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Pittsburgh taxpayers played for rubes (again)

| Saturday, Aug. 15, 2015, 9:00 p.m.

Suckers. That's what Pittsburgh government considers taxpayers to be. Just look at the latest “deal” by the city Urban Redevelopment Authority.

It paid nearly $7 million for the old Saks Fifth Avenue department store and ancillary properties at the corner of Smithfield Street and Oliver Avenue, Downtown. But it will sell the tract to Millcraft Investments and McKnight Realty Partners for $2.25 million.

They plan to build a $35.5 million, 575-space parking garage with street-level retail and, later, up to seven stories of condos or apartments above.

But there's sugar on top of this sweetheart deal. The URA (that is, taxpayers) also will lend Millcraft and McKnight $7 million, to be paid back over 21 years.

But it won't be Millcraft and McKnight paying back the loan. The public will be. Seventy-five percent of the parking tax paid at the new garage by commuters, shoppers and unsuspecting mooncalves will.

Why, it's as if Tom Murphy never left.

Admits Kevin Acklin, Mayor Bill Peduto's chief of staff and head of the URA (no conflict there, eh?), “We are taking a haircut.” Actually, it's a scalping. And, yet again, taxpayers have been conscripted as venture capitalists, handsomely subsidizing those who clearly have the wherewithal to secure private financing.

But why go to the trouble when your friendly neighborhood URA will, with public dollars, pave the way by shaving a third of the market value off the purchase price of the land and offer a sweetheart loan that offloads the debt onto anybody other than the loan recipients?

There's also a credible legal question as to whether an authority can lend in such a manner. Authorities are independent agencies of the commonwealth. And as per Article VIII, Section 8, of the Pennsylvania Constitution, “The credit of the commonwealth shall not be pledged or loaned to any individual, company, corporation or association.”

Of course, proponents tout benefits, primarily increased tax revenues; the public's “investment” will be more than recouped, they argue.

Whether it will be or not remains to be seen; who knows what other sugar will be sprinkled about. But the bottom line remains that taxpayers have no business underwriting any business.

Kyra Straussman, the URA's real estate director, told the Trib's Tom Fontaine that about 99 percent of the authority's real estate sales are for less that what it paid. “That's the nature of the URA, to protect the real estate ... in order to have the outcome we want.” (Translation: to command and, thus, pervert the market.)

Now, while all this might be a sound policy to spur development in a truly blighted neighborhood or on an old brownfield site, it's corporate wealthfare (crony capitalism?) for a prime piece of real estate on a prime Downtown corner in a downtown being hailed for its resurgent “primeness.”

Jake Haulk, president of the Allegheny Institute for Public Policy, sees this behavior for what it is — “an affliction born out of an anti-business, anti-free market mindset,” the product of Greater Pittsburgh's “dominant leftist political culture.”

“To offset the negative policies that deter business startups and expansions, the city feels it has to subsidize to get development to happen,” the Ph.D. economist says.

Asks Mr. Haulk, wondering if Pittsburgh officials have, wittingly or not, conditioned developers to wait for public assistance: “When will it ever become possible for a Downtown project to be built with private investment only?”

Probably never. For as contrarian H.L. Mencken once put it, government's “great contribution to human wisdom ... is the discovery that the taxpayer has more than one pocket.”

Colin McNickle is Trib Total Media's director of editorial page (412-320-7836 or cmcnickle@tribweb.com).

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