Pittsburgh seeks $20M a year from nonprofits in talks after dropping lawsuit, paying $148K in legal fees

Pittsburgh spent $148,000 in legal fees challenging UPMC's tax-exempt status before dropping the court case, the mayor's office said on Wednesday.

Tim McNulty, spokesman for Mayor Bill Peduto, said the fees for outside legal representation went to Downtown law firm Strassburger McKenna Gutnick & Gefsky. Attorney E.J. Strassburger, who represented the city, could not be reached for comment.

McNulty said Peduto was aware of the legal costs when he abandoned the challenge, but he thinks it was preventing the city from reaching an agreement with UPMC and other nonprofits to secure payments in lieu of taxes.

“The city's mindful of the expense, but it wasn't the driving factor in the decision,” McNulty said. “The driving factor was resetting talks in a more positive manner.”

Peduto, who has said he is seeking $20 million collectively in annual contributions from nonprofits to help pay for long-neglected capital improvements, explained on Tuesday that he dropped the lawsuit last week in an attempt to bring nonprofits to the negotiating table. The suit had been filed by former Mayor Luke Ravenstahl.

UPMC responded on Monday by dropping a federal countersuit.

A legal expert said the city freed itself of costly and time-consuming litigation.

Pittsburgh Controller Michael Lamb said it's too soon to say whether Peduto made the right call.

“I assume if the city is taking that step to end the lawsuit, it is in anticipation of some belief that the city is going to gain from UPMC,” Lamb said. “Once we find out what that is, then we can make a determination whether dropping the lawsuit and paying attorneys fees was worth it.”

Pittsburgh and UPMC are now talking, according to Peduto. Highmark and Carnegie Mellon University confirmed that they are in preliminary discussions with the mayor's office.

Bob Bauder is a staff writer for Trib Total Media. He can be reached at 412-765-2312 or bbauder@tribweb.com.