As a non-profit organization categorized as a “public charity,” the Labor Zionist Farband Education Center’s building in Squirrel Hill has enjoyed property tax exemption for decades. Until now.
The organization has owned and operated its building at 6328 Forbes Ave. since 1958. For more than 50 years it has provided meeting and office space for a host of Jewish organizations, including women’s groups and a youth group. It even is home to a daily minyan, community Seders and mahjong games.
But as a consequence of an Allegheny County Council ordinance requiring review of all properties claiming such a property tax exemption, the Labor Zionists are facing $5,400 tax bill.
“We don’t have the money to pay that tax bill,” bemoaned Honey Leon, 86, who as a trustee and one of three remaining Labor Zionist board members takes care of running the building. “It would defeat our purpose.
“It’s a very nice building,” she said, adding that though the Labor Zionists no longer meet as a group, the building currently houses NAAMAT, the Jewish Women’s Center, and the Baal Shem Tov minyan, and is available for wider use by the community. “It was always tax exempt.”
The fact that it “was always tax exempt,” though, will have no bearing on whether it will continue to be, said Jerry Tyskiewicz, Allegheny County’s director of administrative services and the overseer of the office of property assessment.
Pursuant to a 2007 county ordinance requiring a review every three years of tax-exempt properties, 2,800 institutions claiming to be public charities have to reapply with the county to see if they meet the criteria.
Some of the organizations claiming exemption have not been reviewed for 40 or 50 years, Tyskiewicz said.
After notification by the county that all such institutions needed to reapply to confirm their tax-exempt status, about 20 of them recognized they did not qualify as public charities as defined by the Supreme Court of Pennsylvania and voluntarily agreed to be put on the tax roll.
But many entities have not complied with the requirement of submitting a new application. If they fail to comply, Tyskiewicz said, they will be removed from the tax-exempt list.
If an entity is removed from the tax-exempt list, as was the Labor Zionists, it can appeal to a review board.
The Labor Zionists are in fact appealing, Leon said. But, because the group cannot afford to hire an attorney, it is relying on “someone who works for the county” to represent its interests before the review board.
Whether or not an entity meets the criteria to qualify as a public charity is “difficult to determine,” Tyskiewicz said, noting that two different standards have been at play: one determined by the Supreme Court of Pennsylvania and one by the state legislature.
The Supreme Court of Pennsylvania utilizes a five-prong test — the HUP test — to determine whether an institution is a public charity. The validity of that test was reaffirmed in the 2012 case Mesivtah Eitz Chaim of Bobov, Inc. v. Pike County Board of Assessment Appeals, where the Court reiterated that a “public charity” under the Pennsylvania constitution “(a) advances a charitable purpose; (b) donates or renders gratuitously a substantial portion of its services; (c) benefits a substantial and indefinite class of persons who are legitimate subjects of charity; (d) relieves the government of some of its burden; and (e) operates entirely free from private profit motive.”
In the Mesivtah case, the appellant, a not-for-profit Orthodox entity that operated a summer camp in Pike County, argued that it did not need to meet the requirements of the HUP test to be deemed a public charity because that test was at odds with the legislature’s Institutions of Purely Public Charity Act, which defined the term “burden relieving” more expansively than the HUP test.
The Supreme Court rejected the legislative standard, but that ruling remains controversial.
“A lot of people don’t want the legislature determining who’s tax exempt and who’s not,” explained Tyskiewicz, adding that large hospitals and universities — such as the University of Pittsburgh, Carnegie Mellon University and UPMC — may not qualify as tax-exempt under the Supreme Court standard, thus increasing county coffers.
But there is now a movement in Pennsylvania for a constitutional amendment that would allow the legislature to establish a uniform standard and the qualifications for criteria to determine the tax-exempt status of nonprofits. The Pennsylvania Senate voted last month to pass that amendment. If the amendment passes the House, it will be put on the ballot for the voters to decide.
“We support the effort to establish one criteria,” said Hank Butler, executive director of the Pennsylvania Jewish Coalition, which represents Jewish federations and communities before state government.
“But at the same time,” he said, “the PAJC understands the burden placed on local government because of the number of tax-exempt organizations out there. Small tax-exempt programs are being hindered because of larger non-profits that are becoming a tax burden on the cities.”
“We need one set of rules, and to follow those rules,” he remarked.
Allegheny County has not yet issued a response to The Chronicle’s Right to Know request to view the complete list of all tax-exempt properties currently under review.
Toby Tabachnick can be reached at firstname.lastname@example.org.