In a case that could have implications for municipalities across the state, the Connecticut Supreme Court this month will hear the Town of Stonington’s appeal of a Superior Court ruling that Backus Hospital in Norwich is exempt from taxes on the personal property it owns at an outpatient rehabilitation facility in Mystic.

The Connecticut Conference of Municipalities, a nonprofit organization of local officials, has filed a friend-of-the-court brief in support of Stonington’s position.

“Any municipality that hosts hospital property could lose revenue (if the lower court’s ruling is affirmed),” Randy Collins, CCM’s associate director of public policy, said this week.

Backus filed the case against Stonington in June 2021 after the hospital’s application for an exemption from taxes assessed on the town’s grand list of October 2020 had been denied, first by the town assessor and then by the Board of Assessment Appeals. Backus later amended its complaint to incorporate similar denials of its bid for an exemption from taxes assessed on the grand list of 2021.

Judge John Cordani ruled in favor of the hospital in an Oct. 7, 2022, decision.

The personal property in question includes such depreciating assets as tables, chairs, desks, computers, phones and physical rehabilitation equipment, according to Stonington’s director of assessment, Jennifer Lineaweaver. The disputed taxes on the items, which Backus paid under protest pending the outcome of the case, amounted to $12,433, Lineaweaver said.

In his decision, Cordani wrote that state statutes exempt from taxation personal property owned by hospitals and entities “organized exclusively for charitable purposes.” He found there was no dispute that Backus, which leases a suite in the Hartford HealthCare Health Center off Coogan Boulevard in Mystic, is such an entity.

Backus is a hospital and the rehabilitative services provided at its Mystic location are included in its “hospital functions,” Cordani wrote.

In a brief filed in its appeal of Cordani’s decision, Stonington, represented by attorney Lloyd Langhammer, argues the Backus facility in Mystic, which provides “outpatient rehabilitative services, such as physical therapy, occupational therapy, speech therapy, and specialized therapies ...,” does not meet the statutory definition of a hospital.

CCM, which represents all but one of Connecticut’s 169 municipalities (Vernon is the outlier), says it’s interested in the case “because it concerns municipal authority to tax certain real and personal property.” In a brief written by its attorney, CCM contends Cordani “improperly construed” a law the legislature enacted to limit the ability of large health systems to qualify for municipal tax exemptions.

“Second, the court effectively made all property owned by a hospital or a charity tax exempt ― with little or no regard to the business activities undertaken at a particular location ― which is contrary to the well-established principle that tax exemptions are to be narrowly construed,” CCM’s brief says.

If affirmed, Cordani’s decision “likely would force towns to remove many commercial properties from their tax rolls,” CCM asserts.

Backus, in its own brief, rejects CCM’s position as “little more than a transparent money grab.”

“CCM demands that the nominal tax bill at issue here ... be paid to the Town, even though Backus Hospital provides millions of dollars of charitable care to the Town’s citizens and other citizens throughout Connecticut,” the hospital says.

The Supreme Court is scheduled to hear arguments Feb. 14.

b.hallenbeck@theday.com