Another Salem’s lease question …

Another Salem’s lease question …

We’ve uncovered a bit of mystery in the Urban Redevelopment Authority (URA) of Pittsburgh’s lease with Salem’s Market and Grill, coming soon to the old Hill District site of the heavily publicly subsidized and failed Shop ‘n Save.

The URA and Salem’s agreed to terms of a 20-year lease last month. It’s filled with all kinds of taxpayer-subsidized abatements and the conveyance, for $1, off all kinds of grocery store equipment.

But one part of the lease still has us scratching our heads: A three-month abatement on property taxes at the site.

The URA is a tax-exempt organization. Thus, it is exempt from paying property taxes. But the lease has Salem’s paying property taxes. Why?

We posed the question to the URA.

“This is a commercial non-charitable business operating at the site,” Matthew Santiago, an associate counsel at the URA, wrote in an email. “This is not the site of URA operations [and Salem’s] is therefore subject to paying property taxes.”

OK. But that doesn’t jibe with how the property tax question is handled with Pittsburgh’s three major sports teams — the Steelers, Penguins and Pirates – as the Allegheny Institute’s director of research recounts.

“Outside of institute work over the years that has said there are no property taxes being paid” – neither by the sports teams nor the Sports & Exhibition Authority (SEA) and the Stadium Authority – the properties are not listed in the 2020 Allegheny County or City of Pittsburgh Annual Financial Reports on the list of principal taxpayers,” says Eric Montarti.

And he notes, from the 2015 City Controller’s report on revenue from SEA and Stadium Authority property, under the heading “Real Estate Taxes”:

Because the SEA and Stadium Authority are public authorities, they are exempt from paying both real estate property tax and real estate transfer tax. As long as the SEA and Stadium Authority owns the land, even if it is leased to a sports team, it does not have to pay real estate taxes. Until the property owned by the SEA and Stadium Authority is sold to a private business or individual, no real estate taxes are paid.

So, what’s up? If the sports teams are not paying property taxes – and they are not — why is Salem’s being asked to pay property taxes?

And though operating under the aegis of different authorities, are not the sports teams also “commercial non-charitable” businesses?

Why would these authorities treat their tenants differently?

We’ve asked the URA for an explanation and we’ll keep you apprised.

All this said, don’t mistake our questioning as some kind of opposition to Salem’s paying property taxes at its coming Hill District site. That certainly takes some, but not all, of the sting out of it being given limited abatements on some financial responsibilities that, by any calculation, are taxpayer subsidies.

And just think of the possibilities for the public kitty if the sports teams were paying property taxes, too.

As Montarti notes, the assessed values of Heinz Field, PNC Park and PPG Paints Arena are, respectively, $608 million, $457.7 million and $212 million.

The teams were asked to pay money in lieu of property taxes in 2007 but that was met with no response. No surprise there.

That said, the teams do pay Pittsburgh’s amusement, payroll, wage and local services taxes in addition to facilities usage fees. And they once paid the since-eliminated business privilege tax.

But, again, the question remains why Salem’s will be paying property taxes while the Steelers, Penguins and Pirates do not.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).