PROVIDENCE, R.I. (WPRI) -- After almost a year of negotiating, Providence leaders have tentatively reached their first formal payment-in-lieu-of-taxes agreement with the state's largest hospital system. Mayor Brett Smiley's office announced on Tuesday that Lifespan has agreed to pay Providence $1.5 million in voluntary payments over a three-year period. The hospital system also agreed to make at least $50 million in so-called "community contributions" in each fiscal year of the agreement, meaning the deal could generate $151.5 million for Providence over the next three years. (Lifespan and the city did not initially provide examples of what the contributions could be.) "The financial contributions from this agreement would represent the largest annualvoluntary payment Lifespan has made to Providence in over a decade and would finally ensure that every major tax-exempt institution in Providence has a formalized PILOT agreement with the city that meaningfully gives back to our community," Smiley said in a statement. Nonprofit organizations are exempt from paying property taxes, but some of the city’s largest non-taxpaying property owners have still historically agreed to make payments-in-lieu-of-taxes to offset the loss tax revenue and their use of city services. Smiley has previously scolded the hospital group for dragging its feet. The pressure for Lifespan to start making the voluntary payments has been mounting for more than a year. Last October, the city entered into a 20-year agreement with four private higher-education institutions -- Brown University, Johnson & Wales University, Providence College, and the Rhode Island School of Design -- that could generate at least $177 million for the city. The city also signed a supplemental memorandum of agreement with Brown that totals about $46 million over ten years. As recently as July, the mayor indicated negotiations with Lifespan could be coming to an end after briefing the City Council about their progress in a closed-door meeting that month. According to the proposed memorandum of understanding (MOU) with Lifespan, the hospital system would pay $750,000 in the first fiscal year of the agreement in 2025 and the remaining $750,000 in 2026. The third year of the agreement would be dedicated to negotiations for a future PILOT agreement. Lifespan owns Rhode Island Hospital, Miriam, Newport and Bradley hospitals. The not-for-profit corporation is the state’s largest employer, with about 17,000 employees. Providence City Council President Rachel Miller said she was "encouraged" by the deal, but said that the hospital group could still do more. "As the state’s largest hospital system, Lifespan needs to contribute its fair share," Miller said. "$1.5 million is just the start, but Lifespan has much more to do to truly honor its commitment to Providence taxpayers who right now foot the bill for the city services Lifespan benefits from." The proposed PILOT agreement still has some legislative hurdles ahead. The agreement will be introduced to the City Council at its meeting on Thursday, and will be vetted by the council's Committee on Ordinances. Lifespan has been making significant changes in recent months. In June, the hospital system announced it would change its name to Brown University Health as part of a plan to expand its relationship with the Ivy League school in exchange for a multimillion dollar infusion of cash. The name change will be made official on Oct. 15. Earlier this month, Lifespan laid off 20% of Lifespan’s executives, a cost-cutting move move President and CEO John Fernandez said could save roughly $6 million over the next year. “Like much of the healthcare industry, Lifespan has faced financial challenges over the years," Fernandez said in a statement. "Our goal is to achieve an operating income, which will allow us to continue to invest in our health system, provide top-tier healthcare and community benefit to the city’s residents and the region, while working in partnership with our host city." Lifespan is separately finalizing its purchase of two hospitals in Southeastern Massachusetts owned by bankrupt Steward Health Care, St. Anne’s in Fall River and Morton in Taunton. Alexandra Leslie ([email protected]) is a Target 12 investigative reporter covering Providence and more for 12 News. Connect with her on Twitter and on Facebook.