Incumbent Mayor Bill Peduto speaking with local news outside of the Sterrett Classical Academy polling location in Point Breeze. (Photo by Nick Childers/PublicSource)
In his first substantive interview since leaving the mayor’s office, Bill Peduto recalled his work on an innovative deal with nonprofits that ultimately stalled under successor Ed Gainey.
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Nonprofit contributions have reemerged as an issue in this year’s mayoral election campaign, as looming city budget shortfalls collide with the city’s decades-long quest to get its major tax-exempt organizations to help fill fiscal gaps. Both Mayor Ed Gainey and his Democratic challenger Corey O’Connor, the county controller, say they will press major nonprofits including UPMC to contribute more.
Peduto discussed his experience convincing major nonprofits to contribute to the OnePGH Fund, culminating in a deal announced in 2021, the last of his eight years as mayor. The interview is apparently his first substantive interview with a local news outlet since he left office.
Commitments to the OnePGH Fund were announced just before he stood for re-election in 2021. UPMC, Highmark, the University of Pittsburgh and Carnegie Mellon University agreed to invest a total of $115 million over five years, some of it through a nonprofit entity that would pursue projects the city government couldn’t afford.
Commitments included:
- $40 million by UPMC toward affordable housing
- Pitt investments in community engagement centers, green infrastructure and programs for seniors
- CMU spending on a variety of educational initiatives
- UPMC and Highmark support for the Second Avenue Commons shelter, Downtown
- Direct funding from all four to OnePGH.
The OnePGH Fund didn’t please everyone. His political foes criticized the idea of passing the money through a nonprofit organization rather than the city’s own budget. But Peduto said last week that the deal was a breakthrough that surpassed previous mayors’ efforts and could have built goodwill with nonprofits to seed a long-term arrangement.
“I think there was an incredible opportunity to create something different in 2021 and 2022 that could have gotten a lot more people involved, not just the big four nonprofits,” Peduto said.
After Peduto lost his re-election bid, Gainey pulled the city out of the OnePGH Fund and launched a set of legal challenges to the tax exemptions on many of the organizations’ properties. That strategy has yet to yield substantial results, so far yielding just $47,000 more than it has incurred in legal costs, and Gainey has been unable to nail down agreements with nonprofits for voluntary payments.
Peduto said litigation has been tried unsuccessfully before.
“This method was proven to be a failure,” he said, referencing the lawsuit former Mayor Luke Ravenstahl filed to challenge UPMC’s nonprofit status in 2013. He said he found that the nonprofits would hesitate to engage with the city while the city was actively contesting their tax-exempt status. “We wanted to create something that would bring them in.”
Gainey called the OnePGH commitment “too little” and “too late” when it was announced and questioned its timing so close to the election. But Peduto said he began work on the project early in his first term, and blamed delays on the nonprofits, while attributing the timing of its successes to national events.
“Whenever we would get into an agreement with one or two, it would get stopped by the others that were outside suggesting that it wasn’t enough … that went on for years,” he said. “We were trying to create something that wasn’t destined to fail.”
He said the cycle was broken by the upheaval of 2020 when the COVID-19 pandemic shook the world and protests following the murder of George Floyd captured the nation’s attention.
‘Big 5’ nonprofits receive $34.5 million in city property tax exemptions
A 2022 report from the City of Pittsburgh and Allegheny County controllers showed how much money the organizations would owe if state law did not grant them exemptions.
| City taxes exempted/abated | ||
|---|---|---|
| UPMC | $1,425,031 | $13,935,575 |
| Highmark/AHN | $529,960 | $2,138,961 |
| University of Pittsburgh | $452,468 | $11,633,766 |
| Carnegie Mellon University | $270,105 | $3,551,821 |
| Duquesne | $25,671 | $3,265,421 |
| Total | $2,703,235 | $34,525,543 |
“I believe that in 2021 they finally realized the necessity of doing something,” he said. “I believe that really came out of the voices and actions of the murder of George Floyd and Black Lives Matter.”
He said prior to 2020, “conversations regarding money were secondary. By spring of 2021, the conversation was focused solely on money.” He credited UPMC’s commitment of more than $50 million as a key in getting the other nonprofits onboard.
The country is in a vastly different place than it was in 2021, and Peduto would not guess if the nonprofits are just as willing to contribute to city priorities now as they were then. But he repeated that the aggressive tactics employed by Gainey and some previous mayors will not work.
“There has to be a two-way discussion on this,” he said. “The state law states that no municipality can tax any nonprofit. But the nonprofits recognize that they’re a part of this community … I think [the next mayor] would find willing partners in the nonprofit community and especially in the ‘big four.’”
In a role reversal, Gainey is now locked in his own tough re-election fight and his opponent in the May 20 Democratic primary, O’Connor, has criticized him for failing to obtain major contributions from UPMC and other nonprofits.
Peduto said he will not make an endorsement in the primary, citing his move away from politics. He has posted on X a few times this year about O’Connor’s candidacy.
“It’s really within the character of both candidates who are able to work together with these four institutions in order to do something that will benefit Pittsburgh,” Peduto said. “That means leaving a lot of other issues at the side … And the creation of a fund outside of city government to help [residents] can only be done by a mayor.”
Charlie Wolfson is PublicSource’s local government reporter. He can be reached at charlie@publicsource.org.
This article first appeared on PublicSource and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.
