Government
12:45 am
Thu November 8, 2012

Pittsburgh Officials Discuss Merits, Drawbacks of TIF Subsidies

Pittsburgh City Council's general discussion of Tax Increment Financing (TIF) districts on Wednesday was ostensibly not meant to focus on a single proposed TIF district, but city officials did end up sparring over the $50 million proposed subsidy for a Lower Strip District development by the Buncher Company.

When Council Members wondered aloud why the largest public subsidy in Pittsburgh's history lacks spending details, Urban Redevelopment Authority Acting Director Robert Rubinstein defended the proposal. The URA chief said it would be hard to lay out exactly how all the money would be spent at this point.

"What we do have identified are about twenty-five million or thirty million dollars of known costs for streets, for sidewalks, for structured parking, for those types of things we have identified in Phase 1 and partially in Phase 2 of the development," said Rubinstein. "We don't know yet what might happen ten years from now."

Rubinstein said it's normal for the final costs of a long-term development to be hazy until construction is actually underway. He compared the situation with the proposed Buncher development to the planning phases of the now-successful South Side Works redevelopment project.

"We had no idea [of] the types of things we were going to be doing," said Rubinstein. "It all wasn't identified up front on day one."

Dowd Raises Concerns about Parking, Transportation

City Councilman Patrick Dowd, who is withholding legislation to begin the Buncher TIF district, said he is concerned that the URA's funding of TIF projects focuses too much on automobile transportation. Dowd said public money should be invested equitably into many forms of transportation to and from the redevelopment site, including pedestrian, bicycle, and public transit.

"Even though some of the money, significant portions of those dollars might move towards parking structures … that's not the primary purpose of the public support," said Dowd.

However, Acting URA Director Rubinstein said his agency is trying to promote alternative transportation, but it's not that easy.

"The automobile-based society is not going away," said Rubinstein. "We're advancing on all fronts. We'll support walkable communities. We'll support public transit —"

"You'll support seas of asphalt," broke in Councilman Dowd.

Rubinstein denied the charge, and said he believes TIFs are not the appropriate tool for promoting alternative transportation in the city.

How TIFs Work

When instituting a TIF district, a local government agency borrows a certain amount of money to help fund a development project. Once the project is complete, the additional tax revenue created from the new site is dedicated toward paying off the loan. Therefore, the local government earns back the entire investment over time, and has created a steady source of tax revenue for the future.

Allegheny County, the city of Pittsburgh, and the Pittsburgh Public School District earn roughly $19 million in new ancillary tax revenue from TIF districts every year, including wage taxes, parking taxes, and property taxes.

Pittsburgh currently has 20 TIF districts, which account for 6.6% of the city's total taxable property value. State law limits TIF districts to account for no more than one-tenth of a municipality's total land value. That's why Councilman Dowd says the city must be wise about which of the many other pending TIF proposals it will approve.