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Even a desirable Pittsburgh neighborhood such as Shadyside could qualify as blighted under a 1945 state law used to get public money for economic development, a local preservationist says.
On Tuesday, the City Planning Commission used the law to declare the 28-acre Civic Arena property as blighted, paving the way for publicly funded roads, sewers and utilities on the Uptown site.
"Any section of the city with one rat or one abandoned property would qualify if you apply those definitions of blight," said Jeff Stack, who serves on the board of Preservation Pittsburgh and who lobbied to save the Civic Arena.
The Pittsburgh Urban Redevelopment Authority applied for the blight designation so the Civic Arena site would qualify for tax increment financing, which can aid development by using future tax revenues to pay for roads, sewers and utilities. The URA's economic development director said the property qualifies as blighted under the law and that no development would occur on the property without the taxpayer-funded subsidy.
The Penguins own development rights to the property as part of a deal to keep the team in Pittsburgh and want a mix of residential, commercial and retail development.
URA Economic Development Director Robert Rubinstein said the taxpayer-funded subsidies leveraged about $1.7 billion in private investment, created more than 17,000 jobs and generated about $9.1 million in additional tax revenue for Allegheny County, the city of Pittsburgh and Pittsburgh Public Schools.
"Overall I would say the numbers speak for themselves," Rubinstein said. "Absolutely, TIF is a valuable tool. It's created tax revenues to the local taxing bodies that when you figure in wage taxes, it's about $20 million a year. If not for the TIF, these developments would not have occurred."
PennPIRG, a Philadelphia advocacy group, reported in October it found a growing abuse of tax increment financing districts, or TIFs, in cities across the country. Its study found that 49 states use TIFs as an economic development tool. If used improperly, the report said, TIFs fail to reach public goals, enrich special interests at the public's expense and encourage development in areas where it's least needed.
"Localities often use tax increment financing as an all-purpose subsidy for developers, rather than its original purpose as a targeted tool to revitalize neighborhoods with circumstances that otherwise discourage investment," said Alana Miller, a program associate with PennPIRG, in a prepared statement that accompanied the report. She could not be reached for comment yesterday.
In 2005, the Capstone Seminar class at the University of Pittsburgh's Graduate School of Public and International Affairs examined 30 TIF districts in Allegheny County and found that the blight definition used locally was broad and lacked consistency across municipal borders. It also found that the TIF process lacked transparency.
The county has TIFs used for such projects as the Mall at Robinson and the Galleria Mall in Mt. Lebanon, both in upscale communities. Critics classify the use of TIFs in such retail projects as "zero sum gain," because they tend to move the same shoppers from one retail area to another.
Allegheny County would not provide detailed information on specific TIFs without a written request, a process that could take weeks to honor.
Pittsburgh has 20 TIF districts that include such developments as the Pittsburgh Technology Center on Second Avenue and the South Side Works. The projects benefited from a total of about $327 million in public funding, $156 million of which came through TIFs, according to information from the URA.
County Economic Development Director Dennis M. Davin could not cite a specific number, but said the county is home to "numerous" TIFs critical to economic development, especially around Pittsburgh International Airport. He said the county no longer provides TIFs for development that is exclusively retail, such as malls.
"The issue it comes down to is developers aren't going to put in the infrastructure because the returns on their investment just aren't there," Davin said. "I think we have to be responsible with it, and I think we have to do it the right way."
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