Colin McNickle’s column casting doubt on the merits of Pittsburgh’s Esplanade project is a tour de force that illustrates all the erroneous misconceptions surrounding it (“The problem with Pittsburgh’s ‘Esplanade’ project,” March 17, TribLive).
McNickle’s perspective is based on a policy brief published by his co-workers, our local thinkers at the Allegheny Institute for Public Policy. They feel that a $740 million project on 15 acres located in the barren no-man’s-land west of the casino on the North Shore is a bad idea. What follows is a response to their assertions and answers to a few questions posed in their policy brief.
First, the underlying premise of the policy brief is based on a false choice. I.e., if the Esplanade gets all these public resources, then other equally needy areas will not. We can quibble over how often the commonwealth hands out $35 million to real estate projects (as it did with the Esplanade), but the bulk of the incentive package is derived from future taxes and fees — money that does not yet exist and will not exist but for the project. The Esplanade does not jeopardize future revitalization efforts at Station Square or Braddock or anywhere else because the Esplanade is its own self-contained bucket of money. Nothing precludes Station Square or Braddock or anywhere else from doing the same thing.
Second, and closely related to the point above, 75% of future property taxes are pledged to the project, leaving 25% for all the taxing entities. I’m not a math whiz, but 25% of something is a lot more than 0% of nothing. Importantly, what’s the alternative? Is the preference that the property remain 15 acres of mostly unused land with plenty of tent encampments and an underutilized shoreline? I’d rather have the $740 million investment and 25% of its property taxes for the next 20 years. After which, we will receive 100%. Such is the crux of the community’s financial proposition associated with the project.
Third, once all incentives are tallied alongside the developer’s direct investment into the project, the total does not add up to $740 million. Accordingly, McNickle and the policy brief both make the point that “there is no explanation as to where the rest of the $740 million in funding will come.” Generally speaking, the explanation is that the remaining money comes from lending as the developer hits critical pre-leasing thresholds for phases of the project. Such arrangements are standard practice between lenders and developers.
Fourth, $740 million opportunities don’t arise every day for old Rust Belt cities. Of course the city and other public entities are going to entertain the conversation. It would be irresponsible not to. No doubt, this is a wonderful problem to have and a problem I bet Cleveland, Detroit and Buffalo would love to have.
Fifth, who cares what the tool is called so long as it gets the job done? Criticizing the use of a Transit Revitalization Investment District because “transit” is not a significant part of the Esplanade project is superficial and misses the point entirely. The point is to use the right tool for the job. A hammer by any other name still pounds nails. Tax increment financing by any other name still helps to underwrite large-scale projects without raising taxes and at minimal risk to the public.
Finally, I do appreciate their conclusion that we “must face up to the reality of (Pittsburgh’s) high cost and taxes of government and schools.” I couldn’t agree more that our taxes in the Pittsburgh area are something close to oppressive and often act as a repellent toward growth. But the institute failed to establish a nexus between the Esplanade project and how it contributes to our dysfunctional tax system.
Detailed policy briefs about how to fix our local tax system I will support wholeheartedly, but please don’t trivialize a $740 million investment as a “shiny new object” and use it as a straw man to make arguments about tax policies that the Esplanade is subject to just like the rest of us.
The Esplanade is a quality project that’s a logical extension of the North Shore’s entertainment district and located in a place that can use a $740 million investment. For my part, I’m excited to explore new things along the North Shore that help create a city of choice. It isn’t the cure for what ails us, but it is symptomatic of a front facing, 21st-century Pittsburgh, and I applaud our local leadership for partnering with the private sector to help bring the project from concept to reality.
Mike Tedesco is the economic development director for Crafton Borough. He’s new to Pittsburgh and has spent his career working in economic development across the country.