10 years ago, another Cultural Trust development stalled

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In the midst of a recession, the Pittsburgh Cultural Trust announced an ambitious building project with a $400 million-plus price tag, only to scale it back several years later.

That was 10 years ago, when the trust gave up plans it announced in 1990 to build a 17-story office tower on Penn Avenue. History repeated itself last week, when it suspended its plans for Downtown's biggest housing development, a 700-unit behemoth on Fort Duquesne Boulevard, which it announced to much fanfare in 2006.

The trust said the nation's ongoing credit crisis was to blame for scuttling the $460 million "RiverParc" plan, but the lead developer, Susan Eastridge of Washington, D.C.'s Concord Eastridge, said it was instead doomed by poor oversight by trust officials. Yesterday, another developer who worked with the trust on a nearby project said he experienced the same kind of delays and second-guessing Ms. Eastridge described.

"I was there. I lived it. I went through it with my one project," said Kevin Keane, executive vice president of Lincoln Property Co., owners of The Encore on 7th apartment building.

Lincoln signed on with the trust to build the 18-story building at Fort Duquesne Boulevard and Seventh Street in 1999 but did not break ground for five years, finally opening in 2006. The building is now doing well -- with all but one apartment rented on a site directly adjacent to the RiverParc plot -- but getting it built was not easy, he said.

Echoing Ms. Eastridge, Mr. Keane said the trust's design officials, while an "extremely talented group of people," kept putting roadblocks in front of his 151-unit project, which was much smaller than the RiverParc plan.

"When you get six or seven or eight architects in a room together, forget it. It's just a function of the degree of difficulty and pain to get something like that done. I know what I went through with my one building," Mr. Keane said.

Cultural Trust CEO Kevin McMahon acknowledged that the trust can be challenging to work with, but chalked that up to its high expectations. For instance RiverParc, with designs by the internationally known Stuttgart, Germany, architects Behnisch Architekten, was supposed to be one of the biggest environmentally friendly housing developments in the world.

"Look at the board of trustees and you'll see experts in finance, real estate and design. Without question, we have very high standards. When you make sure you finish what you start, you put additional pressure on yourself and those around you, including your developer," Mr. McMahon said.

In announcing the delay in the project Thursday, the trust said it will refocus on two shorter-term projects at the development site: securing government funding for a riverfront park and building new infrastructure to woo future housing development, including a parking garage. The trust's board approved the delay, Mr. McMahon said, not only because of the nation's credit crisis but the failure by the developers to deliver workable financing.

"It was up to Concord Eastridge to come up with an economically viable project and they were not able to do that. That's something the trust felt it had spent enough time on and it was time to move on," he said.

Concord Eastridge -- said attorney and trust board member Thomas L. Van Kirk -- wanted the trust to give it the six-acre site and borrow against its value to raise their funding for the project. The firm "always refused to be an at-risk developer ... Anybody who looked at this -- and we had various outside consultants look -- said this is not common in the development industry."

The developer's counsel, Pittsburgh's Leo A. Keevican Jr., said the financing was not unusual at all and the trust anticipated contributing the land from the beginning, before Concord Eastridge was brought on. The developers would rather "walk in, buy the land and build whatever you want," he said, but the trust required a level of control over the project that blocked that.

Ms. Eastridge claimed last week that the trust mishandled two aspects of the project's financing.

The first was $12.3 million in state subsidies, which she said the trust allowed to lapse after Gov. Ed Rendell promised them in early 2007.

A spokesman for the state's Department of Community and Economic Development, Kevin Ortiz, questioned that, saying the subsidies did not lapse and the trust gave them back after the project was clearly delayed.

The governor "wants projects completed in a timely fashion," he said. Strict deadlines were not included in the official state "offer letter" to the trust, however.

Ms. Eastridge, whose firm was chosen after a worldwide design competition in 2006, also said the trust was spooked by appraisals of properties on the development site. The appraised values were lower than what the trust had paid for the properties, largely using money from private foundations.

That also rang true to Mr. Keane, who said dropping the RiverParc project meant the trust did not have to account for those possible losses on its books, or to its funders.

"The Cultural Trust is a conduit. They don't have their own dough. They get money from local foundations ... How do they go back to the Mellon Foundation, the Heinz Endowments and say, 'This is how much we lost'?"

Mr. McMahon denied that the delay was budget-related, but did say foundations and others had a say in last week's decision. Local foundations largely paid the roughly $15 million the trust spent acquiring the properties

The R.K. Mellon Foundation has given the trust several million dollars since the early 1990s to acquire Downtown properties. Its director, Scott Izzo, could not be reached for comment.

A spokesman for the Heinz Endowments, Doug Root, would not comment on RiverParc other than to say it has granted $1.5 million to the project since 2006, for design and planning. Through a spokesman, Grant Oliphant, former associate director of the Heinz Endowments and current Pittsburgh Foundation head and trust board member, also would not comment.

Trust board members reached yesterday forwarded all questions to Mr. McMahon and Mr. Van Kirk.

The trust's new plans for a riverfront link and new parking may show promise, given the trust's past history.

While it eventually punted on the office building it announced in 1990, it followed through on accompanying plans to build the O'Reilly Theater, Katz Plaza, an adjacent parking garage and the Wood Street Gallery. Focusing now on riverfront improvements and a new park connection between Downtown and the rivers plays to the trust's longtime strengths of building through art and culture, said Rob Stephany, acting director of the Urban Redevelopment Authority.

"The most important thing is, do what they're great at. They brought vision to a stretch of Downtown where it was hard to see that vision 25 years ago," he said. "They need to be the stewards of that vision and they need to take the right next step. That's what the trust does so well."


Tim McNulty can be reached at tmcnulty@post-gazette.com or 412-263-1581.


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