Pittsburgh’s robust nonprofit sector is a huge driver of the economy, but because nonprofits are exempt from paying real estate taxes, the city has long sought ways to compensate for that lack of revenue.
Now, Mayor Bill Peduto has an agreement with the city’s four biggest nonprofits — UPMC, Highmark Health, Carnegie Mellon University and the University of Pittsburgh — to contribute $115 million over a five-year period through a new entity called OnePGH.
“Now, more than ever, we know that to solve the massive needs facing our city we need the corporate community, foundations, nonprofits and government to work together,” says Mayor Peduto. “We also know that this model works, and will continue to deliver real help to Pittsburgh residents for generations to come.”
The nonprofit organization has ambitious goals that include expanding access to affordable housing, strengthening social safety nets, replacing all lead service lines, ensuring pre-K education for all children, planting 100,000 trees and removing 2 billion gallons of stormwater from sewers by investing in green infrastructure. OnePGH also plans to fight climate change by eliminating waste, reducing energy use in buildings and cutting greenhouse gases by 50%.
For years, the city has been seeking ways to get its tax-exempt nonprofits to contribute more to its coffers. Pittsburgh’s previous mayor, Luke Ravenstahl, went as far as to sue UPMC to end its charity status — figuring that if UPMC paid taxes, the city could get about $20 million annually from them alone. Peduto dropped the lawsuit in 2014 in favor of a more collaborative approach.
Nonprofit contributions to the city budget totaled $492,842 in 2020, and approximately $2.5 million over the past five years, according to the administration.
NEXTpittsburgh first wrote about OnePGH in 2017, and efforts to build the nonprofit began years earlier. Last year, OnePGH participants started work on Project Cares Pittsburgh, which brought together the corporate community, hospitals, government entities and philanthropic organizations to build and support a $21 million homeless shelter in Downtown Pittsburgh.
UPMC will invest $40 million in a new affordable housing program and commit $5 million a year to other OnePGH initiatives (in addition to $6.75 million for Project Cares).
Carnegie Mellon University will invest $4 million in community recreation, arts projects, and entrepreneurship programming, as well as STEM, arts and humanities resources for K-12 teachers and students.
Highmark Health ($5 million per year) and the University of Pittsburgh ($8 million) will also be major supporters. Pitt’s contribution will support existing programming and services such as the Community Engagement Centers in the Hill District and Homewood. In addition, there is support from The Heinz Endowments, Hillman Family Foundations and the Richard King Mellon Foundation.
Another OnePGH initiative is the Community Development Financial Institution from the Urban Redevelopment Authority of Pittsburgh, which provides money and technical assistance to small businesses and affordable housing programs. It’s supported by $17 million from the PNC Foundation, Citizens Bank and F.N.B.
State Representative Ed Gainey, who is running against Mayor Peduto in the May 18 mayoral election, objects to the plan.
“For seven years since the Peduto administration dropped the lawsuit challenging UMPC’s tax-exempt status, no progress was made on securing a payment-in-lieu-of-taxes,” Gainey writes in a statement on Twitter.
“Now, in the final weeks of an election where Pittsburghers are standing up and demanding a Mayor who will fight to make UPMC pay their fair share, UMPC comes to the table with a surprise announcement that they’ll make voluntary contributions much smaller than what they’d owe in taxes to an unaccountable slush fund controlled by the Mayor. If UPMC paid city and school district taxes, they’d owe our communities $40 million per year.
“This agreement is $135 million too little, 7 years too late.”