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Voters support challenge of UPMC

| Tuesday, April 9, 2013, 12:06 a.m.

Pittsburgh's challenge of UPMC's nonprofit status has the support of an overwhelming majority of likely voters, a Tribune-Review poll of registered Democrats in the city shows.

The poll conducted by Susquehanna Polling & Research of Harrisburg found that 76 percent of those voters support outgoing Mayor Luke Ravenstahl's bid to strip the health care giant's property and payroll tax exemptions.

UPMC is “too much like a business,” said Harriet Webb, 63, of Lawrenceville, who participated in the poll. “I just think they shouldn't be exempt.”

The survey of 400 likely voters conducted on April 1 and 2 had a margin of error of 4.9 percentage points. Democrats make up 73 percent of voters in Pittsburgh, according to the Allegheny County Elections Division.

The poll found 15 percent oppose the UPMC challenge. Ten percent were undecided. The numbers don't add up to 100 percent because of rounding.

UPMC spokesman Paul Wood called the poll one-sided and said the challenge “sets the city back.”

“It's going to cost taxpayers millions of dollars for a lawsuit it cannot win,” Wood said.

Ravenstahl said taxpayers should no longer subsidize UPMC, a $10 billion hospital system that is Pennsylvania's largest employer and the region's richest nonprofit. The city sued in Common Pleas Court to force UPMC to pay the city's payroll tax and challenged the tax-exempt status of its 150 properties in the city before the Allegheny County Board of Property Assessment Appeals.

“Since our decision to challenge UPMC's status as an institution of purely public charity, we have received overwhelming support from the community,” Ravenstahl said in a written response to the Trib's poll. “We are pleased that so many agree with our decision to pursue what we feel is right.”

Although Ravenstahl won't see the challenge through, three candidates vying to replace him support it.

City Councilman Bill Peduto, 48, of Point Breeze, former state Auditor General Jack Wagner, 65, of Beechview, and community activist A.J. Richardson, 36, of Sheraden said they agree with Ravenstahl's assessment that UPMC doesn't qualify as a charity under state law.

State Rep. Jake Wheatley, 41, of the Hill District, is running for mayor and has said he prefers to negotiate with UPMC rather than take an adversarial approach.

Ravenstahl has estimated that if UPMC paid the 0.55-percent payroll tax and property taxes on land that's exempt, Pittsburgh would net about $20 million a year.

The city's challenge centers on a five-point test, known as the “HUP test,” that Pennsylvania courts use to determine whether a nonprofit qualifies as a “purely public charity” under state law. The state Supreme Court has ruled that an organization must pass all five points:

• Advance a charitable purpose

• Donate or give away a substantial portion of its services

• Help a substantial and indefinite class of people who are legitimate subjects of charity

• Relieve the government of some of its burden

• Operate entirely free from private profit motive

Ravenstahl says UPMC's practices are not free from private profit motive. UPMC argues that doesn't mean the organization can't make a profit.

“Organizations that don't do that go out of business,” Wood said. It means, he said, that profits should be reinvested in the organization, not distributed to shareholders or others.

George Dougherty, an assistant professor at the University of Pittsburgh Graduate School of Public and International Affairs, cautioned that determining UPMC's nonprofit status may not be clear cut. Its hospitals support the mission of a health care provider, he said. But other parts of the organization, such as technology subsidiaries, are clearly for-profit.

“I think the city also needs to be thoughtful in terms of whether or not it sets a precedent for other charitable organizations,” Dougherty said. “It does raise the question of where do we stop?”

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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