Here We Go…Again

As the Pittsburgh Steelers prepare for yet another AFC Championship game, chants of "Here we go" fill the air. However, while the fans bask in the football hype, we are all left listening to the hype from City boosters proclaiming the game will be a financial boon for the region. So here we go again.

While fans will certainly stock up on all manner of paraphernalia with the Steelers logo and on snacks and beverages for the big game, this does not represent new spending in the area’s economy. After all, for those who live in the area this only represents a redistribution of existing spending. The only expenditures that will make a difference will be from those out-of-town visitors who are here specifically for the game.

But will they make much of a difference for the City? VisitPittsburgh is estimating that the Winter Classic generated about $15 million and the first playoff game brought in another $19.2 million for the region. Their estimate for the AFC Championship game is about $26 million. While there may be a direct benefit for the hospitality industry as visitors pack hotel rooms and restaurants, it will not provide much directly to the City. The City will see an uptick in the amount of parking taxes, amusement taxes, and the facility usage fees collected. But these taxes represent only a small fraction of the City’s tax revenue stream, about 16 percent. There may even be a small increase to the earned income tax if City residents work extra shifts as a result of the increase in business. However other taxes such as sales, including the Regional Asset District tax, and hotel are collected by the State or County and do not come back directly to the City.

Keep in mind that this is not the first playoff game or major event hosted by the City. Over the past decade, the City has been host to a few football playoff games including two AFC Championship games, the baseball All-Star game, multiple Stanley Cup playoff series, the Winter Classic and the G-20 summit. And each time, City cheerleaders tell us how much money is being spent and how great it is for Pittsburgh. Yet the City has been mired in economic distressed status since 2004 and is having difficulty finding revenues to address legacy costs such as pensions.

Events like the AFC Championship games are certainly fun for fans and add a positive buzz to the atmosphere. But to suggest that they represent a windfall to the area is an overreach, especially for the City. And if the Steelers are fortunate enough to win this game and advance to the Super Bowl, will the same folks who are talking about the windfall for Pittsburgh then tell us how sad they are to see all the money leave Pittsburgh and go to Dallas, the host of this year’s game? After all thousands will spend money on travel, hotel, tickets, and entertainment and food while in Dallas. Probably not.

A Bird in the Hand…

After years of complaining about the lack of a grocery store in the Hill District, it appeared that residents were finally getting their wish. A proposal for a grand shopping center, anchored by a full service grocery store with all the bells and whistles like a dry cleaner and bakery, was to be built in their neighborhood. This development won favor with residents over an alternate plan of a more modest grocer that would have met the needs of the residents despite the lack of extras. Most in the community chose the new development over the basic grocery store which could have been built quickly. They summarily dismissed the "bird in hand". But more than a year later, the full scale grocer has backed out of the deal and now residents are left looking for the "birds in the bush".

Local grocer Kuhn’s was to be the main tenant of a grand development scheme with a plaza, restaurants, and retail space-all for a projected price of $24 million. But with only $2 million in community benefits grant money (as of a result of an agreement with the Pittsburgh Penguins and their new arena) to get started, this project was to rely on public subsidies to close the remaining gap. National grocer Save-A-Lot was not only smaller in scale, just a grocery store, but would have been built mostly with private money (in addition to the $2 million in community grant money).

It’s very easy to be swayed by promises of quick revitalization, especially when the taxpayer picks up the tab. But many times these grand schemes are not as solid as proposed. Many fail to live up to promises. Sometimes slow, incremental progress is the best way to go-especially when it is done with private money from an established firm.

With the community benefits agreement set to expire soon, the $2 million in seed money could be in doubt. It’s not clear why Kuhn’s backed out of the deal, but developers claim they will proceed as soon as they find a replacement. But how long will that take? When will the residents of the Hill District finally get the grocery store they need? This is a classic case of directed economic development failing the people instead of helping.

County Going Green, Needs Green

In the popular manner of the new paradigm, Allegheny County has just adopted a Sustainability Policy. The new law will focus on energy savings, reduced emissions and water conservation in the County government. Nothing wrong with that if implementing actions to save does not cost more than the projects save taxpayers.

But if the County is truly concerned about the environment and "green house" emissions why does it spend so much time and effort promoting job growth, trying to get more air service at the airport, etc. More economic activity means more travel by car and plane. Think of ongoing and recent initiatives. The Penguins new arena, the casino on the North Shore, fairly new stadiums for the Steelers and Pirates-all are efforts to attract people to the County and City. More event attendees, more car travel, and more emissions.

The County government steps to lower its pollution footprint will produce a drop in the bucket compared to the footprint created by the past and current "development" efforts.

There is one thing the "green" efforts have going for them. The huge decline in manufacturing in the City and County has largely taken care of the "emissions" problem already. Now, if we could do something about those annoying cars.

And, lest we forget, the County’s fiscal situation is not very good and is expected to get worse in coming years. Thus, we hear proposals about new taxes and fees on hospitals to generate more "green" for county coffers. Collecting more tax dollars is very difficult to do unless the economy is expanding, and that means more energy consumption, more emissions. What a dilemma the County faces. It needs green and wants to be "green". It’s not easy as the famous Muppet, Kermit, used to sing.

Another Blow Against City-County Mergers

Advocates of a city-county merger between Pittsburgh and Allegheny County constantly tout the economic development benefits they promise are sure to follow. It is claimed that consolidating City and County economic development agencies will make it easier to attract new firms. Of course they offer no credible evidence this will happen or that it has happened in other city-county mergers. But why let minor details such as convincing arguments or evidence stand in the way?

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