Home Industries Health Services Lifespan and city reach $1.5M PILOT agreement

Lifespan and city reach $1.5M PILOT agreement

By

Katie Castellani

-

10/01/2024

RI-Hospital-1-696x385-1 — AFTER ALMOST a year of discussions, Lifespan Corp. and the city have come to a potential Payment in Lieu of Taxes, or PILOT, agreement./COURTESY OF LIFESPAN

PROVIDENCE – After almost a year of discussions, Lifespan Corp. and the city have come to a tentative $1.5 million payment-in-lieu-of-taxes agreement. The agreement would be the first formal PILOT deal between the state’s largest health system and the city. Under the deal, which still needs City Council approval, Lifespan would provide $1.5 million in

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PROVIDENCE – After almost a year of discussions, Lifespan Corp. and the city have come to a tentative $1.5 million payment-in-lieu-of-taxes agreement. The agreement would be the first formal PILOT deal between the state’s largest health system and the city. Under the deal, which still needs City Council approval, Lifespan would provide $1.5 million in voluntary payments to the city over three years. The payments would come in two installments – one payment of $750,000 this fiscal year and then another $750,000 in fiscal year 2026. PILOT agreements are deals that large nonprofits – which are exempt from paying taxes – make with cities to help offset their reliance on city resources and lack of tax revenue. The three-year agreement also formally values the community contributions that Lifespan provides the city at an estimated $50 million each year. “Following last year’s historic agreement with our colleges and universities, I am proud to have once again negotiated a new payment in lieu of taxes agreement that ensures our tax-exempt institutions contribute directly to the Providence community,” said Mayor Brett P. Smiley in a statement. Once signed, the agreement would mark Lifespan’s first voluntary payment to Providence in three years and the largest annual contribution it has made to the city since 2014. Lifespan’s last PILOT payment was in September 2021 for $400,000, and the hospital group has contributed $4.35 million in total PILOT payments to the city since 2012, according to previous PBN reports. Also, within a Memorandum of Understanding, Lifespan agreed to enter negotiations with Providence in the third year of the agreement. “Lifespan makes substantial contributions to the city and its residents, providing necessary health care, regardless of ability to pay, along with many programs and services in support of resident’s physical, mental and financial well-being. Like much of the health care industry, Lifespan has faced financial challenges over the years,” Lifespan CEO and president John Fernandez said. “We appreciate the collaboration with the mayor in developing an agreement that recognizes the important role we play in the health of the city, and that enables us to continue to provide additional financial contributions and quality community care.” While the agreement is encouraging, Council President Rachel Miller said Lifespan needs to do more. “As the state’s largest hospital system, Lifespan needs to contribute its fair share [and] $1.5 million is just the start. But Lifespan has much more to do to truly honor its commitment to Providence taxpayers who right now foot the bill for the city services Lifespan benefits from,” Miller said. “In years to come, City Council will continue pushing to ensure that Providence residents come out on top." Providence reached new PILOT agreements last year with several colleges and universities, including $223.5 million in direct payments to the city over 20 years from Brown University, Providence College, Rhode Island School of Design and Johnson & Wales University. Care New England Health System also has an existing PILOT agreement that will expire in 2026 that includes annual payments between $375,000 and $400,000. Lifespan was notably left out of that agreement and leaders from the health system and the city started discussing a PILOT in October 2023. Since then, Lifespan has gone through several changes, including announcing a new affiliation agreement with Brown University to rebrand as Brown University Health. Also, the health system is in the process of purchasing two hospitals – Morton and St. Anne’s Hospitals in Taunton and Fall River – for $175 million from Steward Health Care. The proposed PILOT is scheduled to be introduced during a Providence City Council meeting Oct. 3 and then it needs to be reviewed by the Council’s Finance Committee. Katie Castellani is a PBN staff writer. You may contact her at castellani@pbn.com.