St. Luke's Home, an assisted-living facility for the low-income elderly, has dished out more than $100,000 in property taxes since entering into a limited partnership with Bank One (now Chase), says Larry Rush, executive director of the facility.
Using a low-income housing tax-credit program, Bank One and St. Luke's teamed up for a much-needed $2.5 million revamp of the building, which had fallen into serious disrepair and could only accommodate 28 residents, Rush says.
The partnership allowed St. Luke's to completely remodel the facility, which can now accommodate between 65 and 80 residents, depending on the number of couples living together, Rush says.
But because St. Luke's had entered into a partnership with a for-profit organization, it's no longer exempt from paying property taxes as a nonprofit organization, says Pima County Assessor Bill Staples.
But Staples says he wouldn't be opposed to legislation that could change that.
Rep. Phil Lopes, a Democrat who represents Tucson's westside, sponsored House Bill 2425, which would help organizations like St. Luke's retain their nonprofit status for the purposes of considering property taxes.
Lopes says he wanted to help, because the staff at St. Luke's does a great service to the community.
"They've never paid property taxes before," Lopes says. "Why make them pay now?"
The estimated $20,000 per year of property taxes is a huge burden on St. Luke's, says Neel Hall, a member of the St. Luke's Board of Trustees.
The only two sources of income for the home are from the low rents that residents pay--about $550 each per month, which also includes care services--and from charitable contributions, Hall says.
"I would hate to see St. Luke's go into bankruptcy, like Handmaker and other organizations have," Hall says.
St. Luke's has been able to stay afloat so far thanks to a small reserve fund that had been accumulating for several years. Hall warns that eventually, the fund will be totally depleted.
"We can't have the residents pay higher amounts of rent," Hall said. "Basically, their only source of income is Social Security, and what they're paying is all they can afford to pay."
Residents must qualify for residency in St. Luke's Home by making less than $21,000 per year, Hall says. Although they are charged a modest amount of rent, Hall estimated the cost of care for each resident is between $1,500 and $1,600 per month.
The bill to exempt St. Luke's passed the Arizona House of Representatives by a vote of 38-21 in March. But the bill died when Sen. Dean Martin (R-Phoenix) refused to hear it in his Senate Finance Committee.
Martin, who is seeking the state treasurer's post this year, told the Weekly he couldn't recall the specific bill, adding that so many bills were in his committee that he had to narrow down the ones on which he could grant a hearing.
"When we're trying to do broad-based property-tax reform and bring down everyone's property taxes, I shied away this year from exempting any one group or another from property taxes altogether, because that would be at the long-term expense of being able to do reform for everybody," Martin said.
Lopes hopes to resurrect the legislation through an amendment attached to a separate bill.
Mary Greene, the president of the St. Luke's Housing Corporation Inc. and a longtime volunteer with the organization, says she remains hopeful that an amended bill will make it into law.
"There needs to be reconsideration of the current taxing criteria for nonprofits who are benefiting from partnerships with for-profit organizations," Greene says.
The legislation would not only help St. Luke's, but other nonprofit organizations as well, Greene says.
"There are a number of people working very hard to make this happen," Greene says.
St. Luke's, which has been in service in Tucson since 1917, has shown a longstanding commitment to community, and if any organization is deserving of the tax break, it is St. Luke's, Greene says.
"Each of us has parents and grandparents," she says. "We recognize that there's a greater need, and certainly, all of us can help."