Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Profit Motive the City's Upmc Suit Will Turn on One Key Factor

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Profit Motive the City's Upmc Suit Will Turn on One Key Factor

Article excerpt

Perhaps the most surprising thing about Pittsburgh's challenge to UPMC's tax-exempt status is not that Mayor Luke Ravenstahl decided to do it, but that he decided to do it now.

Having just made the decision not to run for re-election, he is now a lame duck 10 months before his term expires. It's unlikely that such a court battle will be concluded on his watch, so it will have to be picked up and waged by his successor.

Still, this is a fight worth having.

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The law firm hired by the city to handle the case, Strassburger McKenna Gutnick & Gefsky, will have its work cut out for itself. Finding a way to make large, successful nonprofits pay their fair share for public services has been an issue in Pennsylvania for years. No state law or payment-in-lieu-of-taxes formula exists to address the situation in a fair and systematic way.

Then last April a state Supreme Court decision changed everything. The justices ruled 4-3 that a summer camp in Pike County run by an Orthodox Jewish school did not deserve tax-exempt status, giving taxing bodies fresh impetus to question in court whether nonprofits with sizable property holdings meet the test of state law.

UPMC, as most Pittsburghers know, is the region's dominant health care network and Allegheny County's largest property owner. Along with its subsidiaries, UPMC owns $1.6 billion in land and buildings, 86 percent of it tax-exempt. Although other large nonprofits have significant untaxed real estate holdings -- for instance, the University of Pittsburgh, with $1 billion worth; Carnegie Mellon University, $412 million; and Duquesne University, $253 million -- UPMC, as a corporate entity, is in a class by itself.

With 55,000 workers, it is the largest employer in the state. UPMC runs more than 20 hospitals and 400 outpatient sites in Western Pennsylvania and has operations in seven countries, calling itself a $10 billion global health enterprise. UPMC's headquarters is not on a hospital campus, but in Pittsburgh's tallest office building. Its CEO makes $5.9 million, more than 20 employees are paid $1 million or more and it has a corporate jet.

At the same time, UPMC has a reputation for delivering quality care -- at top-notch facilities and by skilled personnel. …

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