The Real Loser in the Buncher - Terminal Building Deal may be the Pgh Public Market

After the loss of the Igloo, I began to worry about other pieces of our city's history falling to the bulldozer. Indeed, after reading this post at The Radical Middle I was getting pretty fired up about what was being proposed for the Terminal Building.

It was with this in mind that I attended the public meeting put on by the URA and Buncher (the developer) to hear their proposal for developing the Strip District. The event seemed fairly well attended for this sort of thing - I counted about 45 people, though some were clearly with the URA or Buncher. It also seemed that the audience was overwhelmingly opposed to the proposal. There were jokes made during the presentation about creating open community space that might be used to protest against The Buncher Company, and there was a distinct lack of applause at the end of the presentation. This chilly attitude can't all be attributed to simple love of the Terminal Building; Buncher is a company with a history of powerful political connections and was featured in the PG's Pay to Play feature on government corruption.

 Still, I must admit to being rather pleasantly surprised by the proposal, though this is not to say there isn't room for cynicism.

Buncher first set out to describe the history of the area. In the 1850's development in what is now downtown and Lawrenceville began to run together in the flat area of land known as the Strip. Back then, of course, Lawrenceville was home to the Allegheny Arsenal which directly or indirectly supported most of the business in that area. Until the early part of the 20th Century, the Strip was a hodgepodge of heavy and light industry, housing and open fields. Then in the 20th century, a rail yard was developed to supply the growing number of wholesalers and other industry that were occupying the Strip. In 1929 a section of this rail yard was used to construct the Terminal Building. At first it was shorter than it is now, but in 1930 it was expanded to slightly over its length today. Then a very small potion was removed in the 1980's to facilitate truck traffic. The Terminal Building was first used to unload whole rail cars. But after the 1936 flood, much of the rail yard was damaged and market forces and the depression were conspiring to make trucks the dominant mode of transportation. This led to additional changes to the building: most notably, the installation of modern truck docks on the river side of the building. Throughout this talk, Bucher was very keen to note the amount of change that the building and surrounding area had already undergone.

So what is the proposal?

Buncher owns the open lots surrounding the Terminal Building on the river side. In addition, they own the lots farther up the street toward the Heinz History Center and the area under under the 16th Street Bridge. They want to transform that area into a set of apartment buildings, office space and retail shops. The idea is to take advantage of the river views for residents and office workers. I take it that something like a more ambitious version of the nearby Cork Factory Lofts development is what is hoped for. That project rehabilitated the impressive cork factory into apartments and condos and then put a parking garage, retail space and a (now failed) grocery store.

So the open lots would be developed into office and retail space and would use the already existing draw of the Strip District to bring customers toward the new retail space being planned. Further, the business and restaurants in the Strip would be conveniently located for all of the new residents and office workers along the river.

The sticking point in this plan is the Terminal Building. Its unbroken length acts as barrier to the Allegheny from the Strip and vice versa. Further, if the development goes through, the Terminal Building's current use (absent the public market) wouldn't really be viable. The truck traffic and attendant lading just doesn't have a place in a public space like that. These issues are compounded by the fact that the terminal building is in terrible shape. The brick work needs to be rehabilitated, rotting doors and structural integrity are also a concern.

Buncher argues that this stands as a significant obstacle to maintaining the status quo. The building is currently owned by the city and rented out at fairly cheap rates. I have heard (at the Radical Middle post linked above) the figure $4 per sq ft mentioned as the current rate, but I really have no way of knowing how competitive that is. Buncher claims that those rates do not allow for the rehab of the building and act as a rent subsidy that is being extracted from the building itself in the failure to do proper maintenance. On top of all this, the building is currently unsuited to many uses. It has no heating or cooling and no plumbing along the bulk of its length. Indeed, next time you are in the Public Market take notice of the extensive plumbing and duct work that was installed to make it usable.

So Buncher's agreement with the URA is that development of the site be contingent on the integration of the terminal building. The city will sell the building to Buncher with the requirement that it restore it and install the necessary utilities to make it an attractive retail and office space.

But, Buncher thinks that development won't be possible unless the building is altered to allow pedestrian and vehicle access. They argue that, as it stands, it won't facilitate the movement of people between the Allegheny and the Strip. This means that one of the major draws is defeated because people won't be able to move from shopping in the Strip to the new retail space and the new residents and office workers won't be able to access the restaurants and bars of the Strip. They propose as the solution to this the demolition of one third of the building.

About one city block would be removed to allow for 17th Street to be extended to the Allegheny. This street would abut parking lots and an open public plaza. The alternative to demolition that is being considered, but didn't really come up in the meeting, is to allow road and pedestrian access ways through the building itself - by tunneling through it. This option wasn't really mentioned so much as dismissed. Buncher thought that this option would destroy the most significant aspect of the building - its unbroken length.

After the presentation there were only two questions. One was on parking. The more substantive question, however, concerned the Public Market. As mentioned above, the cheap rents levied by the city constitute a subsidy on whatever happens to occupy that space. Now while you may not have much concern for truck lading operations getting a city subsidy, the Pittsburgh Public Market is a different story. By charging low rents and bringing together like minded businesses to build a customer base, the Public Market functions as an incubator for small business.This is the place where entrepreneurs can test the waters and build a customer loyalty before expanding into a store-front. There is every reason for these people to get a subsidy since this has the potential to expand the tax base down the road when these businesses become more successful and start expanding and hiring.

It seems clear that Buncher has no interest in continuing the current arrangement. Their goal is to raise rents and property value throughout the area. As such they don't want to end up subsidizing the Public Market. Incubating small business does nothing for Buncher as they won't see the returns on that investment in increased tax revenue like the city can.

In fact, this seems to me to be a far more interesting issue than the shortening and restoration of the building. The Public Market is a relatively new business that seems to be doing very well. Given the kind of thing it represents and its potential to flourish in the environment created by this new development, there is every reason for the URA to demand that Buncher lease space to the Public Market at a lower rate. To not do this is to engage in a rather perverse form of imminent domain. Small businesses will essentially have their, albeit small, store-fronts taken from under them so that space can be given to a developer who will double the rent. I would hope to see a group of those who support the Pittsburgh Public Market come together to ask Buncher and the City to modify this proposal to include such a provision.

And this isn't the only reason for some cynicism!

First, I can't help but point out that Right by Nature, the anchor for the Cork Factory Lofts, recently went out of business in the area immediately adjacent, and most similar to, the proposed development. If a fairly small organic grocery store can't be sustained in an area next to a brand-new apartment complex and large contingent of weekly food shoppers, I don't know how the proposed development is going to support the amount of retail that is slated for it. Indeed Right by Nature sat next to Benkovitz Seafood, so the obstacles to accessing it from normal Strip District shopping were not nearly as great as the new development will entail. There may be one caveat to this though. I went to Right by Nature a few times - it wasn't very good. Maybe they just went out of business because they were kind of a crappy grocery store?

Second, Buncher, conspicuously, did not offer a very detailed economic rationale for its claim that the Terminal Building couldn't support itself in this new environment. In fact, the demolition of its western portion frees up a large piece of real estate which Buncher will no-doubt use to build some other part of this development. Understood this way, Buncher looks less like someone who is willing to take a liability off of the city's hands to preserve it while transforming it (if that is even possible), and more like a company getting a very nice piece of real estate simply handed to them to develop. It would be nice to see an audit of this project. Such an audit might begin by analyzing the costs to the city of rehabilitating the building and the increases in rent that could be demanded from such an effort. It might also ask how much revenue would be gained by a development occupying the land where the western portion once stood. This could be done with an eye to seeing how much that would offset the costs of transforming the rest of the Terminal Building. Further, it should include projections detailing the expected tax revenue increase that the proposed development brings in.
I won't hold my breath on anything like this being published.

Still, all told, this is an exciting opportunity for Pittsburgh. I have long thought that this city does far too little with its river fronts and it is good to see that they are being developed. Also, as much as I like the Terminal Building, it is in really poor shape and it would be great to see it repaired, spruced up and made accessible to everyone.