After two hours of public comment and two-and-a-half hours of discussion amongst themselves, Pittsburgh City Council members signaled their support of tax incentives to encourage development Downtown and in adjoining areas of the North Side and Strip District.
A 6-3 preliminary vote Wednesday tees up a final vote next week. Allegheny County and Pittsburgh Public Schools would have to approve tax breaks of their own for the proposed Transit Revitalization Investment District, or TRID, to have its fully intended effect.
Like other tax-diversion programs, a TRID involves issuing bonds to fund redevelopment in a given area. It then pays off that debt by using much of the additional property tax revenue created by the development.
“We are a modern city, and it is appropriate for taxing bodies to make that investment,” said Urban Redevelopment Authority executive director Susheela Nemani-Stanger, whose agency is spearheading the effort.
She and other officials said shoring up investments Downtown could staunch the spread of “vertical blight” in which building vacancies depress tax revenues and hollow out the city’s core.
Supporters of the approach say it doesn’t siphon off existing tax revenues: The bonds are paid off with future revenues that wouldn’t exist if the development never took place.
“Our revenues are not going to decline because of the TRID,” Matt Singer, deputy chief of staff to Mayor Corey O’Connor, told council members. “That’s not how this works.”
Still, it wasn’t an easy sell, thanks to ongoing concern about the city’s rocky finances and the memory of a property tax increase late last year.
“If you explained [the proposal] to any Pittsburgher on the street, they’d say that it sounds like taxpayers are getting ripped off,” said Councilor Barbara Warwick, who voted against the proposal along with Deb Gross and Khari Mosley.
The proposal “sounds like the taxpayers giving money to private developers for something that does not benefit them,” Warwick said.
Other councilors noted, however, that Downtown property taxes generated roughly a quarter of the city’s total property tax revenue — money that residents depended on whether they went Downtown or not.
“An investment Downtown that is able to allow us to invest in ourselves benefits the entire city,” said Bob Charland.
Council did amend the proposal to address one concern about economic fairness. Council member Bobby Wilson amended the bill to include a number of labor protection provisions, such as language reiterating that beneficiaries of the program would have to pay a prevailing wage for construction that would equal union scale.
Developers also would have to submit plans for engaging with unions and mitigating the impact of development on building-service workers currently employed at a property.
“Developers see possibly an angle to cut workers out of good union jobs [in] that development once it’s converted or built,” Wilson said.
The move was an effort to address the concerns raised by SEIU Local 32BJ, which represents building-service workers in a number of Downtown buildings.
Peter Schmidt, the union’s Western Pennsylvania district director, said some building conversions have already displaced members, including 12 janitorial workers who lost jobs at the former Alcoa headquarters Downtown, as it switched from office space to residential.
“Public investment should not be a subsidy to promote racing to the bottom,” he said. Workers “want a Downtown we can be proud of,” but the effect on workers “[is] another crisis that must be part of this conversation.”
According to the proposal submitted by the Urban Redevelopment Authority, the TRID could eventually provide up to $200 million in financing for projects Downtown, on the North Shore and the Strip District.
The initiative would be launched with an initial $50 million investment. Of that, $40 million would be earmarked for a “Downtown Real Estate Investment Program” which could include office-to-housing conversions, storefront and other “projects that contribute to the overall vitality of Downtown Pittsburgh.”
The remaining $10 million would be allocated toward hazily defined “Public Transit, Transportation and Mobility Projects,” which could involve improvements to public spaces and streetscapes.
Nemani-Stanger noted that three similar tax-diversion programs were about to expire after 20 years — and that when they did so, they would produce 12 times the tax revenue they had before.
That impressed some council members.
“I was hesitant at first” about “being asked to forfeit future taxes for the long-term goal,” said Councilor Anthony Coghill. But if there was an opportunity to generate a 12-fold increase in revenue, he said, “I’m willing to take that bet.”
Gross voiced doubt about whether the wager was wise. She cited an email that City Controller Rachael Heisler sent to council members Wednesday. In the email, the controller acknowledged that “it is in our best interest to see Downtown continue to grow and thrive,” but added that “the reality is that, as we all know, the City urgently needs more revenue right now.”
Heisler noted that the city faced steep debt payments in the near future, and that some of the projects the TRID could finance wouldn’t provide additional tax revenue because they were already poised to benefit from existing tax breaks. And the TRID subsidy could mean that some developments slated for completion in 2029 would produce less revenue than projected if the city did nothing at all.
“The outcomes aren’t going to be roses for the future for generating lots of revenue for any of the taxing bodies,” Gross said.
Other critics, who spoke for roughly two hours during the public comment period of Wednesday’s meeting, laced into making investments in Downtown — which has seen considerable development through the years — when Pittsburghers in many communities were struggling.
Investing more resources Downtown, said longtime activist Mel Packer, “will not benefit anyone but the developers. It will do little or nothing for those who make the city work.
“The builders and developers are here, more are coming,” he added. “We don’t need to bribe them. “
Maddy McGrady, who co-chairs the Pittsburgh Housing Justice Table affordable-housing advocacy group, agreed that “Public dollars should be leveraged to serve the public first, and not to protect the profits of speculative real estate investors.”
Public-transit activists were especially vocal, objecting that while the proposal was billed as a “transportation improvement district,” its benefits appeared to be heavily skewed toward non-transit projects.
“This is not in our name,” said Laura Chu Wiens, executive director of the advocacy group Pittsburghers for Public Transit. “This is not a transit policy or project. It is an abomination.”
Council’s preliminary vote Wednesday augurs well for a final vote in favor of the program. But URA officials will also approach Pittsburgh Public Schools and Allegheny County to agree to similar tax subsidies on their share of property tax.
Such approval is not a foregone conclusion: In the late 1990s, the city’s school board rejected a tax subsidy to refurbish a coke works in Hazelwood, plans for which collapsed afterward.
Asked what would happen if one or both taxing bodies rejected the Downtown TRID plan, Nemani-Stanger said, “We would need to evaluate that. I wouldn’t consider it dead.”