Legal ceasefire: Peduto takes a new approach to UPMC’s exemption

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Pittsburgh Mayor Bill Peduto and UPMC have declared a ceasefire in their fight over what the health care giant’s fair share for city services should be. That doesn’t mean either side has surrendered.

The most important question is whether the change in tactics will benefit taxpayers, something we hope will still happen in the end.

Mr. Peduto and his staff have been meeting with UPMC since he won the election last fall, but the mayor said efforts were stymied by dueling lawsuits — one filed by former Mayor Luke Ravenstahl that sought to take UPMC’s tax-exempt status away and a countersuit from UPMC that said it was unfairly singled out from other city nonprofits.

The city’s lawsuit was tossed out on the narrow grounds that it should have been filed against UPMC’s subsidiaries, which employ 62,000 people in the region, rather than the corporate parent; that doesn’t mean the city would not have been successful if it had amended its claim. At the same time, who is to say whether UPMC might not have prevailed in its defense?

An unfavorable outcome is the risk both sides take with any litigation.

As an alternative, negotiations make sense now, largely because Mr. Peduto’s approach to city problems is so unlike his predecessor’s. Anyone involved in negotiations knows that a change in personalities at the bargaining table can make a big difference.

The city must not lose its resolve to get more money for city services from UPMC and other nonprofits that benefit from being in Pittsburgh, particularly the largest employers in that category — Highmark Inc., the University of Pittsburgh and Carnegie Mellon University. Although they employ thousands of people, they are not obliged to submit payroll taxes, unlike for-profit businesses. Although they own a considerable amount of property — in UPMC’s case, $1.6 billion worth of land and buildings — the vast majority is untaxed.

If negotiating with UPMC rather than suing it can result in a fair sum to lighten the load of city taxpayers, Mr. Peduto’s strategic move will have proven its worth.

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