Brian O'Neill: It's still too rocky to begin new housing at arena site

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The Consol Energy Center was built on threats, so it should surprise no one that development around it is progressing in much the same way.

As you recall, the arena opened in 2010 after Penguins owner Mario Lemieux threatened to take his hockey team to Kansas City, a smaller metropolitan area with a weaker TV market and a bad hockey history — and Pennsylvania politicians fell for that, puck, line and sinker.

The result is the last of the three most prominent examples of subsidized housing in Pittsburgh: the buildings that house the city’s three professional sports teams. Mind you, they've all done what they're supposed to do, luring millions of people to the heart of the city throughout the year, and commercial development around the North Side stadiums has been likewise strong.

Similar development hasn’t begun outside the hockey arena. Its Hill District neighbors, having had the chance to study closely the moves of Mr. Lemieux, are playing the game the way he did, using whatever leverage they have to get the best deal they can.

Only three years ago, the team and neighborhood leaders were allies. They argued persuasively against historic status for the old Civic Arena because that would have blocked the development they had in mind for its 28 acres. Since then, however, their views have diverged markedly.

Hill leaders want 30 percent of the new housing units to be priced affordably to people who make 30 to 80 percent of the area median income. The team is willing to set aside only 20 percent of the units, and it sets the income criteria for rental higher, at 80 percent.

That won’t mean much of a break. The U.S. Department of Housing and Urban Development says the region’s median income for a family of four is $65,000, so the maximum income for that size family looking for the best deal would be $52,000. Monthly rent and utilities for a two-bedroom apartment, with the break, still would be $1,300.

That’s a higher bar than the developer, McCormack Baron Salazar, used with great success when it began building Crawford Square up the Hill from the arena a quarter-century ago. Back then, federal tax credits were given in exchange for renting to families earning less than 60 percent of the median. About half of initial rentals were at the lower rate.

But this is the new Hill District. Not far away at the Fifth Avenue School Lofts, rents start at $750 for a 390-square-foot studio apartment and reach as high as $2,950 for a three-bedroom unit. All 1,100 units planned by the Penguins probably would be snatched up at similar rates — if payback were not in order.

Longtime residents of the Hill District, which was blown apart and separated from the Golden Triangle to make way for the Civic Arena in the 1950s, aren’t keen on further disconnects when the goal is to reknit the neighborhood with Downtown.

“It should not feel like a completely separate community,” Marimba Milliones, CEO of the Hill District Community Development Corp., said of the development.

City Councilman R. Daniel Lavelle, who represents the Hill, has said he could withdraw his support for a $21 million federal transportation grant for critical infrastructure at the site if the Penguins don't bend here. In addition to adding more affordable housing, Mr. Lavelle seeks commitment to more minority- and women-owned businesses in the project.

Penguins CEO David Morehouse says the team already has a good track record there. Hill District residents got 35 percent of the 861 jobs in the first 18 months of operations of the new arena, hotel and restaurant, Mr. Morehouse said, and some 200 units of the apartment project will go to a minority developer.

Mayor Bill Peduto hasn’t taken a stance on what percentage of new housing should be market rate, but his chief of staff, Kevin Acklin, thinks the two sides will reach an agreement. Mr. Acklin, who also chairs the Urban Redevelopment Authority, doesn't want too much subsidy concentrated on just these 28 acres, though. Property and wage taxes from nearly 900 new market-rate homes could help the city do more to revitalize the Middle and Upper Hill, he said.

The larger story here, though hardly new, is that builders no longer target the middle class, never mind any working stiffs earning below the median. That’s true well beyond the Hill District. If Pittsburgh does hit on a formula that leads to more affordable homes for the struggling middle, here’s hoping it spreads.

Brian O'Neill:boneil@post-gazette.com or 412-263-1947.


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