Most nonprofits that own land are eager to avoid paying property taxes, and UPMC -- the biggest private-sector beneficiary of tax-exempt status in Allegheny County -- is no different. But in a rare move, UPMC this year guaranteed South Fayette a steady flow of money on a parcel it is buying from the township for an $18.5 million branch of Children's Hospital of Pittsburgh of UPMC, even though the land could become tax-exempt.
By voluntarily agreeing to pay South Fayette the equivalent of taxes on 50 percent of the assessed value of the property, the $10 billion nonprofit is entering into a contract so unusual that only one other tax-exempt facility in its expansive multicounty network has a similarly structured arrangement -- UPMC Hamot in Erie, Erie County.
Having two deals for the same amount -- 50 percent of the assessed value -- occur in the last year certainly caught the eyes of Allegheny County and Pittsburgh officials, who are constantly seeking new revenue sources.
"It's something we are taking a look at," county Executive Rich Fitzgerald said recently. "We are working on it, and it does make sense. The 50 percent area seems to be about fair. There's a lot of valuable land that's now off the tax rolls."
The hospital system owns nearly $1.4 billion in tax-exempt property in Allegheny County -- $1.2 billion of it in Pittsburgh.
If UPMC were to sign the same type of 50-percent Payment In Lieu Of Taxes agreement on only its new Children's Hospital in Lawrenceville, valued at $308 million, the city, county and school district could reap a combined $4.7 million a year.
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