Providence City Council reluctantly backs tax treaty with Lifespan

The entrance to The Miriam Hospital on Summit Avenue in Providence, one of three hospitals in the city owned by Lifespan, which rebranded last month as Brown University Health. The Providence City Council on Thursday backed a new tax treaty in which the hospital group agrees to voluntarily make $1.5 million in payments in lieu of taxes to the city. (Nancy Lavin/Rhode Island Current)

The 12-2 margin by which the Providence City Council has backed a three-year, $1.5 million voluntary tax deal with Lifespan Corporation seems to suggest strong support.

But city officials instead used their Thursday night vote to air grievances with Lifespan (rebranded last month as Brown University Health) and with the flawed negotiation process.

"I am frustrated and disappointed and pretty sick and tired of a lot of this situation," Council President Rachel Miller said. "If we say 'no,' it's not a 'no, go back to the table,' it's a 'no for this year and future years.' We have very little authority."

The Brown University Health name is not reflected in the tax treaty with the city of Providence, which still refers to Lifespan.

Lifespan, like other tax-exempt nonprofit institutions, has no obligation to pay taxes to its host city. Historically, Providence has struck deals with tax-exempt universities and hospitals in which the institutions agree to pay an annual sum — typically far less than they would owe if taxed at commercial rates — in acknowledgement of the city services they receive.

But negotiations have proven fraught; city leaders were deadlocked with Lifespan for a year before a compromise deal was unveiled on Oct. 1.

new payment-in-lieu of taxes (PILOT) agreement marks the first time since 2021 that the state's largest hospital provider will give the capital city any money in exchange for hosting its three Providence hospitals — Rhode Island, Hasbro and The Miriam. The $1.5 million payment to be paid in two $750,000 sums, in fiscal 2025 and fiscal 2026, is the most the hospital network has given the city since 2014.

If taxed at commercial rates based on 2024 property values for its city hospitals, the company would pay about $32 million per year, Josh Estrella, city spokesperson, said previously.

An even more contentious debate played out last fall when the City Council vetted a $223 million, 20-year deal with the four higher education institutions within its borders — Brown University, Providence College, Rhode Island School of Design and Johnson & Wales University. The agreements outraged Brown University students, who insisted the private university with a 10-digit endowment should be paying far more.

Councilor Miguel Sanchez cast the sole vote against the university tax agreements in October 2023; on Thursday, Sanchez was joined by Councilor Althea Graves in voting down the Lifespan deal. Councilor Justin Roias was absent from the meeting.

'Bamboozled'

Graves said she felt misled by Lifespan. Separate from its negotiations with the city, Lifespan signed an expanded partnership with Brown University which infuses the once-struggling hospital operator with $150 million from the university over the next seven years, coupled with the name change that took effect on Oct. 15.

Meanwhile, Lifespan in September closed on a $175 million , debt-financed purchase of St. Anne's Hospital in Fall River and Morton Hospital in Taunton from bankrupt Steward Health Care LLC.

"I don't like the feeling that we are being bamboozled," Graves said Thursday. "If you keep telling me half-truths, then you are lying to me."

Her comments were met with applause from a handful of members of the Rhode Island Democratic Socialists of America, who attended the meeting to protest the vote on the Lifespan deal.

"It is a backroom deal that fails the people of Providence," Tony Unger, chair of the Rhode Island DSA's Medicare for All Working Group, said in a statement. "Given the number of tax-exempt properties that Lifespan holds in the city, Providence taxpayers are essentially bankrolling Lifespan's expansion."

Lifespan did not immediately respond to inquiries for comment on Friday. A company spokesperson previously cited the "social services" offered to city residents as a reason for lack of payments to the city over the last three years.

The new tax treaty pegs the hospital operator's in-kind contributions to Providence — health care, job training, and employment among them — at $50 million a year.

It is a backroom deal that fails the people of Providence.

– Tony Unger, chair of the Rhode Island DSA's Medicare for All Working Group

Echoing prior comments made by Providence Mayor Brett Smiley, Councilor Sue AnderBois said the payment plan was the beginning of what will hopefully be a longer-term, larger-sum agreement.

"I view this as a down payment for future negotiations," AnderBois said.

The council also approved a renewed, with RISD. under a separate, unanimous vote on Thursday. The deal calls for the arts college to pay $250,000 a year to the city for use of 66 parking spaces in downtown Providence during daytime, weekday hours. The parking deal mimics the terms of a now-expired agreement signed in 2012, and does not affect the 20-year tax deal between Providence and RISD signed in 2023, in which the arts school agreed to pay $15.2 million in lieu of property taxes.

Revenue from the new agreements with Lifespan and RISD play a role in the escalating battle between city officials and the Providence Public School Department over an alleged $10.9 million funding shortfall. Facing threats that school sports programs and student public transit passes were on the chopping block, Smiley on Oct. 10 initially offered to give the school district $1 million from the PILOT agreement which increased to $2.5 million, contingent upon City Council approval to repurpose $1.5 million from the city's share of federal pandemic aid.

The total offer was one-fifth of the amount Providence Superintendent Javier Montañez demanded in a phone call to Smiley on Oct. 9.

The City Council Committee on Finance was originally scheduled to meet Thursday afternoon to offer the requisite approval on repurposing pandemic funds for city schools. However, the meeting was canceled a day beforehand because of a parallel legal battle over state education aid to Providence, according to a statement from the City Council.

The finance committee meeting had not been rescheduled as of Friday morning.