Overhauled Plan To Redevelop Lower Hill Promises Housing Construction This Fall

Mar 8, 2019

After more than ten years of negotiations, plans and delays, the Pittsburgh Penguins intend to break ground on the 28-acre Lower Hill project in fall 2019.

First on the schedule for construction are 250 units of housing, followed by a winter 2019 start on a 200,000-square-foot commercial building to host food and entertainment tenants.

The plan, yet to be released in its entirety, is expected to draw $750 million of private investment and provide the city, county and Pittsburgh Public Schools with an estimated $25 million in tax revenue each year. The announcement comes with changes to the development team at the Penguins’ real estate affiliate, Pittsburgh Arena Real Estate Redevelopment. The Buccini/Pollin Group will oversee commercial and office projects, and Intergen will oversee housing development. Intergen is a locally- and minority-owned business.

Including minority and women owned business enterprises in the development was one of the goals outlined in the community collaboration and implementation plan signed in 2014. But it’s just one part of the plan, said Marimba Milliones, executive director of the Hill Community Development Corporation and a signatory to the 2014 agreement.

“Everyone in the region is ready to see this development happen,” she said. “Hopefully all of our elected officials and the Pens are equally eager to make sure that our goals outlined on the [community collaboration and implementation plan] are met.”

Milliones said she is focused on the social and economic investments such as deeper levels of affordable housing, co-ownership of retail spaces, and collaboration between development initiatives in the Lower and Middle Hill. Those exist outside of a plan to use a Local Economic Revitalization Tax Abatement, commonly referred to as LERTA, to invest half of the tax dollars generated by the new development into the Greater Hill District Reinvestment Fund.

Councilor Daniel Lavelle, who represents the community, has been eager to see development in the Lower Hill for years, noting it’s the economic engine to funnel money and investment into the Middle and Upper Hill. However, he has long been critical of the Penguins’ intent and lack of action. After recent discussions with the new development team Lavelle said he’s confident in their capabilities.

“They’ve put a team that has sort of embraced the idea … to not only build a world-class place that people can live, work, play, but do one that is socially and economically responsible to the community,” he said. “We’re going to embrace this community and help this community uplift itself as we redevelop this area.”

The Lower Hill development plans must still go before the Hill District’s Development Review Panel, an 11-member body comprised of residents from different community groups. The panel was created to ensure that development plans align with the Hill District Master Plan. In addition, a final land development plan for each phase of the project will have to be submitted to the Pittsburgh Planning Commission for review.

The changing levels of affordable housing in the Lower Hill plans have been criticized for years. Under the new plan, the first phase of housing will consist of 250 units, 20 percent of which will be affordable at 80 percent of area median income. That housing is less affordable than the units proposed by the former developer, McCormack Baron Salazar, who agreed to make 20 percent of the more than 1,000 planned units affordable to people making 60 percent of area median income. However, that plan depended on being awarded federal tax credits by the Pennsylvania Housing Finance Agency; the project ultimately did not win approval for those tax credits.

“Relative to the Hill District community, [60 percent is] not extraordinarily affordable or accessible, or to the broader Pittsburgh community,” said Milliones. “There’s some communication and clarity that we need to get back around the table to understand what the current affordability levels are, that’s still a question.”

For fiscal year 2018, the U.S. Department of Housing and Urban Development sets the area median income for a family at $76,000. Based on that number, a family of four would have to bring in $60,800 per year or less to qualify for the planned units affordable at 80 percent of area median income. 

In a new options agreement signed in 2017, the Penguins agreed to develop 6.45 acres of the Lower Hill by 2020 or risk losing 20 percent of the money they make from charging people to park in the lots that currently sit on the land. Officials assert they will meet that deadline.

The Lower Hill development proceeds alongside a number of existing initiatives such as Curtain Call, which would honor the Hill District’s history through public art installations. Funding for Curtain Call has lagged in recent years. The Sports and Exhibition Authority is leading a project to build a 2.6 acre park on top of I-579, to create a new green connection to downtown. Most of the funding for that project comes from a federal grant.