Friday, August 31, 2007

Arena Benefits Issue Moving [CORRECTED]

"We're going to work to a consensus for one community benefits agreement that will cover the whole Hill District," [Dan Onorato spokesperson] Mr. Evanto said.

Mr. Ravenstahl said he believes the city has been doing a good job of getting community input about the new arena.

Emphasis ours. Ladies and gentlemen, that is a contrast. The Mayor has not yet uttered the three magic words publicly.

This lies within a P-G Ann Belser article of yesterday, and it aligns perfectly with the rhetorical support we have heard for months from the County Executive.

Mr. Onorato, Mr. Ravenstahl, Ms. Conturo and the One Hill negotiating team are scheduled to meet again next Thursday.

Things should start moving fast. Carl Redwood and the rest of One Hill would prefer to wrap this up in a gentlemanly manner, before it goes to City Planning.


The New Pittsburgh Courier and its own battle cat, Christian Morrow, issue a provocative headline: One Hill or One Hot Mess?

It plays up divisions between a supposed Sala Udin camp and a Tonya Payne camp, and also among forces outside the coalition. It runs some pretty discouraging quotes.

County Councilman Bill Robinson said the coalition itself is too inclusive.

"Who is 'One Hill'? People who live in the Hill, work in the Hill or walk through the Hill -- who qualifies?" he asked. "One Hill is going to have to structure itself a little tighter to get things done. With 100 groups, it could implode internally and lose focus entirely."

Aside from being tactically daft -- Robinson represents the Hill District, which would very much like to display unity -- his statement is confusing because the process was extremely transparent.

The community was heavily leafletted and doorknocked, and all forms of stakeholders were welcomed. Priorities were discussed and voted upon at open meetings, and the negotiating team was elected by popular vote. (See CORRECTION below).

For the moment, maybe we should give Robinson benefit of doubt. Kimberly Ellis AKA Dr. Goddess was also quoted in the piece:

"It's totally corrupt and disgusting," Ellis wrote.

We contacted Ellis about this. She says that although she does not rescind her comments of the time, they were in reference to a very specific stage of the process. It was a very old quote, she explains, concerning an issue she is contented to move past.

She insists that her more recent comments to the Comet are more reflective of the situation today.


Redwood acknowledged there inter-group squabbling and that there is an entirely separate group purporting to represent the Hill District, but said the negotiating team has specific goals it is charged to pursue.

"We're close to being in the same book, but that's to be expected," he said. "That kind of dynamic actually moves things forward. Trying to outdo each other -- it's a healthy competition."

It is probably accurate to report that the level of negotiating ambition among the various players correlates closely with the depth of their previous involvement with the Penguins organization.

However, there is such wide and sharp acknowledgement that a fair C.B.A. must occur, and that rending the coalition would be so predictably depressing, that everyone is staying on board.

There are even some indications that the "nine renegade ministers" are not so estranged from the One Hill pack as yesterday's P-G piece might have indicated, although this remains unconfirmed.


CORRECTION / UPDATE: We received this clarification on process from a rep with Pittsburgh United:

The negotiating team was in deed elected. But the way the process worked was that the group submitted nominations to the exec committee and they put together a slate from that. The membership voted on the slate and approved it 49 for, 9 against, 3 abstain.

Upon approval, this "slate" became the nine-member negotiation team. Recall the executive committee was also elected by the membership. The Comet regrets the error.

Act 55 Hearing: The Non-Profits, and Thoughts

The P-G's Rich Lord on the hearing: LINK

The Trib's Jeremy Boren: LINK

UPMC chief financial officer Robert DeMichiei gave what seemed to be a perfunctory presentation. Like, let's not ruffle too many feathers, and just get off the stage quickly.

We did find it interesting that he did not once shy away from using the word "profit." The record $618 million profit was due to a change in accounting methodology, for example, that includes investments. That leaves only about $200 million in what they call "operating profit."

Although everybody was quick to acquiesce the brilliant work of UPMC, Ferlo in particular noted the profit-making functions: royalties, intellectual property, drug development -- and investments, he seemed to note darkly, "in South Africa."

When DeMichiei said that is all declared to the IRS, Ferlo responded that that's great for the Feds, but not so much for the city. When it comes to profit-making activity conducted on city property, "Maybe the City should go on a hunting expedition."

They also have the capability of making hundreds of millions of dollars in profit, based on research that was funded by the National Institutes of Health, and other public institutions.

DeMichiei conceded that UPMC does work very hard to make a profit -- in order to hire more people, make more capital investments, and maintain their physical plants.

Finally, a rep from the PA Association of Nonprofits opined that “change to Act 55 could make administration much more difficult”, since the major outfits contribute more to their overhead. It could force them to divert money from their interests.

He did not seem to be persuasive; he got lectures from the Senators on the need to maintain police and fire services.

Contrary to the impressions the Comet may have left yesterday, all four Senators seemed quite engaged and interested in actually changing Act 55. It was a good mix of Democrats and Republicans, which bodes well.

What we don't know is, where were the other seven members of the Finance Committee? Will they be acting similarly at the other hearings, held elsewhere in the state? Or did they blow it off because amending Act 55 is really a pipe dream?

Nonetheless, the Comet is now somewhat more optimistic about reform than we would have anticipated.

The consensus among media-types was a feeling of nostalgia upon seeing former City Councilman Jim Ferlo back in action. Notwithstanding the intermittent fireworks of today by Bill Peduto and maybe Jimmy Motznik, back in the day city council meetings were a lot more like Dragonball Z.

Apparently there was something called the "great vulval pain debates" involving Jim Ferlo and Alan Hertzberg, which sounds better than Cats.

Thursday, August 30, 2007

Act 55: The Lawyers & The City

We are attempting to live-blog at the public hearing. Much of the discussion is well above our pay-grade.

We see a good number of probable health care executives, and very few probable outraged taxpayers.

However, three newspapers brought high-profile representation, along with one television station. Michael Lamb and staff are checking things out. Hey, there's Rauterkus.

Thomas Boyle, BI&R:
"It fits under the adage: If it ain't broke, don't fix it."

"Governments are always looking for additional sources of revenue, and that's not the test."

Ed Weisgerber, K&LPGE: "Once you rip the can of worms in trying to define what a charity is, it gets very very confusing."

"The solution has worked so well with all my hospital clients, I just had another one call to say that wanted to 're-up' for another decade."

Sen. Ferlo: "I appreciate your sense of history -- if not revisionist history."

"In my view, Act 55 has been a total disaster."

"There's no dispute about the benevolence of UPMC or any of the other nonprofits ... the real kernel of the issue is the large percentage of tax exempt land."

"Nobody knows who's contributing how much. I guess you need a Ouija Board to figure it out..."

Scott Kunka, Ron Pferdehirt: Making a clear argument on behalf of city taxpayers. Act 55 has eliminated any incentives for the nonprofits to make payments in lieu of taxes. They are speaking really fast, but has a power-point presentation.

"City ambulances literally deliver customers right to their door."

Proposed solutions:

1) Mandate the creation of a permanent public service foundation, as opposed to simply allowing one if desired.

2) Empower the city to levy some portion of Property Tax and/or Payroll Expense Tax on non-profits.

3) Amend Act 55 to redefine the standards for qualifying as an "Institution for Purely Public Charity" (although there isn't much detail).

Tony Pokora: Lays out how much Act 55 is "costing" city real estate taxpayers -- according to his handout, $951.11 per year. Also lays out how that has been increasing.

His recommended solutions include revenue sharing on the model of Connecticut, with mandatory PILOT payments; again a mandatory Public Service Fund; city contracts with health care institutions, and other "city perks."

Another Senator (out of four) sounds very serious about amending the Act, but is less funny and grandstandy about it than Ferlo.

Wednesday, August 29, 2007

Final Notice. Save Your City. Please.

An otherwise brilliant P-G editorial meekly concludes:

Pittsburghers can only hope that UPMC, ever more successful and ever more profitable, will direct more of its abundance to aid the city that sustains it.

Ahem. We can do a lot more than hope.

Tomorrow, Thursday the 30th, from 9:00 AM until noon, the Pennsylvania Senate Finance Committee will hold a public hearing on State Act 55, the Purely Public Charities Act, right here in our City County Building.

Let us reflect on that title. What other purely public charity can compile $618 million in "excess margin" in a single year?

That's $618 million after a $3.3 million payout to the CEO, after million-plus payouts to at least six other executives, after all the acquisitions and investments, and even after the famously vital research and development.

That's 618 million reasons any sane individual should reconsider the definition of "purely public charity."


Let's leave class warfare out of it. We want UPMC to succeed. We want all of our hospitals and insurers and universities to succeed.

Or rather, we want to want them to succeed, but this poorly-written law is getting in the way.

It's brilliant that health care and academia are replacing long-gone heavy manufacturing industries, employing hundreds of thousands of citizens, and making great contributions to medicine and to humankind.

The problem is, a city simply cannot be expected to function if its primary economic activity falls outside of the tax rolls, outside of the commonweal. The equation does not compute. The center can not hold.

Under Act 55, we are systemically unsustainable.


UPMC and the rest do a lot for Pittsburgh, but let us state clearly: Pittsburgh does a heck of a lot for them in return.

We provide a safe city. We provide a clean city. We provide infrastructure. We provide plumbing. We provide a steady stream of literate, capable workers. We provide neighborhoods and a culture that allows these "non-profits" to attract the best talent in the world.

You will hear much talk tomorrow about how everything these institutions do is a benefit to the City of Pittsburgh. It will be a laughable overstatement, but one they have made straight-facedly before.

Rather than focusing on everything they do for themselves, we should emphasize everything we do for them in return.

Pittsburgh and its hospitals, health insurers, and universities are symbiotic. We should be moving forward together. We should be moving forward as partners, as equals.

We should not be moving forward as nobles and serfs, as benign overlords and disenfranchised worker-bees.


The Comet really should not spend our time ranting against UPMC. We have no standing.

Of course a billion-dollar enterprise is going to take the position most advantageous to them! Of course they are going to scream bloody murder if Act 55 is amended! That's their job!

However, unlike the Post-Gazette editorial, and unlike all of the reporting and commentary on this matter to date, we recognize that the remedy lies not in persuasion, but in legislation.

There is no reason to continue lobbying these interests to make payments in lieu of taxes. We will only ever receive the barest minimum that decent public relations demands. That's business. And it is a business.

Our righteous indignance should instead be directed at the State Senate, which is examining this law tomorrow, and for good reason. That is where we have the upper hand. That is where the issue truly lies. It is a flawed law.


A final note. Act 55 of 1997 was passed, obviously, in 1997.

Dr. Jonas Salk discovered the polio vaccine in a laboratory within a building that was taxed like any other.

Most of the great medical breakthroughs of the 20th century were carried out on properties that were taxed like any other.

Expect UPMC and the gang to howl in desperation, weaving tales of collapse and layoffs and death and ruination, if they are made to suffer the indignity of doing right by their own city, county, and state.

That is their role tomorrow.

Just remember. $618 million. In one year. They'll be okay.

Hill District Shenanigans

This morning, the One Hill coalition introduced the negotiating team elected by the community to pursue a Community Benefits Agreement.

Buried somewhat within a P-G Belser & Belko article, is word that nine Hill District ministers have written to Ravenstahl, Onorato, and the Pens requesting their own meetings.

Mr. Redwood said yesterday he did not know why the ministers, some of whom he described as members of the One Hill coalition, are seeking their own meeting with government leaders and the team.

"They don't represent the Hill and to claim otherwise is divisive," he said.

City Councilwoman Tonya Payne, who represents the Hill District, said the One Hill coalition was created so there "would be one voice that represented the entire Hill District." She said it was wrong for the ministers to be seeking their own meeting.

"The community has voted on who they wanted to negotiate a community benefits agreement. They selected negotiators. I think it's terribly unfair that [the ministers] would be that presumptuous that they would come out and say they would be better negotiators than the ones chosen by the community," she said.

As a measure of how well the One Hill Coalition seemed to be jelling, not only is Councilwoman Payne now leaping to defend them, but Kimberly Ellis AKA Dr. Goddess told the Comet recently:

I'm just pleased that the Hill will be properly represented, no matter what. I remain thankful for that. Everybody is saying that "ten years ago" we didn't have this kind of leadership. I don't know what happened ten years ago (heck, I was in college) but myself and others are here now, so . . . no matter what, we'll be there.

If you could keep those two characters playing nicely in the same tent, with no knife-fights breaking out, you had reason to believe you were really getting somewhere.

Suspicious minds might assume that the nine renegade ministers are somehow a creature of the Penguins, sowing discord and confusion. Yet they are the ones holding out for a no-strings-attached check for $10 million in development money -- a hard pill for the Pens to swallow.

One Hill is making no such vague demands -- they seek things like priority hiring and job training for union jobs, the rehabilitation of specified cultural assets, and a few key items like a grocery store. Perhaps the bold demand for up-front cash is meant to siphon off community sympathy, making One Hill seem less tough by comparison.

Tuesday, August 28, 2007

Luke Ravenstahl: The One Day at a Time Mayor

The Burgher probably expects us to credit him for locating the KD/PG Ravenstahl interview, but we were actually tipped off by a PittGirl post moments earlier.

Are they the same person???

Part I - Ugh
Part II - Lord, make it stop

We wanted to transcribe some key portions, but lost our nerve upon typing this:

Schribman: One of the great challenges you face is having people your own age move here, or stay here. What kind of strides have you made there, and what needs to be done?

Ravenstahl: Well I think as I just mentioned today in my previous answer, we have to provide opportunity. Young people that graduate from CMU or the University of Pittsburgh are going to make decisions on where they live based on the opportunities that are provided to them, and that begins with a job.

[You may think Luke is running out the clock until the end of the interview, but he's actually running out the clock till November.]

And I know that myself and the county executive are working very closely to look at this city and this area as a region. I think that's the only way we're going to be successful in terms of dealing with these issues and tackling these issues to provide those opportunities right here in Western Pennsylvania -- not just in the City of Pittsburgh, not even in Allegheny County, but as a ten-county region.

So forget transcripts.


Here is a summary:

1) There is an economic boom Downtown and in the Hill District.

2) We know this, because we are optimistic that there will be an economic boom Downtown and in the Hill District.

3) Luke Ravenstahl deserves credit for the economic boom that hasn't happened yet.

4) We need to provide jobs, but we don't need to explain how we plan to make that happen, except to say we're thinking regionally.

5) The CMU wetlabs, and the Dick Corp moving to the South Side Works, are enough evidence that Ravenstahl is good at creating jobs.

6) We are going to pay off $800 million worth of debt by means of not issuing any new debt. (We will try this line of reasoning with some collections agencies, and get back to you).

7) There is "no magic wand you can wave" to take care of the debt -- ergo, it is pointless to offer any long-term strategy.

8) "It might not be sexy" -- this not having any ideas -- but there are no possible ideas. Being Mayor is about reacting to events one day at a time.

9) Choosing the less expensive health care plan was a "tough choice," and merits getting off his back already.

10) The Pittsburgh Promise is failing because it has been difficult for the Mayor and the Superintendent to coordinate schedules. (Yes, really.)

11) His proudest achievement as Mayor is that the government did not shut down, and city services have continued. (Yes, really!!)

12) Luke gets no benefit whatsoever from appearing on Letterman and in Esquire. However, Pittsburgh "absolutely" gains tangible benefits because it "raises awareness" of the city. You know, like cervical cancer!

13) The Ethics Board has fully resolved the matter of the Mario Lemieux Invitiational, and has cleared Luke of any wrongdoing whatsoever.

14) When the Ethics Board crafts new rules to prevent him from ever pulling a stunt like that again, he will welcome them -- and then ignore them.

15) Ken Rice is a hell of a guy.

DeSantis from Mars, Ravenstahl from Venus

Another lovely report from WTAE, this time on the mayor's race and city finances.

From the challenger:

"Make no mistake, our city is in crisis," DeSantis said. "All of the empty rhetoric and public relations in the world cannot fix the serious budget deficit that's on the horizon. The stranglehold of pension liabilities and the mountain of debt are crushing."

"We have to prevent a complete financial collapse," DeSantis said. "We are facing a very dire, serious financial situation. We are facing the threat of bankruptcy in a period perhaps as soon as two, at the most three years."

From the incumbent:

"I will submit my second structurally-balanced budget," Ravenstahl said. "We have a fund balance, will have a fund balance of over $80 million at the end of this year. That's not a mistake. That's my strong fiscal management by being prudent with the taxpayer dollars, and we'll continue to do that."

"We have some challenges in the out years but to suggest or create a fear within the city of Pittsburgh to its taxpayers that somehow we're going to be bankrupt in two years is just fundamentally false," Ravenstahl said.

Our dream for Pittsburgh is that every television news station will hasten to unleash stylized and digitized charts and graphs; competing to best illustrate the consensus from among the brightest and most respected financial minds of our region, piercing the very heart of who is on track, and who is blowing smoke.

Depressingly, something like this will once again be presented as one of the four "Top Stories" of the day (although this episode was newsworthy in that it succeeded in setting a new Galactic Record for Irony).

A final note -- if DeSantis can be criticized for taking too long to unveil his financial plan, we should remember that Ravenstahl has disparaged the very idea of the need for any financial plan that goes beyond what the oversight boards already require by fiat.

Monday, August 27, 2007


This coming Thursday, August 30, the Pennsylvania Senate Finance Committee will hold a public hearing to "review" Act 55 of 1997, the Purely Public Charities Act.

The hearing will be held in Pittsburgh, in our humble City Council chambers, from 9:00 AM until noon.

Act 55 is the law that allows hospitals, health insurers, and universities to avoid property taxation and other civic responsibilities.

Critics argue that Act 55 must be amended to distinguish these enormously profitable "mega-nonprofits" from religious organizations and genuine charities.

The agenda for the public hearing is as follows:

9:00 - Thomas Boyle of Buchanon Ingersoll & Rooney; Ed Weisgerber of Kirkpatrick & Lockhardt Preston Gates Ellis

9:45 - Scott Kunka, City Finance Director; Ron Pferdehirt, Assistant City Solicitor

10:30 - Robert DeMichiei, Chief Financial Officer, UPMC

11:00 - Jack Owen, Pennsylvania Association of Nonprofit Organizations

One would hope that the 9:45 contingent will argue stridently on behalf of overburdened city taxpayers, in favor of common-sense amendments that will shore-up our famously desperate financial condition.

The Comet will have much to say on the subject as the hearing approaches, but right now we trust our readers are already well-enough informed to begin writing letters and making phone calls -- not to mention finding sitters and making excuses for Thursday.

However, we would like you to check out this WTAE piece headlined Pittsburgh Talks Taxes With Nonprofit Groups; UPMC Has Big Year.

Does it make any sense that UPMC gets to be represented by a man in a priest's collar, seated next to a statue of Jesus?