Village of Colfax writes off $30,000 debt owed by Colfax Health & Rehab Center
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By LeAnn R. Ralph
COLFAX — The Colfax Village Board has written off a $30,000 debt owed to the village by the Colfax Health and Rehabilitation Center for payments in lieu of taxes.
The Colfax Health and Rehabilitation Center is potentially going through a sale process, said Lynn Niggemann, administrator-clerk-treasurer, at the Colfax Village Board’s October 23 meeting.
In 2012, the village entered into an agreement with CHRC in which the facility paid Colfax $15,000 annually as a payment in lieu of taxes (PILOT). The first payment was made to the village in 2014, she said.
For many years, Area Nursing Home/Colfax Health and Rehab operated as a for-profit business. Prior to building the new facility on the south side of town, the facility became a non-profit tax exempt entity.
People who owned shares in Area Nursing Home were asked to turn their shares over to the facility as part of becoming a non-profit facility. A list of shareholders who turned over their shares is on display in the lobby of Colfax Health and Rehab.
The village charges 2 percent for late payments, and the village has been sending past due notices to CHRC, with the knowledge that the facility was experiencing financial hardship, Niggemann said.
Enough past due notices have been sent that the village is at a point where Colfax can continue requesting payment through the past-due process. The total due is right around $30,000, she said.
Two percent of $15,000 is $300. Niggemann did not elaborate on whether the 2 percent past due charges accumulate monthly for every month the payment is past due or whether the past due charges accumulate on an annual basis.
The total of $30,000 suggests that the payment in lieu of taxes has not be paid for two years.
The first option the village board would have is to write off the debt, Niggemann said.
The contract is specific to Colfax Health and Rehab, but the agreement also includes “successors and assigns,” so that technically, if the facility is switching ownership, it would still be a valid contract with the new owner, she said.
Since CHRC is tax exempt, the facility does not pay property taxes, Niggemann said.
The potential buyer has four other facilities, and the assumption is that the sale will happen, she said.
Assisted living
Once the sale is complete, the facility will have a tax identification number and a new name, Niggemann said.
One of the requirements for Colfax Health and Rehab as part of the sale was to change the facility use, and it is now only an assisted living facility, she said.
CHRC initially had a skilled nursing unit, Community Based Residential Facility (CBRF) for assisted living and a Residential Care Apartment Complex (RCAC) as well as a rehabilitation wing for people recovering from surgery or an ailment such as a heart attack.
Earlier this year, Colfax Health and Rehab eliminated skilled nursing.
Several years earlier, many of the rooms in the rehabilitation wing had been turned into CBRF assisted living rooms.
Now the license only has to be transferred for assisted living, Niggemann said.
Colfax Health and Rehab will become an assisted living facility for profit. The four facilities already owned by the company are taxed and are not tax exempt, Niggemann said.
Once the sale is completed, the facility will go on the tax roll, she said.
Property taxes
The amount of taxes that will be paid is $70,000 per year? asked Carey Davis, village trustee.
Niggemann said she had talked to the village’s assessor and had learned that it is difficult to assess facilities for taxes based on the sale price of the facility.
The sale price or the appraised price? asked Rand Bates, director of public works.
If the appraised value is higher than the sale price, the owner would likely fight paying taxes based on the appraised value. The assessed value is based on the closest comparisons in the area, Niggemann said.
What is the sale price? Davis asked.
Niggemann said she could not disclose the sale price until the sale is final.
Is CHRC asking to have the payment in lieu of taxes written off, or are the new owners willing to pay the PILOT amount? asked Anne Jenson, village trustee.
The village board has taken no action previously, so the invoice is still being sent. The village received a special assessment request from a title company asking if CHRC has any unpaid bills, Niggemann said.
The facility still owes the $30,000 in PILOT payments, so that was reported to the title company, she said.
The title company’s question about the assessments triggered an attorney to ask why the payment due is out there because the company thought the past due payments would be written off. There was a misunderstanding from the CHRC Board of Directors about the write-off, Niggemann said.
If the village board says “no” to the write-off, and it is listed on the sale closing documents, it would be a matter of seeing what happens, whether the buyer is interested in paying the $30,000, she said.
Double
“It would be foolish, in my opinion, to ask for the money. If (CHRC) goes on the tax roll, it’s double,” Bates said.
The village’s portion of the property taxes would be right around $30,000 per year. All together the facility would be paying $70,000 to $80,000 in taxes for all the taxing authorities, such as the county, Niggemann said.
The taxing authorities would be the village of Colfax, Dunn County, the Colfax school district and Chippewa Valley Technical College.
Based on the list of top 10 taxpayers in Dunn County issued by the Dunn County treasurer’s office in the annual report to the Dunn County Board in September, by dividing the amount of property taxes paid by the assessed value of the properties, property taxes of $75,000 would mean an assessed value of around $4 million.
None of the top 10 business taxpayers in Dunn County paid property taxes on the fair market value, and the assessed value for tax purposes is several million dollars less than the fair market value.
The top 10 business taxpayers in Dunn County include Walmart Distribution, 3M, Phillips Plastics, a private equity firm, Cardinal Glass, WESTconsin Credit Union, Conagra, Big River Resources, Bill’s Distributing and Chippewa Valley Warehouse.
To build the new facility, the Colfax Health and Rehabilitation Center project received two loans through the United States Department of Agriculture Rural Development Community Facilities Program that totaled more than $11 million.
The grand opening for CHRC’s new facility was held September 5, 2013.
One year
In one year of property taxes, the past due PILOT payments would be paid off, Davis said.
“Which the village would not get anyway — otherwise it would already be paid,” Bates said.
And with the sale, there is still $700,000 in debt, because not all the debt is paid off? Davis asked.
Niggemann said she could not comment on the information that was included in a closed session special meeting of the village board on October 9.
The closed meeting notice indicated the village board met in closed session according to Wisconsin statute 19.85(1)(e) “Deliberating or negotiating the purchasing of public properties, the investing of public funds, or conducting other specified public business, whenever competitive or bargaining reasons require a closed session.”
The closed session also was held under state statute 19.85(1)(g) “Conferring with legal counsel for the governmental body who is rendering oral or written advice concerning strategy to be adopted by the body with respect to litigation which it is or is likely to become involved.”
The Colfax Messenger is unaware of whether the two closed meeting exemptions were connected or whether the village board was addressing two separate issues.
The Messenger reporter sent an e-mail message to Niggemann asking if there was anything that could be reported from the special meeting but did not receive a reply.
The Colfax Messenger does not know if the village was contemplating purchasing CHRC since that is the exemption cited or who the village board would have been competing or bargaining with that necessitated a closed session or whether the village is involved, or is likely to be involved, in a lawsuit.
Write off
The Colfax Village Board unanimously approved a motion to write off the payment in lieu of taxes from the Colfax Health and Rehabilitation Center.
The new owner of CHRC will pay property taxes as an assisted living facility for profit, Niggemann reiterated.
Village trustee Gary Stene was absent from the meeting.
1966
Area Nursing Home on High Street opened in 1966. Several additions were constructed in subsequent years. The latest addition included the clinic built onto the west end in the mid-1970s.
A covered, drive-through entrance was added to the facility on High Street in 2007.
Area Nursing Home changed the name to “doing business as” the Colfax Health and Rehabilitation Center in 2008.
The former Area Nursing Home building on High Street has remained empty since the residents moved to the current location of Colfax Health and Rehab in 2013.
The property on High Street was sold during an on-line auction in June of 2020.
The property sold at auction was Lot 1 where the vacant nursing home is located on 3.56 acres; Lot 2, directly west of the old nursing home, covering 1.94 acres; and Lot 3, on the southwest corner of Lot 2, which has a house on the lot and covers .66 acres.
Area Nursing Home purchased the two lots west of the nursing home in the spring of 2009 with the idea of building an assisted living facility. There were also plans to build a new clinic east of the nursing home and to expand the nursing home into the clinic space on the west side of the nursing home.
Colfax Health and Rehab eventually abandoned those plans and built a new nursing home on the south side of Colfax in 2012.
The clinic at the facility on High Street, which was most recently part of the Mayo health system, closed July 1, 2016.
There is room to build a new clinic on the east side of Colfax Health and Rehab, but to date, Colfax remains without a medical clinic.
Niggemann has spent significant time and energy trying to find a clinic to locate in Colfax.
