Springfield subcommittee hears analysis of hospital tax exemptions as senator readies pilot PILOT bill

Judith Garber, a policy analyst at the Lown Institute, told Springfield City’s pilot subcommittee on Jan. 28 that her organization can compare hospitals’ tax benefits to the community investments they report on federal 990 filings to identify “fair share” gaps.

The Lown Institute analysis, Garber said, would compare categories available on hospital 990s — financial assistance, community health improvement, contributions to local nonprofits, community-building activities and subsidized services — with hospitals’ tax advantages to estimate which institutions could be doing more for the community.

The discussion matters because the committee is considering new revenue options for Springfield and how to match community needs with nonprofit community benefits. “Our goal here as a subcommittee is to identify new potential revenue stream for the city of Springfield,” Councilor Karen Lee said during the meeting.

Garber described the Lown Institute’s approach as focused on “certain types of community benefit that we think are most impactful for actual community health,” and said the group can produce a detailed breakdown for the area’s hospitals using 2020–2022 federal data, with 2023 state community-benefit reports becoming available. She estimated the local analysis would take “maybe 15 to 20 hours” and offered an illustrative fee of about $100 per hour with a $3,000 cap.

State-level action is already in motion: Senator Gomez told the subcommittee he intends to file pilot legislation at the State House by the Friday deadline. “Basically, this week is bill filing. The deadline is on Friday. I plan on filing the piece of legislation, the pilot program,” he said. The senator described the proposal as focused on very large nonprofit properties and assets: “this bill is for 15,000,000 and over of property.”

Senator Gomez and others said the bill would test payment-in-lieu-of-taxes arrangements for institutions whose property/asset base exceeds the threshold; he and other speakers said the pilot could be voluntary in some jurisdictions and structured in others to secure additional municipal revenue without altering nonprofit federal tax status. A committee member clarified the formula discussed would allow a municipality to receive up to 25% of what the property tax would be — meaning a nonprofit would effectively receive a 75% discount compared with full taxation under that proposed structure.

City staff and committee members warned the committee to develop a clear mission before engaging hospitals directly. Councilor Whitfield said the subcommittee should “agree first before the data is interpreted to have a common understanding what our mission is to help guide the analysis.” Several councilors recommended collecting the state community-benefit reports (and federal 990s) and completing an internal analysis before inviting hospital representatives to speak.

Kathy (city staff) told the committee that existing PILOT contracts in Springfield date to older agreements and have not been routinely revalued: “Those contracts were written and they haven't changed. 1993 is the same contract as it is today.” The assessor’s office, she said, does not rebase nonprofits’ agreements annually unless the contract is renegotiated.

Committee members also discussed broader options beyond hospitals, including large colleges and other nonprofits that own substantial property in the city. Councilor Brian Centonello urged support for the senator’s bill and described the likelihood of organized pushback from large institutions: “the nonprofits are gonna push back and say we give out benefits in the form of in kind benefit, other things.”

The subcommittee did not take any formal votes. Senator Gomez said his office will seek testimony and municipal resolutions supporting the pilot once the bill is assigned to a legislative committee, and subcommittee members discussed preparing a municipal resolution to demonstrate local support.

The Lown Institute materials shared during the meeting included preliminary fair-share figures and state comparisons; Garber said some of the specific deficit numbers are embargoed until the group’s forthcoming report but that public state community-benefit reports (and 990 filings) can be used for granular analysis. Garber noted differences in how states report community benefits and recommended using Massachusetts’ more detailed reporting where available.

The subcommittee discussed timing and funding for the local analysis. Garber said she could begin work this summer, with the committee noting the timing could be adjusted around the city’s budget process and possible grant support through a Department of Local Services community best-practices grant. Councilors suggested setting aside small city council funds for research projects from subcommittees in future budgets.

The subcommittee asked city staff to compile available community-benefit reports and 990 filings for Baystate Health, Mercy, Springfield College and other large local nonprofits as background for the Lown Institute analysis and for future meetings. The committee agreed to return to the matter after the city’s budget cycle and to consider a municipal resolution supporting the state pilot bill.