Gainey challenges UPMC, Pitt property tax exemptions

Mayor Ed Gainey will challenge the tax-exempt status of six UPMC properties and one Pitt property, among others, he announced Tuesday morning. 

“I issued an Executive Order on January 24th, and already the Law and Finance departments have identified properties that are not paying their fair share,” Gainey said in a press release. “The next step is for the Office of Property Assessments to review our challenges and make a determination. We hope they will move expeditiously to make them pay.”

Gainey launched a review of tax-exempt properties in Pittsburgh earlier this year, noting that 34% of property in the city was designated as tax-exempt — much of it due to claimed charitable exemptions. In Pennsylvania, properties are exempt from property taxes if they are owned by institutions of purely public charities. 

A 2022 report from the offices of the city and county controllers found that UPMC reduced its property tax liability by $58.3 million to all local governments and school districts in 2021, and Pitt reduced its overall property tax liability by $33.1 million the same year. 

Gainey released a list of 26 properties whose tax-exempt status the city will challenge. The six UPMC properties listed are all at the same address, according to County records — 3600 Forbes Ave., the site of Forbes Tower in Oakland. City Solicitor Krysia Kubiak said at a press conference Tuesday morning that these properties are office spaces, though they are recorded as condominium units in the County system. 

Gainey also placed one University-owned property on his list of challenged exemptions — 3537 Allequippa Street, the site of a parking lot commonly known as the OC Lot. The lot provides parking to faculty, staff, students and visitors. 

Jared Stonesifer, a spokesperson for the University, said Pitt is “confident” that it meets the requirements for a purely public charity. 

“Our conversations with the mayor and his team are active and ongoing — on this topic and many others,” Stonesifer said. “We are confident that the University of Pittsburgh meets the requirements spelled out for tax exempt properties.” 

Paul Wood, vice president and chief communications officer of UPMC, said in a statement that each of the parcels owned by UPMC “have all been previously approved for their tax-exempt status as they support UPMC’s charitable mission of serving our patients, members and communities.” 

“The City of Pittsburgh is aware of UPMC’s ongoing support and the multitude of our investments in the City, and that it can count on our full participation in fair and equitable programs that include the region’s other major nonprofits,” Wood said. “The vibrancy of Pittsburgh — as well as all the communities we serve throughout the Commonwealth — is of utmost importance to UPMC.”

Besides UPMC and Pitt, Gainey also named properties owned by Carnegie Mellon University, Allegheny General Hospital, some smaller nonprofit organizations and several private citizens. In all, Kubiak said the City could recover about $3.5 million in tax revenue. 

In the press release, the Mayor’s Office said the City “believes that these owners do not meet the purely public charity test and/or the property does not serve a charitable purpose.” 

To pass the purely public charity test, property owners must meet five criteria set by the Pennsylvania Supreme Court in 1985. They must advance a charitable purpose, donate or render gratuitously a substantial portion of their services, benefit a substantial and indefinite class of persons who are legitimate subjects of charity, relieve the government of some of its burden and operate entirely free from private profit motive. 

At Tuesday’s press conference, Gainey said institutions not living up to their obligations as purely public charities “need to pay their fair share.” 

“We have bridges that we have to take care of, we have roads that we have to take care of, we have public safety that we have to take care of,” Gainey said. 

The Mayor’s Office said the City’s law and finance departments have reviewed 10% of tax-exempt property in the City — not counting property owned by the government or owned by churches — and hope to finish the full review by March 2024.