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Butler County district officials agree to 'payments in lieu of taxes'

Jeremy Boren
| Saturday, May 25, 2013, 9:00 p.m.

Mars Area School District officials said they risked losing more than $400,000 a year if they didn't team with two municipalities and Butler County in accepting reduced tax payments and removing $4 million in property owned by a retirement community from real estate tax rolls.

Officials from Mars schools, Adams, Valencia and the county agreed to accept a shrinking scale of so-called “payments in lieu of taxes” beginning with the 2013-14 school year from the St. Barnabas Health System, which touts itself as the largest retirement and health care community of its kind in Pennsylvania.

“They wanted us to get zero,” said Mike Hnath, Mars Area's solicitor.

St. Barnabas Land Trust sought tax-exempt status from Butler County because of the charitable aspects of its business, which cater to a population of 755 patients and residents with an average age of 88, said Walter DeForest, an attorney for the nonprofit.

“It donates a substantial portion of the services it provides,” DeForest said.

That includes providing care to low-income seniors, he said, noting that more than half of the skilled nursing services St. Barnabas provides goes to senior citizens who rely on Medicaid.

Courts have used the number of Medicaid patients to determine whether a facility qualifies for tax exemptions as a charity.

The Pennsylvania Supreme Court has ruled that organizations must pass a five-point test to qualify as a charity under state law.

Under the test, the organization must advance a charitable purpose; donate or give away a substantial portion of its services; help a substantial and indefinite class of people who are legitimate subjects of charity; relieve the government of some of its burden; and operate entirely free from private profit motive.

DeForest said St. Barnabas's properties in Allegheny County, including its Gibsonia campus in Richland, are already tax-exempt.

Mars Area School District will lose the most revenue under the agreement because the school district imposes the highest tax rate. Next school year, Mars Area will receive $353,006 from St. Barnabas instead of the roughly $405,754 it receives now.

By the fifth year, the district would receive $243,453, or about 60 percent of the original amount. It would continue to receive $243,453 during each of the next five years.

“It's better to get some of the apple than none of the apple,” said Chris Savage, director of the Butler County Assessment Office. “That's how a lot of taxing bodies are looking at it.”

Butler County Prothonotary officials said St. Barnabas withdrew court filings seeking tax-exempt status last week.

Savage said Butler County has similar agreements with other retirement communities including Passavant Retirement Community in Zelienople, Sherwood Oaks in Cranberry and Concordia Lutheran Ministries in Cabot.

If St. Barnabas adds to its facilities, and thus the value of 19 properties in Butler County, the agreement allows for increases in the payments.

There are five licensed retirement communities in Butler County, 26 in Allegheny County and six in Westmoreland County, according to the Pennsylvania Insurance Department.

In Allegheny County, only two retirement facilities have had payment in lieu of taxes agreements: Masonic Village of Sewickley and Asbury Place in Mt. Lebanon, said Amie Downs, spokeswoman for Allegheny County Executive Rich Fitzgerald. Asbury's agreement expired in 2012.

Jeremy Boren is a staff writer for Trib Total Media. He can be reached at 412-320-7935 or

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