Now you're tax‐exempt, now you're not: Property taxation of assisted living facilities.

This research is motivated by a change in Florida that affected assisted living facilities (ALFs) by removing the property tax exemptions for those operated by nonprofit organizations. As such, this paper addresses two research questions: (1) Are there systematic differences between Florida's for‐profit‐ and nonprofit‐designated ALFs in terms of operations and service provision? (2) What was the impact, if any, of losing and regaining their property tax exemptions on the operations of Florida's nonprofit ALFs? We use data from the Florida Agency for Health Care Administration to conduct difference of means testing for‐profit versus nonprofit ALFs, as well as annual financial data of each ALF property owners' IRS Form 990 from the National Center for Charitable Statistics Core Files and parcel‐level property data from the state of Florida to conduct regression analysis using three different dependent variables measuring various components of nonprofit ALF operations. We find that nonprofit ALFs have greater legitimacy in service delivery than for‐profits, as nonprofit ALFs have higher service capacity, quality, and variety than for‐profit ALFs in Florida. In addition, property tax exemptions for nonprofit ALFs in Florida decrease total expenses and increase officer compensation. Applications For Practice: Nonprofit designated assisted living facilities (ALFs) in Florida have greater legitimacy in service delivery through their larger service capacity, quality, and variety, as well as less property ownership turnover and more nursing staff for residents.The property tax exemption nonprofit designated ALFs in Florida received lead to increasing officer compensation and decreasing total expenses. Nonprofit designated ALFs could better compensate their officers with the tax cost savings afforded them through the property tax exemption, similar to findings of for‐profit nursing homes.The loss of the property tax exemption had no impact on retained earnings of nonprofit designated ALFs within the state of Florida.Possibly, the statutory property tax exemption change forced nonprofit organizations operating ALFs within the state of Florida to function more like for‐profit nursing facilities. [ABSTRACT FROM AUTHOR]