No TIF, No Development?

There has been much debate about the proposed riverfront development in the Strip District. A URA request for proposals says the development will be part residential, part hotel, part office and commercial, and have a parking garage.

The company announced today that it won’t pursue a TIF anymore, noting the company "does not wish to participate in a financing program the community views negatively" and that it will self-finance the infrastructure improvements that would have been funded with the TIF.

Why the change of heart? Was the company worn down by trying to get financing? Pittsburgh City Council agenda notes show that motions to adopt a Lower Strip District Tax Increment Financing (TIF) plan and to set forth cooperation agreements with the URA, the County, and the Pittsburgh Schools were presented and withdrawn on nearly a weekly basis going back to late May of 2012.

Such a large development going forward without expecting some sort of subsidy is rare-the predictable by-product of handing out money to certain developments only to see others parroting the request. If a TIF were granted, the taxing bodies that opt to participate agree to redirect all or some of the incremental property taxes from their coffers to pay off debt issued to get the project off of the ground. Once the arrangement expires, usually it is a twenty year deal, they recapture all of the money from the property.

If the company holds true to its word, and it is not in line for nor seeking any other source of state or local subsidy, then there might be a lesson to be learned for those quick to hand out public dollars when asked and the strength of the "but for" criterion attached to TIF subsidies.

Going to the RACP Well

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.