Homestead Hospice faces stunning tax bill

Just months after capping a huge fundraising goal, a local nonprofit working to reopen a hospice house in Owatonna is facing another financial challenge: a $55,000 property tax bill.

“Going to the assessor's office and finding this out was a shock to our whole board,” Homestead Hospice board president Kasey Kamholz said last week. “The good news is, we’re gonna reopen the house this summer, we’re 99% sure, but in the meantime, this tax is due in 2025.”

Kamholz explained the situation during public comment at the Feb. 11 Steele County Board of Commissioners meeting. The problem, he said, lies in the gap between one provider leaving the house and another moving in.

Allina Health opened Homestead Hospice House in 2005 just west of Owatonna Hospital. It served up to eight patients with end-of-life care. Allina closed the doors in 2023, citing staff shortages and a decline in patients.

The nonprofit house’s board of directors wasn’t ready to give up and found a partner in Rochester-based Seasons Hospice and director Kristina Wright-Peterson. First, though, they had to raise a total of $850,000: $350,000 for start-up costs and $500,000 for the first year of operations.

Operating expenses run steep because insurance and Medicare do not reimburse the full cost of care.

As a nonprofit, Homestead Hospice House incurred no property taxes on the house and half-acre of land it sits on. Kamholz said Allina paid around $600-$700 in taxes on an easement that provided access to the hospital.

Seasons Hospice will also operate as a nonprofit.

The time in between, County Administrator Renae Fry said, led to the larger tax bill.

“The property has been vacant for over a year and the state requirements related to use and tax classification are very specific,” she said.

Kamholz said the board understands that the assessor’s office had to reclassify the building as a commercial property.

“We’re looking to you guys to figure out how can we come to a solution,” he told commissioners. “We’re pleading for some kind of relief. Because it’s hard enough to run a house that loses a half million dollars a year.”

Fry said there’s not much the county can do.

“The Steele County Assessor is reaching out to other counties to see if there are any opportunities to reclassify a property outside of the statutory timelines,” Fry said. “At this time, pursing a claim in tax court may be the only option available for the landowner.”