Wholesale business hinging on ruling for produce terminal
April 21, 2013 12:00 PM
A view of the Produce Terminal along Smallman Street in the Strip District.
Sunny's Fashion at Penn Avenue and 21st Street in the Strip District is one of many storefronts and sidewalk vendors that help draw in shoppers to the area. The Strip District has evolved over the years, as restaurants and retail have taken the place of wholesalers.
By Joe Smydo Pittsburgh Post-Gazette
The 62-year-old Consumers Produce Co. has changed with the times, absorbing parts of other wholesalers as they went defunct, moving to modern quarters and rolling out new services to keep customers happy.
The Strip District, the company's home, also has evolved over the years, taking on more of a tourist and retail persona as its trademark wholesale produce industry shrank.
"I would no longer consider the Strip District the wholesale food industry hub it once was," Consumers Produce chairman Alan Siger, whose father co-founded the company, said.
But what will become of the Pittsburgh Produce Terminal, a neighborhood showpiece and 120,000-square-foot, five-block-long symbol of the fruit- and vegetable-selling scrum? Judge Robert J. Colville of Allegheny County Common Pleas Court may have the final word on that.
Allegheny Valley Railroad and the city Urban Redevelopment Authority are awaiting Judge Colville's ruling on the railroad's suit aimed at preventing the terminal -- opened in 1929, according to court papers -- from becoming part of Buncher Co.'s proposed $450 million development along the Allegheny riverfront. There is no timetable for the judge's ruling.
Woven into the battle over the terminal's future is a debate over the state of the wholesale produce business and the identity of today's Strip.
The authority claims that declines in the produce trade forced it to consider repurposing the building, namely, folding it into Buncher's proposed Riverfront Landing complex of homes, offices and retail. Railroad attorney Jonathan Kamin acknowledged that consolidation over the years has affected the number of produce wholesalers in the neighborhood but argued that authority officials improperly hastened the trade's decline so they could turn over the building to Buncher.
"It's a dying business because they killed it," said Mr. Kamin, who criticized the authority for evicting remaining produce wholesalers from the terminal and ignoring recent overtures concerning an Asian-food distributor that wanted to lease as much as half of the building.
The authority and Buncher last week refused to discuss the court case or even say whether the terminal is empty now. The railroad said the last tenants' leases were to expire in February.
Buncher has operated the terminal since 2011 under a master lease but hopes to purchase it from the authority, then demolish one-third of the building so 17th Street can be extended from Smallman Street to the river.
A ruling limiting the terminal's future use "would burden if not halt an important redevelopment project that is intended to serve as a catalyst for riverfront development," the authority warned.
Mr. Kamin said the railroad wants to preserve the terminal as one of the stations along its route and insisted that the building remains a viable home for rail- and food-related businesses. "Until Buncher and the URA threw everybody out, we delivered 8.7 million pounds of produce there last year," he said.
The debate over the terminal's future is one in a series of controversies dogging Buncher's plan to build Riverfront Landing on 55 acres from the Veterans Bridge to 21st Street between Smallman and the river. City Councilman Patrick Dowd last year held up a financing plan because of various concerns with the project.
The proposed project site once was part of a sprawling Pennsylvania Railroad yard. Mr. Siger recalled when the yard was filled with railcars; the produce terminal, built by the Pennsylvania, a beehive of activity; and the Strip's side streets a bazaar for "sub-jobbers," who bought from the terminal tenants and then sold to grocers and restaurants too small to deal with wholesalers themselves.
Industry consolidation, the decline of family-owned businesses and interstate highways affected the number of produce wholesalers and need for the terminal, Mr. Siger said. His company once received about 5,000 railcars of produce annually but now gets only a couple of hundred, the bulk of its product arriving by truck.
Becky Rodgers, executive director of Neighbors in the Strip, said the neighborhood once was home to about 70 produce wholesalers. Today, she can count only a handful, but she said they remain an important part of a neighborhood that has stayed vibrant through diversification.
The neighborhood remains the city's grocery store, she said, though the mix of products, vendors and buyers has changed. Wholesalers share the neighborhood with specialty-food vendors and other retailers, a combination that has made the Strip a tourist destination and one-stop shop for restaurants and individual consumers,
At the center of the Allegheny Valley Railroad's case is a deed restriction that the authority accepted when it purchased the terminal from Conrail, the Pennsylvania Railroad's successor, in 1981. The deed says the authority must use its "best efforts" to continue using the building for the wholesale produce industry or another rail-related use.
Instead of honoring that obligation, the authority has allowed Buncher to push wholesalers and other tenants out of the terminal, the railroad claimed. The railroad has said the authority forced J.E. Corcoran Co. out of the terminal after 93 years, and railroad CEO Russell Peterson last year sent city officials a letter demanding reimbursement for revenue lost by Corcoran's relocation outside the city.
In court papers, the authority claims that its best efforts were not enough to preserve a shrinking industry's need for an antiquated terminal.
Since the late 1990s, the authority said in court papers, at least four wholesalers went out of business and left the terminal. Consumers Produce gave up 17,500 square feet in the terminal and moved into a 100,000-square-foot building on 21st Street, reflecting what the authority's lawyers called an industry demand for modern facilities. The authority also cited another market trend -- the decision of big grocers, such as Giant Eagle, to buy direct from producers and operate their own cold-storage and distribution centers.
The authority said Conrail, which insisted on the deed restriction, ceased direct rail service to the terminal in 1984 because it wasn't making money on it. Allegheny Valley Railroad served the terminal from tracks nearby.
Unable to maintain the terminal for wholesale produce use long term, the authority said, it began considering other options. But the railroad presented a different picture.
In 2010, it said, produce-related tenants occupied roughly the same amount of space in the terminal as they did in 1989. And, the railroad said, high gasoline costs have created a surge of interest in rail transportation.