Downtown Pittsburgh: Take 3

I've alluded, here and over at City Comforts, to the saga of Fifth & Forbes, Downtown Pittsburgh's primary retail corridor. About 7 years ago, the area - comprising two city blocks along two major avenues - was still anchored by a trio of department stores and retained a pretty broad variety of retail, but was clearly declining: increased vacancy rates, steadily lower-rent businesses, and so on. Mayor Tom Murphy, having just wrangled the financing for two new stadia and an effectively all-new convention center, decided to tackle this next. Trouble was that his plan - pretty much developed in secret - relied on a Chicago-based mall developer to take over essentially the entire area, including the demolition of dozens of historic buildings, some of which were legally protected.

When the plan was announced, in '99, an uproar ensued. Preservationists, conservatarians, business owners, and neighborhood groups resenting the focus on downtown all united in opposition. Rancorous public meetings and threatened lawsuits all played a role, but the ultimate nail in the coffin of the project was Nordstrom's decision not to come to town. In the meantime, a landmark bank was gutted to become a Lord & Taylor's and a heavily subsidized store was built for Horne's-Lazarus-Macy's. But, between the recession and the absence of any improvement in the rest of the district, both shut their doors within 5 years. Fifth & Forbes is now almost completely moribund - it's grim down there, even during the day when office workers swarm the streets.

Well, there's been big movement of late. Last week Piatt, a developer who made his money with a huge exurban office park/golf course/housing plan one county south, announced that he would buy the now-empty new dept. store building, putting in housing, adding townhouse-style penthouses on the roof, and, he hopes, a grocer on the first floor. Yesterday, PNC Bank, which snorked up one entire block before and during the original Fifth & Forbes push, announced that it would put a skyscraper on the site, including condos, a hotel, offices, and retail (complicated, I know). Meanwhile, a retail developer from out of town is looking at the collection of city-owned properties in the area for redevelopment, and is expected to get moving in '06.

All of which is exciting. The reason I bring it up is the twin questions of eminent domain and public subsidy. It was the threat of ED that aroused the greatest anger to the original Fifth & Forbes, and since then the concept has been taboo in this town. Since the heavily-subsidized new dept. store building was such a failure, what was already a dicey prospect (bankrupt city putting cash towards private development) looks even worse. The Piatt deal involves no direct subsidy, although he's getting the empty store in a sweetheart deal. PNC, on the other hand, is getting $48 million from the state and from local TIFs. So, as Jake Haulk, a minion of Dick Mellon-Scaife, put it, "I don't understand why taxpayers should be subsidizing a company that can well afford to put money in this." And I don't know the answer to that.

I'm not at all opposed to public investment in redevelopment. As I always argue with David Sucher, Pittsburgh is struggling to stanch the flow of people and business out of the city and region. If a little "gap" financing can turn around a moribund area, I have no philosophical objections. Furthermore, it's working, right in my neighborhood - a Home Depot and a Whole Foods came into what was a utterly failed '60s redeveloped business district and have - together with entrepreneurs - largely transformed it. East Liberty was synonymous in Pittsburghers' minds with the South Bronx. Another 3 years, and it'll be Park Slope (OK, most Pittsburghers probably have no clue where or what Park Slope is, but most of y'all do). So I think it can work, and I think it can be appropriate.

My biggest problem with the PNC deal is the amount of money, and its purpose. We're talking almost 30% of the development, and 2/3 of that is just a handout from the state. Certainly value will be added, and, as in the E. Liberty example, this may be a crucial catalyst, but we're not talking about seed money for something risky (like investment in a poor neighborhood) or with a big potential return (like a robotics incubator). We're talking about a law firm that's already downtown relocating, about a large bank adding a third tower to the two that are already adjacent, all on land that they already own (my wife would like to add that we're talking about some of the better historic buildings in Downtown being torn down, as well). So, sure, give 'em a little Tax Increment Financing to sweeten the deal - there's little question that it's a good deal for the taxing bodies. But all that state money? Feh.

We'd better at least get a decent building out of this. The rendering sure isn't impressive.