Rice approves agreement for payment in lieu of taxes to city
WILLMAR — The Rice Memorial Hospital Board has approved a new intergovernmental transfer agreement for annual payments to the city of Willmar that take the place of property taxes.
The agreement, approved by the board on Wednesday, replaces a previous three-year agreement that expired in 2012.
As a city-owned entity, Rice Hospital pays no property taxes. The transfer of a yearly payment from the hospital to the city helps support street improvements, fire protection and other city services funded by standard property taxes.
Terms of the new agreement are similar to the previous one, said Bill Fenske, chief financial officer for Rice Hospital.
It sets a baseline of $200,000 a year, ensuring the city will receive at least that amount during each of the three years the agreement remains in effect.
“It’s a calculation that’s pretty dependable,” Fenske said.
The overall formula calls for the hospital to make an annual payment to the city that equals 0.8 percent of the hospital’s net assets, minus the Rice Health Foundation’s net assets, at the end of the previous calendar year. Payments are made quarterly, with the first one due on March 30.
Fenske said the intergovernmental transfer payment to the city this year will be somewhere between $450,000 and $480,000, based on net hospital assets of $60 million.