A Different Way to Run the CITF?

Continued from "Where has the CITF Money Gone?"

Going forward, the public policy decisions made in the past few years regarding this stream of money will certainly manifest themselves in one way or another. There have already been questions regarding the County’s decision to allow the Redevelopment Authority to administer the money. That’s something that was not mentioned in Act 53. In so doing we have to wonder if the County has ceded too much control over the funding.

By pure coincidence, the County Council deliberated on two CITF matters at their November 16th meeting: first, to accept the next disbursement of money from the state, and second, whether to change the amount of control the Redevelopment Authority has over the money.

After all, once the pot of revenue was put into the statute the Authority created the fund and even took action to add the aspect of "tourism" to it. What does that mean for projects in future years in terms of purpose and location? Will cultural amenities funded by RAD look the CITF as another place to explore?

Then too, what effects will the County’s (or the Authority’s) decision to make this program a block grant type arrangement where money would be handed out to municipalities and authorities instead of using it for the infrastructure it oversees itself have? According to the County’s most recent Comprehensive Financial Report, it has over 500 bridges, 12,000 acres of parks, 8 maintenance garages, and close to 400 miles of paved roads. As capital needs for these and other assets increase there might be a debate over whether the infrastructure fund should have been kept "in house".

Where has the CITF Money Gone?

Continued from "Shaking the Gaming Money Tree"

We can evaluate the $9.2 million doled out this far through the CITF by number of projects, type, and location to see if there are any discernible trends shaping up.

There have been 57 projects that have received a CITF award. On average, that works out to $161,000 per project. Of the projects, 23 received above the average amount, with 17 receiving the maximum $250,000 and one project receiving $1,000,000 under a special waiver of the Authority.

And there have been some recipients that "double dipped" for CITF money. Data shows that Stephen Foster Community Center received two disbursements (one for $75k, one for $60k) for window replacement and four disbursements totaling $675,000 were given to Green Innovators Center, Pittsburgh Green Innovators 2, Green Innovation Campus, and Pittsburgh Green Innovators. It is possible that these are four separate and distinct organizations but the close proximity in names makes that seem unlikely. In addition there are at least three recipients that have received money from either the Regional Asset District tax or the hotel/motel tax in the last decade.

About one-fifth of funds have been related to purely public infrastructure. As stated in the program guidelines described earlier the purpose of the money is to fund infrastructure. What this word means varies from person to person. When looking at what one could consider purely public infrastructure-a bridge, a street, a road, a sewer line-we can trace $2 million of the $9.2 million (20%) to this area of spending. Close to $5 million appears to be for projects that involve a building or structure. This could be considered tangible and physical space but may be a step removed from what one would classify as infrastructure, especially public infrastructure.

The remainder of the money ($2 million) is connected to parks, a fountain, a memorial, branding and marketing for the Monroeville Visitors’ Bureau, and loan initiatives that would be further removed from infrastructure.

There has been a near 50/50 split of the money between City and non-City locales.

Aside from one award that was identified as a countywide loan initiative, all other awards went to either a specific municipality or a group of multiple municipalities. $4.3 million was awarded within the City of Pittsburgh and $4.6 million went to municipalities outside of the City. Pittsburgh represents about 25 percent of the entire County population. Of the non-City share, Monroeville received close to 30 percent of the distribution. Swissvale received one stand alone award and was involved in two other multi-municipal awards. Edgewood and Verona likewise followed this trend.

Shaking the Gaming Money Tree

Residents and taxpayers in Allegheny County might be surprised to find that some of the sidewalks upon which they traverse were made possible by people playing slot machines. So too with some bridges, parks, buildings, and other physical structures as well as planning, marketing, and loan initiatives.

One of the eight distributions of slots money Allegheny County received under Act 53 of 2007-the law that divvied up the share of economic development projects funded by gaming-was $80 million for a "…community infrastructure fund of a county of the second class to fund construction, development, improvement, and maintenance of infrastructure projects". The law further stipulated that the County would get ten annual disbursements of $6.6 million through 2018. Thus far $13.2 million has been received by the County and handed over to be administered by the Redevelopment Authority. Some $9.2 million has been distributed through September 2010.

Under the most recent program guidelines for the Community Infrastructure and Tourism Fund (CITF, and the tourism aspect was added by the County’s Redevelopment Authority after Act 53 was passed), the money can fund acquisition of land and buildings; for costs related to storm water, sanitary sewer, water supply, and transportation projects; demolition; environmental projects; planning,; streetscape; and other site preparation costs at the discretion of the Authority. The money cannot be used as bridge financing, for operating expenses, to refinance debt, or municipal vehicles or structures.

Municipalities, authorities, councils of government, and non-profits can obtain a grant or a loan; for-profit businesses are eligible for loans only; the maximum amount for a single project or application (whether a grant or loan) is $250,000.

It is too early to assess the benefits of many distributions from the fund: the guidelines do say that awards are evaluated on job creation and retention over a three year period, the amount of funding per full time job, the amount of matching funds, etc. Much of that will come by way of a close-out audit when funds are drawn down.

Two follow up entries on the blog will detail the money that has been handed out through September of 2010 and the policy framework going forward.

Onorato Hammers Corbett’s Support of Obamacare Lawsuit

Commenting on Attorney General Corbett’s joining the lawsuit by twelve other AGs from around the country aimed at having Obamacare declared unconstitutional, Allegheny County’s Chief Executive called the move "a taxpayer-funded political stunt with the goal of denying more people coverage and making affordable health care less accessible."

How utterly ironic. This from the Executive who: spent years thwarting rulings handed down by a local judge and the Supreme Court requiring the county to reassess properties, standing down only after facing a possible contempt citation; signed an illegal smoking ban bill into law only to have it thrown out by the courts; tried illegally to take money from the liquor tax for purposes forbidden by law-another action overturned by the courts; sponsored an illegal referendum question; surreptitiously grabbed gaming money late on the afternoon of New Year’s Eve that was intended to help the airport lower its costs to carriers, etc.

Almost all of these actions have resulted in the expenditure of taxpayer funds, especially for legal costs for those involving the courts. And what could be more political than holding up needed corrections to errors in assessments simply to improve his political standing?

And one might want to know who will get the bill for the "affordable health care insurance" that will now be available to virtually everyone under the recently passed health care bill?

Gaming Revenue Impact on Government Spending

Money received by Allegheny County from gaming taxes almost certainly delayed hard budgetary choices.  Would the County have raised taxes or cut spending in the absence of gaming dollars promised or received? Recall that the County Executive intercepted gaming derived payments totaling $40 million, money intended originally to be used by Pittsburgh International Airport to pay down debt incurred to construct the new airport facilities. The intercepted funds were used to plug holes in the County’s budget.  In absence of this “found” money, extremely hard budget decisions would have been required.


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County Gaming Money Sees a Shake-Up

As we have pointed out since the slots gaming law was passed and the disbursement of economic development money was codified into law, the language allowing for Allegheny County to receive $80 million for the "construction, development, improvement, and maintenance of infrastructure projects" was overly broad. The County receives the money in annual installments of $6.6 million and funneled the money through the Redevelopment Authority of Allegheny County to a special entity created within the Authority known as the "Allegheny County Economic Development, Community Infrastructure, and Tourism Board (CITB)".

Just this past week Council acted on a measure that would allow the Redevelopment Authority to act as the agent for handling the money since the CITB plans to "dissolve itself, which shall take place on or before March 31, 2010". The decision to end the CITB must have came quickly as the measure was introduced on December 1st and approved on the 15th.

Given the broad statutory language, some of the awards made by the CITB included disbursing $250k to Point Park University for its academic village, $50k to Monroeville for a traffic signal (the money was moved to help research on a site plan for a health club), as well as to construct a parking lot in Lawrenceville, for new housing in Manchester, for a fountain in Allegheny Commons park, for promotional work in Monroeville, and for a retaining wall in Shaler to help prevent flooding along Girty’s Run.

It is unclear why this change was made and what it will mean when the remainder of the money is handed out in the coming years.

Towns Board the Transit Study Bus Again

Responding to a desire to spur high density development near transit stops, the state created legislation allowing for "Transit Revitalization Investment Districts", TRID for short, to encourage it. Soon after the South Hills communities of Mt. Lebanon and Dormont received funds via the County’s Redevelopment Authority (the authority received $225k under TRID) to analyze and study the potential for such development.

Among other things, the 2007 study showed that the towns had both lost population during the study period but that the losses were more pronounced in areas close to the transit stops. Hasn’t one of the long time arguments of transit advocates been that transit generates its own demand as people realize the benefits of being close to stations?

Apparently not dissuaded by what the first study said, now comes word that they are going back to the well once again for $200k ($150k for Mt. Lebanon, $50k for Dormont) to "fund preliminary engineering for development". The money for the study would come from the Community Infrastructure and Tourism Fund, an $80 million pot of money funded by gaming money and set aside for the County for the purpose of funding "construction, development, improvement, and maintenance of infrastructure projects" according to the Gaming law.

Was that what the Legislature intended when the money was set aside? With such broad language it is hard to say so. Now it is possible that close to $500k will have been spent to determine if such development is feasible. A quick look at the nearby Castle Shannon stop, where a developer has been trying for years to get a high density transit development done, could have saved some money.

County Catches Parking Privatization Bug

The County Chief Executive wants to explore the possibility of turning some 13k parking spaces at Pittsburgh International Airport over to the private sector. The hope is that a private interest would be attracted to the possibility of managing and profiting from airport parking and would give the County a massive up-front payment, something to the tune of $500 million or so. That money could then be used to retire a big chunk of debt related to the airport and hopefully lower the fees the airlines operating at the facility are now paying to help retire the debt. Those fees are very uncompetitive in comparison with other airports.

It is a good idea that should be explored. Much like the Pittsburgh proposal to turn over parking garages and lots to a private operator in order to get money to retire debt and shore up pensions, the County would have to work through a separate entity to get the deal done. In the case of the County it is the Airport Authority. The Authority would likely have to complete a valuation of the assets and determine bidding procedures, etc. Though some have been optimistic that the parking could fetch $500 million, considerations like staffing, maintenance, ability to increase rates, applicable FAA regulations, and private ownership (which would entail having to pay property taxes) might lower the number.

Another thing to keep in mind is the $110 million left from the gaming disbursement for retiring debt at the Airport. If a bid is pursued, is successful, but brings in less than the $500m, that money could be used to close the gap. If the bid brings in at least $500m (or more), there will be a strong temptation to use that money for other purposes (the County intercepts all of the money according to state law) that don’t involve paying off airport debt.

Lower Airport Traffic Puts Pressure on Costs

It has just been reported that Pittsburgh International Airport (PIT) traffic in 2008 fell to its lowest annual total since before the new terminal was opened-and presumably quite a number of years prior to the opening of the new facility.

And there is no doubt why. USAIRWAYS at one time had 500 or so flights per day, now the number is 47. While other carriers have come and started flying out of the airport, the loss of the USAIRWAYS hub simply cannot be offset by growth in local travelers.

The bad news is that even though fares are down for many flights owing to the greater competition, the fixed costs of the huge airport debt is an anchor around the airport’s finances. With many fewer landings, gate operations, deplanements and enplanements, the fees charged to the airlines have had to increase to raise the money needed to pay the principal and interest on the airport bonds. That puts PIT in the unenviable position of being one of the higher cost facilities in the country. At a time of recession and weaker travel demand, PIT needs to be lowering costs. If the Chief Executive had not grabbed the $30 million or so of gaming money intended to help pay off the bonds, the airport could have made sizable cuts in the two previous years. It would have been great for the carriers.

Now, even with the $20 million the airport is borrowing for that purpose (pledging future gaming revenues), the $40 million the County plans to intercept means that the gaming money going to the airport will now total only $110 million rather than the $150 million the legislature intended.