 
|
|||||||||
              
|
Weaving a web to snare Nordstrom for Downtown
Wednesday, October 06, 1999 By Dan Fitzpatrick, Post-Gazette Staff Writer
Hoping to raise about $32 million for a new Nordstrom department store Downtown, city officials are turning to local corporations, foundations and the state for help.
"We have to be creative," said Mulugetta Birru, executive director of the city's Urban Redevelopment Authority. "This is not going to be an easy one."
Only days after Mayor Murphy unveiled a complicated $480 million redevelopment plan for the heart of Downtown, his development aides are searching for new ways to fund yet another department store along Fifth and Forbes avenues. The city has a preliminary commitment from Nordstrom, but to close the deal, the city needs to produce about $32 million in incentives. That could take the form of an underground parking garage, new store construction or both.
The problem is, "There isn't a lot of room for the city to raise money right now," Birru said.
So, Birru is looking elsewhere.
To start, he wants 10 local corporations to contribute a total of $10 million. Each company would get 75 percent of its money back in the form of state tax credits, according to a plan Birru recently submitted to the state. To qualify for the credits, Birru needs to prove that Nordstrom and the Market Place projects will create new jobs for local neighborhoods and benefit low-income families.
Until now, the state has agreed to such a tax-credit arrangement only in Bloomfield, the South Side and Manchester. Money from Mellon Bank, PNC Bank and Duquesne Light Co. helped community groups in those neighborhoods build new housing and offer job-training services.
According to Birru, a new Nordstrom and the Market Place project would create more than 2,300 jobs and create employment in nearby neighborhoods such as the North and South sides.
The state, though, is not sold on the idea of tax credits. "We are taking a look at it, but it doesn't look optimistic," said Steve Morgan, a spokesman for the Department of Community and Economic Development. State law dictates that the tax credits can be used only to benefit low-income families, Morgan said. At first glance, Birru's Nordstrom proposal does not appear to meet that criteria, he said.
When reached yesterday, Nordstrom spokeswoman Shasha Richardson would not comment on the talks with city officials, other than to say discussions are ongoing. But "we would really like to be there," she said. Opening a Pittsburgh store would be "part of our overall growth strategy to locate in the top 50 metropolitan."
Founded in 1901, Nordstrom has 71 conventionally sized stores and 26 smaller "rack" stores, which feature off-price merchandise. Many stores are in suburban malls, but several are in downtowns, including Spokane, Wash; Portland, Ore.; Providence, R.I.; and, opening next September, Chicago. The closest Nordstroms to Pittsburgh are in the King of Prussia mall, near Philadelphia, and Beachwood, near Cleveland.
A Nordstrom store is known for its shoes and customer service. But the company also has a reputation for extracting sweet incentive packages from cities.
The city of Norfolk, Va., for example, put up a library and a convention center as collateral for a $32.8 million loan to build a Nordstrom. The Rhode Island legislature agreed to forgo certain taxes to lure it to Providence.
In Pittsburgh, Murphy has said it would not cost as much to land Nordstrom as it has other cities.
One financing method already ruled out is Tax Increment Financing, a controversial tool that Murphy used previously on a number of Downtown projects, including the new Lazarus.
If the state does not come through with tax credits, Murphy's aides will turn to other sources. Executive Secretary Tom Cox already is talking to local foundations about grants for a Nordstrom store.
"Is it something we would be interested in?" said Hank Beukema, executive director of the McCune Foundation. "Absolutely." Beukema has yet to see a formal request for money. "When it arrives, we will consider it."
In addition to foundations, Cox is approaching the Allegheny Conference on Community Development, a group of local CEOs. He hopes the Allegheny Conference can lead discussions with local companies.
City officials expect Nordstrom negotiations to last several more months. For one, Nordstrom and the city have yet to settle on a site. One option is a block on Fifth Avenue next to Market Square. The other is in the Warner Centre, between Smithfield and Wood streets.
Also, the financing on Murphy's $480 million Downtown development plan may have to be reconfigured if Nordstrom comes. The city plans to buy and demolish more than 60 properties, relocate the tenants and save up to 10 historic facades. The city would sell the land for $28 million to Chicago-based Urban Retail Properties Co., which is pledging a total of $179 million.
Urban Retail would then fill the new buildings with upscale retailers and restaurants, paying the URA $3.50 a square foot annually in fees.
If Nordstrom is dropped in the middle of Market Place, "that changes the entire formula," Birru said. A new Nordstrom means Urban Retail probably would want to pay less than $28 million for the land, and probably would want to pay the URA less, too.
Staff writer Tom Barnes contributed to this story.
|
||||||||
