Pittsburgh Mayor Ed Gainey announced a sizable escalation in his plan to wring more property tax revenue out of major nonprofits like UPMC and the University of Pittsburgh.
City Solicitor Krysia Kubiak said during a Wednesday press conference that the city would challenge the tax-exempt status of 104 parcels this year, claiming that the properties don’t meet the legal requirements of “purely public charities” and belong on the tax rolls. The move greatly expands on the 27 challenges the city filed last year.
City officials said the maneuver, if successful, would bring the city an added $6.4 million annually in property tax revenue, plus another $8.8 million for Pittsburgh Public Schools and libraries.
“We are here today to make sure our city has the resources it needs to pave our roads, pick up the snow, open our pools and give our residents the services they truly deserve,” Gainey said.
This year’s volley of challenges is aimed squarely at UPMC. The healthcare giant is the city’s largest nonprofit landowner, and Gainey spent considerable time during his 2021 campaign pledging to make them “pay their fair share.”
Fifty-seven of the 104 challenges announced Wednesday are owned by UPMC or a UPMC hospital. Seven challenges target University of Pittsburgh-owned properties, five target Duquesne University, and seven target Carnegie Mellon University. Six challenges targeted Allegheny General Hospital properties, which are owned by Highmark, the biggest non-UPMC healthcare player in town.
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More than half the potential new revenue is contained in just one challenged parcel: UPMC’s Children’s Hospital, which has an assessed value of $426 million. If taxed, the parcel would owe $3.4 million to the city annually.
The city is also challenging the exempt status of Allegheny General Hospital, which has an assessed value of $167 million and would owe the city $1.3 million annually if taxed.
Gainey said Wednesday’s announced filings will ensure that organizations “shall pay your fair share for the paving of the roads in front of your hospitals, to the EMS crews that bring patients to your doors, for the police and fire teams that help keep you and your students safe.”
A UPMC representative wrote in an email to PublicSource that the properties in question “clearly support the charitable mission” of the hospitals.
“The Mayor knows he has UPMC’s commitment to participate in a program that’s fair and equitable” and includes other major nonprofits, wrote Paul Wood, UPMC’s chief communications officer.
At Wednesday’s news conference, Gainey said he met with UPMC officials as recently as last week, but he declined to provide any further details of the conversations.
Pitt spokesperson Jared Stonesifer wrote, “We are confident that Pitt meets the requirements for tax-exempt properties and are proud of the millions of dollars we contribute to the region’s economy every year.”
Representatives of Highmark/AHN, CMU and Duquesne did not immediately respond to requests for comment.
If the bid is successful, the new revenue could be just what the city needed: With federal pandemic relief funds running out this year, the city projects a razor-thin margin for the next couple years and a reserve fund that will shrink to near the legally required minimum. And that’s on top of ongoing chaos in the county’s property tax system, which has led to major reductions in tax bills for Downtown commercial property owners and the prospect of a countywide reassessment in the near future.
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Deputy Mayor Jake Pawlak said Wednesday that a potential countywide reassessment would likely increase the assessed value of the properties the city is challenging.
Even as school district attorneys and other municipalities sound the alarm about public finance, Pawlak said Wednesday that Pittsburgh does not need these challenges to remain in the black. He said reports of impending financial troubles have been “overstated.”
“We’re not seeking these judgments to address any immediate budget gap,” Pawlak said, “but rather that to ensure the long-term success of the City of Pittsburgh and the long-term thriving of its residents, that our tax system is based on an accurate and fair understanding of who should be paying what.”
The challenges Gainey’s attorneys are issuing could take a long time to bear fruit, if they do so at all. Of last year’s 27, 12 failed, three were withdrawn and 12 succeeded but were appealed by the property owner. Only a few have led to any money coming into the city to date, totaling about $100,000, Kubiak said.
City Council last year earmarked $400,000 for outside law firm Loeb & Loeb to work on this effort alongside the city’s in-house lawyers.
Editor’s note: This story was updated after publication to include new details.
Charlie Wolfson is PublicSource’s local government reporter and a Report for America corps member. He can be reached at charlie@publicsource.org.
