URA Decision on Fate of Produce Terminal is Imminent

Sep 8, 2014

The Urban Redevelopment Authority has owned the produce terminal for more than 30 years.
Credit Flickr user Allie_Caulfield

When Michael Rubino envisions the future of the Strip District, he sees a grand marketplace at the site of the old Pennsylvania Fruit Auction and Sales building, with a farmer’s market, restaurants, business incubators, Amish craftspeople and closeout vendors.

But according to economic development consulting firm Fourth Economy, Rubino’s plan will produce the least amount of tax revenue for the city, when compared with two other plans currently under consideration. The firm is responsible for analyzing the plans and presenting their findings to the Urban Redevelopment Authority, which owns the building.

Kevin Acklin, chief of staff to Pittsburgh Mayor Bill Peduto and chairman of the board of directors at the URA, said the three plans represent two different choices from a policy perspective.

“There’s the privatization of the terminal building, converting it over to housing, retail and office space. Those are the two proposals that are being proposed by (The) Ferchill (Group) and McCaffery (Interests, Inc.),” Acklin said. “Then there’s the other path, which is to make this more of a public space, and that’s the proposal being provided by Mr. Rubino.”

According to Rubino, Fourth Economy made “multi-million dollar” mistakes when they presented their analysis to the city and the URA on Aug. 6. Rubino said his efforts to contact Fourth Economy about the discrepancies were unfruitful, until he reached out to Pittsburgh Post-Gazette reporter Mark Belko.

“Interestingly, he immediately got a response from (Fourth Economy),” Rubino said.

In a letter sent to Peduto last week, Rubino argued that $3.5 million in tax contributions and $2 million in potential New Market Tax Credits were left out of Fourth Economy’s analysis of his plan. Additionally, Rubino said the firm greatly over-estimated the real estate tax income under the Ferchill and McCaffery plans.

Fourth Economy holds that, even with tax abatements through the Local Economic Revitalization Tax Assistance (LERTA) program, Ferchill and McCaffery would pay hundreds of thousands of dollars a year in real estate taxes.

Further, Fourth Economy Vice President of Research and Analytics Jerry Paytas said if Rubino’s company rents the produce terminal rather than purchasing it, “they are asking the city and the URA to take on certain costs that they have not estimated, related to operating and maintaining the building.” That, said Paytas, is a wildcard.

But Acklin said potential tax income from a future development is not the only fact under consideration by the URA and the city.

“There’s a little bit of science to this, but there’s also a lot of art,” Acklin sad. “When we look at the opportunity for this building, which the Mayor thinks can be transformational for the Strip District neighborhood, there are a number of factors we’re looking at.”

Acklin said they want to be sure to minimize any negative impact on Penn Avenue businesses, while maximizing positive impact. The URA also wants the project to be aligned with the needs of those who live and work in the strip, and to be complementary to the Buncher Company development already underway between the produce terminal and the Allegheny River.

The Buncher Company’s plan to demolish one third of the produce terminal is still technically on the table too. In Feburary, Buncher agreed to put their option to purchase the building on hold for six months, while the URA solicited other proposals. That hold has been extended until after the URA votes on which plan to accept on Sept. 11.

In the meantime, Rubino is confident that Fourth Economy’s analysis is incorrect, and that his plan is the best plan for the Strip District both from financial and quality-of-live perspectives.

“Our plan is the only plan that serves the entire community,” Rubino said. “The other plans are for … high-end housing, which by its very nature, excludes most Pittsburghers. Our (plan) is for a grand marketplace that would benefit the entire community.”