A planned $418 million hotel at the David L. Lawrence Convention Center in Downtown Pittsburgh will be funded with ample public dollars, including money from the city, Allegheny County and state.
Loews Hotels has signed a letter of intent to build a 500-room hotel attached to the convention center, Gov. Josh Shapiro’s office announced Thursday. The building would take up the parking lots on either side of 10th Street headed toward the convention center.
The New York City-based luxury hotel chain, which posted $1.7 billion in profits last year, is contributing $135 million to the project. The hotel also will be subsidized with $30 million from the state as well as unspecified contributions from the county and city. It’s unclear whether any additional funding sources are in the mix.
Public officials and industry boosters say the hotel would draw bigger conventions, support surrounding businesses and create 400 permanent jobs, generating economic benefits that make the subsidies worthwhile.
“The economic impact and growth of the city should be great,” said state Sen. Wayne Fontana, D-Brookline, who chairs the Sports and Exhibition Authority of Pittsburgh and Allegheny County. “Everyone is going to want to use it.”
Frank Gamrat, executive director of the Allegheny Institute for Public Policy, is less enthused. He opposes public funding for any hotel, arguing it gives them an unfair advantage over unsubsidized competitors, and questions rosy economic visions from the project’s backers.
“There’s no way the public would ever get a return on that investment,” Gamrat said.
Money sources
Pennsylvania is pulling from its Redevelopment Assistance Capital Program across three grant rounds to support the hotel. This program reimburses developers, rather than paying them up front, and requires them to spend a certain amount of matching funds.
Abigail Gardner, a spokeswoman for the county, declined to say how much the county will put toward the project because the deal is not finalized. She noted, however, that much of the county’s contribution will come from hotel tax revenues and none will be pulled from property tax dollars.
The county levies a 7% tax on all stays at hotels, motels and short-term rentals, like an Airbnb. Revenues go toward debt on the David L. Lawrence Convention Center, covering the county’s collection costs and tourism agency Visit Pittsburgh. Monroeville also gets a share because it has a convention center within its borders.
Any leftover funds can be used to support the Downtown convention center’s operations and promote tourism. Public officials have long eyed using this money to attract a headquarters hotel to the current facility, which opened in 2003.
The county drew in $47 million from the tax last year, $18 million of which went to the discretionary balance.
Pittsburgh has offered a parking tax diversion to support the project, according to Molly Onufer, a spokeswoman for the city. This mechanism uses future increases in parking tax revenue to fund projects. Onufer did not provide additional information, saying she lacked access to the full funding picture.
City finances are in a “delicate position,” Pittsburgh Controller Rachael Heisler cautioned this month. That likely puts any direct contributions to the hotel out of the question. Pittsburgh will nonetheless forgo future revenues through the parking tax diversion.
When is the deal final?
There is no concrete timeline for the deal to be finalized, though Fontana expects it to be a matter of days or weeks. The Shapiro administration says it’s working to get shovels in the ground as soon as possible.
Visitors to the convention center already have a hotel connected to the facility. The 617-room Westin Pittsburgh is connected to the convention center by a skywalk over Penn Avenue. The hotel declined to comment Friday.
Perry Ivery, president of the Greater Pittsburgh Hotel Association and chair of tourism agency Visit Pittsburgh, said it’s time for the convention center to up its game in terms of accommodations.
“Other peer cities — Cleveland, Cincinnati, Louisville, Columbus — they’ve been in this mode adding new hotels and adding additional rooms to their cities so they can attract bigger conferences,” Ivery said.
Wider economic benefits aside, pulling in top-tier events could drive revenue for the convention center, a longtime money-loser for the SEA.
“If we can break even year to year,” Fontana said, “that’s a home run.”