Funny financials

Funny financials

Some in the media have become all a-ga-ga over, as the Post-Gazette reports it, “Lumiere, Downtown’s shiny new condo building” that stands where the old Saks Fifth Avenue once was.

High-end retail has been replaced by high-end condo living. But it comes at no small cost to taxpayers. “Why?” remains the operative question.

There are 86 units on nine residential floors that sit atop a 580-space parking garage. A one-bedroom unit goes for $225,000. A top-floor penthouse, already sold, went for more than $3.5 million.

The P-G story goes into great detail of the opulence of project — including the fact that there’s a pricey monthly homeowners association fee (i.e. about $1,100 a month for a condo listed at $2.65 million, $300 monthly for a reserved parking spot; a mere $200 monthly for non-reserved) and, oh, yes, a free one-year membership to a local gym.

And, guess what? Owners also receive a 10-year tax abatement valued at – we are surmising that it’s an average — $61,800 ($6,180 annually).

We guess there’s “affordable housing” and then there’s “affordable housing.”

Given the price of these condos, reasonable people might just be forced to proffer that taxpayers should not be subsidizing such a project.

If one has the financial wherewithal to buy such a luxurious abode, one should be expected to pay the taxes, too.

And, lest we forget, there’s already more than $9 million in public money, in one form or another, in this project.

“Progress” in Pittsburgh sure does continue to employ a lot of funny financials, doesn’t it?

Speaking of downtown Pittsburgh, while we keep hearing the cheerleaders rah-rah-sis-boom-bah about the latest supposedly incredible renaissance that’s taking place in the erstwhile Steel City, here’s one sobering statistic:

Office vacancy rates have hit a 10-year high, now at 17 percent, the Post-Gazette reports. And while the thrust of the story is that there are some great deals for some premium space, there’s a larger point that’s being missed.

And that point just might be overbuilding.

Consider at a moment in time when there are grand plans for lots more office space in, say, the Lower Hill District site of the old Civic Arena and in the Strip District, among other areas, these are the office vacancy rates among “Class A” properties:

The U.S. Steel Tower is nearly 12 percent vacant. At One Oxford Center, that rate is nearly 30 percent. The vacancy rate is nearly 34 percent at 20 Stanwix and nearly 30 percent at 11 Stanwix (the old Westinghouse building).

And then there’s the granddaddy of vacancy, at least for this snapshot in time – nearly 60 percent at 525 William Penn Place.

Given how subsidy-happy Pittsburgh officials long have been, those vacancy rates are a pretty darn good argument for not diving into taxpayer pockets in any fashion to exacerbate the marketplace’s chant of “glut, glut, glut.”

But, then again, playing the funny financials game is far more politically expedient than practicing sound public policy.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).