Revised Fatima deal will bring even more tax dollars

Revised Fatima deal will bring even more tax dollars

NORTH PROVIDENCE - A revised deal with the owners for the for-profit entity that's buying Our Lady of Fatima Hospital is now an even sweeter one for town taxpayers, say members of the Town Council.

Representatives for Prospect CharterCare last week detailed modifications to a exemption and tax stabilization agreement that has swung increasingly in the town's favor over the past year. The pact presented and approved by the Town Council had several changes even from the one that was advertised for consideration at the meeting.

Gone is a 10-year tangible tax exemption for any new technology upgrades made within four years of the pending affiliation between CharterCare Health Partners and Prospect Medical Holdings.

The new deal calls for tangible taxes to start in year six with a minimum $191,000 payment to the town. After a $211,000 tab in year seven, taxes would be determined by the town's tax assessor at 20 percent of the assessed value of all tangible taxes, or personal property, in year eight, 40 percent in year nine, and 60 percent in year 10.

Even if the assessment comes in lower than $211,000 in tangible taxes in years eight through 10, the town would still receive at least that amount, according to the agreement.

Mark Russo, attorney for Prospect CharterCare, said that "important" new language was also added to have the hospital pay both property taxes and tangible taxes at 100 percent value after 10 years, just "like every other taxpayer." This solidifies what is already a "very sound investment" on the part of the town, he said, and should limit any questioning by other businesses in town about why Fatima should be treated differently.

According to Russo, the changes to the tangible tax agreement were designed to reflect the agreement reached with neighboring Providence on Fatima's sister hospital Roger Williams Medical Center. A $90 million infusion is planned in upgrades for the two hospitals over the next four years.

The extra tangible tax money would be in addition to the $540,000 in property taxes to start and a 5 percent "escalator" each year in years two through 10 that would bring the total property tax paid by the for-profit hospital to $783,000 after a decade.

"The bottom line is we will be getting a considerable amount more than what they started with a year ago," said Town Council President Kristen Catanzaro.

Another significant change for the town relates to proposed state legislation that would funnel sales taxes paid by the hospital to the state back to North Providence. The bill, which is gaining some support according to Russo, calls for no sales taxes in the first three years under the new affiliation but a gradual increase to 100 percent sales taxes in years four through 12. The taxes would be redirected back to the host community.

Hospital officials had been looking to have those sales taxes credited to their tangible tax bill from the town, but that provision was taken out of the final agreement, said Russo. North Providence will now get the "full benefit" of the sales tax revenue if the bill is approved, he said.

Also under the agreement, if Prospect CharterCare sells the hospital, the transacting parties must pay all outstanding property taxes to the town of North Providence.

The final tax stabilization agreement with Prospect CharterCare stands in stark contrast to the one that was proposed when hospital executives first sat down with town officials a year ago, said Catanzaro and Russo.

The original proposal given to the Town Council Ordinance Committee called for $110,000 in combined property and tangible taxes, ramping up to more than $300,000 eventually.

The joint venture of the for-profit Prospect Medical Holdings and CharterCare Health Partners now has its approvals from every state regulatory agency required, according to Russo. Once a similar tax stabilization agreement is given final approval in Providence, the affiliation can move forward, he said.

Fatima spokesman Otis Brown said Monday that officials expect the affiliation to be official by the end of the month.

Our Lady of Fatima Hospital employs about 240 town residents, according to its new tax pact with the town. That fact, coupled with what the hospital means for local health care services and in revenue to local businesses, makes it a vital asset, say local officials.

The affiliation of Prospect and CharterCare, approved by the Office of the Attorney General and Department of Health last month, is seen as a critical step toward maintaining Fatima's services into the future.