Nearly six years ago the borough manager of Castle Shannon stated "it appears the developer [of a proposed transit village at the Shannon trolley lot] has finalized both site development and financing structure". Three years after that the former Governor of Pennsylvania released $4 million in redevelopment funds to the project. And this week Allegheny County Council expects to act on a resolution to join the borough and Keystone Oaks School District in a tax increment financing plan that would allow incremental tax revenues to be diverted from the development to pay for up-front financing help.
The project does have staying power. Consider that the adjacent municipality of Mt Lebanon flirted with TIF plans for both the Galleria Mall at for a site on Washington Road that would have been a mixed use development.
According to the resolution’s language the site is expected to include "construction and lease of residential apartments, commercial space, and community parking of the [trolley station]". The resolution is non-binding and only authorizes an appointee of the County to work in conjunction with representatives of the other two taxing bodies on the TIF plan.
The benefits are enumerated as such: stimulation of private investment, increases in property values, creation of employment opportunities, and improvement of surrounding properties. Of course, for the County and the other taxing bodies they are hoping that these benefits are in addition to what is already there and don’t result from activity shifting around or to the detriment of existing activity.
We’ve written before about the Redevelopment Assistance Capital Program before, whether it is the projects it has funded, the requests made to it by local governments, and, in a July 2010 blog how in its relatively short history (it was created in 1986) the state had upped the credit limit through the years to where it stood at a borrowing cap of $4.0 billion in 2010. Much acceleration on the cap occurred in the mid to late part of the last decade. Overall it took 26 years to get to that borrowing level.
Now the state House has passed legislation that would make a lot of significant changes to the program but its main thrust is that it would gradually decrease the cap that would begin with an immediate reduction of $550 million and then $50 million each year from 2012 through 2019. The amount would increase to $150 million in 2020 until the cap gets to $1.5 billion, or roughly the level it was at in 2002.
A quick calculation shows that the level would be reached in 2029 assuming a strict adherence to the schedule. Roughly 17 years, the same time frame it took the RACP to grow from its initial 1986 appropriation to its 2002 level.
How far removed the City seems to be from the New Year’s rush to avoid a state takeover of the pension system, how plan after plan was tried until Council settled upon using the infusion of value of parking tax monies over the next three decades. All because the state would have been iron-fisted in its treatment of pensioners, at least according to proponents who pushed for the alternative plans.
Since that time the City has authorized the Urban Redevelopment Authority not once, but twice, to apply to the state’s Budget Office for permission to obtain funding from the Redevelopment Assistance Capital Program (RACP) to help prevent the spread of blight and promote economic development. This week Council will give the URA its blessing to pursue $15 million for redevelopment of the Produce Terminal in the Strip, $4 million for the "Downtown Preservation" project, and $1.5 million for projects in Lawrenceville and the North Side. The RACP has assisted many projects around the state for 25 years.
When the previous Governor visited Pittsburgh in December bearing $84 million in RACP "gifts" he indicated that some of the money was committed but not all of it and "he said he was hopeful that [the] incoming governor…would honor all of the requests". Well, now that the new Governor’s administration has begun we will see how the RACP is viewed. The borrowing limit of the RACP increased 179% on the previous Governor’s watch (it took 16 years from the time RACP was created in 1986 to grow at a pace somewhat close to that) and now stands at $4,050 million.
So, after an exhausting week in which City Council tried a variety of methods and went to the wire to beat the deadline of a possible state takeover of its pensions, citing the disastrous by-products of having the Pennsylvania Municipal Retirement System (PMRS) administer pensions and compelling higher payments under Act 44, noting that the state would do horrible things if it became the controlling entity of the underfunded pension system, what did City Council begin deliberating on today?
Giving its blessing to the Urban Redevelopment Authority (URA) to pursue up to $14.3 million in public money from the state’s Budget Office under the Redevelopment Capital Assistance Budget.
That’s right-the same cold and heartless state that was ready to wrest control of the pensions is now being asked to pony up some money for redevelopment projects, all in the name of removing blight.
There’s $2.1 million for the Symphony, $0.500 million for an Amalgamated Transit Union project, $4.5 million for a parking garage, $2.1 million for residential development in the Strip District, and $5 million for rehabilitation of the Goodwill building in the South Side.
Its not the first time the City (or any other municipality in the state) has petitioned for money from the RACP, but less than a week after the rollercoaster ride aimed at throwing any possible revenue source at the wall to avoid a state takeover? What’s the message here?
The City’s Planning Commission has declared a section of land (176 acres altogether) next to the Summerset Park home development blighted. Doing so allows for the City and its related entities, along with the County and the Pittsburgh Schools to sign off on a tax increment financing package for the developer.
Only officials want to redefine the term because, of course, nothing says move to a housing development like a blighted area. The Commission chairman said in a newspaper article that "the term blight is the wrong term…I think it’s really an area in need of redevelopment."
That’s what previous planning officials, redevelopment advocates, and elected officials said when the Summerset project began over a decade ago. By now, with 256 high-priced homes built and more planned on the now blighted area, the public should expect that the time for subsidies and special tax treatment would be over.
But that’s not the case, since a URA official noted that the TIF package will be necessary since the state’s help through the Redevelopment Assistance Capital Program-which provided close to $18 million to the development-is likely dried up. What the official did not note is that during the 20 year life of a tax increment package part or all of the incremental taxes won’t go to pay for the public services necessitated by new homes, families, vehicles, etc. but will go to pay off the debt to build the new high-priced homes.
In fact, the new phase of development might be in line for an $11 million loan from PENNVEST, which is another arrow in the state’s development quiver.
Remember that lots for the new development were once decided by a lottery. The Mayor at the time noted that the housing plan was "going against the popular misconception that people don’t want to live in the city". As recently as 2008 an official of the development company indicated "we’ve continued to have steady interest and good sales despite the economic downturn…we sell about two units each month just as we’ve been doing for years. I currently have a list of over 20 perspective buyers from around the region who want to move into the city." So when does the public get to opt out as a silent development partner?