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$15M in tax credits to transform former steel mill into tech hub

Natasha Lindstrom
| Wednesday, Dec. 27, 2017, 6:15 p.m.
A rendering shows the planned advanced manufacturing hub in Mill 19.
MSR Design/Ten X Ten/R3A
A rendering shows the planned advanced manufacturing hub in Mill 19.
The Mill 19 building is stripped of most of its skin.
Tim Kaulen | Carnegie Mellon University
The Mill 19 building is stripped of most of its skin.

Gov. Tom Wolf announced Wednesday that the state will pitch in $15 million in tax credits to expedite construction at Hazelwood Green — the site of a massive abandoned steel mill that a group of nonprofits hopes to transform into a bustling corporate hub for research and technology.

The Commonwealth Cornerstone Group's New Markets Tax Credit funding ensures that the first of three office buildings planned at Pittsburgh's last big brownfield can begin construction early next year and be ready for occupants by spring 2019, said Donald Smith, president of Regional Industrial Development Corp., the Downtown Pittsburgh-based nonprofit real estate developer awarded the tax credits.

"It's huge. Literally the project couldn't happen without it," said Smith, whose organization owns the ionic Mill 19 building, a portion of the Hazelwood Green development.

"Now, weather-dependent, we're ready to go."

From old mill to robotics hub

Carnegie Mellon University's Advanced Robotics Manufacturing Institute will be the modern Mill 19's first tenant.

Under a 10-year lease with renewal options, the ARM Institute and Manufacturing Futures Initiative will take up two floors of a 94,000-square-foot building, the first of three set to be built within the 264,000-square-foot steel superstructure steel frame of the old mill — a concept described as "building within a building."

"It's going to be a tremendously important site," Smith said. "We're really trying to make this a landmark building that emphasizes both the best of Pittsburgh's past, with its steel-mill heritage, and the best of its future, with the technology that CMU and the other companies will be bringing here."

The first building is estimated to cost $46 million.

Nearly 10 percent of the cost — between $4 million and $5 million — has gone toward remediation efforts, such as doing sub-slab soil testing, removing asbestos and replacing rotten paneling, Smith said.

"Reusing the mill structure and remediating some of the conditions left by the mill is really very expensive," Smith said, "and so this (tax credit) was the only way it was possible to do a project of this magnitude and this quality."

A long-awaited development

The vision behind Hazelwood Green has been more than 15 years in the making.

Owned by three prominent Pittsburgh foundations since 2002, the 178-acre property along the Monogahela River formerly known as Almono is slated for redevelopment as a green high-tech center with space for housing, offices and recreation. The property is jointly owned by the Richard King Mellon, Benedum Foundations and The Heinz Endowments.

In addition to building residences and more office space for tech-minded companies, plans for Hazelwood Green include a 2.5-acre public space and constructing a new street running the length of the property.

Smith said getting involved in Hazelwood Green made perfect sense for RIDC, which has access to subsidies that for-profit entities don't and specializes in financing projects that benefit the public.

"It's a project that would be very hard for a for-profit developer to do, but it will have enormous impacts on jobs and the business that it generates," Smith said.

In total, RIDC has received about $43 million combined in local, state and corporate tax credits toward the first phase of the Mill 19 project, including funding from Pittsburgh's Urban Redevelopment Authority, PNC Bank and Telesis. After financing and administrative costs, the contribution translates into a net benefit of about $7 million toward the $46 million project, Smith said.

More tenants needed

The developer still needs to find an anchor tenant and secure more financing to advance a second planned 70,000-square-foot building estimated to cost about $30 million. A cost estimate is not available for the third building.

State officials estimate the Mill 19 project will generate at least 132 temporary construction jobs, followed by 116 full-time permanent ones.

"This project has great potential for revitalizing an unused brownfield site and bringing jobs and additional high-tech employers to Hazelwood," Wolf said in a statement.

Natasha Lindstrom is a Tribune-Review staff writer. Reach her at 412-380-8514, or on Twitter @NewsNatasha.

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