Monday, February 18, 2008
When Does the Public Bailout of Lazarus Stop?
When the City decided to grant a financial incentive package to build a downtown Lazarus department store in 1998, the public was told that this would spur development in the deteriorating corridor of Fifth and Forbes Avenues. It cost $78 million to build the store and parking garage, with public sources providing $48 million of it through the Pittsburgh Development Fund, Parking Tax and Revenue bonds, City funding, and a TIF package.
We all know how that scheme turned out. Virtually all money gambled on that vision is lost. Now the corridor, and most of Downtown, is banking on the growth of condominium development for revitalization.
Currently, Millcraft Industries is in the process of converting the department store into a mixed use development including condominiums that will range in price from $320,000 to $1 million. Of course, the development is viewed by elected and civic leaders as a success and a rebirth for Downtown housing.
Millcraft bought the building from Federated for $8.5 million in 2005. Here’s the record of public involvement since that time:
• In December of 2005, the state granted $3.7 million for the conversion of the store into its new mixed use status
• In December of 2007, the URA debated modifying a $2 million mortgage so that the developer could take advantage of a program called the New Market tax credit
• In February of 2008, the URA agreed to purchase 43 parking spaces and enter into a lease agreement with Millcraft for the spaces instead of Millcraft purchasing them from the Pittsburgh Parking Authority because “adding the cost of the spots to the price of the condos could make the units too expensive”
What is wrong with this picture? People who can afford very expensive housing have to be shielded from the cost of parking? If Downtown Pittsburgh wants to be like New York City, the shortage of parking has to be reflected in the price of the housing, which, thanks to ten years of generosity to the site when it was a store and now being converted, is likely well below where it should be anyway.
According to the URA’s general counsel the intervention of the URA to enter into the lease agreement on the parking spaces is “…an assistance to the redevelopment of the building.” The burning question is “when does all of the public assistance end?”
We all know how that scheme turned out. Virtually all money gambled on that vision is lost. Now the corridor, and most of Downtown, is banking on the growth of condominium development for revitalization.
Currently, Millcraft Industries is in the process of converting the department store into a mixed use development including condominiums that will range in price from $320,000 to $1 million. Of course, the development is viewed by elected and civic leaders as a success and a rebirth for Downtown housing.
Millcraft bought the building from Federated for $8.5 million in 2005. Here’s the record of public involvement since that time:
• In December of 2005, the state granted $3.7 million for the conversion of the store into its new mixed use status
• In December of 2007, the URA debated modifying a $2 million mortgage so that the developer could take advantage of a program called the New Market tax credit
• In February of 2008, the URA agreed to purchase 43 parking spaces and enter into a lease agreement with Millcraft for the spaces instead of Millcraft purchasing them from the Pittsburgh Parking Authority because “adding the cost of the spots to the price of the condos could make the units too expensive”
What is wrong with this picture? People who can afford very expensive housing have to be shielded from the cost of parking? If Downtown Pittsburgh wants to be like New York City, the shortage of parking has to be reflected in the price of the housing, which, thanks to ten years of generosity to the site when it was a store and now being converted, is likely well below where it should be anyway.
According to the URA’s general counsel the intervention of the URA to enter into the lease agreement on the parking spaces is “…an assistance to the redevelopment of the building.” The burning question is “when does all of the public assistance end?”
