City to recoup $2 million in Landmark taxes after nonprofit conversion

City to recoup $2 million in Landmark taxes after nonprofit conversion

WOONSOCKET – The city stands to regain $2 million in tax revenue over the next four years in a deal reached with administrators of Landmark Medical Center after one of the city’s largest taxpayers officially converted to nonprofit status this week.

In an agreement negotiated by Mayor Lisa Baldelli-Hunt and City Solicitor John DeSimone and approved by the City Council on Monday, Prime Healthcare Services, parent company of Landmark Medical Center, has agreed to donate $500,000 per year to the city over the next four years. The agreement commences with fiscal year 2020, the same year the hospital’s nonprofit conversion was scheduled to take effect.

While the agreement does not come close to returning the commercial tax revenue the city lost when the hospital was approved to return to nonprofit status after converting to for-profit in 2013 – an amount as high as $1.7 million per year – Baldelli-Hunt noted the agreement is preferable to the alternative, which would have left the city with almost nothing from the now tax-exempt property.

“Certainly it’s more than what we had, and I think it’s important to have an agreement with them to show their support to the city because they had indicated from the outset that they had wanted to be a good community partner,” she said.

Landmark CEO Michael Souza was not immediately available for comment for this story.

In addition to the $500,000 per year, the city also expects to continue to collect tangible taxes on some medical equipment housed in the hospital that is leased from for-profit companies and not owned by Landmark Medical Center. In the case of leased equipment, the entity that owns the property is responsible for paying the tangible taxes.

“We’re running those numbers now,” she said.

Last year, the city’s General Assembly delegation attempted to force the company to continue paying some or all of the taxes on the property by submitting state legislation that would require formerly nonprofit hospitals that converted to for-profit and back to nonprofit status to pay the full tax bill on the property. The bill died in the House, while an amended version that required hospitals to pay 65 percent of the tax obligation passed the Senate.

This year, the city’s General Assembly delegation once again submitted an amended version of the bill that called for 65 percent of the taxes to be paid, but the efforts were not brought to completion due to the fact that the city secured its own tax agreement with Prime without a state law, according to Baldelli-Hunt.

“Due to the fact that we struck our agreement prior to the close of session, it was a good faith agreement that this would be the four-year donation going forward,” she said.

The agreement passed the council unanimously with no discussion during Monday’s meeting. Following the meeting, City Council President Daniel Gendron told The Breeze that while the amount could have been higher, he was pleased with the outcome of negotiations.

“I wished it had been more, but I’m pleased we were able to acquire half a million for four years for the city. It’s better than we had,” he said.

Asked whether the agreement might be renewed after four years, Baldelli-Hunt described it as a “straight four-year deal.”