Holy crap. The Trib has a story detailing the extent to which a condo-buyer downtown will benefit from recent tax-abatement proposals. Pay special attention to the dollar amounts involved, who is getting helped, and what said people are doing with the help:
Chris Pretsch said he was able to pay about $200,000 more for his condo unit at Millcraft Industries Inc.'s Piatt Place development Downtown because of the program.
"I wanted to live Downtown because of the convenience it provides me for work, restaurants and entertainment," said Pretsch, 42, a portfolio manager for Staley Capital Advisors in One Oxford Centre, Downtown.
Pretsch will save $2,700 a year from the city and $3,480 from the school district, based on their current millage rate of 10.8 in the city and 13.92 from the school board. ... If Allegheny County approves the abatement, it would add another $1,172.50 in savings, based on its 4.69 millage rate. That could mean a combined total of $7,352.50 annually.
I'm sure Mr. Pretsch is a hell of a guy. But I am not at all sure he's so cool that we ought to single him out and help him pay for a $200,000 addition to his condo. Seven thousand dollars a year? Wow.
But, hey, that's the price you pay to get people moving downtown, right? Well, uh... no. The price we paid for that was huge subsidies for the condos. Remember those? And if you recall, everyone told us that was working. Think back to this report in the Post-Gazette, from last September (emphasis added):
Downtown's residential renaissance is producing its first fruits.
Developers say they are having little trouble finding people willing to spend $250,000 or more to buy a Downtown condo or as much as $3,275 a month to rent an apartment.
Since opening at the end of April, the new Encore on 7th has leased 73 percent of its 151 units, with most rents ranging from $1,400 to $3,275 a month.
The Golden Triangle's newest condominium building, 151 First Side, has commitments on 43 of 80 units, with prices ranging from $250,000 to $500,000. Piatt Place at the former Lazarus-Macy's building has lined up buyers on 10 of 65 condos, with prices running from $335,400 to $634,500, in the four months the sales office has been open.
"It exceeds our expectations. We're excited about it," said Jack Piatt, chairman of Millcraft Industries Inc., the developer.
So. If we were having such great success and it was exceeding everyone's expectations, why am I paying for Pretsch's extra square-footage again? This might make sense if there was a blanket abatement in the city. But there isn't. Just a few select neighborhoods. So why give people tax breaks in the one neighborhood where, reportedly, the richest people in the area are already moving in droves? Weird.
And here's another question:
Going to a citywide tax break would mean giving up tax revenue in areas "where market-driven development activities are occurring," said city Finance Director Scott Kunka. "When you go citywide, we expect the program will cost the city $75 million over the life of the program." The abatement is, instead, designed so that new property revenue the city gives up is offset by gains in wage and other taxes.
Notice that he said what we really don't want to do is provide incentives where people are already moving. And as we all know, these condo projects are hugely successful and people are already moving there. Huh. But look beyond that. How high is the wage tax? And keep in mind, that only works in the city's favor if he used to live outside the city. He might have. But that's not clear. How many Penguins games is Pretsch going to have to attend to make up for the lost tax revenue? Quite a few, I think. And going to Pens games only helps if he had never done so in the past.
All of which goes to argue, again, that if we ARE going to pick winners in the abatement lottery, downtown should be the last neighborhood eligible rather than the first.