Beaufort will charge some nonprofit organizations business fees

Beaufort will charge fees to nonprofit organizations with operations competing with other businesses, keeping tabs on them through required registration.

City leaders say the new rules are an issue of fairness. Churches renting apartments or operating day cares open to the public and private medical practices now associated with Beaufort Memorial Hospital are among tax-exempt organizations in the crosshairs.

Beaufort Memorial has more than $45 million in private contracts, Mayor Billy Keyserling said Tuesday. The hospital wouldn’t necessarily be charged the new business license fee, he said, but the individual contractors could be.

“It’s protection for businesses to make sure they’re not getting subsidized competition, I think is the way to put it,” Mayor Billy Keyserling said Tuesday.

The new rules passed unanimously in a City Council vote Tuesday. In another change approved Tuesday, all businesses, including nonprofits, will be required to register with the city.

The new license fee will be in effect next January, city manager Bill Prokop said. Until then, the city will try to reach out to affected businesses and explain the new rules.

The registration doesn’t mean all nonprofits will be charged a business license fee, Keyserling said. The registration will allow the city to hold nonprofit organizations to the same operating standards as regular businesses, he said.

It will also give the city a list of nonprofits to inspect for income subject to the new fee.

Business license fees for nonprofit groups will only apply to the money made from operations competing with for-profit businesses.

A church day care facility open only to church members, for example, would not be charged. A nonprofit organization renting houses, apartments or commercial property to the public would be charged.

The city’s rules are the same the Internal Revenue Service uses on nonprofit businesses reporting “unrelated income,” city finance director Kathy Todd said.

Beaufort leaders met with executives from Beaufort Memorial Hospital in preparing to implement the new rules, where they learned about the millions in private contracts. Private practices have been brought under the hospital’s wing, with some paying taxes and some not, Keyserling said.

“It’s a huge nonprofit organization that has been acquiring medical practices and real estate,” he said.

On Tuesday, City Council also:

▪  Voted to allow city manager Bill Prokop to negotiate a contract to buy Sea Eagle Market on Boundary Street. The facility would be demolished as part of a plan to create a passive park along Battery Creek.

▪  Annexed 46 Robert Smalls Parkway into the city and zoned the property highway commercial. Warehouse owner Richard Martin plans to operate a business on the Spanish Moss Trail.

▪  Heard budget presentations from the city’s police, fire, courts and planning departments. The city has until the end of June to pass its next budget.

This story was originally published May 10, 2016 at 9:20 AM with the headline "Beaufort will charge some nonprofit organizations business fees."