Group bids to lease Strip District's Produce Terminal
A locally based group with alternative plans to redevelop the Strip District's Produce Terminal wants to renovate the crumbling landmark, but it would not buy the building as at least three other developers propose.
The group, led by businessman Michael Rubino, proposes spending $19.3 million to renovate the building and then lease it from Pittsburgh's tax-exempt Urban Redevelopment Authority.
That would keep the building from generating property tax revenues for the city, Allegheny County or Pittsburgh Public Schools. It is assessed at $1.8 million, which would generate nearly $40,000 a year combined if privately owned, according to records and current tax rates.
“This plan allows for a much greater revenue stream than just putting it back on the property rolls, and it's a chance to do something really grand with this property,” Rubino said, projecting it would generate an estimated $3.1 million a year in state and county sales taxes and unspecified money for URA through a proposed profit-sharing plan.
State Sen. Jim Ferlo, D-Highland Park, a URA board member, isn't interested.
“URA has had ownership of this property for far, far too long. The authority does not need to be owning property that should be in the private sector's hands. There's no way I would ever vote to continue any leasing operation,” Ferlo said.
But URA Chairman Kevin Acklin, Mayor Bill Peduto's chief of staff and chief development officer, said, “What's most important is that the use of this site reaches its potential and is a catalyst for the neighborhood. What form that takes, sale versus lease, is probably secondary.”
Rubino's proposed Produce Terminal Marketplace would be anchored with closeout vendors that sell deeply discounted merchandise. Marden's, based in Maine, signed a letter of intent to operate there, Rubino said.
It also would offer incubator space for new companies and space for existing Strip merchants to establish second or third businesses, Rubino said. At least four Strip businessmen signed letters of intent. Restaurants are planned.
The URA bought the Produce Terminal for $1.1 million in 1983, county records show. Today, it's one of a small number of properties the URA owns and leases, including Lexington Technology Park in Point Breeze, the National Robotics Engineering Consortium in Lawrenceville, the Western Restoration Center in the Upper Hill and several parking lots, said spokeswoman Gigi Salada.
The lease revenue was not immediately available. In 2010, the Strip-based Buncher Co. agreed to lease the terminal for $15,275 a month for up to five years, with an option to buy it for $1.8 million.
Mayor Bill Peduto and some preservationists opposed Buncher's plan to demolish about one-third of the terminal to extend 17th Street to the riverfront, where it plans $400 million in development. In February, Buncher agreed to halt its terminal plans for up to six months while the city sought alternative proposals.
Three groups submitted bids: Ferchill Group and MCM Co. Inc., both in Cleveland; McCaffery Interests Inc. of Chicago; and Rubino's group, also including Fourth River Development, Pfaffmann + Associates, Pennsylvania Commercial Real Estate Inc. and Market Ventures Inc.
MCM CEO Melissa Ferchill said her group would spend $36 million to develop more than 200 rental apartments, a produce market, an art gallery, retail space and other amenities. McCaffery Chairman and CEO Dan McCaffery offered fewer specifics, but envisions the building becoming home to “live-work lofts” designed to house tenants and their businesses, along with some retail and other amenities. Both said they'd pay $2.5 million for the building, as requested in the URA's request for proposals.
Acklin said the proposals are still being evaluated. He didn't offer a timetable for a decision.
Tom Fontaine is a staff writer for Trib Total Media.