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	$15 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.

The More Things Change…Penguins’ 2013 Plan for the Lower Hill Brings Shades of the 1950s

I was working my way through the Sports and Exhibition Authority’s TIGER application(Transportation Investment Generating Economic Recovery) to the Department of Transportation  with the idea of posting responses to it in pieces (it’s a 30 pp application with hundreds of pages of supporting docs) and then making my comment to the Southwestern PA Planning Commission in advance of the September 11th deadline, but, thanks to a brief conversation with Rep. Wheatley, I learn that as of this afternoon the application has not received support from the Department of Transportation. Looking at the criteria for TIGER grants being centered around innovative transportation solutions, I am actually not sure building infrastructure for the Lower Hill would ever have been a good fit.  Still, I do think there are some comments worth making about this application. The application provides insight and supporting documents for the arguments that were and probably will continue to be made to justify further public investment in the private economic success of the Pittsburgh Penguins and their owners, Mr. Ron Burkle and Mr. Mario Lemieux.

The TIGER application includes 14 or so support letters from authors such as Senator Casey, Rep. Doyle, Pittsburgh Water and Sewage Authority, Port Authority Transit, the Hill District Development Corporation, and Councilman Daniel Lavelle and most talk of the injustice and error that was made in the removal of thousands of African American residents and hundreds of businesses in the 1950’s and 60’s. Many of the letters go on to say that a chief reason that this development must happen is to reconnect the Hill District to downtown and right the wrongs of the past. However, in many ways this development reads as a finishing of the job, so to speak, of the project begun in the 1950’s the so-called Renaissance I.  Yes, the Hill  to downtown, but who will the residents be? Who will businesses serve? What will the cultural life look like?

The Lower Hill residents and business that were removed in the 1950s Renaissance I era were predominantly African American and working/middle class, the research titled Mellon Arena Redevelopment Strategy-Economic and Fiscal Impact in February of 2010 by Economic Research Associates, an AECOM company, (ERA) poses that of the 1191 units that will be built in the Lower Hill Development 30%, or 356 units,  will be for sale and of these 356 for sale units, 80% or 285 units will be “market rate”. What’s market rate according to the ERA analysis? $375,000. Cha-ching! And the rental rates do not present a better picture. 835 units will be rental and 80% of these, or 668 units, will be “market rate” costing on average $1500 per month. In a city with some of the worst racial disparities in the country, how does this kind of housing market in the Lower Hill District address what happened on the same land 50 years or so ago? Wasn’t the plan at that time to essentially remove the African American folks living and doing business there and replace them with a cultural district that would serve a predominantly white and middle/upper class population? Okay, so the first step of removing African American working and middle class residents was clearly accomplished, but the city fathers couldn’t pull off step two and just managed the Civic Arena and parking lots. 50 years later in the Lower Hill we have a brand new hockey arena (is there a more stereotypically non-African American sport than hockey?) and a plan to build one of the more expensive housing markets in the city. Combine this with the fact that as of now there is no enforceable agreement or commitment that this development will benefit the Middle and Upper Hill District and it seems fairly obvious that 50 years later the city is just finally getting to step 2. While using public dollars for this objective is problematic enough what really is disturbing is the  way so many of this proposal’s backers invoked the Hill District’s history as a location of African American exploitation as though this development was in any way dreamed up as a way of remediating those injustices.