Opinion ID: 2197282
Heading Depth: 1
Heading Rank: 3

Heading: Leasing of the subject property

Text: HealthEast received $1,394,512 over three years from leasing the Bethesda Clinic property, first to the University of Minnesota and later to UMPhysicians. HealthEast's tax return described the revenue as received from an unaffiliated tax exempt organization. The tax court called the leasing of the clinic property [t]he most obvious example of HealthEast performing services for entities outside the HealthEast Care System, which it does not control. HealthEast, 2008 WL 5102621, at . Ramsey County likewise argues that the leasing of the property is not exclusively for the benefit of the member hospitals. While it is conceivable that the clinic venture indirectly benefits the HealthEast hospitals by giving UMPhysicians' medical students a place to practice, HealthEast did not make this argument. Nothing in the record indicates that the leasing of the clinic property benefits the hospitals. Given our standard of review in tax court appeals, we conclude that HealthEast has not carried its burden on this issue and therefore we view the clinic lease as an additional indication that HealthEast has a separate purpose and existence from the care system. HealthEast's services to outside entities and the property's lease to UMPhysicians lead us to conclude that HealthEast does in fact have a purpose or existence apart from the hospitals and care system. Therefore, because HealthEast failed to meet its burden to demonstrate that it does not have a purpose or existence apart from the HealthEast care system, the care system may not be considered the owner of the subject property, and thus we conclude that the subject property does not qualify as tax-exempt property under Minn.Stat. § 273.19. [4] We do not doubt HealthEast's value to the community. But based on the record before us, we are unable to conclude that HealthEast has met its burden under the applicable statutes and our case law to have its separate corporate tax status disregarded. Therefore, we hold that the tax court correctly concluded that the Bethesda Clinic property is not exempt from real property taxes assessed by Ramsey County in 2002, 2003, and 2004. Affirmed.