Skip to Navigation
University of Pittsburgh
Print This Page Print this pages

March 8, 2007

City ponders nonprofit fees

City officials are considering establishing a formula under which nonprofit institutions in Pittsburgh, such as Pitt, would pay annual fees in lieu of taxes. Currently, the University is part of a consortium formed in 2005 that contributes voluntarily to the city’s coffers as a trade-off for their property tax-exempt status.

Under a deal brokered by the mayor’s office in August 2005 between the city and the nonprofits’ umbrella group, the Pittsburgh Public Service Fund, composed of more than 100 universities, hospitals, foundations and other charities, agreed to pay a total of $13.25 million over three years.

Under the contract, contributors then were freed from existing agreements they had with the city to make payments in lieu of taxes. Prior to the establishment of the service fund, Pitt had made payments to the city voluntarily for years for some city services such as fire protection.

The public service fund contract runs out at the end of 2007, and the future of the fund is uncertain.

“We’ve not made a decision on that,” said Rev. Ron Lengwin of the Catholic Diocese of Pittsburgh, who is the service fund’s spokesperson. “We were pretty firm about the fact that it would be for three years.”

He added that the nonprofits had no obligation to contribute anything after this year.

That leaves city officials, who have budgeted for $5.7 million in tax-exempt institutions’ donations in 2008, scrambling to make up anticipated revenues from the fund, which this year are expected to total $4.2 million.

Among the proposals floated by city officials are:

• Tying annual donations to a percentage of an nonprofit institution’s property values or of its net revenues;

• Limiting the nonprofits that would pay annual fees to universities, hospitals and insurers, but making payments state-mandated based on the size of their payrolls;

• Urging the state to reimburse some lost revenue to the cities, which have disproportionate amounts of tax-exempt property due to the large number of nonprofits within their borders, and

• Convincing the service fund to both extend its operation long-term beyond 2007 and establish a formula for what individual institutions donate.

G. Reynolds Clark, Pitt vice chancellor for community initiatives and chief of staff in the Office of the Chancellor, said the consortium was set up with two things in place: that it would have a three-year agreement and that donations by member institutions would be kept anonymous.

An article published in the Feb. 20 Pittsburgh Post-Gazette, citing “public disclosure, interviews and documents obtained by the Post-Gazette” — reported that Pitt had given $800,000 to the fund in 2005, the first year of the three-year agreement.

Clark, who serves as vice chair of the service fund consortium, said that he would neither confirm nor deny that the published amount is accurate. “That was the agreement we made going in, that the members of the Pittsburgh Public Service Fund would not make public any of their contributions, and we’re sticking to that. We made it public when this began that the agreement would call for a total donation of $13.25 million over the three years,” he said. “The University has done everything to honor its commitment.”

Should the service fund dissolve operations, Pitt has not determined what action, if any, it will take, Clark said. “At this point there have been no discussions about what might happen after [the end of the agreement].”

—Peter Hart

Leave a Reply