PITTSBURGH | Development Rundown II

[glowrock]

Originally Posted by DKNewYork

I don't think you are so alone in your opinion. My sense is that most people want a compromise (and that, I think, includes most posters on this page). They want the riverfront site developed and, to get that done, will give up the western third of the terminal, particularly given the deteriorated condition of the building and the unique challenges that its redevelopment poses. I had been previously told that Buncher will have no problem walking away and simply sitting on the riverfront property. The cash flow from the parking concession is significant. They can wait.

I noted the online comments from Rob Pfaffman. He has previously told numerous people in the loop that he has a developer who will take on the Terminal project. Yeah, just like he did with the Civic Arena. I hope he is not just talking but he always leaves me with that sense.

Pfaffman needs to put his money where his mouth is. Or at least needs to bring in people with the money to pay for the plans he's supposedly come up with. Just being against something currently proposed and making other proposals isn't enough. If you don't have a way to finance your alternative, you might as well have not even come up with one to begin with!

Aaron (Glowrock)

[SkyPittsburgh]

Originally Posted by DKNewYork

What if the Buncher plan for the riverfront property is improved? Would that make the sacrifice of the western third of the Terminal acceptable to you? Just curious if the building is sacrosanct or negotiable.

If the buncher plan was improved to look less, as some people call it "suburban" then yes, I would be fine with part of it being razed, but if it is purely to create bland buildings, then I would be inclined to say no.

[themaguffin]

I don't think "bland" is the big concern. Not everything has to be a wow, it just should make good use of the land and with that, not the be those North Shore apartments built in the 90s and a little more like the apartment building built in the Cultural District in the 2000s... though maybe with a more appropriate Strip District style or facade.

[DKNewYork]

Originally Posted by glowrock

Pfaffman needs to put his money where his mouth is. Or at least needs to bring in people with the money to pay for the plans he's supposedly come up with. Just being against something currently proposed and making other proposals isn't enough. If you don't have a way to finance your alternative, you might as well have not even come up with one to begin with!

Aaron (Glowrock)

Amen. Pfaffman is an odd case. I like a lot of his architectural work and he clearly is able to land clients, which makes me wonder about the strategy to his historic preservation activism. He proposes ideas as if costs are inconsequential (Produce Terminal) and advocates saving buildings regardless of their utility or the greater good of the neighborhood (Civic Arena). His enthusiasm is passionate but also inflexible and often impractical, which is a huge hurdle when trying to save older buildings. In his practice as a working architect, he must be mindful of costs and practicality, so I cannot understand how he can ignore those dimensions of his historic preservation proposals. It is as if he has accepted the role of gadfly rather than work to get a seat at the table and actually be taken seriously.

[BrianTH]

Originally Posted by glowrock

If you don't have a way to finance your alternative, you might as well have not even come up with one to begin with!

I don't entirely agree with that. Suppose, for example, that we could de-couple the rest of the Buncher project from the Produce Terminal, so all that happens if Buncher "walks away" is the Produce Terminal specifically remains undeveloped for an indefinite period. That would not necessarily be a disaster, and I would personally think that showing it could be economically redeveloped at some point in the future, even if no one currently was offering to do it, would be relevant to that decision.

And really, what you would want to do is put out a real RFP, to see what happens. But that is not something anyone but the owner can do. In other words, why would a private developer go through the effort of studying the project and coming up with a detailed proposal for Pfaffman, when Pfaffman cannot actually give them the rights to do the project? And why would anyone agree to finance such a thing?

[BrianTH]

Originally Posted by DKNewYork

It is as if he has accepted the role of gadfly rather than work to get a seat at the table and actually be taken seriously.

One possibility is he is trying to move the Overton Window:

http://en.wikipedia.org/wiki/Overton_window

The Overton window is a political theory that describes as a narrow "window" the range of ideas the public will accept. On this theory, an idea's political viability depends mainly on whether it falls within that window rather than on politicians' individual preferences. . . . Proponents of policies outside the window seek to persuade or educate the public so that the window either “moves” or expands to encompass them. Proponents of current policies, or similar ones currently within the window, likewise seek to convince people that these should be considered unacceptable. Other formulations . . . add the concept of moving the window, such as deliberately promoting ideas even less acceptable than the previous "outer fringe" ideas, with the intention of making the current fringe ideas acceptable by comparison.

One implication of all this is if one side of a contentious policy issue has some people willing to take extreme/maximalist positions, and the other side only has people willing to take reasonable/compromise positions, the first side will tend to get a lot more of it wants because its extremists will be moving the Overton Window in their favor. As a corollary, even if you are personally taking on the role of the reasonable compromiser, it can be a good idea not to engage in friendly fire with respect to the extremists on your side, because they may be serving a valuable purpose in terms of moving the Overton Window your way, or at least keeping it from moving the other way.

Anyway, I have no idea what Rob is actually thinking. But I do believe he, and other more maximalists preservationists than I am personally inclined to be, can be serving an important role in this process.

Edit: Oh, and in this particular policy area, there are almost always plenty of people around expressing the maximalist pro-developer position (that historic preservation is BS and developers should be allowed to do whatever they want with their land).

[DKNewYork]

Originally Posted by BrianTH

I don't entirely agree with that. Suppose, for example, that we could de-couple the rest of the Buncher project from the Produce Terminal, so all that happens if Buncher "walks away" is the Produce Terminal specifically remains undeveloped for an indefinite period. That would not necessarily be a disaster, and I would personally think that showing it could be economically redeveloped at some point in the future, even if no one currently was offering to do it, would be relevant to that decision.

Buncher appears to not want to invest money in a big redevelopment if the "front door" (the Terminal) is not under their control. So I would assume a de-coupling would mean that the riverfront property remains surface parking. Buncher does have a master plan that does not involve the Terminal at all (provided by a PHLF architect), but they were not interested in it when it was presented. I guess that could change.

In other words, why would a private developer go through the effort of studying the project and coming up with a detailed proposal for Pfaffman, when Pfaffman cannot actually give them the rights to do the project? And why would anyone agree to finance such a thing?

Sensible questions. But since Pfaffman has not ever provided the name of the developer that is "interested," we have no one to ask. The bigger question is why would Pfaffman announce that he has a developer? It just seems odd. Perhaps it is to encourage debate, but surely there are better ways to do that.

[BrianTH]

Originally Posted by DKNewYork

Buncher appears to not want to invest money in a big redevelopment if the "front door" (the Terminal) is not under their control.

I'm not sure that is true. It appears they are still being unclear on this issue, and of course they are still trying to influence the political process. Obviously their preference is to get exactly what they want, but they have not definitively said the whole project is off if they can't do what they want with the Produce Terminal.

The bigger question is why would Pfaffman announce that he has a developer? It just seems odd. Perhaps it is to encourage debate, but surely there are better ways to do that.

I should note I don't always find Pfaffman to be credible. So it seems entirely possible to me he is trumping up this supposed developer interest more than any such developer would be willing to actually confirm. Heck, maybe the developer in question does not even know Pfaffman is referring to them.

[AaronPGH]

Is there any way a developer could build up, like 5-6 floors (or more) from within the produce terminal? This would include the street cut-throughs proposed. Not only would it be a nice dose of height and density to match the buildings across the street, but it would also provide enough income opportunities with all of the extra floors to make the renovations worth it. Or maybe I'm just pipe dreaming here.

[DKNewYork]

Originally Posted by BrianTH

I'm not sure that is true. It appears they are still being unclear on this issue, and of course they are still trying to influence the political process. Obviously their preference is to get exactly what they want, but they have not definitively said the whole project is off if they can't do what they want with the Produce Terminal.

I am going by what I was told last month when I spoke to a few people who are close to Buncher and know the URA. Buncher is quite worried about plowing money into the riverside property only to have an inappropriate or sub-par development (in their assessment) in the Terminal. Buncher's analysis is that the Terminal will always be a money-loser due to the restoration and operational costs, and it is the spin-off profits of the adjacent development (both the open land and the land beneath the western third of the Terminal) that will subsidize it. If the Terminal cannot be shortened to make the whole development profitable, Buncher would simply let the purchase option on the Terminal lapse and then continue to use the open property for parking. Is this a negotiating stance? In part, surely. But I don't think it is all bluster. I think that the company would postpone everything and wait---wait for the Terminal to be redeveloped by someone else or for the Terminal to deteriorate further or for the city to remove the historic designation. Is that a disaster? It depends on how much one values the Terminal and how much one wants that property developed. As for me, as long as their master plan is uninteresting, I don't mind the delay. But I cannot see anyone else making a go of this so Peduto needs to use this as the opportunity to improve the Buncher plan.

I should note I don't always find Pfaffman to be credible. So it seems entirely possible to me he is trumping up this supposed developer interest more than any such developer would be willing to actually confirm. Heck, maybe the developer in question does not even know Pfaffman is referring to them.

Agreed. I am sure that I have agreed with him on some issues...I just can't name one.

Your suggestion about an RFP is a good one but didn't the URA do that shortly after acquiring the building? I thought so. That would not preclude a second RFP but then we are talking years...

[DKNewYork]

Originally Posted by BrianTH

I'm not sure that is true. It appears they are still being unclear on this issue, and of course they are still trying to influence the political process. Obviously their preference is to get exactly what they want, but they have not definitively said the whole project is off if they can't do what they want with the Produce Terminal.

One final note: It would not benefit Buncher to say anything definitively. If the company were to announce that historic designation of the Terminal would result in cancellation of the whole project, Buncher would appear petulant. Too many people have a fondness or an awareness of the Terminal and too few have any idea what the cost of the renovation would be. Probably smarter for Buncher to be vague. Yes, Buncher's preference is to get exactly what it wants...just like all of us. But its preference is, ostensibly, based on a profitability analysis. I'm not privy to that, but PHLF did an analysis back in the late 90s and could not make the numbers work. The unusual variable here is that, with Buncher, the city is dealing with a developer that seems to be quite happy to not develop its property. Other real estate firms might push for some kind of compromise or lobby more vigorously or even sell out. But Buncher will wait. They make a good return on the parking lot concessions and the carrying costs of the Terminal (higher every month as the tenants depart) will be reduced to zero if/when the purchase option is allowed to lapse.

[glowrock]

[QUOTE=DKNewYork;6332536][QUOTE=BrianTH;6332405]I'm not sure that is true. It appears they are still being unclear on this issue, and of course they are still trying to influence the political process. Obviously their preference is to get exactly what they want, but they have not definitively said the whole project is off if they can't do what they want with the Produce Terminal.

One final note: It would not benefit Buncher to say anything definitively. If the company were to announce that historic designation of the Terminal would result in cancellation of the whole project, Buncher would appear petulant. Too many people have a fondness or an awareness of the Terminal and too few have any idea what the cost of the renovation would be. Probably smarter for Buncher to be vague. Yes, Buncher's preference is to get exactly what it wants...just like all of us. But its preference is, ostensibly, based on a profitability analysis. I'm not privy to that, but PHLF did an analysis back in the late 90s and could not make the numbers work. The unusual variable here is that, with Buncher, the city is dealing with a developer that seems to be quite happy to not develop its property. Other real estate firms might push for some kind of compromise or lobby more vigorously or even sell out. But Buncher will wait. They make a good return on the parking lot concessions and the carrying costs of the Terminal (higher every month as the tenants depart) will be reduced to zero if/when the purchase option is allowed to lapse.

This is exactly why I'm so concerned about this whole situation. Buncher IS very happy making tons of money off of the parking concessions on those lots and never develop them. It's in Pittsburgh's best interests to get them developed and on the tax rolls. It's in Pittsburgh's best interests to get more people living in and near downtown. It's in Pittsburgh's best interests to develop a strong tie-in between Downtown and the Strip District.

It's in PITTSBURGH's best interests, not necessarily Buncher's.

Aaron (Glowrock)

[DKNewYork]

Originally Posted by glowrock

This is exactly why I'm so concerned about this whole situation. Buncher IS very happy making tons of money off of the parking concessions on those lots and never develop them. It's in Pittsburgh's best interests to get them developed and on the tax rolls. It's in Pittsburgh's best interests to get more people living in and near downtown. It's in Pittsburgh's best interests to develop a strong tie-in between Downtown and the Strip District.

It's in PITTSBURGH's best interests, not necessarily Buncher's.

Aaron (Glowrock)

You're absolutely right. Buncher knows it can generate a profit by using the land for parking. But the executives are surely smart enough to know that developing the land would be much more profitable. Why else would they offer to take on the shortened-but-still-money-losing Terminal as the gateway to their development. This is going to happen. Peduto will get involved, realize that there is no "third way", and leverage city approval to get a more urban development, which would ultimately be more profitable to Buncher. This is agonizing but it will happen.

[BrianTH]

I'm not sure I see the logic of not seeming "petulant" up front, and then actually having to be "petulant" if they don't get their way.

Meanwhile, setting up a "whisper campaign" implying they will walk away from the whole thing if they don't get their way would be a smart way of getting that thought into the public's mind, while allowing them to go ahead and do the project anyway if their bluff is called.

The bottom line is this is, by design, a public process. So if they want the public to take it as a fact that they will walk away from the whole project if they can't do what they want with the Produce Terminal, they should say that. And it is a terrible precedent to give into threats that aren't even made.

[GeneW]

Buncher vows to build in the Strip

The Buncher Co. on Friday said it will proceed with the rest of its $450 million Riverfront Landing development even if its efforts to include the historic produce terminal in the project fall short.

"We're not walking away from the development," Thomas Balestrieri, Buncher president and CEO, said.

Mr. Balestrieri's remarks came a day after he sent Pittsburgh City Council members a letter urging them to reject historic status for the 1,500-foot-long terminal, which Buncher hopes to buy from the Urban Redevelopment Authority for $1.8 million.

[DKNewYork]

Originally Posted by BrianTH

I'm not sure I see the logic of not seeming "petulant" up front, and then actually having to be "petulant" if they don't get their way.

Rather than "petulant" I should have instead said a definitive statement to cancel the whole project would be the wrong PR move. It just wouldn't advance their effort, at least not at this moment.

Meanwhile, setting up a "whisper campaign" implying they will walk away from the whole thing if they don't get their way would be a smart way of getting that thought into the public's mind, while allowing them to go ahead and do the project anyway if their bluff is called.

The bottom line is this is, by design, a public process. So if they want the public to take it as a fact that they will walk away from the whole project if they can't do what they want with the Produce Terminal, they should say that. And it is a terrible precedent to give into threats that aren't even made.

Couldn't it be the case that Buncher doesn't fully know how they will proceed without the Terminal? So it cannot really say anything truly definitive.

The Terminal is the entire southern boundary of Buncher's riverfront property. It seems sensible, to me at least, to assume that the company would be hesitant to commit funds to the development on the vacant land without 1) having control of the Terminal and permission to do what they want or 2) knowing who will buy the Terminal and what will be done with it.

The PG article this morning is encouraging. Buncher vows to build. But the article says that Balestieri "cautioned that the development could be slowed" if the Terminal is excluded because a "prospective condo owner or building tenant might balk without knowing the future of the hulking Strip District icon." That seems logical.

I am not bothered that the project is delayed a bit, as a few people are having a go at changing their plan for the vacant land.

[BrianTH]

I think that settles that. I absolutely agree a negotiated resolution would be best, but they are not in fact planning to nuke the whole project if the Produce Terminal portion gets put aside for now.

[BrianTH]

Article on The Overlook, the new apartment development in Braddock we were discussing earlier:

http://www.post-gazette.com/local/east/2...s-24-new-apartments/stories/201311090074

They report having a waiting list of 300 applicants for the 24 units. What I think this shows is the potential for inherently well-located places like Braddock to spring back with the right sort of targeted investment.

[BrianTH]

The sad saga of the airport hotel may be drawing to a close:

http://triblive.com/news/allegheny/5032712-74/airport-payments-authority#axzz2kBBQuFDk

Despite doing a good business it was overburdened with debt, and so never made its planned payments in lieu of taxes. The planned sale won't get back most of that money, but going forward it will be taxed.

[Jonboy1983]

Originally Posted by BrianTH

The sad saga of the airport hotel may be drawing to a close:

http://triblive.com/news/allegheny/5032712-74/airport-payments-authority#axzz2kBBQuFDk

Despite doing a good business it was overburdened with debt, and so never made its planned payments in lieu of taxes. The planned sale won't get back most of that money, but going forward it will be taxed.

I think there's an error in that article. If this is the Hyatt right next to the moving walkway, it certainly did NOT open in 2009! It opened in 2000; I flew to MCO in April of that year and it was still under construction.