Pittsburgh offered Amazon its best development sites — for free
Amazon would have had its pick of five of the Pittsburgh area's most iconic, valuable and primed-for-development sites and $4 billion in economic incentives had the Seattle-tech giant picked the city for its second headquarters.
The five locations — the Strip District, Hazelwood, the former Civic Arena site in the Lower Hill, Carrie Furnace and 152 acres near Pittsburgh International Airport — would have in most cases been offered to Amazon at no cost with the state picking up the tab, public officials behind Pittsburgh's bid for Amazon HQ2 said Thursday.
The land alone is together worth upwards of at least $20 million, according to recent property assessments.
Dan Adamski, managing director of Jones Lang LaSalle in Pittsburgh, said that's the price a city had to pay to lure an opportunity like Amazon. He wasn't surprised to see any of those five sites in the mix.
"Those are some of our best sites,” Adamski said Thursday. "You have to put your best foot forward, and frankly, we don't have a large number of sites that could have accommodated Amazon's requirements in the city.”
Adamski said giving that land to Amazon for free would have been worth the cost. Amazon would have brought the equivalent of another UPMC to Pittsburgh.
"You have to weigh the scales,” Adamski said. "You weigh the value of that land against the taxes and the ensuing development that would be coming here, and to be frank, that value of that land would be dwarfed by the value of what would have been created.”
The public got its first look at Pittsburgh's bid for Amazon's second headquarters as Mayor Bill Peduto, Allegheny County Executive Rich Fitzgerald and Stefani Pashman, head of the Allegheny Conference on Community Development, shared its contents.
Amazon announced Tuesday it would split its second headquarters between New York City and communities just outside of Washington, D.C., with each location getting 25,000 jobs and $2.5 billion in investment. Nashville will be the site of an operations center and 5,000 jobs.
Those three locations offered government subsidies from states and municipalities totaling more than $3 billion.
Pittsburgh, a top 20 finalist that was seen as a dark horse for HQ2, offered more but got nothing.
"The incentives weren't the driving force that was making their decision,” Fitzgerald said Thursday.
Fitzgerald said the team behind Pittsburgh's HQ2 bid was disappointed but also proud. In the end, Amazon was looking for things Pittsburgh couldn't offer.
"We can't compete with the nation's capital in many ways. We can't compete with the nation's financial center in many ways,” Fitzgerald said. "Nor would we want to.”
Public officials stressed that the incentive package offered to Amazon was meant to attract the company but also to benefit Pittsburgh. The city and county could have expected about $5.8 billion in new revenue over the next 20 years, according to Fitzgerald.
Of that $5.8 billion, $3.7 billion would have gone directly to the operating budgets of the city, county and city school district, he said.
The remaining $2.1 billion, which would have accrued over 25 years according to the proposal, would have been reserved for regional investments through the Forging Pittsburgh's Future fund. That money would have been applied to transportation, affordable housing, workforce training and infrastructure projects like improving drinking water.
"The initiatives were created specifically for where the greatest needs are and where we viewed where there would be disruption if Amazon were to locate here,” Peduto said.
Low-income residents would have been the beneficiaries of these projects, he said.
The bid claimed to offer Amazon $4 billion in incentives to be paid out over 25 years, according to an analysis by the city and county. The state, however, estimated the incentive package to be worth $9.7 billion based on its calculations. The state Tuesday announced it offered $4.5 billion in performance-based grant funding and $100 million toward state transportation improvements, according to Gov. Tom Wolf's office.
The $4 billion in incentives from the city and state broke down as follows:
• $637 million in capital to reduce initial occupancy costs, such as land value, infrastructure and transit
• $1.3 billion in performance based grants as Amazon creates jobs
• $2.1 billion in the way of forging Pittsburgh's future investments. These investments would improve funding for pre-K, K-12 and workforce development programs and ensure affordable housing and transportation and infrastructure, according to the bid.
The state, county and city fought in court to keep the bid a secret, appealing a ruling from the Pennsylvania Office of Open Records and threatening to appeal one from county Court of Common Pleas judge ordering the full bid be released. Peduto and Fitzgerald would not say Thursday how much the city and county spent on legal fees fighting to keep the bid a secret. Both said they used existing resources within their respective legal departments.
The bid also outlined five locations — "each offered at zero cost to Amazon,” according to the document — available to Amazon.
Despite the bid submitted to Amazon saying the company would have access to these sites at no cost, Peduto clarified Thursday that each location offered different incentives. For some areas, like the 152 acres at the Pittsburgh International Airport, Amazon would have leased property. In others, the state would buy the property and give it Amazon for free.
"The vast majority of any of that cost was coming from the state,” Peduto said.
No details about these site-specific incentives were included in the bid or the attached documents. Peduto and Fitzgerald said those details would have been shared had Pittsburgh reached more advanced talks with Amazon.
Pittsburgh offered Amazon space at the 178 acres of the former Jones & Laughlin steel mill in Hazelwood. The company also had access to the 28-acre site of the Civic Area in the Lower Hill. The 65-acre Carrie Furnace site was part of the offer as were a cobbled-together 44 acres in the Strip District, among Pittsburgh's hottest neighborhoods for tech development.
"HQ2 at the Strip would be positioned alongside several large technology and robotics firms,” the bid stated. "Amazon would benefit from the district's historic industrial architecture, walkable and bike friendly public realm, and high-quality retail, cultural, and recreational amenities.”
Peduto said several property owners worked together to create a tract of land large enough to market to Amazon. Oxford Development led the Strip District proposal. The development firm did not return calls for comment.
Specific parcels in the Strip District development were not discussed. Oxford Development is behind the 16-acre 3 Rivers Crossing development in the Strip. The land for The Offices at 3 Rivers Crossing is valued at $1.2 million for less than acre, according to the 2018 assessment.
The 28-acres of the Civic Arena site, owned by the Sports and Exhibit Authority and Urban Redevelopment Authority with the Pittsburgh Penguins holding exclusive development rights, is assessed at more than $15 million. Hazelwood Green, the 178 acres along the Monongahela River and owned by a consortium of foundations, is assessed at more than $6 million. The Carrie Furnace site, owned by the Redevelopment Authority of Allegheny County, is assessed at $2.5 million. The county bought the full 168-acre site in 2005 for $5.75 million.
The Allegheny County Airport Authority would have leased the county's World Trade Center site to Amazon at a fair-market rate, authority spokesman Bob Kerlik said.
Aaron Aupperlee and Jamie Martines are Tribune-Review staff writers. You can contact Aaron at 412-336-8448, aaupperlee@tribweb.com or via Twitter @tinynotebook. You can contact Jamie at 724-850-2867, jmartines@tribweb.com or via Twitter @Jamie_Martines.
