Nonprofits being pressed for payments
When Kim Driscoll ran for mayor last year, she promised voters that she'd run Salem like a business. One of her first targets? Nonprofit organizations, which do not have to pay city property taxes.
Since January, Salem has reached three agreements with nonprofits, the largest coming last month, when the North Shore Medical Center agreed to pay $125,000 a year to the city.
``Like many communities, we're struggling to make ends meet, and while we value what our nonprofits provide to the community in terms of services and community benefit, it's really important for us that they contribute something back to the city to offset the costs that are sometimes incurred relative to their presence here," said Driscoll.
Facing higher utility, health insurance, and special education costs, more communities are turning toward nonprofits as a way to bolster their budgets.
``I think it's legitimate to say that large, not-for-profits making additional payments to communities is a growing trend," said David King, a North Shore Medical Center spokesman.
``I think it's part of taking a leadership position in the community."
In addition to the North Shore Medical Center agreement, Salem has reached agreements on payments in lieu of taxes -- or PILOTs -- with the Northeast Animal Shelter and the Children's Friend. The shelter, which purchased a former car dealership earlier this year, will pay the city $34,400 a year. The children's counseling center, which bought a former school from the city, has agreed to donate $10,000 a year in free counseling to Salem's children for the next five years.
Driscoll said a portion of the $125,000 North Shore Medical Center PILOT would help pay for public school nurses. The rest of the funds, including the shelter's payment, would go to the city's general fund.
``It will help keep jobs, and that's the bottom line," said Salem City Councilor Tom Furey.
Earlier this year the city cut 36 school employees and 13 other municipal workers from the payroll to help reduce a $4.1 million budget deficit.
Driscoll said she expected more PILOT agreements to be announced. She has begun informal negotiations with the Peabody Essex Museum and Salem State College.
According to the city, the North Shore Medical Center is Salem's largest employer, with more than 5,900 workers -- more than 900 of them Salem residents. Salem State is the second-largest employer, with 1,400 workers, and the Peabody Essex Museum is the sixth largest, with 265 employees.
``In fulfilling our charitable mission, we look forward to continued collaboration with the city and its residents," said Robert Norton, president and chief executive officer of North Shore Medical Center.
For more than a decade, Beverly Mayor William Scanlon Jr. has pursued formal and informal PILOT agreements. With tight fiscal budgets, Scanlon says, more communities will turn to nonprofits for money.
``I think the subject is getting more discussion that it has in the past. More people are aware of it, and I think it will get increasing scrutiny everywhere," he said.
Beverly receives a $15,000- a-year PILOT from Montserrat College of Art and is negotiating with the North Shore Music Theatre (last year it received $70,000 ). But most of the revenue given by Beverly's nonprofits has been done by a handshake.
Those agreements include a $250,000 road improvement donation last year from Beverly Hospital and a $40,000 donation last year from Endicott College.
``I think every dollar helps, and I think it gives the average citizen a good feeling if they know that these folks are trying to be good citizens," said Scanlon.
In Danvers, Town Manager Wayne Marquis said the town would soon begin negotiations with hospitals that are setting up health centers in town.
``We're not in a position where we can lose tax revenue. We have less money coming in in state aid than we did four years ago," said Marquis.
The North Shore Medical Center and Massachusetts General Hospital plan to convert part of the Osram Sylvania plant into a $108 million ambulatory care center and cancer center.
King said the nonprofit hospitals would pay the town $250,000 a year -- the same amount that the town received in property taxes from the site.
Earlier this year, Beverly Hospital also announced plans to build an ambulatory care center in town. The planned $20 million healthcare center will have an oncology suite and will be constructed on the site of Danvers State Hospital.
While some mayors, like Beverly's Scanlon, believe that PILOTs are necessary for cities, not all mayors have made the agreements a priority.
In Lynn, Haverhill, Malden , there are no PILOT negotiations underway.
In Lynn, Mayor Edward J. Clancy Jr. said it would be unfair to target large nonprofits over smaller nonprofits for payments. ``If you're going to do it for one, you've got to do it for everybody," he said. ``It's not even on my radar screen."
