Saks Salvo Smacks of Past

Downtown Pittsburgh, September 24, 2010. The department store Saks Fifth Avenue has intimated that it needs help for renovation of its store, preferably from its landlord, but it would not turn down assistance from the City or its agencies, either.

"If it is important to the community for us to remain a viable retail presence in Downtown, it is necessary that the city and/or the landlord provide Saks an economic incentive for us to continue to operate" said the store’s spokesperson.

She also noted that "we are not looking to expand, but to comprehensively remodel both the interior and exterior of the store to meet the standards of both our customers and our design partners". The chain does not want to invest much in the building "because it’s unlikely there would be a reasonable return on investment because of reduced sales".

Downtown Pittsburgh, October 12, 1995. In a proposal outlining projects that would comprise the Center Triangle Tax Increment Financing District in Downtown, the Urban Redevelopment Authority (URA) noted that "the retention of a major department store in the downtown is considered to be very important" and a tax increment finance arrangement was critical to make the project viable. The development costs of that store totaled $78 million. Five years later the URA’s chairman noted that "…this store will become one of the most popular places to shop in a revitalized Downtown". Four years later it was gone.

It probably won’t come as much of a surprise that the store was Lazarus and is now a condominium project, which itself has received a fair share of public subsidy to help with its conversion. Is history repeating in Downtown?

A Golden Opportunity for Pittsburgh

News came today that Robert Morris University is planning to put its Downtown center on the selling block so as to better prioritize its existing resources. Currently exempt from paying property taxes as it is owned by a university, the County’s website shows a value of $6.4 million. If it were taxable, the building would generate a combined $188k for the City, County, and Pittsburgh Schools.

Now is the time for the City-who for years has complained about the burden of tax-exempt property within its borders-to mobilize its economic development machinery and capitalize on all of the good press the City has achieved to find a private and taxable enterprise that would seek the 5th Avenue location right across from Bank of NY Mellon’s operations center. The City does not own the site, and the University will decide to whom to sell, but one would think that the City could let its friends in the development community know that there is a prime parcel up for grabs. Consider it akin to finding a suitor for the site: that would be a lot less offensive than the usual depth of intervention in economic development by the city government and its related agencies.

And though it is in the shadow of the BNY center-which needed a tax increment finance package to get it built in 1998-the City could make it known that a prospective development should be able to stand on its own merits and without subsidy.

In so doing the City could recoup what it felt it "lost" when Robert Morris’ Uptown neighbor Duquesne University bought Citiline Towers in 2004. That structure is on the books with a $5.1 million assessed value and would generate $149 million for the three taxing bodies. Getting a taxable buyer for the Robert Morris building-without extending a subsidy-would be a net positive in terms of tax collections.