The Post-Gazette reports that the Pittsburgh Urban Redevelopment Authority (URA) is requesting $30 million in state aid to help convert struggling Downtown offices to residential units.
As we have repeatedly noted, if such conversions are such a good idea, why are taxpayers being improperly turned into venture capitalists to subsidize them?
The money would be used for “’core and shell’ renovations, including HVAC-related work, fire safety, energy efficiency and facade improvements, site preparation, building stabilization, windows, egress and interior work,” the P-G reports.
All of which are costs that taxpayers have absolutely no business subsidizing. Such costs should only be borne by the private developer risking its own money in pursuit of profit.
The private marketplace would step up to underwrite these conversions — but only if they made economic sense. In most cases, they do not.
How that becomes any kind of acceptable rationale for diving into taxpayer pockets truly is public policy at its most warped.
The URA request came fast on the heels of Allegheny County Council adopting a dubious 10-year tax-abatement program for new Downtown development projects.
Again, per the P-G:
“Under the program, developers or property owners interested in converting office space into residential units could get up to $750,000 in annual tax breaks depending on the size of the project.
“For a project to get the abatement, at least 10 percent of the units must be affordable to households earning at or below 50 percent of the area median income [AMI], or at least 60 percent of the units must be affordable to households earning at or below 80 percent of the AMI.
“As an alternative, commercial or industrial developments would be eligible if they increase the number of full-time equivalent jobs by 50,” the P-G reports.
But Jake Haulk, president-emeritus of the Allegheny Institute is not impressed with what he sees as “some job growth and increasing property values of existing properties.”
Wryly notes the Ph.D. economist:
“[A] tax-exempt development that requires major blocs of low-income housing in the Downtown area is what passes for progress in the ‘Burgh.”
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy cmcnickle@alleghenyinstitute.org).
