Thursday, June 08, 2006
Misguided Fawning over Deer Creek
“We will finally have economic growth in the [Allegheny] valley”
“[The project] is going to be a financial boon to the valley”
“We may eliminate Harmar real estate taxes by 2008”
Believe it or not, these public pronouncements were made not in response to a new manufacturing or high-tech business development, but to the announcement that the retail center known as Deer Creek Crossing would proceed following County Council granting a TIF to pay for part of the project costs. That was two years ago.
Who knew another mall could do so much? But how empty these comments seem today. Instead of fulfilling its promised wonders, the development has stalled after losing its development leadership for the second time. The first developer quit the project after shepherding the development through its first set of tax increment finance approvals and court challenges that went all the way to the state Supreme Court.
After that developer withdrew, another developer took up the reins but recently decided against going forward. The owner of the land where the development is to be built was asked to take an equity stake in the project, but passed. Not a ringing endorsement of the potential of the project.
Why the hesitancy? It is really no surprise at all. Back in 1999 we wrote about the possible negative side-effects of adding more subsidized retail to the mix in Allegheny County. Then, in 2004, a study commissioned by the County Department of Economic Development showed that a lot of the activity that might occur at Deer Creek would be siphoned off from other retailers, many of who were not showered with favorable tax treatment. The affected stores could close as a result. We also pointed out that nearby Pittsburgh Mills, which also received a tax increment finance deal, would offer a lot of competition for Deer Creek when it got off of the ground.
In a bit of irony, the 2004 Deer Creek study noted that the development would be competing with a big box component of the Mills project known as the Village at Pittsburgh Mills. The study stated that “[the Village] will likely have more leasing difficulties and may need to shift its merchandise mix or reduce its size given Deer Creek Crossing’s superior location”. In fact, two of the anchor stores specifically mentioned in the study will be part of the Village at Pittsburgh Mills development. Looks like Deer Creek will be the one to make accommodations.
Talk about needing to remove the egg from one’s face. In this case, there is plenty to go around for a lot of faces. This is one more example of what happens when government interferes too heavily in private sector projects, especially when the government ignores the criteria spelled out for its possible involvement.
“[The project] is going to be a financial boon to the valley”
“We may eliminate Harmar real estate taxes by 2008”
Believe it or not, these public pronouncements were made not in response to a new manufacturing or high-tech business development, but to the announcement that the retail center known as Deer Creek Crossing would proceed following County Council granting a TIF to pay for part of the project costs. That was two years ago.
Who knew another mall could do so much? But how empty these comments seem today. Instead of fulfilling its promised wonders, the development has stalled after losing its development leadership for the second time. The first developer quit the project after shepherding the development through its first set of tax increment finance approvals and court challenges that went all the way to the state Supreme Court.
After that developer withdrew, another developer took up the reins but recently decided against going forward. The owner of the land where the development is to be built was asked to take an equity stake in the project, but passed. Not a ringing endorsement of the potential of the project.
Why the hesitancy? It is really no surprise at all. Back in 1999 we wrote about the possible negative side-effects of adding more subsidized retail to the mix in Allegheny County. Then, in 2004, a study commissioned by the County Department of Economic Development showed that a lot of the activity that might occur at Deer Creek would be siphoned off from other retailers, many of who were not showered with favorable tax treatment. The affected stores could close as a result. We also pointed out that nearby Pittsburgh Mills, which also received a tax increment finance deal, would offer a lot of competition for Deer Creek when it got off of the ground.
In a bit of irony, the 2004 Deer Creek study noted that the development would be competing with a big box component of the Mills project known as the Village at Pittsburgh Mills. The study stated that “[the Village] will likely have more leasing difficulties and may need to shift its merchandise mix or reduce its size given Deer Creek Crossing’s superior location”. In fact, two of the anchor stores specifically mentioned in the study will be part of the Village at Pittsburgh Mills development. Looks like Deer Creek will be the one to make accommodations.
Talk about needing to remove the egg from one’s face. In this case, there is plenty to go around for a lot of faces. This is one more example of what happens when government interferes too heavily in private sector projects, especially when the government ignores the criteria spelled out for its possible involvement.
