Mayor Peduto still at work on agreement to make tax-exempt nonprofits contribute to city services
August 3, 2015 12:00 AM
Mayor Bill Peduto's administration is still at work on an agreement that would deliver a financial contribution from the city’s large tax-exempt institutions to government coffers.
By Robert Zullo / Pittsburgh Post-Gazette
More than a year after Mayor Bill Peduto dropped a lawsuit seeking to strip UPMC of its nonprofit status, his administration is still at work on an agreement that would deliver a financial contribution from the city’s large tax-exempt institutions to government coffers.
“We have one ask and that ask is not with a tin cup. It is that if there is going to be a partnership, there must be … a [payment-in-lieu-of-taxes] plan in place by the end of this year,” Mr. Peduto said in an interview last week. “We have negotiated in good faith. We have been very upfront with our need. With almost 45 percent of the land in this city nontaxable and with our goal of seeing these institutions grow, we cannot continue to place the burden of city services simply on those that sleep here.”
Mr. Peduto withdrew the suit, filed by his predecessor, Luke Ravenstahl, in July 2014, about a month after a judge dismissed it on narrow legal grounds that would have left the city the option of suing UPMC’s subsidiaries individually in a bid to collect payroll taxes.
At the time, Mr. Peduto called negotiations on a new nonprofit payment impossible with legal “guns” pointed at each other and UPMC agreed to drop a countersuit against the city.
He said his administration remains in individual negotiations with the “big four” — UPMC, Highmark (and its Allegheny Health Network), Carnegie Mellon University and the University of Pittsburgh — but would not provide many details beyond the previously stated bones of the arrangement. Those include making it a voluntary deal that sunsets after 10 years, a contribution that does not go into the city’s operating budget and a plan more akin to the Pittsburgh Promise scholarship program than a cash payment.
Mr. Peduto said his administration hopes to transition from four separate sets of talks to a round of negotiations after Labor Day with all the institutions at the table.
“It would be something that would invest in the long-term infrastructure of the city and assist with the two tracks the city is on: growing technology and research and innovation and the other side that is not connected to it, including affordable housing and job opportunities for those who have been left behind,” the mayor said. “There was no conversation one year ago. Six months ago, we were in the process of putting together what the parameters of a program would look like based on what their concerns were. And we are at the point of talking now what it will be.”
City council President Bruce Kraus said “council in its entirety” would welcome an agreement before budget talks begin this fall.
“I’ve never surrendered hope that we could reach an ongoing, substantial contribution from nonprofits,” he said.
Last year, Mr. Peduto’s first budget drew fire for including a property tax increase but no new money from the city’s large nonprofits.
And the city’s latest recovery plan under the Act 47 program for distressed municipalities — developed by the mayor’s team and the city’s financial overseers and approved last year by the council — states that “seeking higher annual contributions from the tax-exempt non-governmental institutions that rely on the same roads, bridges and other infrastructure that city residents and business owners do” should be a “major initiative.”
UPMC spokesman Paul Wood referred a request for comment to the mayor’s office.
Ken Service, a spokesman for Pitt, wrote in an email that the subject was “one of a number of issues under discussion” with the mayor’s office.
Abby Simmons, a Carnegie Mellon spokeswoman, said the university had participated in several meetings with the mayor’s staff and the other institutions.
“These meetings have been very positive, and we look forward to continuing the discussions,” she wrote in an email.
Highmark “continues to be a strong partner with the city of Pittsburgh,” spokeswoman Lynn Seay said.
“We have had meetings with the mayor, expect to be involved in the mayor’s program and look forward to learning more details about it,” she wrote in an email.
Robert Zullo: firstname.lastname@example.org or 412-263-3909. Twitter: @rczullo.
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