Welltower donation may take land off tax rolls

Sept. 22--The University of Toledo Foundation is set to assume ownership of Welltower Inc.'s Toledo campus midway through 2018, part of an agreement between the public university and private real estate investment trust that includes the largest donation in UT history.

Welltower, which invests in health care facilities, announced Wednesday it would gift the university about 100 acres of land and two office buildings at 4500 Dorr St., reportedly worth more than $30 million.

Louise Jackson, a Toledo attorney with Eastman and Smith and a certified public accountant, said the company likely is entitled to a charitable deduction for making the large gift. She is not involved in the donation, though another attorney for Eastman and Smith is.

"Generally the deduction is equal to the amount of the cash, and the fair market value of the real property," she said.

Ms. Jackson added the deduction is generally limited to 10 percent of a company's taxable income, which can carry over for five years until it's exhausted.

Chief Executive Tom DeRosa said Welltower will maintain its headquarters on the campus through a lease agreement with the university, which will allow the company's roughly 150 Toledo employees to occupy the smaller of the two office buildings on the site.

"This is now a reason for us to stay in Toledo. This company, its headquarters, will remain here in Toledo," Mr. DeRosa said Wednesday. Welltower has been in Toledo since 1986.

Mr. DeRosa said the property is too big for the company's 150 Toledo employees, and he wanted to share the campus with the greater Toledo community versus listing it to an unknown buyer.

The company moved its headquarters to the sprawling campus across from the Inverness Club in 2010, after it bought and remodeled the property from what was then called Dana Holding Corp. The purchase price was never disclosed, and Welltower spent between $10 and $12 million on renovations and energy efficiency upgrades.

The Toledo-Lucas County Port Authority assumed ownership of two parcels on which the office buildings sit and leased the property back to the company. Welltower had the option to buy it back five years into the agreement, and they'll do so for $500 before gifting it to the UT foundation.

Lucas County Auditor records show the port authority paid $272,940 in property taxes in 2016 on one parcel, which has a listed taxable value of $8.02 million. The port authority paid $1,165 in special assessments on the other.

The majority of that tax revenue, about $186,300, went to Toledo Public Schools. About $50,500, including special assessments, benefited Lucas County, and about $14,600 went to the city of Toledo.

The Toledo Lucas County Public Library saw $8,140 in annual property tax revenue from the site, while the Toledo Area Regional Transit Authority received $7,000, Metroparks of the Toledo Area saw about $6,500, and the port authority received just over $1,000.

UT spokesman Meghan Cunningham said the foundation, a nonprofit, will apply for a tax-exempt status for the real estate once it is officially in their hands. That likely will mean lost revenue for entities with property tax levies.

The foundation will not need to assume a mortgage, but it will be responsible for maintaining the large property. Ms. Cunningham said the lease agreement with Welltower to stay in the smaller building on campus should offset those costs. She said the lease details, such as dollar amount and length, still are being negotiated but reiterated it will be a long-term lease because Welltower intends to keep its headquarters in Toledo.

"It is too early to quantify all the costs associated with the property, but the UT Foundation expects to be able to manage it without tapping into other funds," Ms. Cunningham said in an email.

Contact Sarah Elms at selms@theblade.com, 419-724-6103, or on Twitter @BySarahElms.

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