In the past, local private colleges have stated that payments to the city would be a hardship.
Baystate Medical Center in Springfield.SPRINGFIELD – Baystate Health has agreed to provide a $250,000 payment to Springfield in lieu of taxes in the coming fiscal year while the city evaluates if voluntary contributions can also be prodded from other major nonprofit institutions.
The $250,000 pledge is less than half the amount that Baystate Health was paying annually under a its prior five-year agreement that expires June 30.
Baystate, which is tax-exempt, initially agreed to a $500,000 annual payment-in-lieu-of-taxes in 2006, as sought by a state-imposed Finance Control Board and former Mayor Charles V. Ryan. The amount increased by 2.5 percent each year.
Mayor Domenic J. Sarno said he appreciates the new agreement to continue the payment program, saying it helps the city in difficult financial times.
“Would I like more? Certainly,” Sarno said. “Do I understand and respect it? Yes, I do. They face budget constraints also.”
Sarno cited other Baystate’s other benefits, including the fact that it is the largest employer in the city with more than 10,000 workers.
Under its agreement, the amount Baystate Health pays is slated to drop to $150,000 in fiscal 2013, and $100,000 in fiscal 2014.
Mark ToloskyBaystate, however, will keep the amount at $250,000 each year if the city raises $250,000 from other large nonprofit organizations in each of those years, said Mark R. Tolosky, president and chief executive officer of Baystate Health.
“Our mission is not just to take care of people when they are sick, it is to be a partner to our communities and a good corporate citizen, and we believe that contributing again to the city of Springfield is the right thing to do,” Tolosky said in a statement.
Baystate Health evaluated the city’s needs along with its own capital needs and challenges, Tolosky said.
Baystate Health’s board of trustees agreed to the extension “with the hope that other large nonprofit organizations will also contribute to the city,” Tolosky said.
Lee C. Erdmann, the city’s chief administrative and financial officer, said he appreciates the Baystate Health decision “and welcomes the challenge to work with our other major non-profits.”
Local private colleges had limited responses on Tuesday, but in the past have stated that payments to the city would be a hardship. In addition, the colleges have pointed to other contributions made to Springfield in employment, spending in the local economy, and contributing to educational and cultural activities.
Craig Greenberg, a spokesman for American International College, said that once specific information is received, he would expect the colleges to discuss it and “issue an appropriate response.”
Mark FulcoMark Fulco, vice president of strategy and marketing for Sisters of Providence Health System, which operates Mercy Medical Center, said there have been discussions with a Springfield study committee evaluating the payment in-lieu-of-taxes program. Those discussions are continuing, he said.
“From a financial position, it would be a challenge for Sisters of Providence to participate in a (payment-in-lieu-of-taxes) program,” Fulco said. “The fiscal challenges we face are pretty widely known.”
The study committee was established six months ago by Sarno and City Council President Jose F. Tosado. A final report is expected within 60 days, said Erdmann, a member of the study committee.
In Boston, city officials sent out letters to its largest nonprofit institutions this year, seeking to increase payments in lieu of taxes already received from that city’s major tax-exempt hospitals, colleges and cultural institutions.
In fiscal year 2010, the Boston program yielded approximately $34 million, including participation from Boston University, Harvard University, Massachusetts General Hospital and Beth Israel Deaconess Hospital, according to a 2010 task force report.
In Springfield, the amount received totals approximately $5.7 million, including Mass Power, urban redevelopment corporations, the Springfield Housing Authority and Baystate, city officials estimated last year.
In Palmer, letters have been sent to 25 tax-exempt organizations asking them to make an annual payment to the town in lieu of taxes, as a way to generate revenue, according to acting Town Manager Patricia A. Kennedy.
It was Kennedy’s idea to solicit funds from the organizations, which include churches, the American Legion, Palmer Ambulance, Amvets, Palmer Housing Authority, Camp Ramah, Three Rivers Chamber of Commerce, and Wing Memorial Hospital.
“We are looking for sources of revenue. We really should extend our tax base. They have no obligation to pay that, but I would hope that in the spirit of good community cooperation they would make some kind of payment because they do use our town services, such as the ambulance, or police,” Kennedy said last week.
As of Tuesday, there had been no responses.
A spokesman for Wing Memorial Hospital declined comment; he said a letter has been sent out, but declined to provide the details until town officials received it. Wing is being asked to contribute the largest amount of money – $115,572.90.
Staff writer Lori Stabile contributed to this report.