AntiRust

Pittsburgh's Condo Market: Hot or Cold?

Jonathan Potts has a nice post about where our new downtown dwellers might be coming from, in which he is nice enough to link to AntiRust. He also links to a story in the the Pittsburgh Business Times (registration required) about the market for all the new residential units. That story offers this quote:

Eve Picker, head of no wall productions and a developer of several loft projects Downtown, said that while sales of some properties may be sluggish, especially in unproved residential markets like Downtown, she expects them to pick up soon.

Sluggish? Balls. I just read that the market is booming. From the Post-Gazette:

David W. Bishoff is so pleased with condominium sales at the Carlyle, the soon-to-be-converted Union National Bank building at Fourth Avenue and Wood Street, Downtown, that he's ready to try it again -- right next door.

Even as the ribbon was being cut yesterday to celebrate the start of construction at the Carlyle, Mr. Bishoff said he had a "second phase" of housing planned at its 20-story sister, the Commonwealth Building, next door on Fourth.

Mr. Bishoff, president of E.V. Bishoff Co. of Columbus, Ohio, said that conversion project moved from thought into planning because of the early success of the 21-story Carlyle, where 20 of 60 luxury units ranging in price from $190,000 to $1.2 million have been sold.

Twenty out of sixty units is pretty good. In fact, the Post-Gazette pointed to that statistic in another article:

A few blocks away, at Wood Street and Fourth Avenue, the Carlyle has secured buyers on 20 of 61 condos, ranging from $236,000 to $1.2 million for a top-floor penthouse, and expects to have all sold by next September.

Only that article was published six months ago, on September 24, 2006. Four months before that:

A few blocks down at the Carlyle, another stop on the tour, 16 of 61 units sold even before Realtors had a model to show prospective buyers, said Heather Miller, a site coordinator. Prices for the two bedroom condos range from $205,000 to $1.2 million for a top floor penthouse. A model has just opened.

So they've sold four units in 10 months. Maybe. From a year ago:

Sales at The Carlyle, which should be ready later this fall, are also proceeding well, says site coordinator Heather Miller. Thirteen of the 61 two-bedroom condos have sold, and another six are pending.

Thirteen plus six equals 19. So basically, they've moved one unit since last March? And they plan to sell 41 more by this September?

Look, I hope they do. I think it would be a good thing for more people to move downtown. And as far as I can tell, whatever subsidies the Carlyle's owners have gotten from government hands (if any) amount to less than other developers have gotten.

Still, one unit in 12 months does not seem all that encouraging to me. I admit that I know very little about high-dollar real estate. (Or high-dollar anything, for that matter.) Maybe the developer has not been pushing sales. Maybe people are waiting for the abatements to take hold. (Anyone know what happens if you buy a condo the day BEFORE they go into effect, assuming that they will go into effect?)

Either way, does this seems like a good market for investing taxpayer dollars? Is it a good idea to use public money to entice PNC and the Piatts to enter this game?

Alternatively, if the market is so hot, hot, hot, that the Carlyle is expanding, why do we need the subsidies? 

Redevelopment, Eminent Domain and Other Things No One Can Understand

I have posted numerous entries about the "superblock" project in Baltimore. Looks like it just got "resolved."

Quick background: Baltimore was planning to seize several blocks of property to do a redevelopment project on the city's west end. Only one of the main property owners was a multi-billion-dollar foundation that was planning to use the property to do... a redevelopment project. Only the city wanted to control the project. So it seized the property anyway. The foundation had better lawyers than your average property owner, of course, and it looked like a groundbreaking legal fight was in the works.

Well, I think the city saw that. And what we got was a solution in the form of a "land swap." The city gets the foundation's property. And gives the foundation other property in return. A libertarian's dream.

Well, no. Get this:

In January, the city approved an agreement to sell 37 properties, more than half of them owned by the foundation, on 3.6 acres bounded by West Fayette, Howard, Lexington and Liberty streets, and Park Avenue - to Lexington Square for $21.6 million.

The city still must acquire properties to turn over to both development teams and will probably be forced to use condemnation powers to do so.

So let's recap. The city wants to do a redevelopment project, but has to condemn property to get it done. Despite the fact that a redevelopment project is in the works anyway, free of charge to the city. The foundation sends its lawyers into action. So the city proposes a land swap. To get the land it needs for the swap, it seizes property that belongs to someone else. So the foundation that was planning to do a redevelopment project anyway can still do a redevelopment project.

Awesome.

There's still some fight in a few people, though.

Two lawuits are challenging BDC's award of the development rights and subsequent land sale agreement to the Chera/Dawson Group, which formed Lexington Square to complete the project.

For the Weinberg-Cordish project [the foundation project] between Lexington and Clay streets, the city needs to acquire property owned by Nam Koo, owner of the New York Fashions retail chain, which has its flagship store and warehouse in a former movie theater at Lexington Street and Park Avenue.

"He wants to stay in his property" and is prepared to challenge any taking of his property, said Koo's attorney, John C. Murphy. "He has been holding on all these years hoping to stay."

Good luck, Mr. Koo. My suggestion: Get the foundation's lawyers. Maybe they can seize someone else's fashion store and give it to you.

Old Ladies: Public Enemy Number One

Well, Allegheny County has finally gotten around to kicking the crap out of the Lithuanian Citizens Society. Yeah, all those old ladies playing bingo, making all those charitable contributions. It's about time someone levied a $16,000 fine on them.

And yep. We have the smoking ban to thank for that.

Congratulations, folks.

Congratulations.

The Bloggers Did It: A New Medium's Impact

The other day I posted some musings about an analysis of TIF projects in Kansas City. The city had just released a pretty damning document detailing how the projects in question had fallen hundreds of millions of dollars short of revenue projections.

How and why, exactly, did that report get released?

The bloggers did it, apparently.

Impact? Hard to say. But yesterday, Kansas City voters electer former auditor Mark Funkhouser to be their mayor. (Note that the link above takes you to his blog.) I discussed Funkhouser here. Note that he recently said that Kansas City's plan to build a hockey arena "stinks."

Seems like an interesting fellow. Too bad he can't run here. We could use the competition.

Big Steel, Big Subsidies: Smokestack-Chasing Is Alive and Well

Sigh.

Who's Moving Downtown? Or, with Suburbs Like These, Who Needs a City?

So high-end condos at the Carlyle are selling like hot cakes. (Twenty units sold already!) Awesome. But I still wonder where all those people are coming from. If they are just moving there from elsewhere in the city, who cares?

Enter this article in the Tribune-Review. Wow. Things sound great:

Bishoff said about 30 percent of Carlyle buyers are out-of-towners who transferred to Pittsburgh. The remainder are primarily suburban residents.

One is Brian Ritz, an attorney with the Downtown firm of Pietragallo Bostick & Gordon who said, "I now own a little piece of the Golden Triangle."

Thirty percent of 20 condos means six are occupied by people who are "out of towners." I guess that means from way out of town. Because the rest are "primarily suburban residents." Which makes most of them new to the city. Follow? Brian Ritz is "one of these," meaning, I presume, a resident of a Pittsburgh suburb. Primarily speaking.

Welcome to the city, Brian! Can we learn a little more about you? Well, sure!

A resident of the city's Friendship area, Ritz said he decided to locate Downtown to be closer to his job and to eliminate the commuting time. He chose a two-bedroom unit on the 15th floor.

Friendship, eh? Is that out by Cranberry? No. Actually, it's where I live.

As the article helpfully points out, it's in the city.

Weird.

How many are from out of town again?

Update: OK. Maybe the Trib just struck out. So let's go see who the Post-Gazette found:

One Carlyle buyer, Brian Ritz, is trading in his Friendship home for a two-bedroom, two-bath unit on the 15th floor. He likened his investment to "owning a piece of the Golden Triangle."

Uh oh. Is every guy in the place named Brian Ritz?

And really. "Ritz"? Sounds pretty upscale. Who's his neighbor? Baron Von Screw the Working Man? If so, I hope he's from Cranberry.

Megaprojects and the Press

So is there any chance that planners will give up on redevelopment-through-megaprojects? The stadiums, convention centers and big-ticket transit and road projects that have been guiding revitalization schemes for decades? I see no reason to think so. But just in case you do, here's an interesting editorial from the Erie Times-News (registration required):

How will Erie County spend the money? That is the $11 million question that regional leaders must answer correctly.

Gaming revenues from Presque Isle Downs & Casino are producing dollars in numbers that far exceed expectations.

As the slot-machine buttons are pushed and the buses continue to pack the casino's parking lot, Erie County Council is taking the first steps toward creating the mechanism to spend these millions.

Here are the two words that must drive the process: think big.

Yes. Always. Think big.

Someone mentioned this to me a while ago, but I think it would be worth exploring: To what extent to editorial boards at major metropolitan dailies support the stadium and arena and convention center deals that consume so many hundreds of millions of dollars? I have never lived in a city in which the biggest daily opposed such plans, at least on a consistent basis.

Interesting?

Sports Heroes and Economic Development

What happens when the government builds a stadium for a hometown hero? It becomes a point of local pride, of course. Which must translate into economic development, right? Er...

The minor league Ripken Stadium, which opened to acclaim and sold-out games five years ago, has proved to be such a financial drain to the small town of Aberdeen that the mayor now wants to sell it.

Mayor S. Fred Simmons says that he has had conversations with several potential buyers but that the most promising involve the stadium's namesake: hometown hero Cal Ripken Jr., who owns the team that plays there, as well as a sprawling youth baseball operation headquartered nearby. ...

The team pays only $1 a year for use of the stadium and keeps virtually all of the money generated from games. But officials say the biggest hit has come from an adjacent development project that was counted on to help pay for the stadium but has been delayed. Each year Aberdeen loses several hundred thousand dollars - a significant problem for a city with an annual budget of only $16 million.

Completed in 2002, the stadium became an instant draw and point of pride for the city of 14,000. Named for the Harford County city's most famous family, the stadium was seen as a logical extension of the tradition that began when Ripken's late father taught his two sons baseball at a home a few miles away, where their mother still lives. ...

But the city's commitment to the stadium project - annual payments on about $4.8 million in state bonds - has proved difficult to meet, with expenses outpacing the money the city makes on the facility and forcing city leaders to dip into the general fund.

Oops.

Oh. And right on cue in the same paper, a columnist says Baltimore needs a new arena. There's no hockey team there. Not a basketball team, either. They just need an arena. For the buzz of it.

TIF Tussle: Redevelopment Schemes in the Town Pittsburgh Loves to Hate

So Kansas City didn't get the Penguins. Which gives that city the seemingly impossible distinction of having an arena deal worse than ours. (On the other hand, at least they only offered Mario 75 percent of non-hockey revenue. We gave him the whole kit and kaboodle.)

But a passion for professional sports welfare is not the only thing we have in common with KC. A helpful reader has forwarded a draft version of a report about that city's experience with TIF financing. My gosh. It is dismal, dismal stuff. Seriously. Look at this. Just look at it:

TIF plans generated $233 million below original projections. The projections are the revenue expected to be available to pay redevelopment costs. The City Council reviews the TIF plan, including the projections made by developers who have an interest in securing public incentives, before plan approval.

TIF projections consistently overstate TIF revenues. TIF revenues fell below projections for about 78 percent of the plans. Approved plans are a promise by both the developer and the City Council to citizens about what will happen in a TIF area. ...

Ten of the approved TIF plans are backed by city bonds. Revenues from five of these TIF plans are insufficient to cover debt service. ...

The revenue totaled only 50 percent of the original projections. ... These original projections help sell the plans to the TIF Commission and the City Council. Less than a fourth of the plans met or exceeded expectations. ...

The plans projected about $465 million in revenue but produced only $231 million through 2005.   

Well, certainly there are consequences when a TIF-supported development does not live up to expectations. Or at least there is when a full 78 percent of them fail to live up to projections. Well... er. Not really. The report is advocating some sort of accountability. But so far... nothing.

It's brutal. But at least a few people are beginning to cast a skeptical eye on the whole idea. From the report:

Projections have been consistently overstated. TIF revenues fell below projections for about 78 percent of the plans. It may be easier for TIF proposals to be approved when revenue projections are inflated. Research of 300 large projects in 20 countries to determine which projects were built found that "it isn't the best ones, but instead those for which the proponents best succeed in designing --deliberately or not--a fantasy world of underestimated costs, overestimated revenues, overvalued local development effects and underestimated environmental impacts."

That final quote is from an article in Harvard Design Magazine, titled "Design by Deception: the Politics of Megaproject Approval." It was written, apparently, by the stupendously named Bent Flyvbjerg. So now I will,as they say, get Bent. Meaning I will try to track it down.

In the meantime, try real hard and see if you can think of anything that sounds like "a fantasy world of underestimated costs, overestimated revenues, overvalued local development effects and underestimated environmental impacts."

UPDATE: Found that article. Holy crap.

Counting Heads: Who Lives Where, and Where Are They Going?

Scads of people are moving to Maryland. The Census Bureau tells us so. But people are moving away in droves. Which all points to more people for York, PA.

Confused? Thought so.

This editorial in the Baltimore Sun explains some of it. See, a growing population does not necessarily men people like living in a place. For instance, Maryland is becoming more and more congested. So people are bolting for greener, or at least less congested, pastures. That's not really news. But the editorial is still worth a look for this:

It does Maryland no good to lose residents to other states - especially when there's room for housing in Maryland, and it's not on farmland or in forests. It's in the city of Baltimore, which once had a population half again as large as it does now. It could again. But last year, Baltimore took the third-biggest hit after the D.C. suburbs when it came to net migration - losing nearly 8,000 more residents than it gained.

This is odd. Because when you read other reports, you see people chattering about what a huge success Baltimore is in terms of getting people interested in cities again.

But that's neither here nor there. What I find interesting is the level of AMBITION in this editorial: "Baltimore, which once had a population half again as large as it does now. It could again." Wow. It's not very often you see people talking in stark terms like that. Can Baltimore really be as big as it was at its peak? Should it be? What would it look like? Who would live there? How would they live? Is this just true of Baltimore? Or is it something that can/should happen in other aging Rust Belt cities? Baltimore has DC, after all. But does that mean that rather than re-emerging as a "city," it's going to become an enormous suburb? Should we WANT people to live in Baltimore and work in DC?

But at least they are putting it on the line and saying what their vision is. Baltimore, as big as it ever was. Man. You don't hear a lot of people talking about Pittsburgh becoming a city of 600,000 again.