Pittsburgh, Penguins announce deal to start Lower Hill development

Date Published: 
Tuesday, September 9, 2014

Pittsburgh officials on Tuesday committed more than $400 million over 20 years to redevelop Uptown and the Hill District, a plan that starts with redeveloping 28 acres once occupied by the Civic Arena.

Mayor Bill Peduto wants to establish the city's largest tax-increment financing district, encompassing the two neighborhoods, and reach an agreement that permits the Penguins to begin construction on a portion.

"You're going to see a drastic change in this neighborhood," said Councilman R. Daniel Lavelle, who represents those neighborhoods, Downtown and parts of the North Side and Oakland. "It won't be overnight. This is going to be a process, but over ... four, five, six to 10 years, you will begin to see that transformation."

The 20-year TIF district would plow 65 percent of tax money generated by development into a fund to improve roads, utilities, homes and buildings in Uptown and the Hill. It would help offset the Penguins' costs of providing low-income housing on the arena property.

The hockey franchise received arena site development rights as part of a deal in 2007 to build the 18,387-seat, $321 million Consol Energy Center.

It opened in the Hill in 2010 to replace the Civic Arena, which dated to 1961 and was the NHL's oldest venue.

"(The development's) goal is to build transformational wealth for the residents of the greater Hill District," Peduto said in a news conference.

"At its worst case, this district will generate $22 million and as much as $50 million for investment in the total Hill District."

The city, Pittsburgh Public Schools and Allegheny County would divide the remaining 35 percent of new taxes if they approve the TIF district.

Such a development could trigger investment from Downtown to Oakland, said Gregg Broujos, managing director for Colliers International Pittsburgh, which tracks Pittsburgh real estate trends.

"They've always talked about that area between Downtown and Oakland being ready to take off, but (it) never really did," he said. "I do think the Civic Arena project exploding with that kind of dollar commitment ... will help expand the Golden Triangle and be the catalyst for expanding the Hill/Uptown area into Oakland."

Not everyone likes the plan.

Carl Redwood, who heads the Hill District Consensus Group, called the agreement a "backroom deal" hatched by Democratic politicians. "We haven't seen it," he said.

Marimba Milliones, executive director of Hill Community Development Corp., cautioned that the agreement is tentative.

"We shouldn't put the cart before the horse. It's subject to legal review, and there are still finer points that need to be worked out," she said, but would not identify outstanding issues.

"We shouldn't put the cart before the horse. It's subject to legal review, and there are still finer points that need to be worked out," she said, but would not identify outstanding issues.

Robert Rubinstein, acting executive director of the Urban Redevelopment Authority, said the agency would borrow money to pay for improvements. Developers guarantee loan payback through TIF agreements, he said.

The deal brokered by Peduto's chief of staff, Kevin Acklin, tentatively ends a stalemate between the Penguins and Hill community groups over building low-income housing and enabling minority- and female-owned businesses to participate in the $500 million arena development.

Acklin said the agreement was the product of about 50 meetings with residents.

"Not everybody got what they wanted," he said. "We could have simply rolled over the community and put through a plan with the Penguins. That didn't occur here."

The Penguins have retained McCormack Baron Salazar, a St. Louis-based real estate investment company, to build offices, apartments and stores in the Lower Hill. Residents wanted 30 percent of about 1,100 apartments set aside for low-income residents. Under the agreement, 210 apartments -- or 20 percent -- would be available to people earning 60 percent to 70 percent of the Hill District's mean income of $19,375, Penguins Chief Operating Officer Travis Williams said. Rental rates would start at $600 a month, he said.

Williams and team spokesman Tom McMillan were the only Penguins officials who attended the news conference. Former player Mario Lemieux and billionaire Ron Burkle co-own the team but rarely appear at such events, typically delegating that responsibility to Williams and CEO and President David Morehouse.

Williams said the deal requires more public subsidy to offset the loss of revenue from pricier apartments, though he could not say how much.

Residents won their request for minority- and female-owned business participation levels of 35 percent and 15 percent, respectively. That level of participation would be the highest in city history, Peduto said.

"We committed to the community that we would not advance development until we made sure the community was on board," Williams said. He credited Lavelle, the Lower Hill Working Group and others with helping to forge the agreement.

Infrastructure improvements for the 28 acres have begun. Construction of housing in an area known as the Melody Tent site near Crawford Street is set to begin in nine to 12 months.

Bob Bauder is a staff writer for Trib Total Media. He can be reached at 412-765-2312 or bbauder [at] tribweb.com.