Pittsburgh's Hill District revitalization project hits financial hurdle in TIF

Date Published: 
Sunday, December 21, 2014

A plan to revitalize the Hill District and Uptown with tax money from a redeveloped Civic Arena site is more complicated than envisioned, say officials who hope to make public a proposal in January.

"There are a lot of moving parts," said Robert Rubinstein, acting executive director of Pittsburgh's Urban Redevelopment Authority, which is crafting a plan to pay for improvements.

An agreement reached this fall by city, neighborhood and Pittsburgh Penguins officials established conditions for the proposed $440 million project. The hockey team won the development rights to the site in a 2007 deal to build Consol Energy Center.

Among conditions in September's agreement, the parties will borrow as much as $50 million, then use 65 percent of the anticipated increase in property tax money from the 28-acre site to pay for improvements and programs in the Hill and Uptown.

But after announcing the 20-year deal, officials learned the tax increment financing money legally cannot be used for some intended programs in the nearly 2-square-mile area -- including workforce development, job training and childhood education initiatives.

Pennsylvania's Tax Increment Financing Act, adopted in 1990, allows local governments to borrow money for infrastructure projects to spur development in blighted areas, not for social service programs, Rubinstein said. The governments use a portion, or increment, of tax money generated by development to pay the debt.

Penguins Chief Operating Officer Travis Williams said the team will do what it can to support the neighborhood programs.

"The Penguins remain committed to working with the city, county and (Pittsburgh) school board" to find money for the Community Reinvestment Fund, Williams said.

Rubinstein said officials are pondering sources of money because of the restrictive TIF.

The state's Local Economic Revitalization Tax Act could allow officials to abate property taxes on the proposed U.S. Steel headquarters building at the site, and possibly others, for up to 10 years. Up to $750,000 a year that would have been owed in taxes on the properties would go into a fund for neighborhood rebuilding.

Donations from corporations and foundations could help, as could state tax credits.

Finding money to pay for neighborhood revitalization "is key to a successful agreement," said Marimba Milliones, president and CEO of the Hill District Community Development Corp., who signed the agreement.

It's unclear how much money the URA will borrow through a TIF to support the project.

Since 1993, Pittsburgh has pursued 23 TIF projects, borrowing a combined $270.8 million to spur more than $2.8 billion in development, according to URA data. Eighteen completed TIF projects led to 14,576 permanent jobs, which was 242 more than projected.

Five projects in progress or in planning stages are projected to generate 13,231 jobs.

Pittsburgh uses tax increment financing less frequently than it once did. It approved six TIFs in 1999 alone but just nine since, URA records show. The last two TIFs, however, have been among the largest in city history: $80 million for a project to redevelop the 178-acre former LTV Steel Co. site in Hazelwood, the city's largest TIF; and $24 million for the Summerset at Frick Park residential development, the third-largest.

"It's a critical tool to enable projects that might not otherwise have been possible," said Donald F. Smith Jr., president of the Downtown-based Regional Industrial Development Corp., which is teaming with four foundations to redevelop the Hazelwood site.

The development group, doing business as Almono LP, predicts more than $1 billion in development on the site. The TIF money would be used to build infrastructure, including a road through the sprawling development, highway ramps, sanitary sewer and water lines, and a stormwater system.

Tom Fontaine is a staff writer for Trib Total Media.

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