Pittsburgh, Allegheny County near payment deal with Big 4 nonprofits
Pittsburgh and Allegheny County officials say they’re close to striking a deal that calls for the region’s four largest nonprofit employers to make hefty annual payments toward public projects for the next decade.
“It’s been a long marathon negotiation,” said Kevin Acklin, chief of staff to Mayor Bill Peduto, “but we feel that the marathon will be completed in 2017.”
After almost three years of talks, Peduto and county Executive Rich Fitzgerald are finalizing figures in what Acklin called a “comprehensive investment proposal” that involves the so-called Big Four: UPMC, Highmark, Carnegie Mellon University and the University of Pittsburgh. He did not provide specifics.
Each is tax-exempt under federal and state law. Together, they take in billions of dollars in revenue and employ roughly 120,000 people.
“Those are the four agencies that are driving our local economy right now. They are at the heart of the resurgence in this city,” Acklin said. “What we’d like to do is to make sure that the cost of running a city is borne by those who are leading its economy.”
UPMC spokesman Paul Wood said, “The mayor knows he has UPMC’s support and can count on our fullest possible participation for a solution that is fair and equitable and includes the other large nonprofits.”
Susan Rogers, Pitt’s vice chancellor for communications, declined to discuss a possible deal, saying only “there isn’t an agreement in place right now.”
Officials from Highmark declined to comment, and Carnegie Mellon officials did not return a message seeking comment.
The goal, Acklin said, is to agree on a payment formula that ensures the health and education behemoths pump money into public works projects such as improving parks and roads as well as into government-driven initiatives that benefit the public.
Fitzgerald said he believed the sides were “getting close.”
“We’d like to see a long-term agreement that gives both sides, both entities stability and practically makes sense for everybody,” he said.
City officials met with nonprofit officials to discuss the developing agreement as recently as last week, Acklin said.
He said they’ve examined similar arrangements with hospitals and universities in Boston and New Haven, Conn.
“We don’t want this money to come to the city and be part of our operating or capital budgets,” Acklin said. “We want to invest it in things that will grow and benefit the city such as affordable housing and early childhood education — not just to subsidize the city but to make direct investments into our infrastructure and into people.”
Peduto has said he expects to get more than the $5.2 million in payments the city received from nonprofits as payments in lieu of taxes, agreements known as PILOTs, in 2012 and 2013 under a previous pact.
“We’re not even going to call this a PILOT,” Acklin said. “It’s more about finding the way that a city and county can have a long-term, meaningful commitment from nonprofits who are leading the city’s economy.”
City and county leaders would like to see state legislators enact broader reforms to tax laws to account for areas such as Pittsburgh that have shifted toward nonprofit-driven economies, Acklin said.
“Every time UPMC or Highmark or Pitt or Carnegie Mellon expands, our real estate tax base shrinks,” Acklin said. “That doesn’t mean that we don’t encourage expansion, job growth and the new economy and people coming here because of the innovation that’s happening, but it is a reality that we have to address.
“The situation you have right now is there are taxpaying citizens who are subsidizing the growth that’s occurring.”
Natasha Lindstrom is a Tribune-Review staff writer. Reach her at 412-380-8514 or [email protected]