MuniLand

This time it’s ‘not in my yard’

I’ve written previously about the local hospital in my community trying to complete a massive expansion in the tiny, historic village of Rhinebeck. Rhinebeck is a 300 year-old American treasure with one of the largest collections of nationally landmarked buildings in the nation. The hospital is surrounded with nationally land-marked homes, including my own.

Northern Dutchess Hospital is one of several hospitals run by the non-profit operator Health Quest. The salaries of those who run Health Quest, like most hospital salaries, are in the high six figures (page 29). Northern Dutchess Hospital is highly profitable and is probably subsidizing the money-losing operation of Health Quest’s Putnam Hospital. The hospital has focused on providing specific medical procedures and its birthing center delivered over 870 babies in 2010. The village population is only about 2,700.

I learned of the expansion last March when local papers reported that the developer, Kirchhoff Medical Properties, was seeking a PILOT (payment of lieu of taxes) for the first floor of the hospital expansion. A PILOT would allow that space to be privately owned by the developer and leased out to private doctors as medical offices. The Village Trustees, under media scrutiny, decided that that a plan for privately-leased physician offices in a non-profit hospital does not qualify for a PILOT.

As an adjacent property owner, I was invited to come to a public hearing on the project. Along with several of my neighbors, I got a look at the site plans for the expanded hospital. The plans included cutting down the majority of the 40 to 60-foot trees in the multi-acre lawn in the front of the hospital, paving it and lighting it at night. The historic neighborhood will be given the equivalent of a grocery store parking lot in the hospital’s expansion.

It has been a fight since that June hearing to retain the green space. According to the parking analysis, the massive parking lot is needed for the physician medical offices that are the focus of the proposed PILOT. But the Village Zoning Code does not allow professional medical offices in a hospital. It’s never been clear how the planning board rationalizes contravening the law on this matter. Rhinebeck is recognized nationally as a Tree City and preserving and planting trees has always been a community goal.

The non-profit tax shell game

Old cities in the Northeast often have high concentrations of non-profit, tax exempt properties such as universities, hospitals and churches. Cities generally receive the bulk of their revenues through property taxation, so for cities with high concentrations of tax exempt properties the tax base can be considerably diminished. Ryan Delaney of WRVO, a public-radio station in upstate New York, reports that Syracuse has an astonishing 56 percent of city properties exempted from property taxes. Delaney drills down into a current fight over tax exemption for a proposed development project. The fight shows how property-tax exemptions are growing and can be just a mask for private development and profit. From Innovationtrails.org:

The project includes a few steps: Cameron Group would lease a small strip of land in front of an off-campus parking garage from the university for $1. Cameron Group would then spend $20 million to construct a new building that will mostly be filled with a fitness center and bookstore, and offering some space for private retail.

The university would rent out the space for its fitness center and bookstore. At the end of the 30-year tax break, ownership of the building would be transferred to the university, and only the private retail space would be taxed.

Providence drowns while Brown thrives

Municipalities across the country are looking to local non-profits to pay for their share of community services. These payments, known as PILOTs, or “payments in lieu of taxes,” are voluntarily contributed by private schools, hospitals and other non-profits as an alternative to paying property taxes. As cities come under more fiscal stress, this will be a growing trend.

The mayor of Providence, Rhode Island, Angel Taveras, is in a wrestling match with Brown University over increasing the school’s annual payments to the city. Taveras is angling to get a bigger sum from Brown, but if he is unsuccessful, then his only option to balance his city’s budget would be to get public unions to agree to concessions. Others, including Robert Flanders, the receiver of nearby Central Falls, believe that Providence’s only option is bankruptcy:

“I don’t see how [Providence] can get out of it without going there,” said Flanders, a former state Supreme Court justice and a partner at Hinckley, Allen & Snyder LLP in Providence. He put Central Falls into bankruptcy in August and has since torn up contracts with city workers and cut pension benefits.

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