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Stadium-convention center projects offer tourism venture, new hurdles
Tuesday, March 10, 1998 By Tom Barnes, Post-Gazette Staff Writer
Pittsburgh and Allegheny County officials have come up with an $803 million plan to build two new sports stadiums and a larger convention center, but they admit that some serious hurdles remain before the ambitious development proposal becomes a reality.
At a news conference yesterday, Mayor Murphy said the goal was to have all three facilities -- a $233 million football stadium, $228 million baseball park and $267 million expansion of the David L. Lawrence Convention Center -- under construction by summer 1999.
The football stadium is planned just west of Three Rivers Stadium, which is to be torn down. The new baseball park is to be on the North Shore at the end of the Sixth Street Bridge. The convention center would be expanded to the west, across 10th Street, tripling its exhibit and meeting space.
And officials yesterday unveiled a new wrinkle in the North Shore development plan -- locating something called the "Pittsburgh Destination Center" between the two new stadiums.
It would be a combination of commercial projects, including hotels, restaurants and entertainment venues. Murphy also wants to put a "first-day attraction" on the site, a high-profile destination that will attract tourists and visitors.
Besides the three big projects, the $803 million financing plan includes $30 million for the destination center plus $45 million to retire the existing debt on Three Rivers and demolish it.
Murphy and county Commissioners Bob Cranmer and Mike Dawida, principal architects of the plan, said there were three parts to the financing package.
The local financing portion of $305 million was the most firm at this point, and officials also were confident that the state and federal governments would come through with needed funding of $328 million.
Most of the unresolved questions pertained to $170 million in private funding for the projects.
"A stool can't stand on just two legs, it takes three," said Cranmer, who has strongly pushed for greater private funding in the plan. "All three components must be successful for this to work. We can't go forward with just the public commitment."
Included in that private funding segment is a proposed $45 million in investment in the stadiums by small and large private corporations. Cranmer, who proposed this portion, calls it the Pittsburgh Investment Capital.
Local firms will be given an opportunity to buy parts of the stadiums, such as the scoreboard or seats, and use the depreciation of such items over time as a write-off to lower their taxes, Cranmer said. There may be further talks with federal officials on this part, too.
Firms will also have a chance to buy exclusive rights to certain operations, such as food service or novelty sales, and then franchise those out to vendors, for a fee. Cranmer estimated the return on the investment at between 6 percent and 10 percent and urged local firms to participate.
Another part of the private funds would come from a proposed 5 percent surcharge on football and baseball tickets, which would raise $22 million but is still subject to negotiations with Pirates and Steelers owners.
Another controversial issue that would bring private funds to the projects is a proposed tax on ball players, which is expected to raise $7 million over the life of the funding package.
The precise amount to be contributed directly by the teams is also subject to further talks. Steelers owner Dan Rooney has pledged $50 million, but Cranmer is trying to get more from the Steelers. Pirates owner Kevin McClatchy has pledged $35 million.
The leases binding the Steelers and Pirates to their new stadiums will either be for 25 years or 30 years -- whichever length of time is set for the $305 million bond issue that will generate the local funding source.
The bonds will be paid off with revenue from the county sales tax and the county hotel tax. The date when the bonds will be sold and their exact term are still unsettled.
Local officials said they were confident about getting the second, state/federal portion of the funding. They are seeking $300 million from Gov. Ridge and the state Legislature, plus $28 million from the federal government.
Further negotiations with state and federal officials are still needed. U.S. Sen. Rick Santorum yesterday pledged his help in getting the federal aid, to go for roads and other infrastructure related to the construction.
The exact terms of the state funds haven't been nailed down. While Ridge has said he would provide up to half the cost of the convention center work and up to one-third of the stadiums' costs, local officials may not know until after the November elections exactly how much they are getting from Harrisburg.
Contacted last night, Ridge said there had been no discussions within the administration about the specific amounts the state would commit to the convention center and the stadiums.
"We still have work to do, obviously," Ridge said. "(Officials in Pittsburgh) do as well. . . . Now that they've got some solid -- I presume, some solid numbers on paper -- we've got to look at it and I'm sure the mayor and everybody else will get back to me to see what our calculations come out to."
Murphy said he would like, by the end of April, to have approvals of public financing by the Regional Asset District board, which controls county sales-tax revenue, and the Public Auditorium Authority and county commissioners, who control the hotel tax funds.
Cranmer, however, was more cautious on that timetable, saying he wanted clear commitments for team and private funding to be in place before the public puts up its share.
"The teams and the private sector must cooperate and negotiate in good faith in the next few weeks," Cranmer said, before local agencies like the RAD board and the auditorium authority commit to reallocating county sales-tax funds and county hotel tax funds.
The Steelers' Rooney said yesterday he was willing to talk about providing more private funds, but he stopped short of pledging more than the $50 million he had already agreed to for a new football stadium.
"This is a step in the right direction," he said of the city-county plan released yesterday. "There is still a lot to do. It needs a lot of explanation. It's good they have come this far."
Rooney is hoping the new football stadium will be ready for play by September 2001. He wants to have a new stadium, rather than a retooled Three Rivers, to enhance revenue-generating capabilities through luxury boxes and club seats, similar to what other teams in the Steelers division have.
The Pirates' McClatchy sounded a bit more optimistic about reaching agreement with the city.
"I think we're pretty close," he said. "My prediction is we'll get this done fairly soon."
One major stumbling block regarding the hotel tax funds has been resolved. The Greater Pittsburgh Convention & Visitors Bureau won't have to give up the $1 million in hotel tax funds that Murphy had wanted it to. That would have been 20 percent of its annual budget, and bureau officials complained such a loss would have hurt their marketing efforts.
Doubletree Hotel General Manager Joseph Kane said that with the new construction, more hotel rooms will be added Downtown, raising enough additional hotel-tax revenue to eliminate the need for the bureau to give up the $1 million.
Kane also announced that he was studying the possibility of adding 500 more rooms to the 600-room Doubletree, by adding a 26-story room tower directly over Penn Avenue, connected to the existing hotel.
City officials estimated that stadium construction could take 18 to 24 months, but left a tight time frame for McClatchy's desire to be playing ball in the new park by April 2001. Several months at least will be needed for property acquisition and demolition.
Property acquisition for the convention center expansion could begin this summer. There is already about $5 million in state funds previously authorized for the expansion, plus several hundred thousand dollars in hotel tax funds generated by a 2 percent addition to the hotel tax that went into effect in September.
One factor that could delay the convention center expansion is the need to complete a new PNC Bank operations center (to be built at Grant Street and First Avenue) before the current operations center, just across 10th Street from the convention center, can be bought and torn down.
City officials are hoping the expanded center can be completed by late 2001 or early 2002.
Post-Gazette Staff Writers Jon Schmitz, Bob Dvorchak and Peter J. Shelly contributed to this report.
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