Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Tuesday, March 26, 2013

Pittsburgh looks to tax the Pittsburgh Medical Center

Many cities have eyed the idea of local universities paying property taxes.

Center cities have so much tax exempt property on their rolls that it becomes extremely difficult to raise revenue.  Property taxes on residents become onerous, which makes it that much harder to recruit and retain residents.  See "Cities ask tax-exempt groups to pay for services" from the Minneapolis Star-Tribune and "Tax-Exempt Properties Rise as Cities Cope with Shrinking Tax Bases" from Governing Magazine.

The concept of "payment in lieu of taxes" or PILOTs is a way for cities to get some extra revenue from nonprofits, especially universities, without setting the precedent of assessing a nonprofit property tax.

E.g., I thought that the University City District business improvement district was really interesting--it's funded by assessments willingly paid by the largest nonprofit organizations in the district, led by the University of Pennsylvania--but a Philadelphia-based colleague pointed out to me that they did it because they didn't want the precedent of a tax assessment that they would pay, even if it was for a service organization like a BID, rather than the city.

Providence, RI has proposed a tax on universities.  See "Tax-exempt Brown University to pay Providence $31.5M anyway" from Fox News.  From the article:

A Colonial charter from 1764 provides that Brown University be "freed and exempted from all taxes." That document was penned before a fiscal crisis seized Rhode Island's capital city.

So on Tuesday, after months of tense town-gown negotiations brokered by the state's governor, the Ivy League university agreed to make $31.5 million in voluntary payments to Providence over 11 years in lieu of taxes. ... Brown, whose red-brick campus dominates a hill in Providence's toniest neighborhood, is the city's largest and most prestigious landowner. It currently pays the city about $4 million a year: $2.5 million in voluntary payments and $1.6 million on commercial property not used for educational purposes or land it leases.

And the Wall Street Journal reports in "Pittsburgh Challenges Medical Center's Tax Status" that the City of Pittsburgh is looking to end the property tax exemption for the University of Pittsburgh Medical Center, which is the largest property owner and the largest economic institution based in Pittsburgh.

I do remember some financial shenanigan where cities or states would tax hospitals because they would be passed through to Medicare, but I can't remember if that loophole was ended.  Probably.

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At 11:35 AM, Anonymous charlie said...

There are levels of tax exemption

1. Federal income.
2. State income
3. Local Property
4. State/Local sales

I don't think we should taxing nonprofit income, and in any case that is easy to fudge (just pay profit out in salaries, which are taxed)

The case for local property taxes is a lot weaker. Taxing genuine charities for property would be harsh. Taxing hospitals/universities -- not so much.

I'd narrow the exemptions down on the local side, just as we have for sales taxes.

At 11:48 AM, Blogger Richard Layman said...

In DC, c4s might not get property tax exemptions. E.g., I looked into Heritage Foundation once, and they don't get a property tax exemption.


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