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Nonprofits told to justify tax exemption

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By Bobby Kerlik
Tuesday, March 5, 2013, 9:17 p.m.

Allegheny County nonprofits that own tax-exempt properties will likely receive one or more of 2,800 letters this week asking them to prove to the Office of Property Assessments that they deserve the tax break.

The letters are part of a review promised by County Executive Rich Fitzgerald to examine whether all nonprofits meet the criteria for property tax exemption. Fitzgerald has said he wants to ensure that the 2,800 properties off the tax rolls deserve to remain so.

“The Office of Property Assessments has not done a good job of keeping records and when I was on council we were frustrated about why or why not some properties were eligible. A property may have been given a tax-exempt status but changed,” Fitzgerald said. “We're trying to tighten that up. Parcel owners are getting these letters to basically respond why they're tax-exempt.”

The nonprofits must fill out a three-page application and explain why the property meets a 2012 state Supreme Court decision that qualifies them for tax exemptions as a public charity.

Mike Hepler, president and CEO of the Boys and Girls Clubs of Western Pennsylvania, said he's confident that his group's 11 buildings in the county will continue to maintain their tax-exempt status. The organization has received letters for six of their buildings, he said.

“At the onset, it's somewhat of a burden, but what isn't?” Hepler said. “They're doing their job. It's part of their responsibility to make sure organizations like ours are in compliance. I have no hostility for the process.”

UPMC spokeswoman Susan Manko called the process “cumbersome and time-consuming.

“An important point to remember is that 97 percent of our tax-exempt properties are hospital campuses, each operating as an ‘institution of purely public charity,' unquestionably meeting all requirements for tax-exempt status,” she said.

Other groups are fighting to keep their exemption.

Junior Achievement of Western Pennsylvania president Dennis Gilfoyle is challenging the county's denial of tax-exempt status for a vacant lot in Munhall the nonprofit owns. It has a court hearing this month. The group also is appealing the property assessment, which jumped from about $350,000 to $3.8 million.

“We haven't gotten our letter yet but I would say, generally speaking, it can be a burden,” Gilfoyle said. “You throw this at us and it gets in the way of getting to the heart of our mission. It doesn't help us serve our mission.”

Fitzgerald says he's enforcing a 2007 ordinance passed by County Council that demands a review every three years of all tax-exempt properties.

“That's fair for everybody,” said Councilman Bill Robinson, D-Hill District. “As long as it's the same for everybody.”

Nonprofit tax breaks have been a contentious point. County Council held a hearing in December to seek input on UPMC's tax-exempt status on many of its properties. UPMC contends it pays property taxes on 49 percent of its land.

Controller Chelsa Wagner said last year that the value of all tax-exempt property in the county totaled $16.7 billion and estimated that the county would have gotten $95 million had those owners paid property taxes.

Councilwoman Heather Heidelbaugh warned her colleagues in December that the county's scrutiny of the tax-exempt status resulted in Moody's Investors Service recording the move as a “credit negative” for the county's nonprofits.

Moody's wrote that it causes tension between nonprofits and local government.

Bobby Kerlik is a staff writer for Trib Total Media. He can be reached at 412-320-7886 or

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