In Pittsburgh, PILOTS are still sparse and Public Shaming Campaigns Don’t Work
The Roberto Clemente Bridge, Pittsburgh
About a year ago, Pittsburgh Steelers Mayor Ed Gainey held a moderately hyped press conference announcing a new effort to challenge charitable property tax exemption for some of the big Pittsburgh eds and meds. I checked the local tax office and have not found any evidence that the City has actually challenged anybody’s charitable tax exemption. We noted last year that shaming was a typical strategy to try and extract payments in lieu of taxes:
First, announce the City’s budget is stretched to the limit, but the Mayor is holding the line against higher taxes. Second, note the presence of apparently wealthy nonprofits sitting around doing nothing while eating up more than their “fair share” of public services. Third, make explicit that tax exempts pay no taxes, free-riding all over the working and tax-paying folk. Fourth suggest some sort of legal scrutiny, short of legal process because the City would lose probably. Fifth, ride the media circuit shaming the big nonprofits for bringing nothing to the cookout. Sixth, wait until one of the big nonprofits –UPMC, Pitt, Duquesne or Carnegie Mellon — gets tired of bad press and finally just pays up. Wash, rinse, repeat.
Well, its been a year now and nothing much has changed amongst the Yinzers. The Steelers are still mired in mediocrity, though its worth noting that Coach Mike Tomlin has never once had a losing record in the 17 seasons he’s been at the helm. And while Providence Rhode Island is pulling in more than $11 million annually in PILOTs pursuant to a newly inked MOU, Pittsburgh still collects less than $500,000 from its much bigger and wealthier eds and meds. Here are excerpts from a recent local news report:
Pittsburgh’s meager results are not for a lack of desire: Mayors have tried to raise revenue from nonprofits for decades. Gainey made the issue a centerpiece of his 2021 run for office, covering the campaign trail with promises to make UPMC “pay their fair share” to the city. But two years into his term, he has little to show for it. How did Providence achieve what Pittsburgh seemingly can’t? Interviews with leaders in both cities show drastically different approaches, with collaboration and transparency winning the day in Rhode Island.
Gainey has met infrequently with nonprofit leaders and has spoken in combative terms about legal challenges he is bringing to certain nonprofit-owned properties’ tax exempt status. Gainey’s move is the latest in decades of tries by Pittsburgh mayors to reap more money from nonprofits. Former Mayor Tom Murphy created a fund which saw the city’s PILOT contributions temporarily increase to $17 per capita. Former Mayor Luke Ravenstahl sued UPMC to try to revoke its nonprofit status. Former Mayor Bill Peduto nixed that lawsuit and created his own PILOT-like initiative, called OnePGH, which was scrapped when Gainey took office.
Providence’s mayor took a collaborative-but-determined approach to working with four colleges to get a deal. “You get more with honey than with vinegar,” said Dan Egan, president of the Association of Independent Colleges and Universities of Rhode Island, who negotiated with the City of Providence. “I think it’s appropriate to ask for money, but it’s appropriate to ask for it in partnership, not in the sense that it’s owed, per se.” Egan and Providence College administrator John Sweeney both said that Providence Mayor Brett Smiley took a fair, even-handed approach to the negotiations.
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Local taxing authorities probably have only limited success using the bully pulpit to extract ad hoc taxes from nonprofits within their jurisdiction. PILOTs are sort of the norm nowadays but the amounts paid are still clearly determined by the nonprofits themselves by virtue of a cost-benefit analysis to determine the nuisance value of shutting down regular shaming campaigns such as those waged rather unsuccessfully by Pittsburgh and other municipalities. Researchers pretty evenly think the combative approach doesn’t work. “Public shaming is sometimes used to try to compel nonprofits to make contributions,” says Langley. “I don’t see a lot of evidence that’s an effective strategy.” Instead, they recommend communicating respectfully, justifying the amount of a requested payment, and, when possible, earmarking PILOTS for public services consistent with a nonprofit’s mission.”
darryll k. jones