Des Moines hospitals exit voluntary tax program
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Des Moines' nonprofit hospitals have ceased contributing to the city's voluntary Payments in Lieu of Taxes (PILOT) program, potentially exacerbating budgetary pressures amid statewide property tax limitations, records obtained by Axios show.
Why it matters: The program encourages organizations exempt from property taxes to support services such as public safety, reducing tax burdens on homeowners and businesses.
Between the lines: DSM's two largest hospital networks also lead Iowa's list of charitable hospitals, with the largest gaps between their tax exemptions and charity or community investments, according to a recent report by the nonpartisan Lown Institute.
- UnityPoint Health's Iowa Methodist Medical Center and MercyOne Des Moines Medical Center fell a combined $70 million short for three years ending in 2022.
State of play: Charitable hospitals in DSM owned nearly $617 million in property exempt from taxes last year, according to the Polk County Assessor.
Flashback: The PILOT program was initiated in 1998 in response to concerns from city leaders that over one-third of Des Moines properties were tax-exempt, creating increased strain on the city's tax base.
- Hospitals pledged to pay the city $860,000 annually, the DSM Register reported at the time.
Zoom in: UnityPoint Health last contributed $543,299 in FY22, catching up the health system with three years of voluntary payments it had previously agreed to make.
- Catholic Health Initiatives (MercyOne) made its most recent payment of $247,204 in FY21.
- The hospitals declined to comment in response to Axios' inquiries about their PILOT contributions, but they said they had provided hundreds of millions of dollars in community investments in recent years through charity care and education.
The intrigue: Only six of the hundreds of local nonprofits and government entities have contributed in the last three fiscal years.
- Contributions so far for the fiscal year ending in June include the DSM Airport Authority ($2.8 million), DSM Water Works ($1.3 million), Wastewater Reclamation Authority ($956,000), Metro Waste Authority ($40,600), Community Foundation of Greater DSM ($5,000) and Hoyt Sherman Place ($700).
The big picture: Other cities including Boston and Providence, Rhode Island, have implemented PILOT programs.
- The National Council of Nonprofits opposes the programs, saying they hinder organizations' ability to deliver services to their communities.
What we're watching: West Des Moines city manager Tom Hadden recently said his city may pursue PILOTs if Iowa lawmakers place further restrictions on property tax growth.