We have railed against corporate wealthfare for decades. But this particularly irksome example takes the cake in our book:
The Post-Gazette reports that Stark Enterprises of Cleveland is seeking $12.5 million in state aid to convert the long-ago Frank and Seder Department Store and, later, a seven-story office building in downtown Pittsburgh, into 165 residential units on the top six floors with retail on the first floor.
“Stark has done little with the block-long building at 441 Smithfield between Forbes and Fifth avenues since buying it in 2017 for $10.4 million, leaving a number of Downtown stakeholders, including Pittsburgh Mayor Ed Gainey, frustrated,” the P-G reports.
Stark’s lack of progress so frustrated city leaders that they considered seizing the property through eminent domain. That, of course, would have been a cluster cluck of another breed.
Stark even attempted to sell the building in 2020 but to no avail. Two past renovation plans never got off the ground.
But here it is, now, bellying up to the public trough.
The P-G says Stark’s proposal for the $68 million project would be a “full building renovation.” It would set aside 10 percent of the 165 units for “affordable housing.”
“The redevelopment of this block-long building will bring much needed vibrancy to Smithfield Street and Fifth Avenue and support Downtown’s evolution into a residential community, essential to its long-term economic success,” Stark stated the rationale for its claim on the public kitty in its grant application.
But how is that an excuse for turning taxpayers into venture capitalists and be expected to pay more than 18 percent of this project’s cost? Or any of its costs, for that matter?
Simply put, they should not be. Stark, nor any other developer, should be allowed socialize the development risk that it alone should bear. Let’s put this into a more easily understood context:
Let’s say I’m planning on adding a third floor to my house. And I want taxpayers to help me pay for it. “That’s daft,” you say. “No, it’s not,” I argue.
“I will enhance the economy and help to make my neighborhood more vibrant to boot,” I claim.
“How’s that?” you ask.
“Well, I’ll have to hire an architect to design the expansion,” I explain. “Then there’s the contractor who will build it. Don’t forget the building permits and inspections.
“And, most assuredly, the new and improved home will pay more in taxes, that is, unless there’s some kind of tax-abatement program employed,” I argue.
“Not only that, the newly expanded, three-story home will be quite aesthetically pleasing.
“Everybody wins!” I exclaim.
Except the taxpayers, who without their permission, had their precious tax dollars diverted from otherwise bona fide public purposes and into a private person’s pockets to reduce the cost of a home expansion for my private gain.
The “benefits” to society as a whole in this case are suspect, both economically and morally. Just as they are in the case of Stark or any other developer seeking to offload their costs – their risk – onto taxpayers.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
