Public money boosts plans to build Gardens at Market Square

Bob Bauder
| Tuesday, Aug. 20, 2013, 11:27 p.m.

Taxpayers again are helping reshape Pittsburgh's skyline as construction begins on a $100 million development Downtown.

Millcraft Investments is scheduled to break ground on Wednesday on the Gardens at Market Square, a hotel, office and retail complex.

It is Millcraft's fourth major Downtown project, three of which were partially funded with public money. A fifth in the planning phase includes tearing down the former Saks Fifth Avenue building.

City economic development leaders said Downtown's rebirth would not have been possible without public help and firms such as Millcraft, which has invested heavily in residential development.

“We heard a lot of swagger from a lot of developers,” Robert Rubinstein, acting executive director of the Urban Redevelopment Authority, said of 1990s-era plans for developing Downtown. “(Millcraft has) done everything they said they were going to do ... despite what seemed like early boasting.”

Critics say TIFs, meant to encourage redevelopment of blighted former industrial and urban property, have become so common that developers expect one even though they can afford to build without it.

Millcraft President and Chief Operating Officer Lucas Piatt said the company couldn't have invested in Pittsburgh projects without subsidies.

“To build a new high-rise Downtown ... we most definitely need subsidies, simply because the costs are too high to make it totally economically feasible with the current rents that are generated Downtown,” he said.

PNC Corp., which is building a $400 million bank tower Downtown, did not ask for public money. But that's because PNC will own, occupy and manage the building, Piatt said.

“They're going to be their own occupant. We're charging rent and our rents have to cover the costs,” he said.

Millcraft invested more than $160 million in Downtown development, including a former Lazarus department store, G.C. Murphy store and state office building. It is getting more than $13 million in public help and turned the vacant buildings into residences, stores and offices.

The latest venture on Forbes Avenue near Market Square will feature a high-rise Hilton Garden Inn hotel, parking garage, offices and retail space. Confirmed tenants include a construction firm and restaurant. It is the first time Millcraft will build from the ground up Downtown.

Pittsburgh awarded Lazarus a $9 million tax-increment financing package, which Millcraft inherited, plus $20 million in public subsidies before the retail giant left town amid declining sales. Millcraft built Piatt Place on Fifth Avenue in its place, with luxury condos, offices and stores.

Millcraft received a $5 million state grant plus tax credits for the old G.C. Murphy Building at Forbes Avenue and Market Square, which is now Market Square Place and includes a YMCA, loft apartments and stores.

The 16-story former state office building on Stanwix Street, called River Vue, with 218 luxury apartments, wasn't accompanied by a subsidy, but the state sold it to Millcraft for $4.6 million. Former state Auditor General Jack Wagner criticized the sale because it represented only half of the property's assessed value.

The Gardens at Market Square project is receiving $8.1 million in tax-increment financing and about $500,000 in other government aid.

Under a TIF package, additional tax revenue generated from a developed property pays for public infrastructure improvements. The Gardens TIF is paying for the parking garage, streets and sidewalks.

Piatt said the company intends to remain in Pittsburgh and has other projects “in the pipeline.”

“Pittsburgh is the center of the region,” he said. “We're seeing good corporate growth there. We're seeing young people moving back to the city. We're riding the wave.”

Staff writer Aaron Aupperlee contributed to this report. Bob Bauder is a staff writer for Trib Total Media. He can be reached at 412-765-2312 or

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