City Selects Strip District Produce Terminal Renovation, Relies On Specious Funding Plan

Artistic Rendering from McCaffery Interests Inc. showing the potential renovation of the Strip District Produce Terminal

The City of Pittsburgh is moving forward with a revised development plan from Chicago-based McCaffery Interests Inc. to renovate the Produce Terminal along Smallman Street in the Strip District. The total cost of the project is estimated to be $70M, as per Dan McCaffery of McCaffery Interests. Of that total, nearly $20M is pencilled in as coming from either foundation grants or public subsidies.

The plan itself is bold in nature. It would be a “food-centric” plan that seeks to harmonize itself with the existing Strip District, which represents the stomach of Pittsburgh. There would a public market and food-based stores, complemented by 20 live-work apartments, general office space, and restaurants. The fear that some people have and have already raised is that this renovation will make the Produce Terminal too new and shiny, a stark contrast to the gritty nature of the industrial warehouse look of the Strip District. I remember when I first started visiting the Strip as a kid, it was dirty. Back then, you weren’t quite sure if the food you were getting was safely prepared or safe to eat, but that was all part of the adventure. It’s been greatly cleaned up today, but it is still a no-frills adventure to get the raw food goods to prepare not only your personal meals, but the meals for many of the restaurants throughout the City of Pittsburgh.

The artistic rendering shown above comes from McCaffery Interests’ vision for the property. There shouldn’t be a whole lot of apprehension to McCaffery Interests, as they were the developer responsible for the renovation of the Cork Factory and the construction of the adjacent Lot 24, both right up the street from the proposed Produce Terminal project. The Cork Factory has maintained an adequate amount of grit, coupled with a heaping dose of renovation.

The Produce Terminal rendering has a promenade feel to it, with an encouragement towards pedestrian traffic to walk along Smallman Street and then buzz in and out of shops on the elevated dock portion of the project. This would essentially create a narrowing of Smallman Street, a typical traffic calming measure that is implemented in other settings to slow down traffic, which would be a positive development. As currently situated, Smallman is too wide, which leads to people passing cars all the time without regard to pedestrians. On the other hand, this eliminates a huge amount of on-street parking that currently exists. This plan proposed by McCaffery did not explicitly mention parking, but some type of low-rise parking garage would have to be built between the Produce Terminal and the river to compensate for this loss.

Setting aside the nature of the project and whether or not they can make it shabby chic to blend in with Penn Avenue/Smallman Street, what I’m concerned about is the bridge funding that will be sought out to pay for this project. I hope that the City does not go for a Tax Increment Financing (TIF) plan to make up the shortfall of funding. Quite simply, TIF’s are scams that benefit only the developers and leave the host municipalities holding the bag. The basic premise behind a TIF is that the developer receives a certain amount of money interest-free to complete their project. The host municipality is paid back under the premise that there will be a significant incremental increase in tax revenue generated from the project than if the project never moved forward. But as can be shown with Pittsburgh Mills out in Frazier Township and their current $1.3M shortfall, these estimates of revenues are typically wildly overestimated and the revenue falls short to the municipality.

What I would like to propose is some sort of diversion from the revenues of the state’s casinos for this project. The City of Pittsburgh receives a healthy cut of tax revenue from the roughly $280M that Rivers Casino generates each year, but they also receive a share of the total amount from the statewide pool of casino revenues, as well. These monies are already being used to renovate and revitalize parts of the City. Additional monies are dedicated to projects in non-City of Pittsburgh municipalities through the Community Infrastructure Tourism Fund (CITF) and Gaming Economic Development Fund (GEDF) to improve infrastructure and support programs. I would like to see a dedicated revenue stream of perhaps $666,666 per year for 30 years (with a low interest increase of 1-2%/year) set aside from the gaming industry to support this program, rather than a TIF which the City would never see the full return on anyway. This way the monies are not being diverted from existing earmarked City funds and are small enough that the State Department of Revenue could bleed it off without disrupting over funding streams like the CITF/GEDF.