BREWER, Maine — Eastern Maine Healthcare Systems officials bought the Cianchette Building, home to their headquarters on Whiting Hill, earlier this month, saving the company millions of dollars but removing more than $300,000 from city tax rolls.
Buying the building is less costly for EMHS compared with fulfilling the original 15-year lease.
But the deal will hurt taxpayers’ pocketbooks, especially since an arrangement to help ease the transition has been “removed from the table,” City Manager Steve Bost said Monday.
“The implication of the sale, from a financial standpoint, is it takes $305,000 off the tax rolls,” he said. The sale “takes the building and moves it into the nonprofit category.”
An initial agreement between EMHS and the city would have provided Brewer with a year’s worth of taxes, split between two years, Bost said. That would have provided approximately $150,000 for two years to reduce the burden on taxpayers, he said.
That initial offer was made a month ago. When Bost called on Thursday to accept the deal, he was told it was no longer being offered, and that the sale was completed.
The Cianchette Building was constructed in 2004 by Cianbro Corp. of Pittsfield, which owned and leased the building to EMHS until the Nov. 14 sale. EMHS is the parent company of Eastern Maine Medical Center in Bangor and various other health care organizations in the area.
EMHS paid $22.6 million for the building, Daniel Coffey, EMHS executive vice president, treasurer and chief financial officer, said Monday.
“That’s going to result in a really sizable savings over the years,” he said, estimating the savings in the $6 million range.
“There really haven’t been any offers made” to the city. “There were several discussions around the fact that this building” would become exempt from taxes. “My understanding is those discussions are still under way.”
The original 15-year lease, signed in 2004, allowed EMHS to move its corporate offices to the building. That space has always been tax-exempt, but the remainder of the building was taxable, Bost said.
City officials knew the building would someday be purchased by EMHS, but with the signed 15-year lease they expected that to occur “many, many years out,” Bost said. He said officials at Cianbro, which has a good relationship with the city, had said “that there would be some effort to ease the blow that the city would take when this went into the nonprofit” category. Nothing was put in writing and the city has no legal standing to ask for any funds under Maine statutes.
Coffey said if EMHS had built the building, as originally planned, the city would not have seen any money.
“The city had no expectation that it would get any property taxes off this buildings,” he said. “[But] when we decided to do this as a project that would be owned and financed by Cianbro, it was sort of a windfall for the city.”
The building sits on a 72-acre campus owned by EMHS at the top of Whiting Hill near the Interstate 395 end of Dirigo Drive, which is where the new $42 million CancerCare of Maine facility is under construction.
“As you know, we’re building another building right next door and the two buildings are going to be connected … and it was going to be awkward with one owned by one entity and one owned by another,” Coffey said.
He said that other debts have been paid down since 2004, excellent financing was offered and now “seemed like the right time to acquire the [Cianchette] building.”