuca told me the company "really was accountable to the community." She cited the company's figures that it provides $61 million annually in charity care.
"We have offered to sit down with the Kirkwood School District officials to discuss ways we can share our resources," she said. "We've got 12,000 employees at Unity, and we do all sorts of programs and activities in Kirkwood and other communities.
"We really do try to do whatever we can."
That, of course, is a matter of some contention. Damerall counts about 405,000 reasons why it isn't so, but there's no doubt that many Unity employees like DeLuca are indeed out there trying their best.
So how should Unity and the Sisters of Mercy reach out and embrace their friends in the Kirkwood School District?
Maybe they should try an open house.