Peduto hopes to reach contribution deal with nonprofits by year's end
Pittsburgh Mayor Bill Peduto said he hopes by year's end to complete an agreement with the city's largest nonprofits that would pay for chronically underfunded needs including infrastructure upgrades, employee pensions and housing in poor neighborhoods.
In an interview with Tribune-Review editors and reporters Thursday, Peduto said he was negotiating with the “Big Four” — Carnegie Mellon University, Highmark, University of Pittsburgh and UPMC — which together he said employ most of the people working at city nonprofits.
He wants an agreement with the nonprofits to last 10 years that would provide much more than the $5.2 million nonprofits provided as payments in lieu of taxes in 2012 and 2013 under a previous pact.
He said nonprofit leaders aren't willing to pay for daily operating expenses but would consider contributing to street paving, technology and housing and improvements to poor neighborhoods that could spread benefit across the city where many nonprofit employees work and live.
“We're looking at something much more significant for a long-term basis ...” Peduto said. “By getting the Big Four to the table to agree to this, we're basically getting the majority of the nonprofits there, but the rest need to be a part of it, too.”
Some nonprofit representatives confirmed they are in discussions with Peduto's office.
“UPMC will participate in whatever scheme the city can come up with as long as it is fair and equitable and includes all the other nonprofits,” UPMC spokesman Paul Wood said.
Reynolds Clark, chief of staff to Pitt Chancellor Patrick Gallagher, said the university is looking for a way to partner with Pittsburgh.
“We say all the time the city is our campus, and the University of Pittsburgh wants to have a vibrant, quality-oriented growing community in which we reside,” Clark said. “We want to look for ways that we can collaboratively help the city administration move forward in significant arenas.”
That willingness is a significant change from July when Clark said he had no information about efforts to work with city officials.
The talks between the city and nonprofits were nonexistent earlier this year before Peduto in July dropped a lawsuit filed in 2013 before he took office that challenged the tax-exempt status of medical giant UPMC, Pennsylvania's largest employer. It was difficult to negotiate with “guns pointed at each others' heads,” Peduto said at the time.
“Between the lawsuit and tuition tax (proposed by former Mayor Luke Ravenstahl) nonprofits walked away from the table,” Peduto said.
He previously said he wanted $20 million a year from nonprofits, but later said the amount was negotiable. He said Thursday that he hoped the nonprofits' contribution to the city would be “double or triple” the roughly $8 million a year that a proposed 0.5-mill real estate tax increase he is proposing for 2015 would generate.
Peduto said the tax increase is necessary to help offset a $35 million deficit caused by higher pension payments, a 2013 tax rate decrease triggered by a countywide property reassessment and employee benefit and debt service costs.
He said the property tax rate decrease from 10.8 mills to 7.56 mills led to a loss of about $7.3 million a year in real estate tax revenue. If City Council and the city's state-appointed financial overseer approve, the new millage rate would total 8.06 mills in 2015. The city also lost revenue because of decreased annual payments from entities such as Pittsburgh Allegheny County Thermal, a nonprofit established in 1983 to provide steam heat for Downtown buildings, including government offices in the City-County Building and Allegheny County Courthouse on Grant Street.
The company paid Pittsburgh about $600,000 a year for the right to use public rights of way and had been overpaying the city for years, Peduto said. The city agreed to waive future fees. In return, Pittsburgh Allegheny County Thermal dropped claims that it had been overpaying.
Bob Bauder is a staff writer for Trib Total Media. He can be reached at 412-765-2312 or email@example.com.