Former Steel Mill Town to Challenge Tax Exemption for 104 Charities

We previously reported about Pittsburgh’s efforts towards extracting taxes or payments in lieu of taxes from some of the big exempt organizations in the city.  Here and here.  A few years ago, Mayor Gainey announced that the city would undertake a review of all charitable property tax exemptions to determine compliance with state and local laws.  On Thursday, the Mayor released a list of charitable property owners whose tax exemption will be challenged. The list includes properties owned by all the big ones, like Carnegie Mellon, UPMC, Magee-Women’s and the University of Pittsburgh.  From the Mayor’s press release:

PITTSBURGH – Today Mayor Ed Gainey and City Solicitor Krysia Kubiak announced that the city is challenging the property tax exemptions for 104 parcels of property owned by non-profits.  

“We are here today to make sure our city has the resources it needs to pave our roads, pick up the snow, open our pools, and give our residents the services they deserve,” said Mayor Ed Gainey. “It means that if you do not meet the standard as defined by the Supreme Court, that you should pay your fair share for the paving of the roads in front of your hospitals, for the EMS crews that bring patients to your doors, for the Police and Fire teams that help keep you and your students safe, and for the DPW crews who pick up the garbage and make sure that our bridges are operational so that our economy has the ability to thrive.” 

The PA Supreme Court has ruled that in order to be considered a purely public charity an organization must meet all five prongs of the HUP Test.  

This means that they must:  

1. 1. Advance a charitable purpose 
   2. Donate or render gratuitously a substantial portion of its services 
   3. Benefit a substantial and indefinite class of persons who are legitimate subjects of charity 
   4. Relieve government of some part of its burden and 
   5. Operate entirely free of private profit motive. 

Failing on any one of the above prongs means that an organization can not cannot be considered a purely public charity, and as such the City of Pittsburgh will pursue payment of property taxes on those parcels through these challenges. 

“This week, we will be filing 104 challenges,” said City Solicitor Krysia Kubiak. “As of today we have reviewed 62% of all parcels that have a charitable exemption status. I am confident that the City has an extremely strong case to make in court.”  

Last year the City of Pittsburgh challenged 27 parcels, and as a result of that work the City is receiving $100,000 in property taxes annually. The challenges this year would represent $6.5 million annually for the City of Pittsburgh.  

“Forgone tax property revenue represents dollars that could go to supporting local services like schools, roadways, parks, and social programs that support the well-being of our neighbors in our communities,” said Emily Gee, senior Vice President for Inclusive Growth at the Center for American Progress. “Tax exemptions essentially allow charities to put foregone tax dollars toward whatever they deem a suitable charitable purpose, which may not necessarily align with the community’s most urgent needs. The public services needed to keep a major city thriving are not possible without a reliable tax base.” 

A listing of properties challenged is available HERE. Here’s a link to the press conference: https://youtube.com/live/w3QzI2NBGHg?feature=share

darryll k. jones