Colin McNickle At Large

Make this call, Almono (& another shakedown)

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The folks at Almono LLC should have a discussion with a fella by the name of Dave Ziel before they move forward with any plans to construct what surely would be a quite expensive “speculative building” on the grounds of the former LTV Coke Works in Pittsburgh’s Hazelwood neighborhood.

Ziel is the chief development officer of Urban Outfitters, described in one news account as the “hipster-leaning apparel chain” based in Philadelphia. It caters to fashion-minded customers aged 18 to 28.

Ziel’s company just inked a lucrative deal in Indiana County to build a huge fulfillment center said to be the size of 21 football fields in White Township’s Windy Ridge Business and Industrial Park.

The term “lucrative” cuts both ways, depending on which side of the Tax Break/Industrial Economic Development Complex you fall.

A plethora of dubious tax incentives clearly will trim costs that only the very profitable Urban Outfitters should bear.

But supporters defend the breaks saying 225 jobs will be created. There’s happy talk about 500 people being employed there down the road. About 600 short-term construction jobs will be created for a complex set to open in August 2019.

That’s “the most jobs created by a single employer in Indiana County in more than five decades,” recounted Indiana Gazette reporter Chauncey Ross in a Sept. 27 dispatch (a reference to the expected permanent jobs).

Expect to hear defenders employ that old standby “but for” argument: But for the tax incentives, Urban Outfitters would have built elsewhere.

More on that later.

But it’s something Ziel told Ross that should pique the interest of the officials of Almono, a partnership of the Heinz Endowments, the Richard King Mellon Foundation and the Claude Worthington Benedum Foundation, that is working to redevelop the 178-acre tract known as “Hazelwood Green” along the Monongahela River.

In addition to tax breaks, Ross reported:

“What also gave Indiana (County) a competitive advantage, according to Ziel, is the absence of huge, ready-to-occupy business centers that he said are seen sitting empty at almost every turn in Eastern Pennsylvania.”

Furthermore, Ross reported:

“The explosion of ‘speculative building’ prior to tenants coming in tends to oversaturate the region and limit the hiring potential in the east, Ziel said.”

To be fair, Almono’s Hazelwood Green project director, Rebecca Flora, told the Post-Gazette that “spec construction” – meaning to build without a signed tenant – is still in the ‘very early exploratory’ stages.”

And, indeed, the developments of Urban Outfitters and Hazelwood Green are quite different. The former is a retail operation’s fulfillment center (the fancy term for a product distribution center) and the latter is touted as a mixed-used development anchored by high-tech startups and those established tech companies looking to expand.

Nonetheless, there’s an object lesson in all of this that warrants an Almono call to Urban Outfitters’ Dave Ziel.

Build it and they will come? Not necessarily. And given that you can bet there will be some public money component bandied about, sound public policy deserves no less than picking up that phone.

Now, back to the Urban Outfitters incentive plan.

Make no mistake, this retailer is no slouch firm. To wit, it most recently reported quarterly financial results showing earnings per share skyrocketed 91 percent to 84 cents, beating Wall Street forecasts. Net sales of $992 million also exceeded expectations and represented a quarter-over-quarter gain of 13.7 percent. It’s now a corporation valued at $2.2 billion.

Thus, Urban Outfitters is doing quite well, well enough to move ahead with its $30 million Indiana County project. It should do so, however, with its own money, not diving into the public purse.

This profitable and growing concern has been given a very large tax break – paying real estate taxes on the current, undeveloped assessed value for 10 years, through the end of 2029. This being retail, and given the vagaries of the retail economy, who knows if it ever will pay property taxes based on the value of the new operation a decade hence.

And, yet again, taxpayers have been turned into venture capitalists. It’s a role they never should be forced to assume.

Urban Outfitters is self-described as “a lifestyle retailer dedicated to inspiring customers through a unique combination of product, creativity and cultural understanding.” And, hey, it even allows employees to bring their dogs to work.

That, of course, is its business. Woot-woot, and all that. But sound public policy dictates that taxpayers have no business subsidizing it.

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

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Colin McNickle
Colin McNickle

Colin received his B.G.S. from Ohio University. The 40-year journalism veteran joined the Institute in October 2016. That followed a 22-year career with the Pittsburgh Tribune-Review, 18 as director of editorial pages for Trib Total Media. Prior that, Colin had a long and varied career in media — from radio, newspapers and magazines, to United Press International and The Associated Press.

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