How Jack Buncher created an empire, and gave it away
In the 1950s, Jack Buncher opened a business park in Leetsdale with an old building that he had shipped to the site in pieces and reassembled.
He intended to use the building for offices and storage, but to his surprise, a utility company asked to lease it. "It took Jack about 30 seconds to decide," Tom Balestrieri, Buncher Co. president and CEO, said.
That, Mr. Balestrieri said, was an early foray into leasing for a company that began as a scrap dealer and now ranks among the region's top developers with about 10 million square feet of commercial and office space.
As he grew the private company, Buncher gave away millions to local and out-of-town nonprofits. And in the ultimate act of philanthropy, Buncher, who died at 90 in 2001, gave away the entire company -- an unexpected move, never publicly announced, that's a potential windfall for a handful of nonprofits.
Set in motion in 2008, transfers of closely held stock from the Jack G. Buncher Trust have given company ownership to the Jack Buncher Foundation and five charitable funds, one each for Carnegie Library of Pittsburgh, Carnegie Mellon University, the Jewish Federation of Greater Pittsburgh, the Pittsburgh Foundation and the New York-based American Jewish Joint Distribution Committee. Each fund currently owns 9 percent of company stock, while the Buncher Foundation owns 55 percent, the company said.
As more stock is shifted from the Buncher Foundation to the funds, the foundation eventually will lose majority ownership of the Strip District-based company, said H. William Doring, executive vice president and treasurer of Buncher Co. and treasurer of the Buncher Foundation. The bylaws of the Buncher Foundation provide for the possible disbursement of all Buncher Co. stock to the funds one day.
The stock is expected to yield dividends for the funds, which, in turn, will make grants to the institutions they were set up to support. The company declined to discuss its revenues or say how much money the stock might generate for the funds. Also unclear is how, or whether, the nonprofits will affect company culture.
How 'Buncherians' came to be
Sam Warwar, a Dayton, Ohio, attorney, said it isn't unusual for nonprofits to have an ownership stake in for-profit ventures, even private companies. Hospitals, he noted, routinely own physician practices. He said some nonprofits encourage gifts of private company, or closely held, stock so they can earn dividends or redeem the stock for cash down the road.
In such cases, he said, the businesses pay income taxes while dividends public charities receive are not taxed.
Some nonprofits own franchises. A few years ago, YWCA Greater Pittsburgh created a for-profit subsidiary to operate a Nathan's Famous hot dog shop on the ground floor of its Downtown building. CEO Magdeline E. Jensen said the YWCA sought an additional revenue stream in an uncertain funding environment.
Disclosure of the Buncher Co.'s nonprofit ownership structure puts a different light on a company accused in recent months of not being as civic-minded as it should be. The advocacy group Riverlife and other critics have complained that Buncher's plans for a $450 million Strip District project do not include sufficient public access to the Allegheny River.
Jack Buncher proposed his own riverfront makeover in the 1980s but couldn't bring it to fruition The current plan -- for retail, offices and homes -- would be one of the company's most ambitious projects yet. Riverlife says the site presents one of the most remarkable urban riverfront development opportunities in the nation.
At the time of Buncher's death, a company official said that Buncher owned 100 percent of the company stock and that ownership likely would pass to the Buncher Foundation, even though Buncher had a daughter, Bernita, a son, Steven, and other family. The plan to draw the library system, university and other organizations into the ownership structure was not announced at that time, but Mr. Balestrieri said that was part of Buncher's vision.
"We conformed with his guidelines, his wishes," Mr. Balestrieri said, noting the five organizations long had been beneficiaries of Buncher's philanthropy.
For example, in partnership with the Jewish Federation and Joint Distribution Committee, Buncher in 1989 established a leadership development program for troubled and isolated Jewish communities. Called "Buncherians," the program's hundreds of alumni "have become the current leaders of many Jewish communities throughout the world," Steven Schwager, retired CEO of the Joint Distribution Committee, said.
"As I learned, it was like many things Jack did. He was ahead of his time," Mr. Schwager said.
Established in 1974, the Buncher Foundation has been the conduit for the entrepreneur's philanthropy. Over the years, it's received gifts of cash, property and securities from the Buncher Co., related Buncher business interests and the Buncher Trust, according to documents filed with the Internal Revenue Service. The foundation, in turn, has supported dozens of local and out-of-town nonprofits, giving away about $21.3 million over the 2009-2010 and 2010-2011 fiscal years alone.
Bernita Buncher is president of the Buncher Foundation and has held a seat on the board of each of the five charitable funds that now are part owners of Buncher Co.
Buncher's wife, Joanne, died in October. The company said members of the Buncher family did not want to be interviewed for this story.
Buncher Co. keeps a low profile in an image-conscious world. Mr. Balestrieri said the company has no ego to feed and prefers not to talk about its work or philanthropy.
"If I have to think about where they've been and where they are and where they're going, they're actually a classic Pittsburgh story, a great Pittsburgh story," said Councilman Patrick Dowd, who has clashed with Buncher Co. over current riverfront development plans.
Buncher Co. has 1.25 million square feet of space in the Strip District, plus developments in Lawrenceville, the West End, the North Side, other parts of Allegheny County, outlying counties and other states.
Buncher also repairs railroad cars and supplies parts for rolling stock. In recent years, it's expanded into the hospitality industry with construction of the Hampton Inn & Suites in the Strip District and the purchase of Hidden Valley Resort in Somerset County.
As of 2011, the company was the city's fourth-biggest payer of property taxes, with holdings assessed at about $192 million, according to Pittsburgh Controller Michael Lamb.
On Dec. 4, 2008 -- the seventh anniversary of Buncher's death -- the Jack G. Buncher Trust gave the Buncher Foundation 500 shares of Buncher Co. voting common stock and 9,800 shares of other kinds of company stock with a combined fair-market value of $178 million, according to documents filed with the IRS.
After receiving that stock, Buncher Foundation began redistributing it. From December 2009 through November 2011, reports showed, the Buncher Foundation gave each fund $900,000 in cash and 25 shares of Buncher Co. voting common stock valued at about $2.1 million.
Buncher Co. did not provide details of the stock distribution for 2011-2012, and federal reports for that period are not yet available. However, the company said each of the five funds now owns 9 percent of company stock. It said plans for a 2012-2013 stock distribution have not been finalized.
Mr. Schwager recalled plans to give each of the five funds an ownership stake of 16 percent or so. However, the Buncher Foundation bylaws provide for the disbursement of all Buncher Co. stock to the funds in certain instances, such as a decision to dissolve the foundation.
Each fund is governed by a board of three Buncher representatives and four representatives of the institution it benefits. So far, the funds have made cash grants ranging from $10,000 to $600,000 to their respective institutions, reports filed with the IRS showed.
John Ellis, spokesman for the Pittsburgh Foundation, said the foundation hasn't attempted to use its ownership tie to influence Buncher Co. operations. He declined to discuss the ownership arrangement's revenue potential. Mr. Schwager said he didn't know details about dividends.
CMU and the Jewish Federation and current leaders of the Joint Distribution Committee either declined comment or didn't respond to questions. The library expressed gratitude for Buncher's generosity and said the Buncher stock doesn't obviate the need for the library tax enacted last year.
In converting his company into a vehicle for philanthropy, Buncher, whose portrait hangs in the reception area at the company's Penn Avenue headquarters, continues to enlarge his mark on the city and to shape it in ways other developers haven't.
Three Rivers Stadium, Washington's Landing, the West Busway and the HOV lane connection at West Carson Street all were built -- at least partly -- on land owned by Buncher interests. Rough negotiations over sales price gave Buncher a reputation for hardheadedness, a quality also attributed to his successors at Buncher Co. during debate last year on the proposed Strip District project.
"Fruit doesn't fall that far from the tree," Mr. Balestrieri said. "We learned from him."
Buncher, the son of Russian immigrants, was born in the Strip District.
As a boy, he dusted boxes in a relative's shoe store and sold vegetables, and later, he immersed himself in the scrap business established by his father, Harry. "I always worked," he said during a 1994 interview for a history project by the Pittsburgh Section of the National Council of Jewish Women.
During World War II, Buncher toured South America to scavenge raw material for the war machine. Afterward, Buncher Co. salvaged military and Liberty Ships at Philadelphia and Mobile, Ala., selling the scrap for the economic boom.
In the early 1950s, Buncher launched the Leetsdale business park, which the company describes as the first development of its kind in the region.
Buncher built a real-estate portfolio with large tracts of old railroad property, some of which he parlayed into office and warehouse buildings around the city. The busway and HOV properties also were railroad tracts. Buncher, ever a scrap dealer, bought the former to repurpose rails and railroad ties.
"It was the foresight of Jack Buncher. He saw value in excess railroad property that nobody else did," Mr. Balestrieri said.
In the mid-1960s, Pennsylvania Railroad proposed Penn Park, a sprawling mixed-use development along the Allegheny River in the Strip District. The project died for financial reasons, and Buncher acquired part of the site in 1978.
Several years later, Buncher proposed Riverside, a riverfront development to include offices, a hotel and festival market. His proposal came as other cities were reclaiming riverfronts in similar ways. Buncher found a partner in James Rouse, who had developed Baltimore's Harborplace and Miami's Bayside.
But the project encountered numerous obstacles, including a debate with city officials over financing. Eventually, Rouse walked away, and the project died.
Company officials encountered similar obstacles last year when they proposed Riverfront Landing, which would stretch from the Veterans Bridge to 21st Street between Smallman and the river.
Riverlife and Mr. Dowd assailed Buncher's refusal to keep buildings 95 feet from the riverfront -- a setback they said is needed to expand a riverfront trail and create other public amenities. Mr. Balestrieri said a 95-foot setback would cost the development about 3 acres and "really affect the economics of what we could do there."
Mr. Dowd also blocked legislation for a tax-increment-financing plan of up to $50 million, saying it's unclear how most of the money would be spent. Last month, Buncher Co. said it didn't want the financing or the bad publicity it brought.
"We're proud of our reputation," Mr. Balestrieri said. "We're proud of what Jack Buncher did before us."
First Published February 3, 2013 12:00 am