February 3, 2017
Health Care Authorities ? Ad Valorem Taxes ? Hospitals ? Health Care ? Elmore County
The Elmore County Health Care Authority may provide financial support to Community Hospital, a private, nonprofit corporation in Elmore County, from the lease revenue or other Authority funds that are not ad valorem tax proceeds.
Dear Mr. Barrett:
This opinion of the Attorney General is issued in response to your request on behalf of the Elmore County Health Care Authority.
QUESTION
Whether the Elmore County Health Care Authority (?Authority?) may provide financial support to Community Hospital, a private, nonprofit corporation in Elmore County, from the lease revenue or other Authority funds that are not ad valorem tax proceeds?
FACTS AND ANALYSIS
The Elmore County Health Care Authority is incorporated pursuant to section 22-21-310, et seq., of the Code of Alabama for the purposes of facilitating, assisting, and participating in the construction, equipping, maintenance and operation of suitable hospitals and related medical facilities within Elmore County.? Ala. Code ???22-21-310 to 22-21-344 (2015).? The Authority is publically supported by ad valorem taxes levied and collected pursuant to section 215.02 of article XI of the Recompiled Constitution of Alabama.? Ala. Const. art. XI ??215.02?(amend. 72).? These funds have been used to support Elmore Community Hospital, a public hospital owned by the Authority and leased to an operator.
In addition to receiving tax proceeds pursuant to section 215.02, the Authority receives lease payments from the lease of the property, building and equipment constituting the Elmore Community Hospital.? You state in your inquiry that lease revenue is maintained separate and apart from the ad valorem taxes received by the Authority.? Finally, you note that the hospital property was initially acquired and constructed predominantly with ad valorem tax proceeds or financing supported by such proceeds.
Your request additionally states that the Authority seeks to provide support to Community Hospital, a private, nonprofit entity exempt from federal taxation under section 501(c)(3) of the Internal Revenue Code.? 26 U.S.C. ??501(c)(3).? Community Hospital is located in Elmore County and is the sole provider of certain services within the community.? Your inquiry comes in an effort to promote improved health for all residents of the county and in response to a request for support by Community Hospital.
Section 215.02 states as follows:
If the tax is authorized by vote of a majority of the qualified electors of the county who participate in any election called for that purpose, the governing body of every county except Mobile, Montgomery, and Jefferson counties must levy and collect, in addition to all other taxes authorized by law, a special county tax, not exceeding four mills on each dollar of taxable property in the county to be used solely for acquiring, by purchase, lease, or otherwise, constructing, operating equipping, or maintaining county hospitals or other public hospitals, non-profit hospitals and public health facilities.? An election may be called at any time by the governing body of the county, and must be called within three months of receipt of a petition, signed by not less than five percent of the qualified electors of the county, requesting that the election be called.? The election shall be conducted in the manner which the governing body of the county prescribes.
Ala. Const. art. XI ??215.02?(amend. 72).
Nothing in section 215.02 expressly or impliedly restricts the use or distribution of proceeds generated as a result of prior expenditures or investments of ad valorem tax monies.? Any funds that are a derivative of ad valorem tax monies received pursuant to section 215.02 are not subject to the same limitation on all other funds received directly as a result of the levy of ad valorem taxes under section 215.02.
To the extent that the Authority may have funds that are indirectly received as a result of the levy of ad valorem tax pursuant to section 215.02, it is the opinion of this Office that the Authority may expend such monies pursuant to the provisions set out in section 22-21-310, et seq., of the Code of Alabama.? Ala. Code ???22-21-310 to 22-21-359 (2015).
CONCLUSION
The Elmore County Health Care Authority may provide financial support to Community Hospital, a private, nonprofit corporation in Elmore County, from the lease revenue or other Authority funds that are not ad valorem tax proceeds.
I hope this opinion answers your question.? If this Office can be of further assistance, please contact Monet Gaines of my staff.
Sincerely,
LUTHER STRANGE
Attorney General
By:
WARD BEESON, III
Chief, Opinions Section
LS/MMG/as
2287974/194742