Tax Exempt Myopia

The City and County are justifiably working assiduously to assess and collect taxes from large non-profits that actually have for-profit operations or that do not meet the Supreme Court’s five part test to qualify as tax exempt. Too bad both the City and County have long supported and promoted some of the worst examples of tax dodging by for profit enterprises.

And what would that be? Think Heinz Field, PNC Park and CONSOL Arena to name three. With combined property value approaching a billion dollars, these structures represent over $25 million in foregone property tax revenues owing to the tax exempt status of the facilities.

Ironically, one of the complaints about UPMC has been the high salaries of some of its top officials. Why ironic? Consider the yearly pay of many of the athletes performing in the three venues. Several are well above the $5 million mark that has raised so much ire when attached to the head of UPMC. This is not to justify the UPMC head’s compensation. For a tax exempt non-profit, it is does seem out of touch with a prudent approach to pay.

But the point is that the teams and the players using the tax exempt facilities are in effect being subsidized by the low rent they pay to utilize them. If a market based rent were being paid, the total for the three facilities could be above $50 million year, some of which would be used to pay taxes if the facilities were not tax exempt. So, the taxpayers get hit twice. They put up the preponderance of the money needed to build the structures, get no property tax revenue and pittance for rent.

Now that is a sweet deal.