Pa. Supreme Court to hear appeal on cultural trust's tax exemptions

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Normally partners, the Pittsburgh Cultural Trust and city officials are squaring off in a state Supreme Court case that revolves around the question of how broad the nonprofit group's real-estate tax exemption should be.

The case centers on two trust-owned properties, a vacant five-story building at 110 Ninth St. and a five-story building at 820 Liberty Ave. that's vacant except for occasional use as an art gallery.

The trust argues that the properties, even if vacant for an indefinite period, fit into the group's overall strategy to enhance the city Cultural District -- a charitable purpose -- and therefore qualify for a tax exemption.

But city officials say the trust shouldn't get an exemption for properties it's just sitting on.

"The properties are not being used for a charitable purpose, and they would not be eligible for a tax exemption," city solicitor Daniel Regan said.

At stake are about $68,000 in annual real-estate taxes to the city, Pittsburgh Public Schools and Allegheny County.

Despite the tax disagreement, trust spokeswoman Veronica Corpuz said the group still has good relationship with the city, its longtime partner in building the Cultural District. The trust owns the Benedum Center, the Byham Theater and other Downtown arts venues.

Joe Geiger, executive director of the Pennsylvania Association of Nonprofit Organizations, and Melanie Lockwood Herman, executive director of the Nonprofit Risk Management Center in Leesburg, Va., said the dispute comes as cash-trapped local governments increasingly question the tax exemptions of nonprofit groups.

"If the Supreme Court were to rule in favor of the government, it would, I'm sure, open the door for a parade of additional cases," Mr. Geiger said.

Don Kramer, a Philadelphia lawyer and editor of the online newsletter Nonprofit Issues, said the case poses a "very interesting question." Is mere ownership of the buildings directly related to the trust's charitable mission?

The trust has tax exemptions on some of its properties but pays taxes on those used for commercial, not charitable, purpose, according to court records.

The trust owned and paid taxes on 110 Ninth St. and 820 Liberty Ave. for years before seeking exemptions for them in 2006. When the county's office of property assessments granted the exemptions, the city appealed to Common Pleas Court.

When a judge ruled for the trust, the city appealed to Commonwealth Court. When Commonwealth Court sided with the city, the trust appealed to the state Supreme Court, which agreed Tuesday to hear the case.

The trust planned to use at least part of the Ninth Street building for a residential development-- and to pay taxes on the portion of the site used for that project. But those plans fell through, according to Commonwealth Court records.

The Liberty Avenue building intermittently is used as gallery space for university art students and for the trust's "gallery crawls." The trust has no other plans for the building, according to the court records.

The trust said its ownership of the buildings prevents their reuse by other would-be developers, whose plans might not be in the best interests of the Cultural District. While many people view the trust as an arts group, Ms. Corpuz said, its work -- spelled out in its bylaws -- includes real-estate development and encouraging business growth in the district.

However, Commonwealth Court ruled that long-term ownership of vacant buildings does not entitle the trust to tax exemptions. Ira Weiss, solicitor for the city schools, said the court made the right decision.

"We do not believe inventorying properties like this entitles them to a tax exemption ... . We don't believe their mission is that broad," he said. "They're not a redevelopment agency. They're not the URA."

Joe Smydo: or 412-263-1548. Staff writer Vivian Nereim contributed.


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