Non-profit hospitals in Salt Lake County have won a long-fought battle this week, but the fight continues in Utah County where Intermountain Health Care's three county hospitals have been denied tax-exempt status.

Salt Lake County Commissioners granted tax-exempt status to a number of Salt Lake-area hospitals Monday in a process that is being repeated in counties throughout the state.In Provo, an official from the Utah County attorney's office said a tie vote Monday on the tax status of IHC's three county hospitals means that, for the time being, the hospitals are not tax exempt.

The long-standing tradition of automatically granting non-profit hospitals a tax exemption by classifying them as charitable organizations ended in 1985 with a Utah Supreme Court ruling.

A year later, Utah voters astonished experts by defeating a proposition that would have automatically exempted all non-profit hospitals from paying property taxes.

Since then, the hospitals have had to prove to county commissioners each year that they are worthy of the exemption. Some have qualified and some have been rejected.

The hospitals had to meet court-mandated criteria that ensured they are not for-profit hospitals in disguise. They had to show that service was provided without the expectation of payment.

But the way county governments interpreted the criteria set by the court led to some 30 appeals on 1986 and 1987 tax assessments, leaving the State Tax Commission to referee between county governments and hospitals, which have been squabbling over the issue of tax-exempt status since the early 1980s.

After years of study, the Tax Commission last year finally released new tax-exempt standards by which non-profit hospitals will be judged by county boards of equalization.

The Salt Lake County Commission, acting as the Board of Equalization, granted religious tax exemptions Monday to Holy Cross Hospital Complex, St. Joseph's Villa and Aids Hospice and exemptions for 1986 and 1987 only to HCA St. Mark's Hospital. Charitable exemption applications were granted, for the most part, to Holy Cross Hospitals and a number of Intermountain Health Care facilities: LDS Hospital, Primary Children's Medical Center, Cottonwood Hospital, Alta View Hospital and Wasatch Canyons Hospital.

Utah County commissioners weren't as generous.

Last week IHC asked the county to grant Utah Valley Regional Medical Center, Orem Community Hospital and American Fork Hospital tax-exempt status.

At issue is about $870,000 in property taxes annually and about $3 million in taxes dating back to 1986 - the year the State Tax Commission put a hold on the taxes while it established guidelines for counties to use in determining the tax status of hospitals.

IHC officials said the hospitals qualify as non-profit and charitable according to the Tax Commission's six guidelines. They said the hospitals' charitable donations to the community last year exceeded $19 million.

Acting as the Board of Equalization, Commissioner Gary Herbert voted Monday to grant IHC's request. However, Commissioner Richard Johnson voted to deny the request. Commissioner Malcolm Beck excused himself from the case because of his position on the American Fork Hospital's board of directors.

After the vote, Deputy County Attorney Jeril Wilson said the tie vote has the same effect as a vote against IHC's request.

"I believe the taxpayer has the burden of proof in convincing the county to grant them the exemption," Wilson said. "In this case that has not been done."

However, Doug Hammer, IHC's attorney, said that because the board's 1987 ruling in favor of IHC has never been overturned, it takes an affirmative vote to place the hospitals back on the tax rolls. He will ask the Tax Commission to rule on the tie vote.

If the Tax Commission agrees with Wilson, Hammer said IHC would then appeal the board's ruling.

"It appears this issue will go on to the Tax Commission for resolution," Hammer said.

IHC officials say the value of charity care and other community gifts totaled $104 million for its Utah facilities in 1990, including $11 million for indigent care, compared to the $6 million its 17 Utah hospitals would pay in property taxes if they were not tax exempt.

Still, in Salt Lake County, the charitable exemptions were granted over the objections of County Auditor Robert L. Yates and County Commissioner Jim Bradley.

Yates has labeled IHC a profit-making business that burdens taxpayers with expenses it should pay through property taxes. Yates has said he will take the issue to the Utah Supreme Court, if necessary, to force IHC to pay property taxes.

Bradley agreed and said the value of charity care shouldn't necessarily qualify a hospital for tax-exempt status. "If every person paying property taxes received a dollar-for-dollar credit against property taxes for the value of all their volunteer efforts and charitable contributions," he said, "I believe there would be little or no property tax collected."

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Commissioner Mike Stewart called the standards for evaluating a hospital's eligibility to be tax-exempt a "moving target" that changes with the way hospitals change to remain competitive.

"It's like trying to change a tire on a car that is moving as we, in subsequent years, have to deal with this taxation request."

IHC lawyer Alan Sullivan said the hospital chain's tax-exempt status is under review in Washington, Sevier, Sanpete, Millard, Garfield, Box Elder, Iron, Weber and Cache counties.

Not all of IHC's tax-exemption requests in Salt Lake County were granted. The board denied requests to exempt vacant parcels of land set aside for Alta View Hospital expansion, houses used for visiting doctors, patient family housing or commercial buildings.

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