Ending four years of costly litigation, the Dartmouth-Hitchcock Medical Center and the city of Lebanon last week announced a tentative agreement that will settle their long-standing tax dispute.
The disagreement started in March 1998 when Lebanon revoked the DHMC's tax exemption and served them with a notice stating that property taxes were due immediately. The DHMC filed a court appeal and the two parties entered into four years of expensive and sometimes bitter litigation.
As part of the agreement covering the next 20 years, DHMC will contribute $26 million, adjusted for inflation, to the city through the year 2020. The DHMC will also immediately pay $3.5 million.
In return, the city will withdraw its claims for taxes on the DHMC complex in Lebanon for tax years beginning in 1997, and will refund the DHMC $13.4 million in taxes paid to date under protest, including the income earned by the city on those funds.
"One of the most difficult things about the last four years is that the two entities that should be working together were at loggerheads," DHMC spokesperson Deborah Kimbell said. "Now that we're over this hump the city and the medical center really can work in partnership, which is what makes sense. It's what we wanted."
Lebanon will grant the DHMC charitable and educational exemptions, while the DHMC will make contributions in lieu of taxes for any taxable property acquired and converted to exempt use during the term of the agreement.
Explaining that their long-term interests are closely linked, Lebanon and the DHMC also announced in their agreement to institute measures that would create a closer and more cooperative relationship between the city and its largest employer.
Among other things, the DHMC will report annually to the city on its charitable services, and will continue to notify the public of free or reduced cost care.
The parties also agreed to meet with each other at the request of either party and to attempt to resolve any disputes over the next two decades through mediation before initiating any litigation.
Both sides said the agreement was mutually beneficial and in the best interests of the residents of Lebanon, the DHMC's patients, employees and DHMC students.
"We at Dartmouth place a very high value on our relationship with the city of Lebanon, and we take great pride in the work of the Dartmouth-Hitchcock Medical Center," President James Wright said in a press release. "I am pleased that we can now move forward together and enhance our ability to serve as a resource for the community and the region in clinical care, research and teaching."
For the agreement to go into effect, it must be signed by the Lebanon's Board of Assessors and city manager, the governing boards of the DHMC constituent organizations, and the Merrimack County Superior Court.
