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Going Through the Motions: Dec. 18, 2007 

"Pittsburgh Promise" turns sour for UPMC and council

We should have seen it coming. Anytime you have the mayor, the school superintendent and officials at UPMC gathered together, shaking hands, and announcing a landmark charitable agreement, alarm bells should go off in your head.

Thus, the announcement on Dec. 17 -- that UPMC's much-celebrated $100 million pledge to the Pittsburgh Promise scholarship fund came with conditions -- shouldn't have been a surprise. The 24 hours that followed shouldn't have been surprising either.

As part of its commitment to provide "matching funds" of $100 million to the Pittsburgh Promise over 10 years, UPMC wants a promise of its own. First, the "gift" is being made in lieu of any voluntary tax payment to the city. Second, if the state legislature ever requires nonprofits to pay municipal taxes, UPMC either wants to be exempt from the tax or be able to opt out of its pledge to the Promise. In theory, students in college on the Promise could lose their funding if UPMC were to opt out.

At roughly 10 a.m. on Dec. 17, legislation was sent from the administration to city council granting that concession. Mayor Luke Ravenstahl also sought an expedited process in which a preliminary vote on the deal would take place the following day, with a final vote happening at council's year-end meeting on Dec. 27. Some council members were ticked at the deal being rammed down their throats, and community activists scrambled to secure a public hearing.

Indeed, after lengthy discussion and several comments made by outraged members of the public on Dec. 18, it became obvious that the agreement would not be approved so quickly. Council agreed to hold the matter for a public hearing, which is unlikely to occur before year's end, meaning three new members of council will be on hand to make the decision.

The heated debate got off on the wrong foot when UPMC's general counsel, Robert Cindrich, told council that "you shouldn't look a gift horse in the mouth." Cindrich said UPMC wanted to make the gift but didn't want to "pay it twice" in the form of taxes.

Shadyside resident Jeanne Clark said UPMC is "confusing charity with extortion." Other residents wondered if this deal was hatched "back on the golf course over the summer," referring to Mayor Ravenstahl's participation in a charity golf tournament earlier this year; UPMC helped pay his admission.

Councilor Bill Peduto told Cindrich that UPMC's gift to the Pittsburgh Promise should have no bearing on payments to the city.

"The Pittsburgh Promise is not the city of Pittsburgh," Peduto said. "The Pittsburgh Promise is a charity the same as the Salvation Army or the Jubilee Kitchen.

"If we approve this, we're setting a dangerous precedent. It's the same thing if Giant Eagle goes out and feeds the poor and then says, 'We don't have to pay our taxes.'"

In fact, because it is a matching gift, UPMC's initial $10 million installment to the Promise only takes place if another $15 million is raised elsewhere. That could be dangerous in two ways. First, the scholarship fund has barely raised a penny. Second, other nonprofits could kick into the Promise fund, and then decide they didn't want to make payments to the city either.

"What this is about is our friends at UPMC hedging their bets," said Council President Doug Shields. "Well, who the hell is covering the bases for the city of Pittsburgh?" 

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