Lifespan — soon to be Brown University Health — has agreed to pay Providence $1.5 million over three years as part of a new arrangement for payment-in-lieu-of-taxes, commonly abbreviated as PILOT. The agreement still needs to be signed and will be presented to the City Council on Thursday.
The proposed agreement includes the largest annual contribution Lifespan has made to Providence since 2014 and begins in fiscal year 2025. After the third year, Lifespan will develop a future PILOT agreement with the city. This would be the first formal voluntary payment agreement between Lifespan and Providence, according to a city press release.
Negotiations for the proposed agreement began in September 2023, according to City Spokesperson Josh Estrella.
In exchange for the payments, Providence agreed to extend the hospital sub-district occupied by Lifespan’s Rhode Island Hospital and approve its construction of a road nearby. Both requests must be approved within six months after Lifespan’s completion of the required applications and paperwork. Providence will also maintain the road once it is constructed by Lifespan.
The PILOT plan comes after last year’s PILOT agreement between the city and four local universities — Brown, Johnson and Wales, Providence College and the Rhode Island School of Design. Like Lifespan, the universities are nonprofit institutions and do not have to pay property taxes on institutional properties. The city estimates that Lifespan would pay about $32 million in taxes, according to the Boston Globe.
The agreement with Lifespan “would finally ensure that every major tax-exempt institution in Providence has a formalized PILOT agreement with the city that meaningfully gives back to our community,” said Mayor Brett Smiley in a press release. Care New England, the state’s second largest hospital system, currently has a PILOT agreement with the city.
In addition to cash payments, the memorandum of understanding between the city and Lifespan details $150 million in expected “community contributions,” such as subsidized healthcare for city residents or programs for Providence children. But there are no consequences for Lifespan if they do not meet the “community contribution” goals.
“As the state’s largest hospital system, Lifespan needs to contribute its fair share,” City Council President Rachel Miller said in the press release. “$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.”
The hospital group has faced financial challenges over the past few years, according to the press release. While it made an $8 million profit in the 2023 fiscal year, it faced losses in the two previous years. The group also recently laid off 20% of its executives, The Herald previously reported.
In renaming Lifespan to Brown University Health, Brown will invest $150 million into the hospital system.
Lifespan did not respond to a request for comment by publication time.
Maya Kelly is a Metro senior staff writer who covers health and environment. When she's not at The Herald, you can find her hanging from an aerial silk, bullet journaling, or stress-baking.
Ciara Meyer is a senior staff writer from Saratoga Springs, New York. She plans on concentrating in Statistics and English Nonfiction. In her free time, she loves scrapbooking and building lego flowers.
