Developer promises to build apartments at Saks site some day

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A plan to build apartments as part of the proposed redevelopment of the former Saks Fifth Avenue department store site on Smithfield Street, Downtown, is back on -- just not right away.

After discussions with Democratic mayoral nominee Bill Peduto, developers Millcraft Investments and McKnight Realty Partners have pledged to add apartments in a second phase after the completion of a 590-space parking garage and 25,000 square feet of retail.

The developers had decided several months ago to scrap plans for apartments above the garage, saying the timing and complexity of the design made the housing impractical.

But Mr. Peduto, the prohibitive favorite to become Pittsburgh's next mayor, said he has since won a commitment from the developers that they would include housing in a second phase to be completed at a later date.

"They've assured me now that any proposed development at the site will not only include housing as a second component but also include retail along the first floor as a primary component," Mr. Peduto said. "So instead of having one parking garage, we're now going to have basically a two-phased development."

The city councilman said it would have been a "lost opportunity" to build only a parking garage at the site, given its prominent location near Mellon Square, the former Mellon Bank building that is being converted into office space, the William Penn Hotel and the Grant Street skyscrapers.

Mr. Peduto said he did not threaten to withhold his support for the redevelopment unless he got a commitment on the second phase.

"I didn't have to. So there was never a stick approach. It was standing at the site and then two subsequent meetings afterwards to really talk about what we could do there that would be more substantial than a parking garage," he said.

Lucas Piatt, Millcraft president and chief operating officer, said after the Gardens at Market Square project groundbreaking in August that he agreed with Mr. Peduto. He said Millcraft and McKnight are looking at a minimum of 100 apartments at the site.

"We think it makes sense in the long term to have phase two," he said.

In building the parking garage and retail, the developers plan to put the infrastructure in place to make it possible to add residential units in the second phase, Mr. Piatt said.

"There's a cost associated with it but we think we can fill that gap," he said. "At the end of the day [a second phase] makes sense."

Mr. Peduto said he asked for some assurance that the first phase would be "built to be able to sustain and develop the second housing phase" but added that he left it up to the developers as to how to accomplish that.

The city's Urban Redevelopment Authority board is expected to consider giving approvals related to the proposed Saks redevelopment Thursday.

Mr. Peduto said he would like to use the project as a jumping off point to spruce up the entire Smithfield Street corridor, particularly if tax increment financing or other types of public funding are awarded to support the redevelopment.

"If you look at the public infrastructure of Smithfield, it's worn out. And if you visit cities like Chicago, you'll see that what helps to spur good development is good infrastructure, the public sidewalks, the street poles, the trees," he said.

"What you don't see in a city that invests in its infrastructure is graffiti and trash. So we should use this as an opportunity as well to look beyond just the development site and start to look at a very, very critical corridor that connects Downtown."

Mr. Peduto said that, if elected mayor, he would like to see public investments such as TIFs and state redevelopment assistance capital grants targeted to areas rather than a specific developer or project.

Furthermore, he said he wanted to move away from using tax increment financing for parking garages and retail and to "start to invest more strategically in housing and neighborhood business districts."

"There's the opportunity there to utilize those tools in a different way," he said.

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Mark Belko: or 412-263-1262.


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