Tulsa Tax Assessor Takes Aim at Luxurious Nonprofit Retirement Community

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May 18, 2012; Source: NewsOn6 (KOTV)

How tax-exempt are you for local government property tax purposes? In Tula, Okla., an “upscale retirement community” called Montereau hasn’t paid a nickel of property taxes since it opened 12 years ago. A little out of the blue, the Tulsa County assessor decided to reexamine the tax status of Montereau authorized, saying that state law suggests a periodic check-up on the tax-exempt status of properties. Assessor Ken Yazel found Montereau owes taxes on its property valued at over $107 million. Based on Tulsa’s most recent tax rate, Montereau would have been required to pay $1.5 million last year alone.

Both sides of this debate are understandable. On one hand, Yazel seems to be reexamining several “continuum of care retirement centers” (CCRCs), not just Montereau. A lawyer for the Baptist Village Retirement Centers, another of the reviewed CCRCs, charged that Yazel was bent on “attacking sick, elderly people.” Yazel is also looking at other CCRCs including Franciscan Villa, St. Simeon’s Episcopal Home, the Tulsa Jewish Retirement Community and Health Care Center, and the Villages at Southern Hills. But according to Montereau’s lawyer, state law expressly exempts CCRCs from local property taxes, and in the case of Montereau, the facility is a 501(c)(3) nonprofit.

But what a nonprofit! According to Yazel, “ they have much more out there than they are licensed for…You can be exempted for various reasons, (but) that doesn’t apply to building a village out there, which is seemingly what they have done…They have all kinds of amenities – they have valet parking, a restaurant, an eight-story apartment building – and if you take that value, which is very conservative, and divide it by the number of licensed beds, that’s more than $1 million per licensed bed.”

We took a look at Montereau’s website and saw what might have suggested to Yazel that Montereau might warrant another look. For example, the 306 apartments in the eight-story apartment building have floor plans ranging in size from a low of 750 square feet (roughly equivalent in size to a conventional two-bedroom apartment) to a very generous 3,750 square feet. The garden homes, sized between 1,492 and 1,606 square feet, each come with two-car garages. In addition, there are four assisted living centers within the complex and a wide variety of amenities for residents of the assisted living facilities as well as the retirement apartments and garden homes.

Yazel contends that if the CCRC statue governs the tax treatment of facilities like Montereau, then only 40 percent of the property is tax-exempt because the remainder is beyond the specifics that the state licensed when it granted Montereau CCRC status. But perhaps Yazel is really challenging the underlying statute itself, suggesting that even the state’s CCRC statute is giving carte blanche tax-exempt status to local CCRCs.

Regardless of how the Montereau situation turns out, Yazel’s action against Montereau and other CCRCs demonstrates a willingness of local government authorities to question the tax-exempt bona fides of swaths of the tax-exempt sector, including those that wrangled local property tax exemptions through state government fiat.—Rick Cohen