Taxpayers should not underwrite FNB skyscraper
Well doesn’t this just take the cake:
The Post-Gazette reports that First National Bank (FNB) has requested $15 million in state aid – i.e. taxpayer dollars; a grant, not a loan – from the Pennsylvania Redevelopment Assistance Capital Program (RACP) “to help with the construction of its new 24-story, $200 million headquarters on the former Civic Arena site” in Pittsburgh’s Hill District.
Who does FNB think it is, PNC? You’ll remember that PNC shook down the public for $48 million to help it build the 23-story, $170 million Three PNC Plaza that opened in 2009. “Civic leaders” then had the temerity to criticize those who called out PNC for its shamelessness.
What is it with banks – banks, of all things – thinking the public should help underwrite capital costs that they alone should bear?
What, FNB cannot get a loan? Hey, maybe it can’t. After all, the price of its shares has dropped 41 percent since the beginning of the year. Maybe FNB is a bad investment in these coronavirus times.
So, that’s an excuse to attempt to offload 7.5 percent of the cost of its new headquarters tower on taxpayers?
Well, while share prices are down (per its second-quarter earnings report posted in mid-July), its earnings per share (adjusted for one-time gains and costs) still were 26 cents. And that beat Wall Street expectations (of 11 cents per share) for the quarter by more than 136 percent.
Woot-woot and all that.
FNB still earned $83.6 million for the quarter. FNB’s second-quarter revenue was $358.5 million. Revenue net of interest expenses was $305.6 million, exceeding Wall Street expectations by more than $8 million.
Still, FNB feels it has a right to public dollars.
Besides the fact that big banks should have no claim on public dollars, there’s another quite compelling reason to reject this latest dive into taxpayer pockets – the incredible glut of premium office space in Downtown Pittsburgh.
And that was evident before the coronavirus pandemic struck; the pandemic most assuredly will lead to an even worse glut as working from home continues to evolve into the norm and not the exception.
But here’s how an FNB spokesperson defended the $15 million request:
“This support is necessary to continue FNB’s investment in the project in a post-COVID economic environment. We believe this is a priority project for the city and region because it creates several thousand construction and permanent jobs, generates millions in tax revenue and helps restart our economy at a critical moment.”
So, if FNB doesn’t get taxpayer help, it won’t invest its own money and that undoubtedly will scuttle the project. Good corporate citizenship always makes our heart warm.
And if this is such a “priority project,” why doesn’t FNB do the right thing, pay for the whole thing itself and take full credit for all those jobs, increased tax revenue and that economic jumpstart?
Bottom line: FNB wants to socialize the risk of what should, even in pandemic times, be a 100 percent private investment and, in the process, exacerbate the office space glut.
Gee, what’s not to like?
But First National Bank is not the only private concern all too hopeful of feeding at the public trough in times of pandemic-scarce public dollars. Among the others:
A Chicago company wants $8 million total for two projects that would create even more office space and some retail/restaurant space in the Strip District.
But that’s not the taxpayers’ responsibility.
A New York company wants nearly $11 million to, as the P-G reports it, “convert the SouthSide Works Cinema into the Box Office, a 77,000-square-foot innovative and creative office space. The developer also would use the money to rehab the town square, adding space for food and drink operators, fencing, a canopy, a ‘stage’-like platform for events, games and seating.”
Neither should that be the taxpayers’ responsibility.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (firstname.lastname@example.org).