Clemency for a hospital killer: UPMC and other big nonprofits should remain tax-exempt

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Just how schizophrenic we have become over UPMC and other local "super" nonprofits is showcased by Mayor Luke Ravenstahl suing UPMC to lift its tax exemption while lauding UPMC for funding The Pittsburgh Promise. After an extensive expose of UPMC real estate holdings by the Post-Gazette, Allegheny County Council is holding hearings on UPMC's tax-exempt properties as well.

Now, if there is any elected official with more reason to resent UPMC than myself, please have him or her call me. After watching UPMC raze our beloved hospital in Braddock and call Pittsburgh's finest to arrest me, and then having UPMC ignore my fruitless groveling for an urgent care center, I have more than three years' worth of bloody knuckles from this unrequited relationship.

It may then come as a surprise to many that I do not believe that soaking UPMC and the region's other big nonprofits for tax revenue is good public policy.

First, a disclaimer: I will never embrace some of the professional choices made by UPMC CEO Jeffery Romoff. For example, Mr. Romoff took a $2 million pay raise the same year he closed UPMC Braddock, bringing his compensation to $6 million a year. His pay raise alone is 10 percent larger than Braddock's entire annual municipal budget.

But we must step back and objectively evaluate just how much UPMC and the other super nonprofits bring to the region as a whole.

As the father of two small children (with Highmark insurance), if, God forbid, something should happen to them, I'm rushing them to UPMC Children's Hospital. I'm grateful that this world-class facility exists, and I have no issue with UPMC paying no property taxes on it. This hospital is a $750 million investment in Pittsburgh that saves our children's lives every day.

I'm also profoundly grateful that my children will be able to attend world-class universities right here in Pittsburgh if they choose to do so. Once again, I'm absolutely A-OK with, for example, Carnegie Mellon University not paying property taxes in exchange for birthing the finest computer science department anywhere, right in our back yard.

What about Highmark, with its game-changing and generous support of a MedExpress in Braddock and its shoring up of the West Penn Allegheny Health System? Or the University of Pittsburgh's $2 billion endowment?

To better evaluate the value these nonprofits bring to our region, an excellent proxy is the huge petrochemical "cracker" plant proposed for Beaver County. Gov. Tom Corbett and some other officials champion $1.65 billion in tax incentives for a giant, hugely profitable oil company with the reasonable justification that it could create 10,000 construction jobs and employ thousands of others, including spinoff businesses, when it is up and running.

Ten thousand jobs plus significant environmental concerns equals $1.65 billion in public money.

That's one powerful equation: What then might be the hypothetical incentive needed to lure a UPMC and its 56,000 jobs? A Highmark? A University of Pittsburgh? West Penn? Carnegie Mellon?

Collectively, these nonprofits -- our "eds and meds" -- provide tens of thousands of local jobs and world-class health care, education and research, all without any significant environmental degradation or pollution. They also represent the fastest growing sectors of the regional economy.

Within the past year, I've visited both Cleveland and Detroit -- two iconic American cities that are struggling mightily. In those communities, it's much easier intellectually to subtract the civic impact and contribution that our nonprofit organizations have here in Pittsburgh.

Take away UPMC, and we're Akron. Take away UPMC and Highmark, and we're Cleveland. Take away UPMC, Highmark, Pitt and CMU, and we're ... Detroit. Instead of the most livable city in the nation.

Of course, that is a broad oversimplification. But our region's economic health is certainly not due to companies such as US Airways. As a for-profit entity that received generous public subsidies, including a beautiful airport that we're still paying for, US Airways dumped us like a bad date, taking with it 90 percent of the jobs it had provided. Now the company may pull its maintenance facility -- the last, puny vestige of its once-massive job-creating empire.

Let's move on to Public Policy 101: The law of unintended consequences.

Need I remind everyone what was accomplished by the most recent movement aimed at making property taxes more "fair"? We got a demented reappraisal system that punishes the very communities it was intended to help -- such as Braddock and Rankin -- while squandering $15 million.

After UPMC Braddock closed, I participated in a face-to-face meeting with, among others, Jeffrey Romoff. One suggestion made was taking the amazing UPMC-supported Pittsburgh Promise countywide so that children from my community and others like it in Allegheny County could have a better shot at a college education, just as so many children in Pittsburgh have. Mr. Romoff, to his credit, expressed a willingness to explore this.

I feel now, as I did then, that the only way this could happen is if UPMC and/or other regional super nonprofits decide to lift up the entire county through this tremendous philanthropic endeavor. No government agency, business concern or the foundation community alone could possibly make this a reality. Yet some people want to go after the very entities that have done more than any others to make Pittsburgh successful for a relatively minor amount of property taxes.

That is simply bad public policy.

Understandably, many people in my community are unable to forgive Mr. Romoff and UPMC for closing our hospital. And, thanks to the generosity and vision of former Allegheny County Executive Dan Onorato and his successor, Rich Fitzgerald, Braddock has moved on.

I now find myself in the unusual position of advocating clemency for the killer of Braddock's hospital and urging a stop to the dangerous destabilization of the local nonprofit climate that birthed UPMC and the other regional nonprofits. I'd much rather see these nonprofits, along with local governments and our robust philanthropic community, invest in innovative ways -- like the Pittsburgh Promise -- to take our whole region, including and especially the Monongahela Valley, to a new level of growth, prosperity and livability.


John Fetterman has been mayor of Braddock since 2006.


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