Editorial: Limit UPMC tax exemptions

UPMC should pay taxes on land not being used for health purposes.This week, the Pittsburgh Post-Gazette published several stories by reporters Sean Hamill and Jonathan Silver detailing UPMC’s vast empire of land holdings and property tax exemptions.

The hospital system owns $1.4 billion of tax-exempt property in Allegheny County or 8 percent of all the county’s exempt land. As a nonprofit organization, it avoids $42 million in taxes a year toward municipalities, schools and the county.

Perhaps most shocking is that nearly 37 percent of its properties aren’t even used for health-related purposes, but instead, are being used for parking or are simply sitting vacant.

Therefore, with local governments’ budgets in complete disarray and having never fully recovered from the loss of tax-paying industries, it is time to ask why these non-health-related properties aren’t being taxed.

The conglomerate’s tax exemptions only exist because, as a non-profit, the organization creates benefits for the community beyond a typical business organization. UPMC heals people and helps create a healthier, more vibrant population.

So despite how hospitals put a strain on public services and infrastructure, it is justifiable to allow some exemptions to continue. The organization also donates considerably to local charities, including an annual grant to the scholarship-granting Pittsburgh Foundation, further bolstering their exemption status.

But the last time we checked their parking lots and vacant properties haven’t cured anyone of cancer.

Unlike the legitimate operations of UPMC, the vast, tithe-like land holdings scattered throughout the county do not contribute to the public good. They are the vestiges of a uniquely UPMC business strategy in acquiring massive amounts of land to allow flexibility in future expansions.

The practice is uncommon, as hospital chains don’t typically need land holdings to administer health. Gerard Anderson, director of the Center for Hospital Finance and Management at Johns Hopkins Bloomberg School of Public Health, called the practice “unusual” in the Post-Gazette story and believed there weren’t many centers “buying things for expansion and just holding them like that.”

Since the land isn’t going toward charitable use, and since the land isn’t required for UPMC to achieve its goals, these land holdings should be taxed.

To illustrate the effects of taxation, consider the largest non-health-related UPMC land holding in the Oakland area: the site of the former Syria Mosque concert hall, which is now the parking lot behind the Pittsburgh Athletic Association between Bigelow Boulevard and Lytton Avenue.

When UPMC purchased the site in 1991, the city, county and school district received $66,535 a year in property taxes. The acoustically perfect hall, while in need of renovation, still brought visitors and residents to Oakland.

Since then, no taxes have been paid for the land. Instead of acting as a neighborhood stimulus, the land still sits as an unproductive parking lot. As Oakland grows, with Class A office vacancies well above 95 percent — “literally, totally full,” according to Pittsburgh Business Times — UPMC faces no tax incentive to dump the property.

The Syria Mosque story is repeated throughout the city. And while the overall hospital system contributes greatly to the health of the region, tax-exempt land holdings are a black mark on the organization’s record. It’s time for UPMC to pay up.