In Michigan, a common misconception occurs when 501(c)(3) nonprofit corporations buy and sell real property.  While nonprofit 501(c)(3) corporations can be exempt from paying real property taxes while retaining title to and occupying real property in Michigan, they can be subject to a real property transfer tax at the time title to its property is transferred.  It is customary for a seller (or transferor) of real property to pay the transfer taxes at the time of transfer, but this tax can be negotiated as part of the transaction.

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Part 2 of 2

If it survives the current legal challenge in the U.S. Supreme Court, the mandatory coverage aspect of the Affordable Care Act (“ACA”) will not take effect until 2014.  This timing has the effect of making hospitals tentative about capital deployment in general and for real estate in particular.

Besides timing and uncertainty, there are other aspects of the ACA and the general economic environment that diminish current and short-term spending by hospitals for new real estate development: (more…)

Part 1 of 2

It seems like yesterday, but we are two years into the “health care reform” era.  The Affordable Care Act (“ACA”) became law in March of 2010.  The primary goals of the ACA are three-fold:  increase coverage, reduce the cost of care and improve the quality of care.  Few argue the importance of the objectives.  When Congress passed the ACA:

• 45 million Americans lacked coverage;
• Health care constituted a full 16% of GNP (compared to Britain’s 8.4% and France’s 11%);
• The per capita annual cost of care was $7,290 (about double that of most industrialized countries); and
• Quality was comparatively poor (as measured by preventable deaths in the US vs. other developed nations). (more…)

Hall Render real estate attorneys regularly police our health care clients’ real estate contracts, particularly leases, to ensure they comply with applicable health laws. In particular, federal Stark and Anti-Kickback laws. A Michigan nonprofit hospital system’s 2011 payment of $30 million in fines for alleged health law violations demonstrates the potentially high cost of noncompliant leases. (more…)

During the 4th quarter of 2011, Grubb & Ellis (G&E) released their investor outlook for health care properties. The report states that demand is strong and that health care properties will continue to be a reliable investment over the next decade.

G&E points to a number of factors to justify its outlook. The driving force will likely be the number of baby boomers reaching age 65 during the next few years. Experts are predicting that the 65 and over population will grow 36% over the next decade. Current data suggests the 65 and over population visit hospitals and healthcare facilities twice as much as their younger counterparts. (more…)