Washington Health System and Washington officials have agreed on a contract that will have Washington Hospital pay the city more than $560,000 over the next 11 years in lieu of property taxes.
City Council approved the contract 3-1 during a special meeting Wednesday afternoon, although Councilman Terry Faust vigorously protested the agreement because he said he still had not seen the legal details before the vote.
Faust’s biggest concern was that the city might be locked into the contract even if state lawmakers change the tax-exempt status for nonprofits such as Washington Hospital.
“We should be looking at the agreement and asking (the solicitor) are we protected?” Faust said. “Are we fine?”
Solicitor Jack Cambest said the agreement would protect the city if changes are made to state law, although the hospital would get a “credit” for previous payments in the agreement if the tax-exempt status is retroactively stripped for earlier years.
Faust also questioned whether there was any “give and take” between both sides during the negotiations. He complained that Washington Hospital officials didn’t cater to many of the city’s requests and gave council no choice but to accept them agreement.
“Why would the agreement even be necessary if they want to contribute to the city?” Faust said. “If they want to contribute something, God bless them. I would gladly and humbly take their money for the citizens of the city.”
City officials have been working on the deal with the hospital for two years after the previous contract expired in 2012. That 10-year deal, however, was modified in 2002, just a year after both sides agreed to it, because the city was in dire financial trouble and needed a lump sum of $425,000 rather than the even distribution.
The new contract starts with a retroactive payment of $46,100 for 2013 that will be made July 1. There will be 2 percent increases every year until it expires in 2023, which will result in a total of $561,832 being paid to the city.
The starting figure and annual increases concerned other city leaders who thought both should be higher because they haven’t received a payment since taking the lump sum 12 years ago. However, they lamented that the hospital is not required to pay the city any money because of its nonprofit status.
Washington Health System Chief Executive Officer Gary Weinstein said each side presented numbers during the negotiations and he thinks they were able to arrive at an arrangement that will benefit both sides.
“I think the discussions were conducted amicably and respectfully on both sides,” Weinstein said. “I think we were able to meet in the middle and now have a nice partnership for the next 10 or 11 years.”
Mayor Brenda Davis and Councilmen Ken Westcott and Joe Manning voted to approve the contract, while Councilwoman Tracie Graham abstained because she works for Washington Health System.
The city first entered into the “payment in lieu of taxes” program in 1993 when the hospital paid $40,000 per year to it and gave $53,000 annually to Washington School District.