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New council bill would look at how much nonprofits would pay Pittsburgh if not tax exempt

Maggie Young
/
90.5 WESA

Pittsburgh City Councilor Ricky Burgess has introduced yet another bill that seeks to garner funds from tax-exempt institutions and organizations.

The bill would have the city determine how much nonprofits would have to pay in property and payroll preparation taxes if they were a for-profit.

The bill then authorizes city officials to use those numbers as a basis for negotiating payments in lieu of taxes, frequently referred to as "PILOTs," with the nonprofits. The legislation sets revenue targets at either 50% of what a non-profit's real estate taxes would be or 75% of what its payroll preparation taxes would be — or a combination of the two.

However, any payments would be voluntary. Non-profits have made such payments to the city's coffers in the past, but nothing in the bill gives the power the city to dictate the amount, or to compel any payments at all.

Burgess said this bill would focus especially on large nonprofits like UPMC, Carnegie Mellon University, and Allegheny Health Network.

"The large nonprofits are both the largest employers and financial engines in our region," he said. "In addition ... they all use our infrastructure.."

Burgess said the approach could bring around $30-$35 million to the city.

The city's inability to extract revenue from large nonprofits, who are among its largest landholders and employers, has been a concern for decades. Pittsburgh Mayor Ed Gainey campaigned for his office last year on a pledge to resolve the issue with legal action if need be. But Burgess isn't waiting to raise the temperature: The new bill comes one week after Burgess proposed a tax that would be levied on students and healthcare patients at area nonprofits.

City Controller Michael Lamb, who has long argued that nonprofits should be contributing more to the city, said Burgess' new bill is "a much better approach than the original he introduced" last week.

"This is a negotiation, there has to be a starting point," Lamb said. "If they were paying the payroll prep tax what would it look like? If they paid property taxes, what would that look like?" Lamb said. "Those are the kinds of conversations to have."

Lamb said organizations like UPMC are making such payments this in other cities, like Altoona and Erie.

"The city needs to buckle it down," he said. "It’s problematic that we haven’t done this. There was never a conversation with [former Mayor Bill] Peduto about a direct subsidy to the city of Pittsburgh. I look at that as a failure of the last eight years."

Peduto's approach to nonprofits was less confrontational, and centered on the creation of a social-service fund, called OnePGH, that would allow nonprofit entities and others to donate to funds for particular civic needs, rather than have the money be placed in the city's general fund.

Burgess said the city should be open to a variety of approaches.

"I intend to have a conversation and look at all available options," he said. "The best approach is to lay all of the options out on the table. I don't want to rule anything out at this point."