Property taxation of a not-for-profit hospital: a case study

The city of Burlington, Vermont assessed a $2.83 million property tax against the Medical Center Hospital of Vermont, a not-for-profit teaching hospital. The hospital responded by challenging the action in a civil court suit. The city argued that the hospital had ceased to be a charitable institution as the term was used in state statutes. The Vermont Superior Court found for the hospital, over-turning the assessment by the city and prohibiting collection of the tax. The court held that the hospital retained its charitable nature in spite of changes in the organization and the health care environment. The holding in the case provides one more view in the continuing national debate over the function and future of charitable hospitals.