Partners HealthCare, one of the state’s largest nonprofits, has agreed to pay Somerville more than $1 million a year when it moves 4,500 employees to new offices in Assembly Square.
The payments are in lieu of local property taxes, which nonprofits, such as hospitals and universities, are exempt from paying.
Partners, which operates a system of hospitals and other health care facilities, will start annual contributions of $1.1 million by 2017, when the first phase of its 1.1-million-square-foot project is complete, said Denise Taylor, a spokeswoman for Somerville Mayor Joseph A. Curtatone. Those payments will rise to $1.5 million a year when the second phase of the development is finished, although a start date for that construction has not been set.
“The significance of this moment goes beyond revenue,” Curtatone said in a news release Tuesday. “We can now seize upon this momentum to bring other high-quality employers not just to Assembly, but also to Union Square” and other parts of the city.
Boston-based Partners, the state’s largest private employer, announced late last year that it would consolidate several scattered offices in Somerville, irking former mayor Thomas M. Menino of Boston, who wanted Partners to choose a site in the city.
“This agreement recognizes the investment that the city of Somerville is making to support our 4,500 employees,” Partners spokesman Rich Copp said. “Our goal is to foster the same positive relationship we enjoy with the city of Boston, where many of our hospitals are located.”
In Boston, Partners owns Massachusetts General Hospital, Brigham and Women’s Hospital, Spaulding Rehabilitation Network, and other sites. It has some corporate offices in the Prudential tower. Partners pays more than $8 million in lieu of property taxes to Boston each year.
Partners’ Somerville office will include ground-floor retail and restaurant space developed by Federal Realty Investment Trust of Rockville, Md. That company’s part of the project will be subject to property taxes.
When fully built out, the development should yield $2.2 million a year for Somerville in combined payments from Partners and the real estate trust, city officials said.
The agreement also requires Partners to use union labor to build its office space and to make job opportunities available to Somerville residents.
Somerville signed a payment-in-lieu-of-taxes deal with Tufts University in 2013 but for less money. Tufts agreed to pay the city $275,000 a year.Priyanka Dayal McCluskey can be reached at firstname.lastname@example.org. Follow her on Twitter @priyanka_dayal.