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Businesses savor the fruits of 'blight' -- special tax breaks

Sunday, January 12, 2003

The road to renewal is paved with self-deprecation. It seems you can hardly build anymore without first saying the neighborhood is a dump, even when it's not.

The Pittsburgh Planning Commission will have a public hearing Tuesday so folks can argue over whether part of Shadyside might be called "blighted." Without that designation, the state won't let the city give Giant Eagle a special tax break to triple the size of its store on Centre Avenue.

Mayor Tom Murphy has taken considerable grief for his frequent disbursement of "TIFs," bureaucratic jargon for "tax increment financing," this past decade. These deals allow some of the new taxes created by a development project to be used to pay off the loans that financed the project itself.

The Downtown operations centers for Mellon and PNC banks, the new Alcoa headquarters on the North Shore, the Lazarus department store, the Renaissance Pittsburgh Hotel and Home Depot are among the developments that got this break. Apart from Lazarus, they've been largely successful.

Critics have suggested the city is too free with its TIFs, but if you think declaring all of Downtown blighted is a stretch, how about 300 largely green acres in south Frazer, where a new mall is planned? How about Ohio Township, where a shopping center is planned just down the street from the Camp Horne interchange of Interstate 279? County Council approved the Frazer TIF in October and is currently considering Ohio's.

As Jake Haulk, director of the Allegheny Institute, has said, "You could declare the entire western world blighted" given Pennsylvania's broad definition of the term.

Groups such as Sustainable Pittsburgh and PennFuture generally support redevelopment of urban areas, but they're raising an alarm about how TIFs are being used in the hinterlands.

Court Gould, director of Sustainable Pittsburgh, says metropolitan Pittsburgh "is sprawling worse than Los Angeles." Gould cites a Brookings Institute study that says between 1982 and 1997, our population decreased by 8 percent while we consumed 43 percent more land.

We could save more of our diminishing green space and be less dependent on foreign oil if we concentrated on redeveloping areas where roads, sewers and public transportation are already in place. But in a county with 130 municipalities and 46 school districts, competition for tax-spewing retail development is fierce. Taxing authorities are more than willing to declare themselves blighted and forgo some taxes through TIFs. They'll still get more revenue than the town next door, which will get only the headaches from traffic and the knowledge that its own businesses will lose revenue to the region's newest big-box store.

All TIFs have to be approved by the municipality, the school district and the county. The county has no comprehensive plan, so the TIF-or-not-to-TIF question is wide open at the highest level, every time. Each development is treated uniquely, rather than as part of a broad strategy.

And at every level, the fear of losing ground to municipal neighbors is palpable. City Councilman Bill Peduto, who represents Shadyside, is a backer of Giant Eagle's $50 million plans for Centre Avenue. Only some of that would get a TIF, and Peduto says that's partially to reward the supermarket chain for changing the project to better suit the neighborhood, where some opposition remains.

The plan includes a parklet, 130 apartments in two towers above the store and underground parking, and involves demolition of 16 older row houses, nine other homes and a couple of vacant and scarred commercial buildings. The Urban Redevelopment Authority has had only preliminary talks with Giant Eagle and hasn't committed to any tax breaks.

Peduto speaks eloquently about how modern supermarkets are just one of the many amenities an urban neighborhood needs to attract and hold residents. And he's right. But this also is a city that has taken to looking for dimes under bar coasters to balance the budget. It desperately needs development that pays full freight. And the more these tax breaks get passed around, the more the next developer wants one here, there and everywhere.

None of these are easy calls. One day, perhaps, the city and county will feel strong enough to tell developers they must stand on their own two feet. But right now, the free market is revered more in the abstract than in reality.


Brian O'Neill can be reached at 412-263-1947 or boneill@post-gazette.com .

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