PITTSBURGH | Development Rundown II

[GeneW]

Originally Posted by Evergrey

Allegheny City Brewery... supposed to open around January

...

http://www.bizjournals.com/pittsburgh/bl...y-employees-uber-expects-to-work-at.html

400 employees!? That's ambitious and isn't going to be easy or quick to find, recruit and hire that many qualified engineers.

[BrianTH]

Wow, 400 is much more than I expected.

I can't tell you how much I would love to see these buildings matched on the other side of the highway some day:



Obviously Allegheny Center is what it is and the Faros plan won't change it much in terms of acting as a barrier along Federal. But if that surface lot and Post Office lot south of "Commons" got redeveloped with buildings you could see from south of the highway, it would do a lot to psychologically pull the North Side and Downtown closer together.

[Brentsters]

.

[BrianTH]

This was a nice renovation project in Braddock:

http://www.nextpittsburgh.com/city-desig...novated-revitalized-free-press-building/

The Free Press building, which spans 522 through 528 Braddock Ave., had been vacant for a decade, before the Mon Valley Initiative bought it in 2013 with help from Allegheny County’s Vacant Property Recovery Program. It used to house businesses such as Guentert’s Bakery, the Braddock Moose Lodge and the Braddock Free Press newspaper. The space will now be home to retail tenants like Studebaker Metals and Meter Feeder, Inc., a variety store, a pizza place and a coffee shop, as well as seven apartments on the upper floors. . . . The project will restore 28,000 square feet back to Braddock’s tax rolls. And the apartment units will be listed at affordable rental rates, says MVI’s Zinat Naderi. While much of the building needed to be completely overhauled, there are some architectural details that were preserved, including the tin ceilings in the storefronts facing Braddock Avenue, and some of the original interior design.

Not so timely, but this was another cool project in Braddock:

http://www.nextpittsburgh.com/uncategori...-the-strip-to-a-very-welcoming-braddock/

Evan Indianer is no stranger to working in unusual spaces. The founder and CEO of Unicentric first brought his business to a warehouse in the Strip District nearly two decades ago. “There was nothing there,” says Indianer who said his friends were mystified by his move. “We were on the edge of Lawrenceville.” . . . [T]he team at Unicentric has moved its business from the Strip District into the former church. The space, built in 1894, has seen a variety of change in Braddock. Next to the Edgar Thomson Steel Works, the building was first established as a synagogue and became a Baptist church in the 1930s. Despite its age, the building was in excellent shape. “It was very different when it was full of pews,” jokes Indianer, but Unicentric worked with Joel Farkas of Farkas Associates to seamlessly transform the church into an open office space. The first floor is offices, featuring large stained glass windows flanked by private meeting rooms. The basement, with original stone walls, can hold over 100 people. While Unicentric is using the area for training, Indianer hopes “that we could have some community events there.”

[photoLith]

That renovation in Braddock is absolutely incredible. Im going over tonight to photograph it.

[Austinlee]

Nice pics of Foreland St, Photolith. I love that the central Northside full money restorations are sweeping towards 279N and also happening over in East Deutchtown too. These neighborhoods have bright futures as some of the most sought after locations in the future.

[themaguffin]

Does Pittsburgh even try?

Ever?

Atlanta Mayor Kasim Reed is ready to offer whatever it takes in the form of tax incentives to convince General Electric Co. to move its headquarters to the city, Bloomberg News reported Thursday.

http://www.bizjournals.com/atlanta/blog/...angling-tax-breaks-to-attract-ge-to.html

[BrianTH]

In most cases, tax incentives are wasted money. Big businesses have many more important factors that go into site locations, but they hit up all the purported contenders for tax incentives anyway, which then just becomes gravy when they choose the location they would have chosen even if there were no incentives.

There are some exceptions--for example, filming locations, which are much more flexible about location because they are just there temporarily anyway, a lot of the main labor is imported anyway, and so on. But mostly you are better off spending your public funds on just building a better city in terms of infrastructure, education, housing, and so on, and then you will get plenty of site locations because of those other, usually dominant, factors.

All this is well-known in the literature, but of course politicians ignore all that, because the political incentives are all oriented toward making it look like you are doing something personally to attract or retain big-name businesses.

Originally Posted by themaguffin

Does Pittsburgh even try?

Ever?


http://www.bizjournals.com/atlanta/blog/...angling-tax-breaks-to-attract-ge-to.html

I'd love to see Pittsburgh actually throw its hat into the ring to vie for GE HQ (wouldn't win, but it would learn a lot about itself in relation to other cities from this type of exercise)... it makes total sense to me given Pittsburgh's long affiliation with GE historically, fast-growing hi-tech sector, strong white collar presence, big time universities, cultural amenities, etc etc.... aside from the airport of course and remote location and PA corporate tax structures for a multinational corporation like GE.

Meanwhile, in Erie, GE is laying off 1,500 blue collar workers (very well-paid blue collar workers) from the locomotive division as it continues to grow its production in Fort Worth and overseas. Decreases in global orders resulting from a downturn in the global mining industry and US Import-Export Bank policies are being blamed, and I'm sure there's some truth to that, but it's really the same old story and game of corporate downsizing in one area in favor of growth where the grass is greener in another...

This really sucks, not just for the Erie area, but for western PA and the state overall. Grove City's engine plant has seen and will likely also see greater layoffs in the future, and decreased production at the Erie plant means the hundreds of smaller manufacturing suppliers to GE in Erie that exist throughout the nation (but located mainly in western PA) will feel the ripple effects.

Originally Posted by BrianTH

In most cases, tax incentives are wasted money. Big businesses have many more important factors that go into site locations, but they hit up all the purported contenders for tax incentives anyway, which then just becomes gravy when they choose the location they would have chosen even if there were no incentives.

There are some exceptions--for example, filming locations, which are much more flexible about location because they are just there temporarily anyway, a lot of the main labor is imported anyway, and so on. But mostly you are better off spending your public funds on just building a better city in terms of infrastructure, education, housing, and so on, and then you will get plenty of site locations because of those other, usually dominant, factors.

All this is well-known in the literature, but of course politicians ignore all that, because the political incentives are all oriented toward making it look like you are doing something personally to attract or retain big-name businesses.

Rising corporate tax rates in CT does have something to do with GE putting the feelers out for a HQ relocation though. But I definitely agree with you on cities/states tripping over themselves to offer tax break giveaways to corporations to to entice them to set up shop in their city/state. As you said, spending that $ on improving the city is $ spent so much more wisely than dangling what amounts to a "limited time offer" to a company.

[Austinlee]

Originally Posted by Perch

I'd love to see Pittsburgh actually throw its hat into the ring to vie for GE HQ (wouldn't win, but it would learn a lot about itself in relation to other cities from this type of exercise)... it makes total sense to me given Pittsburgh's long affiliation with GE historically, fast-growing hi-tech sector, strong white collar presence, big time universities, cultural amenities, etc etc.... aside from the airport of course and remote location and PA corporate tax structures for a multinational corporation like GE.

Meanwhile, in Erie, GE is laying off 1,500 blue collar workers (very well-paid blue collar workers) from the locomotive division as it continues to grow its production in Fort Worth and overseas. Decreases in global orders resulting from a downturn in the global mining industry and US Import-Export Bank policies are being blamed, and I'm sure there's some truth to that, but it's really the same old story and game of corporate downsizing in one area in favor of growth where the grass is greener in another...

This really sucks, not just for the Erie area, but for western PA and the state overall. Grove City's engine plant has seen and will likely also see greater layoffs in the future, and decreased production at the Erie plant means the hundreds of smaller manufacturing suppliers to GE in Erie that exist throughout the nation (but located mainly in western PA) will feel the ripple effects.

Wow, had no idea GE was laying off 1,500 employees in Erie. That's awful.

[photoLith]

This country is going to shit, no such thing as job security. The new American norm I deal with way too often.

[PITairport]

A tax incentive or tax break is not something that existing money is "spent on" or paid for in the same manner as a subsidy or handout/welfare. In simple terms, a subsidy is the direct aid or payment to an institution FROM the government, whereas a tax break is the lowering of tax burdens TO the gov't.

With tax breaks, the gov't is still getting more revenue than if the relocated company never came to start with.

I made the same argument for the Shell cracker. Everyone was up in arms that we taxpayers were "subsidizing" Shell via the tax breaks Corbett offered. The tax breaks may reduce the overall increased revenue the state is getting while they are in effect, but to claim the taxpayers are subsidizing Shell directly out of the existing gov't kitty and thereby reducing existing gov't funds just isn't how it works. Then, after a set number of years those breaks will expire anyway.

So to suggest that money would be better spent on schools or infrastructure is flawed thinking. With tax breaks, we are still looking at a net increase in incoming gov't revenue (unless the new company pays zero taxes which is hardly the case). It shouldn't be an either/or thing because the tax revenue is not a zero sum game.

In the case of GE looking to leave CT, the increased tax burden the state is putting on companies is indeed the major factor at play. Last I saw, CT has pretty good infrastructure and schools/universities.

Originally Posted by Perch

I'd love to see Pittsburgh actually throw its hat into the ring to vie for GE HQ (wouldn't win, but it would learn a lot about itself in relation to other cities from this type of exercise)... it makes total sense to me given Pittsburgh's long affiliation with GE historically, fast-growing hi-tech sector, strong white collar presence, big time universities, cultural amenities, etc etc.... aside from the airport of course and remote location and PA corporate tax structures for a multinational corporation like GE.

To add to what you said, GE is building an advanced 3D manufacturing research facility near the airport.
http://www.post-gazette.com/local/west/2...d-research-facility/stories/201504090159

[BrianTH]

Originally Posted by PITairport

In simple terms, a subsidy is the direct aid or payment to an institution FROM the government, whereas a tax break is the lowering of tax burdens TO the gov't.

To be blunt, that distinction makes no sense.

If I collect $X in taxes from you then give you a check for $Y, or instead I collect $X-Y from you in taxes, the financial outcome is exactly the same. The proper question is whether with that $Y I am intending to give you a financial incentive to do something in particular. If so, that is a subsidy regardless of which form it takes.

With tax breaks, the gov't is still getting more revenue than if the relocated company never came to start with.

Again, the necessary premise here is that the tax incentive is actually determining the site location. That turns out to be true far less often than companies and politicians imply it is true (and in fact usually if you carefully parse the company's official statements, they never quite say that exactly).

Shell is a great example. We have no real reason to believe they would have chosen another cracker location if not for the tax break, and in fact they never quite claimed that.

In the case of GE looking to leave CT, the increased tax burden the state is putting on companies is indeed the major factor at play.

GE is selling off the bulk of its finance business, which employed most of its CT workers. THAT is the actual "major factor" at play. And in fact you might notice that in general, business is doing just fine in CT.

Oh well. These name-brand companies and the relevant politicians share an interest in persuading people this isn't usually a scam, and so it is very, very hard to break through all that noise.

Originally Posted by Austinlee

Wow, had no idea GE was laying off 1,500 employees in Erie. That's awful.

Yeah no good at all. I think it says something about dedication to American manufacturing too. These are skilled workers that are assembling the world's most advanced freight locomotives we're talking about too, not just laborers who are working on a shop floor pounding something. We always hear about advanced manufacturing and how US companies are all about it... but they're really not... at least they're not interested in paying people realistic wages to do it.

GE somehow thinks that what they've been doing for years now at the Erie plant is going unnoticed by the population at large. Recently, GE Transportation's HQ moved from Erie to Chicago. A year ago they laid off 950 employees in Erie, and then hired back around 500 to complete orders, but those 450 jobs never returned... they went to Fort Worth where they built a new plant in 2011. And they've been doing that same thing for a while now... large layoffs, 200 here, 150 there, 800 here... hire back a fraction of what they laid off and promote that "good" news. Then layoff more, hire some back, layoff even more... and it continues that way until what we have now (only 3,500 employees at the plant) and then it will keep dwindling in the same way until they finally close it. This for a company which featured an Erie-built locomotive on the cover of their 2014 annual report... from a plant that brought the company over $2B in new orders last year. I hate to see this kind of stuff continually happening in western PA.

Originally Posted by BrianTH

To be blunt, that distinction makes no sense.

If I collect $X in taxes from you then give you a check for $Y, or instead I collect $X-Y from you in taxes, the financial outcome is exactly the same. The proper question is whether with that $Y I am intending to give you a financial incentive to do something in particular. If so, that is a subsidy regardless of which form it takes.


GE is selling off the bulk of its finance business, which employed most of its CT workers. THAT is the actual "major factor" at play. And in fact you might notice that in general, business is doing just fine in CT.

Oh well. These name-brand companies and the relevant politicians share an interest in persuading people this isn't usually a scam, and so it is very, very hard to break through all that noise.

Exactly. Subsidy, tax credit, tax break... call it it whatever you want to call it... the resulting amount is the same.

Yeah, the CT corporate tax increases are being used by GE brass as the reason why they are flirting with other locations, but I doubt that is the root of their considering a new HQ city.

[PITairport]

Originally Posted by BrianTH

To be blunt, that distinction makes no sense.

If I collect $X in taxes from you then give you a check for $Y, or instead I collect $X-Y from you in taxes, the financial outcome is exactly the same.

The distinction is you are in no position to tax me unless I am new to your jurisdiction. And if drawn into your jurisdiction, your overall tax base is still greater even if I have a reduced effective tax rate. Again, it's not a zero sum issue. The tax base its expanded. That's what's missing from your formula.

As for Shell, how can you say they would have still settled on that site irregardless of tax incentives? They had other out of state sites under consideration nearby, and they probably wouldn't comment publicly about the impact tax incentives had on their decision making.

[Steel City Scotty]

I originally posted this photo two weeks ago, but it's a little more relevant now that the cranes at the Presby project were mentioned and asked about.

[photoLith]

So are they tearing down that ugly terd?

[BrianTH]

Originally Posted by PITairport

And if drawn into your jurisdiction, your overall tax base is still greater even if I have a reduced effective tax rate. Again, it's not a zero sum issue. The tax base its expanded. That's what's missing from your formula.

I explicitly addressed this. Again, studies have found that in most cases, other site location factors dominate and the tax incentive just ends up being a windfall for the business that would have made the same site location decision anyway.

As for Shell, how can you say they would have still settled on that site irregardless of tax incentives? They had other out of state sites under consideration nearby, and they probably wouldn't comment publicly about the impact tax incentives had on their decision making.

So first, I would suggest the burden of proof is on those proposing to hand out billions in tax incentives. If it is just a mystery whether or not it mattered, that is a scathing indictment of the rush to offer them.

Second, again, there is a well-studied backdrop here. Taxes are usually only a very small factor in most locational decisions, because factors like access to upstream and downstream markets, labor supply, and so on dominate the long-term financial prospects of a site location. It really depends on the industry, but something like an ethane cracker is extremely likely to fall into that category where taxes just aren't a major factor.

So absent compelling evidence to the contrary, it is very likely Shell would in fact have preferred this location even without incentives.