Pittsburgh City Councilor Bill Peduto wants to use tax abatements to spur development in Pittsburgh. So does Mayor Luke Ravenstahl. But "I can't compare my plan to his because he doesn't have one. I can't debate a press release," Peduto says. Ravenstahl "took a carefully crafted economic development tool that has been lacking in this city for the past 20 years and turned it into a game of one-upmanship."
Peduto, who is challenging Ravenstahl in the upcoming special mayoral election, has proposed offering a 10-year-long, 100 percent tax abatement for new construction Downtown and five adjoining neighborhoods. City property tax on construction within that area would be waived for the decade.
Developed by an 18-member working group, Peduto's plan focuses on six neighborhoods near the city's center -- Downtown, the Lower Hill District, North Shore, South Shore, the Strip District and Uptown. After eight months of work, Peduto was set to release the plan at a Feb. 15 public hearing. However, at a meeting of the Pittsburgh Downtown Partnership the day before, Ravenstahl outlined a plan that offered a similar 10-year, 100-percent tax abatement.
There are differences between the two proposals. Only Peduto's plan offers additional tax credits on historic renovation and environmentally friendly building technologies. Ravenstahl's plan, meanwhile, includes 20 other neighborhoods, including such struggling areas as Homewood, Larimer, Lincoln-Lemington-Belmar and the Upper Hill.
Peduto says he will now convene another study group to look at alternative tax-abatement plans. One would include economically under-performing neighborhoods, like those Ravenstahl's plan covers. Another will look at applying the exemption throughout the city.
"I will be doing the difficult work that the mayor avoided," Peduto says. "At some point you have to be responsible, instead of offering everyone an ice-cream cone just to get elected."
Noor Ismail, the city's assistant director for strategic planning, says the basis of the mayor's plan is no different than the basis for Peduto's -- the plan developed by the work group and the Pittsburgh Downtown partnership, "which the city is a member of."
The plan introduced by Ravenstahl has been in the works for the past three months, she said, and while based on the same plan as Peduto's the mayor's plan "takes it one step further to include neighborhoods" in select areas next to growth zones.
"The hope is that including these neighborhoods in the tax-abatement plan will trigger development in these areas that had no growth in 2005 and 2006," Ismail said.
Ismail said documentation backing the mayor's plan would be publicly released soon.
Peduto's proposal is drawing some criticism because it focuses on areas such as the South Side and the North Side that are already seeing a boom in development. Peduto said the working group was following up on the ideas of the Riverlife Task Force, whose work focuses on parts of town along the rivers.
Peduto added that in Philadelphia, whose tax-abatement program inspired his plan, the areas that saw the largest boom under the tax-abatement program were "already over-performing, affluent neighborhoods."
Steve Zecher, a consultant who worked on Peduto's plan, says the goal was "to focus on the Triangle and the five neighborhoods that surround it. That's the city's regional brand and the area that defines Pittsburgh in the national and international community."
He said the tools proposed were developed to deal specifically with the needs and problems Downtown, like the steeper cost of site acquisition and parking costs.
"All of these things translate into capital costs that can't be recovered in a short amount of time," Zecher says. "This plan would provide the sufficient return they would need to get them to come to this city."
Zecher noted that there are already programs in place to help struggling neighborhoods elsewhere in the city. For example, the Local Economic Revitalization Tax Assistance Act (LERTA) District already provides a five-year, 100-percent commercial tax abatement, he says.
"I am a big proponent of using the right tool for the job," Zecher says, "and this tool has been developed for the Downtown area."