Negotiations are underway between South Middleton School District and UPMC Pinnacle over a proposed payment in lieu of taxes — or PILOT — agreement that could impact about $700,000 in district operating revenue.
District representatives along with Cumberland County officials are expected at a tax appeals hearing Wednesday at 2:15 p.m. in the second floor courtroom of the Old Courthouse in Carlisle.
During the hearing, attorneys for UPMC Pinnacle will make the case as to why the Carlisle Regional Medical Center should qualify as a nonprofit and be exempt from having to pay property taxes to the county and school district.
“We have been advised by our solicitor that they will likely qualify,” school board president Michael Berk said. “We anticipate it. They were able to prove it in other municipalities.”
The district will let the county take the lead in presenting legal arguments against qualifying the hospital as a nonprofit, said Matthew Ulmer, district operations and business manager. “We’re not going to differ from the county position. We will stay unified.”
Each year the district receives about $700,000 in tax revenue from the hospital, which is the largest single taxpayer in South Middleton Township. The township and school district share a common geography.
The district was advised this year of the pending merger between PinnacleHealth and the University of Pittsburgh Medical Center.
“The district has been very proactive in talking with them,” Berk said. “We’re light years ahead of other school districts which have not even thought of meeting with them. We came prepared to talk to them and express to them our situation here in South Middleton.”
Under a PILOT agreement, UPMC Pinnacle would provide services or payments in lieu of the annual tax payment under certain conditions for a period of time. Ulmer was not sure if the services or payments would be equal to the $700,000 in annual revenue the district would lose if the former Carlisle Regional Medical Center qualifies as tax-exempt.
“We are currently undergoing positive conversations,” Ulmer said about the negotiations. “I’m not at liberty at this time to talk about the details.
“Hopefully we can come to a positive resolution,” Ulmer said. “When it’s all finalized, it will be something that the board will vote on. It’s not going to be a secret at that point in time.”
“This is something that we as a board and community need to watch very carefully,” Berk said. “This is a work in progress that will impact our tax revenue in this district.”