Pittsburgh City Controller Urges More PILOTS For “Eds and Meds”

According to Pittsburgh City Controller, fully 20% of assessable real property is owned by exempt entities.

On page 1-4 of the Pittsburgh City Controller’s Annual Comprehensive Financial Report published last Friday, is this discussion:

Diversifying revenue streams must be a top priority for the City. As mentioned earlier, parking usage is slowly returning, but it has become increasingly evident that the downtown commuter model, which benefitted the City through the parking tax, is unlikely to return to pre-pandemic levels. The City relies too heavily on revenue derived from its residents, including wage, deed transfer, and real estate taxes, and we must pursue different avenues for revenue.

In 2022, the City Controller’s Office released a joint report with the Allegheny County Controller’s Office analyzing revenues lost by local municipalities to tax-exempt properties owned by the region’s largest nonprofits. The report found that the five largest nonprofits own $4.3 billion in tax-exempt property in the City alone, reducing their cumulative tax bill by nearly 93%. If not exempt, these institutions would owe $34.5 million in real estate taxes annually.

While the region has undoubtedly benefitted from a nonprofit model centered on these “eds and meds” the growth of these institutions has also taken an increasing share of properties off the tax rolls, putting strain on City finances. As of 2022, around 20% of all property in the City was owned by nonprofits, 63% of which belonged to the five largest nonprofits. The report recommended that City leaders reprioritize “payment-in-lieu of taxes” (PILOT) agreements with these institutions as compensation for essential public services used by all organizations in the City, like critical infrastructure and emergency services. Doing so would ensure long-term, stable sources of revenue to help the city offset post-pandemic declines in other revenue sources.

Pittsburgh’s Mayor has promised challenges to tax exemption for the likes of Pitt, CMU, and UPMC, but I haven’t seen any petitions to Allegheny County yet.  

darryll jones