Hey kids! You've probably heard the biblical story of Lazarus, the dead guy who got up and walked out of his cave with gross bandages stuck to him. I've got a story for you about another Lazarus. This one is a dead store that is getting up and walking out of Downtown with millions of dollars in public money stuck to it. But -- surprise! -- there may be more to be thankful for in this Lazarus story than in the one about the smelly dead guy.
In 1997, Mayor Tom Murphy was so confident that a new Downtown department store would do well that he agreed to pay $48 million to help one open up. Of that, $23 million was basically a gift. But about $25 million came from a neato trick called tax-increment financing. TIF involves borrowing lots of money, using it to fix something up, and then paying it back over time using the increased taxes and fees that result. It's like borrowing money from mom to start a lemonade stand, and promising to pay it off with the next 20 years' worth of lemonade sales.
Federated Department Stores was so confident that a new Downtown Lazarus would do well that it even promised to pay the city something back -- if it managed to sell $41 million worth of stuff per year. So Mayor Murphy put up the money, Federated built a nice store, and in 1998, with much fanfare, the city gave you .... Lazarus!
That turned out to be just like the time your dad emptied out your bank account and bought you that stupid train set he liked, instead of the new PlayStationTM you really wanted. Darned if you were going to touch those trains, and darned if any self-respecting Pittsburgher was going to buy anything in that store.
One year Lazarus managed to sell $22 million worth of stuff, but it never got close to rent-paying levels. On Jan. 15, Federated announced that it would close Lazarus in May. The other store Mayor Murphy bought for us, Lord & Taylor, is closing, too. The mayor blamed the shortsighted people who didn't want to give up more of their money and property to bring in more stores. Bad shortsighted people! Bad!
Lazarus walking isn't as bad as it seems, though. The Federated people and the Pittsburgh Parking Authority have to continue to pay off that $25 million in TIF borrowing. Another $4 million that was spent on the garage arguably isn't a total loss, since we get to keep the garage. In fact, since no one can afford to park Downtown once they raised the taxes, the Lazarus garage is a great place to play hide-and-seek. Maybe that's what Mayor Murphy has been doing lately!
So really, we're only out $19 million -- or $57 for each remaining Pittsburgher. About all you can get for that is a used GameBoy Advance ConsoleTM -- and who wants something that's been used, when you can have an empty store that's hardly been opened?