By SUSAN JONES
Pittsburgh Mayor Ed Gainey announced on Jan. 24 that he was directing the city’s finance and law departments to review the status of all tax-exempt property in the city owned by charities “to ensure that the special tax-exempt status is appropriate under Pennsylvania law, and, if not, to act accordingly.”
This audit would include the University of Pittsburgh and the four other largest nonprofits in the city — UPMC, Highmark/AHN, and Carnegie Mellon and Duquesne universities — along with other institutions.
“In the City of Pittsburgh, 34 percent of the property is designated as tax-exempt, that is, the owners are not paying any property taxes,” Gainey said in a news release. “The only properties that should not be subject to property taxes are those owned by purely public charities — places where people who are down on their luck get the services they need, mostly for free. For example, the new Second Avenue Commons homeless shelter is a huge help to our community, and it is clearly a purely public charity.”
Chancellor Patrick Gallagher, in an interview shortly after Gainey’s announcement, said the issue is an old one.
“Many city governments have looked at the issue of nonprofit holdings in real estate and the impact on taxes. So that's not a surprise,” Gallagher said. “The mayor's approach using an audit process to verify the tax-exempt status of these holdings is something that we're pleased to cooperate with. We don't have any reason to expect that to result in any significant changes. But our partnership with the city is very important, and we want the city to be able to do what it needs to do and so we'll work with him on that.”
The University of Pittsburgh, as a nonprofit educational institution, is classified as tax exempt under the Internal Revenue Code section 501 (c)(3) and under Pennsylvania code.
City officials have been looking at whether the large nonprofits, in particular, should pay more to support city services. The first review of nonprofit properties began in 2003 with former Mayor Tom Murphy.
A 2022 report by city and Allegheny County officials estimated the loss in taxes from the five largest nonprofits at $58 million annually. The report advocated for local governments to enter into agreements for “payment in lieu of taxes.”
Gainey’s announcement said the review will not include churches or religious institutions. For those properties that are not owned by institutions of purely public charity as defined by state law, the city plans to take legal action to address the tax-exempt status.
Susan Jones is editor of the University Times. Reach her at email@example.com or 724-244-4042.
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