Pittsburgh touts early payment of debt tied to Oakland development
Mayor Luke Ravenstahl said Tuesday that the city paid off the $5.25 million tax-increment financing plan for the Schenley Center project in Oakland five years earlier than scheduled.
TIFs use the promise of future increases in property taxes to pay for sewers, roads and utilities at sites where development is occurring.
Schenley Center includes a 176-room Residence Inn extended-stay hotel, the 156-room Schenley Gardens Assisted Living Center and a 273-space parking garage. The $42.2 million project was built in 1998.
In December 1997, the city approved the TIF to partially fund the parking garage and site preparation.
Before the TIF, the Schenley Center parcels generated $1,531 annually in taxes to the city, Allegheny County and Pittsburgh Public Schools, the mayor's office said. During the TIF, the taxing bodies collected $204,336 annually. Now that the TIF debt has been paid, the taxing bodies will collect $612,232 annually in taxes.
TIFs have come under fire because money backed by public subsidies can be lost if the developer pulls out. They also can fail to generate enough tax revenue to cover loans, as in the case of two TIF deals that built The Mall at Robinson.
The financing tool's most high-profile failure in Pittsburgh came when the city used it to entice Lazarus to open a department store Downtown in 1998. Lazarus closed in 2004 because of poor sales.