ShareThis Page
News

Tax-break critics balk at incentives for wealthy developers

Bob Bauder
| Friday, Dec. 9, 2011, 12:00 p.m.

Pittsburgh Councilman Bill Peduto wants to expand an existing tax break program to stimulate new development in the city, but critics say wealthy developers who don't need and haven't asked for help would benefit at the city's expense.

A glaring example would be PNC Financial Group, which is planning a $400 million office tower Downtown, said Councilman Ricky Burgess. The company had plans to build the tower at Fifth and Forbes avenues and Wood Street before Peduto proposed the tax breaks, Burgess said.

"Why should we give PNC money that they don't need to build their building?" he asked. "They didn't ask for it. Why should we give large interests like PNC tax breaks for a building they're going to build anyway?"

PNC spokesman Fred Solomon said the company does not comment on legislation, but noted that PNC paid city transfer taxes twice on one of the properties it acquired for the 33-story building. A shell company that PNC created paid taxes on the property, Solomon said. PNC paid again when it assumed ownership.

Peduto said he proposed the legislation, which earned council's preliminary approval this week, after hearing from developers that tax abatements make it easier to finance projects. He said developers are holding back on construction because of difficulties borrowing money in the economic climate.

"I think it's a good program and I know it will get at least five projects going in my district," said Peduto of Point Breeze. "At a time when banks aren't lending money, we have to give incentives to get projects moving."

The tax breaks would apply only to projects exceeding $1 million and expire after 10 years. Owners would pay taxes on twice the assessed value of the property before any improvements are made. Peduto said that means the city would receive double the tax revenue on a property before any abatement takes effect.

Properties would then be 100 percent exempt from city real estate taxes for the first two years. The value of the tax break would decrease every two years thereafter by 10 percent and end after it reaches 60 percent. The largest discount any property owner could receive in a single year is $250,000.

PNC's office tower hasn't been assessed but based on the value of the development it is likely to qualify for the maximum tax break, potentially saving the company $2 million over 10 years.

Joanna Doven, spokeswoman for Mayor Luke Ravenstahl, said he supports offering tax incentives to spur development, but not where development is already occurring.

"That's money that's not benefiting city residents," she said.

Nate Benefield, director of policy analysis for the Commonwealth Foundation in Harrisburg, said the best way to stimulate development is to lower taxes for everyone.

"With tax abatements you have the seen and the unseen," he said. "You see development that happens because of this abatement, but you don't consider the effect of the unseen. When they lower taxes on these properties, it's requiring higher taxes of everyone else.

"What would happen if they just lowered property taxes across the board for everyone?"

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.

click me