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Developers push for extended tax breaks on South Side Works proposals

| Thursday, July 10, 2014, 11:03 p.m.

Developers of proposed apartment complexes and parking at two vacant South Side Works sites say they need tax incentives to make their projects happen.

Critics and other private developers say the projects have benefited from nearly 16 years of tax breaks as part of a tax increment financing district, and further tax breaks aren't necessary to build in the prospering South Side entertainment and shopping district.

“The rest of us in the marketplace do not get those kind of incentives. These guys are double-dipping,” said Michael Healy, owner of The Healy Co., South Side-based real estate development, apartment rental and home improvement company. “This market can stand on its own two legs.”

Sen. Jim Ferlo, D-Highland Park, a member of the Urban Redevelopment Authority of Pittsburgh board of directors, which has approved the sale of the parcels, said tax incentives ensure that properties achieve their highest potential.

Michigan-based Village Green Holdings LLC wants to build 262 apartments and a 559-space parking garage on two vacant lots at 26th and Sidney streets. A partnership named 3030 South Water LP — which includes Downtown developer Ralph A. Falbo Inc. — has proposed 56 apartment units and parking spaces for a lot along South Water Street between the Spring Hill Suites hotel and UPMC's Sport Medicine Facility.

The developers have told the URA that city tax breaks are needed. They will not seek tax relief from Allegheny County or the Pittsburgh Public School District, according to the URA.

Neither developer responded to requests for comment.

The developers are paying for the infrastructure improvements funded by the TIF through the purchase price of the land, said Susheela Nemani-Stanger, manager of development for the URA. Average sale prices for properties in South Side Works increased 126 percent from 1999 through 2012, Nemani-Stanger.

The URA board approved selling the South Water Street property for $237,300 in June. In March, the board approved selling the properties at Sidney and 26th streets for about $1.05 million.

The three parcels are part of the South Side Works TIF district, a financing plan approved in 1998 that diverted property taxes to pay off the costs of building roads, sewers and other infrastructure. The developers have asked that the parcels be removed from the TIF district to qualify for a 10-year, partial tax abatement from the city.

County Council, City Council and the Pittsburgh Public Schools board must approve releasing the properties from the TIF. The proposal went before County Council on Tuesday, where it was referred to committee for study.

Eric Montarti, a senior policy analyst at the Allegheny Institute for Public Policy, said seeking release from the TIF district and then applying for further incentives is not needed. The developers benefited from the infrastructure without helping to pay for it, he said.

“It's someone trying to extend the life of favorable tax treatment beyond the life it was originally intended,” Montarti said. “The public has done its part.”

Aaron Aupperlee is a staff writer for Trib Total Media. He can be reached at 412-320-7986 or aaupperlee@tribweb.com.

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