No Agreement from Pens to Provide Specific Benefits. How About Specific Costs? Well, that's the Plan.
The Sports and Exhibition Authority's recent unsuccessful application to the Federal Department of Transportation for a Transportation Investment Generating Economic Recovery grant (TIGER grant) continues to provide the best window into the Pittsburgh Penguins and City Government's plans for the 28 acres of the Hill District known in the current development discussions as "the Lower Hill". Folks will remember that the city ceded the development rights to this land to the Penguins in order to prevent them from saying "anyplace but home"... and moving to Kansas City. I spent about 20 minutes to no avail looking on-line for the June 2007 URA minutes, to see if there was any other justification then was offered by Don Kortlandt, the URA General Counsel at the time who said that the Penguins considered the development rights to be "an important part of the economics of their deal" and wanted agreements in place before the (arena) lease signing. "That was part of the quid pro quo for them staying in Pittsburgh," he said. This seems to be the longhand version of "The Penguins made me do it", but not a justification a government agency like the URA should be using for this kind of major land use decision.
The 2010 Penguins commissioned study on the likely economic impacts of the proposed development on the 28 acres conducted by Economic Research Associates, an AECOM company, frames the benefits generally to the region and specifically to various levels of government in the form of taxes, but does not pose specific benefits to Hill District residents. To see the various proposed benefits please see a table I pulled together from looking at that study.
| Item | Cost/Revenue | Tax Benefit |
|---|---|---|
| Purchase of local construction materials | $209 million | $4.9 million |
| Construction related employment | $160.8 million | $4.9 million/$1.1 million State/Local |
| Annual property taxes | 1191 housing units, 208,750 sq. ft. of retail space, 605,550 sq. ft. of office space,150 rm hotel and multi-screen cinema. | $4.6 million/$5.9 million/$2 million City/School/State |
| Entertainment retail space | $450 million annually in sales | $2.5 million /$423,956/ $258,480 State/ City/ County |
| Annual Parking Revenue | Amount not given | $1.4 million |
| Earned Income taxes | Total amount earned by new city residents not given | $943,884/$1.9 million City and School District |
| Annual onsite employment | $145 million | $955,884/$4.5 million City/State |
| Total Construction Period employment and tax benefit | 4231 estimated full time jobs | $21.1 million tax benefit |
| Annual employment and tax benefits | 2948 estimated full time jobs | $25.1 million tax benefit |
While I found these benefits to give me a little better understanding of the scale of this project, I found two things in the study particularly interesting. One, and as you can see above, the money that would be made from parking was not given, but rather just the taxes that would be paid on that revenue. The second piece of notable information was the following quote:
"No attempt has been made in this study to estimate the real increases in off site property taxes from permanent impacts from the mixed-use of development. It is difficult to determine where such impacts would occur as well as the appropriate values to apply. However, it can be assumed that the off-site property tax impact would be positive."
So while agreeing to benefits like a dollar-a-car and/or a formalized agreement specifying specific benefits to the Hill District is not something the Penguins have been willing to do, their own research points out that this development is almost a guarantee to bring specific costs to Hill District residents. I get that increased property values for home owners can be of value, but that is essentially if you are looking to sell. If you are not planning to sell, one is just stuck with higher taxes, and in the case of renters, this will almost assuredly raise rents. The obvious guess is that this will hit the Crawford Square section of the Hill first, but, as the research notes, increased property taxes could show up in other locations as well. At the end of the day most of us are on fixed incomes of one form or another (i.e. wages/salaries vs stock market), but seniors or lower income home owners could be particularly vulnerable to rising property taxes. Yet, the Penguins don't think that a fund supported by the site's parking revenues and focused on supporting the implementation of the Master Plan in the rest of the Hill District is a fair or tenable arrangement for all of the benefits they have received and possibly negative impacts their development could cause? Priceless.
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