The borough assembly and SouthEast Alaska Regional Health Consortium have come to an agreement of voluntary payments by SEARHC of $45,000 per year for 10 years on property owned by the nonprofit health care provider in town.
In negotiations that began in November, the borough had been asking for $225,000 a year, and SEARHC had asked for a refund on a $331,287 property tax bill it paid in full on the new Wrangell Medical Center in 2021. As a nonprofit, SEARHC is exempt under state law from property taxes.
In the agreement approved by the borough assembly May 17, SEARHC agreed to donate the $331,287 to the borough, listed in the negotiated agreement as an “overpayment,” and not seek a refund.
“Without property tax revenue to fund the cost of providing services to the community, the burden of providing such services has the potential to increase year-over-year,” the agreement read.
The health care provider will pay the borough $45,000 on or before Oct. 15 of each year. That represents just over 2% of Wrangell’s annual property tax revenues.
“SEARHC is pleased to have reached an agreement with the city and borough of Wrangell regarding historical property taxes,” Senior Vice President and Chief Operating Officer Leatha Merculieff said via email last Thursday. “With this agreement in place, SEARHC can continue its support of the health and well-being of the Wrangell community.”
Before entering into a closed-door executive session to discuss the tax contribution agreement, Mayor Steve Prysunka declared a conflict of interest, as his wife is the medical director at the hospital. The assembly did not object to the mayor’s participation, and came out of a 50-minute executive session to unanimously approve the agreement in public.
At the meeting, Prysunka told the other assembly members that he was appreciative SEARHC “stuck with us,” and that they were working together to get to the same place.
“I’m pleased with this agreement,” Prysunka said.
Borough Manager Jeff Good last Thursday said, ”It’s definitely good for Wrangell, and a good partnership moving forward to support the community.”
Good said the payments are not directed to any particular project or service, just as property tax revenues go into the general fund for assembly appropriation. “We're definitely going to partner with them (SEARHC) to make sure their services are met and the funds will be distributed where they are needed.”
The tribal nonprofit owns the hospital, clinic and other office and rental housing properties in town, including the Amanda Building on Lynch Street across from City Hall, where contract staff such as traveling nurses and their families are housed.
The health care provider does not make payments in lieu of property taxes in Sitka or Juneau, where it owns much more property than in Wrangell.
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