PITTSBURGH — The education and healthcare giants of this city represent some of Pittsburgh’s biggest advantages in the new economy. But those institutions also present a challenge, as tax-exempt nonprofits controlling large swaths of land in a place that needs more property tax revenue to achieve its ambitions.
Talk with a longtime Pittsburgh resident about the city’s problems, and this usually comes up right after the potholes.
“You get this tension that builds up, and that tension is real,” acknowledged Patrick Gallagher, the University of Pittsburgh chancellor, in an interview with GeekWire in his corner office at the Cathedral of Learning, a landmark building that a student tour guide called “more Hogwarts than Hogwarts.”
But Gallagher, who is also a board member at the University of Pittsburgh Medical Center (UPMC), says the organizations benefit the public in other ways, through direct services that reduce the financial burden on local government, and by serving as a magnet for companies to put and expand their operations in the city.
“The most powerful argument that we can make, almost better than any other nonprofit, is that we can grow the pie,” he said, describing the benefits of this “high-adjacency model of companies wanting to be right in the front lap of a university.”
“We want to be surrounded by a business district of people that are one small espresso away from their collaborators at Pitt or UPMC. That can suddenly turn the disadvantage into an advantage.” he said. “It’s a very different dynamic. It’s very positive. It’s about growth. And that’s why we’ve been focused on that.”
Gallagher and other Pittsburgh leaders believe Amazon could become the biggest example of this dynamic. The pipeline of technical and business talent from Pitt and nearby Carnegie Mellon University are a major part of the region’s proposal for the Seattle-based tech giant’s $5 billion second headquarters. Amazon says the corporate campus will bring ultimately bring 50,000 jobs to the chosen community, to be named sometime this year.
For the Pittsburgh region, landing Amazon HQ2 would be “unquestionably a good thing,” Gallagher said, noting that the project is being pitched not just as a branch office but as a full second headquarters, resulting in additional financial benefits for the regional economy.
Gallagher is not unanimous in that opinion. At two forums in Pittsburgh this week, organized by the University of Pittsburgh Human Rights Working Group and UrbanKind Institute, panelists from the university, community groups and activist organizations will explore the potential impact of Amazon’s HQ2 and other projects on low-income residents and communities — questioning the contention from city leaders that the HQ2 proposal will lift up the entire community.
The discussion will focus on issues including affordable housing and displacement, and the risk that economic development projects focused on high-income, skilled workers could push low-income staffers out of Pittsburgh neighborhoods already being threatened by gentrification.
Whether the proposal is truly “forged for all,” as promised, isn’t possible to know yet. Pittsburgh leaders are preparing to go to court to keep the details of their Amazon pitch, including any potential tax benefits for the company, out of the public eye for the time being.
It’s a window into the larger debate taking place across the country as cities roll out the red carpet for the tech giant.
Pittsburgh is among 20 finalists, but still considered a longshot for Amazon HQ2. However, Gallagher said he believes the city’s value proposition for Amazon may be higher than “higher than most people think” — as a livable, business-friendly city with the capacity to accommodate a major influx of people. Amazon would have a chance to symbolize the rebirth of Pittsburgh, he said, resulting in a positive brand effect for the company.
And there’s a new twist in this story. Just last week, Amazon, JPMorgan Chase & Co. and Berkshire Hathaway announced plans for an independent healthcare company focused initially on new technologies to serve their U.S. employees. That plays directly into Pittsburgh’s strengths, and Gallagher acknowledged that he could envision Amazon partnering with UPMC as part of its expansion into healthcare.
“Amazon is one of the great disruptors,” Gallagher said. “And at that level, it’s not surprising to see them want come in and see if they can disrupt healthcare.”
Gallagher, who served in the Obama administration as acting deputy secretary of the U.S. Commerce Department and director of the National Institute of Standards and Technology, received his PhD in physics from Pitt in 1991, and returned in 2014 as chancellor of the public university, which has more than 34,000 students.
Coming back to his alma mater as chancellor was a “pretty special treat,” Gallagher said, but apart from that, he was attracted by Pittsburgh’s evolution and potential.
“It’s at this inflection point,” he said. “It’s not there yet, but you can see all the incipient conditions are set. To be a direct and central part of that was really exciting.”
