Springfield panel calls for new effort to collect up to $20 million from nonprofits

SPRINGFIELD – A task force wants a consultant to develop a policy to increase the number of nonprofits making payments to Springfield in lieu of taxes.

City Councilor Victor Davila, who heads the City Council New Revenue Special Committee, announced he will work with Mayor Domenic J. Sarno and the City Council to hire a consultant to develop rules to negotiate with the nonprofits.

Davila’s committee is working to push colleges, hospitals and charities to contribute more to the city’s tax base. The consultant the panel seeks to hire is the Edward J. Collins Jr. Center for Public Management out of the University of Massachusetts and the Lown Institute.

“We are asking for $40,000 to yield a potential $20 million of new revenue to the city,” he said.

Nonprofits, which include churches, the housing authority and the state and federal governments, own property in the city assessed at more than $2.7 billion. Of those, the city receives about $300,000 in payments in lieu of taxes on 15 properties, 12 of which are owned by the same entity, the Mental Health Association.

Another, the Center for Ecological Technology Inc., closed this year, Davila said.

If each of the nonprofits were to pay 25% of the amount they would be assessed in taxes if a regular business, it would bring in an additional $20 million, city financial officials figured, Davila said.

“We want to bring them to the table but we don’t even have a table to bring them to,” he said. “Agreements have always been a handshake and that cannot be the case.”

Hiring consultants will remove the politics and create a neutral and fair process that the city can use to negotiate with existing nonprofit organizations and those that move into the city, he said.

The committee, made up of residents Juan LaTorre III and Kim Lee, says all nonprofits should be asked to make payments, instead of just those which own property assessed at $15 million or more, as is proposed in a state bill.

“Nonprofits do utilize a lot of resources including fire, EMS, DPW and more,” he said. “This is an appropriate solution.”

The concern is that without the effort, residents and for-profit businesses will continue to see their real estate taxes rise annually. During this fiscal year, the city cut 15 positions and shaved expenses to balance the budget. Davila predicted financial strains will continue as health insurance and other expenses rise and federal grants decline.

The committee understands that not all nonprofits are created equally and a small social service organization or churches may not be able to provide the same contributions as one of the three private colleges in the city. But even small amounts will help, Davila said.

One of the largest nonprofits in the city is Baystate Medical Center, which has a total assessed value of $528 million and would pay about $18.7 million in taxes if it was a for-profit institution, or $4.6 million if it paid the proposed 25% of the tax value.

It now pays $243,279 in an in-lieu of tax agreement that expires in 2027.

Some of the other large nonprofits include Springfield College, which has a total assessed value of $348 million and would pay $3 million under a 25% agreement, and Western New England College, which is assessed at $202 million and would pay $1.7 million if it was to pay a quarter of the normal taxes on its property.

The only college which has a payment in lieu of tax agreement is Springfield Technical Community College. It paid $3,994 in taxes last year on the campus that is valued at $123 million, according to data gathered by the committee.

“When friends need help, friends step up,” Davila said, adding that agreements will create more goodwill among residents.

City Councilor Kateri Walsh attended the announcement to show her appreciation for the committee’s work. She said she will be supporting its recommendations.

“I think it is prudent to look at other sources of revenue for the city of Springfield,” she said.

The mayor will first have to agree to spend the money to hire a consultant. If he does, it will go to the City Council for a final vote.

“I look forward to announcing the Targeted Tax Relief program that my administration has put forth to our Legislature. While we await final approval, we will continue to review and work with Councilor Davila,” Sarno said in a statement on the announcement.

Read the original article on MassLive . Add MassLive as a Preferred Source by clicking here .