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Posted Apr 1, 2012, 11:05 PM
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Eurosceptic
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Join Date: Apr 2003
Location: Pittsburgh
Posts: 24,141
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http://www.pittsburghlive.com/x/pittsburghtrib/news/pittsburgh/s_789319.html
Quote:
Teams control land, but sit out on most North Shore development
By Andrew Conte, PITTSBURGH TRIBUNE-REVIEW
Sunday, April 1, 2012
The Downtown landscape is reflected in the window of The Tilted Kilt, one of the tenants of the Del Monte building on the North Shore.
Andrew Russell | Pittsburgh Tribune-Review
Graham Osbourne, 29, (left) and Nate Zubik, 26, both veterans and students taking a writing workshop at the Community College of Allegheny County, enjoy the patio at the Jerome Bettis' Grille 36, one of the tenants of the Del Monte building on the North Shore.
Andrew Russell | Pittsburgh Tribune-Review
Owners of the Steelers and Pirates won't make a dime from the proposed sale of the two Del Monte Center office buildings on the North Shore for more than $55 million, the Tribune-Review has learned.
Given development rights to the land between Heinz Field and PNC Park, team owners opted to buy the land and lease it, but not invest an ownership interest in the offices. Their development partner -- Columbus-based Continental Real Estate Companies -- financed construction and will reap any profit, Barry Ford, the president of development, told the Trib.
"People in my company put their names and reputations at risk for this project," Ford said. "We are hoping to make some money on the sale of the building, as it is a great building with a great roster of tenants on board."
Insider interviews and public documents reviewed by the Trib paint a clearer picture of just how much the sports teams benefited from the development between the stadiums, which opened 11 years ago after intense debate over the public financing to replace Three Rivers Stadium.
Nearly 10 years after construction between the two publicly owned stadiums got under way in 2003, the projects are drawing attention as Continental seeks to sell Del Monte while developing 1.3 acres of the parking lot across the street for two two-story buildings with offices above first-floor restaurants or retail. Two other major development sites remain open.
The teams do not own the land beneath the Hyatt Place Pittsburgh-North Shore hotel, and the money they make each year from leasing land beneath three office buildings to Continental might leave them enough after paying off loans and business expenses to "buy a decent new car," Ford said.
As part-owner of Stage AE and as a partner with its operator, the Steelers could make more money from the North Shore amphitheater. State taxpayers paid $2.5 million to reduce its $13 million construction cost, which, in turn, cut the operator's monthly rent payments.
Steelers officials declined to say what they earn from the amphitheater.
"Our main concern was complementing our primary businesses and making this an attractive destination that works for Heinz Field, PNC Park and the city," said Mark Hart, the Steelers' director of planning and development.
The Pirates likewise got involved in the North Shore's development to protect their business and make sure fans have easy access to parking, said Brian Warecki, team spokesman.
"Our primary goal of participating in this partnership was never a direct financial benefit for the club, but rather to protect our interest and the interest of the fan experience at PNC Park," he said.
After having nothing but surface parking around Three Rivers Stadium for three decades, public officials put an onus on team owners to make something happen this time.
"Fans drove to the games, parked in the adjoining lots and left right after," said Mary Conturo, executive director of the Stadium Authority. "To maximize the economic benefit of those (stadium) investments, the development of that surrounding area is something that we've focused on."
Fans might hate losing parking space for pre-game tailgating, but parcels with buildings on them generate more money in property taxes.
Taken together, the four developed properties generate $2.35 million a year for Allegheny County, Pittsburgh and city schools, tax records show. The value of those properties increased 58 percent under the countywide reassessment to $126 million.
"It's a big success," said Thomas McCue, a Duquesne University finance professor who teaches real estate. "The biggest problem they have to some extent is there's a lot of entertainment, restaurants, things like that. There aren't a lot of people who walk around there at night. But as that fills in, that's more likely to be the case."
The sports teams "got quite a deal on the thing," said Jake Haulk, president of the Allegheny Institute for Public Policy, a Castle Shannon-based think tank.
"For the taxpayers, there's some payback I guess but not nearly enough to cover the cost of developing the stadiums," said Haulk, a longtime critic of the stadium deals.
The authority negotiated terms that would give the teams a reason to build, said developer Mark Schneider, who chaired the Stadium Authority when the terms were negotiated.
The option agreement gives team owners the right to purchase the land for development and provides the owners with financial incentives from a non-game day parking fund as construction occurs. The fund paid out $125,925 last year and $79,341 in 2010.
"I'm sure the Steelers make more from Kenny Chesney than they do from all the real estate stuff," Schneider said, referring to the country singer's concerts at Heinz Field.
Alco Parking owner Merrill Stabile in September offered to pay $10 million for a North Shore parcel. Alco Parking operates the surface parking and garages between the stadiums.
The authority agreed last month to sell a portion of that land to the team owners for $900,000.
Stabile wanted options that would have made the property more valuable, said Douglas Herold, a director of Integra Realty Resources Inc., who appraised the property for the authority. Stabile wanted 3.3 acres versus 1.3 acres, and he wanted the opportunity to collect parking revenues for up to 10 years while looking for an office tenant. If he couldn't find one, he would have allowed the authority to buy back the land.
"At this point, I respect the decision of the mayor and the authority to stick with Continental," Stabile said, "but give them more time to come up with a better plan than a two-story building that adds more bars to the North Side."
He praised Continental for the developments that have been done and said he agreed with the original purchase price set by the Stadium Authority when nothing existed on the North Shore. The Authority initially agreed to sell parcels for either $15 per square foot or $8 per square foot, depending on location.
When the projects started, developing the North Shore was no sure thing while Downtown still had ample office space, said Hoddy Hanna, chairman and CEO of Howard Hanna Real Estate Services.
"Looking back, there was no guarantee it would turn out the way it looks right now," Hanna said.
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I didn't pick up on that Smithfield Street Bridge reference, but I went back to look at the design and I completely see it. I'm still not so sure about it tho...
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