It turns out that one of the first posts here was about the
recently opened Pittsburgh Mills Mall in Frazer Township.
At the time local biz/politics guru
journalist Jon Delano had a piece on how “Pittsburgh Mills future could be in doubt
Last week the mall was again
in the news with plenty of national coverage of the fact that much of the mall
was foreclosed on and as a result was ‘sold’ for all of $100.
All a formality of course as equity owners of
the site transferred ownership to the lien holders who lent money to the
project. Yes, the project is worth more
than $100 most likely, but apparently less than whatever $$ is still owed on the loans. Thus the lenders submitted a de minimus bid to complete the transfer of ownership. Somebody lost a lot of money on the project to date.
But a full accounting of the project is not limited to
that. There was a lot of public money
that went into facilitating the project as well. Little mentioned in much of the media coverage, but at the time it was developed,
the county's $58 million dollar TIF (or Tax increment financing package) that
went along with the project was the biggest TIF in Allegheny County’s history.I am pretty sure no public entity retained a stake in the project, and much of what was spent will not be coming back, but I note I know of know formal accounting quantifying that.
The national coverage of the mall's 'sale'
seems to imply that the developments
are the result of greater travails in the nation’s retail industry.
The mall is one of the newer malls across the nation having only opened
A model of patience and
tenacity if nothing else, the mall had been in planning for
more than a quarter century before finally opening.
Local developer Damian Zamias conceived the future Pittsburgh Mills
project in the late 1970s.
the late 1970s.
By 1997, local opposition to the project
, lead by retail businesses near the new project, had been ongoing for 16 years. Some called the situation a veritable 'civil war' in Frazer Township and environs.
Still the project proceeded.
In 1989, Zamias and company threatened topull back from the project
if Allegheny County did not continue support for a
TIF to go along with the project.
seems to be have been no risk that would actually happen, and the prevailing wisdom was that the
mall was ‘needed’ here. Zamias kept plugging away even though the
drain of the project was a major reason his development company went bankrupt in 2001
You think that might have
killed the project?
Of course not.
We all know now bankruptcy is merely a tool of
the big developers and the very next year (2002) he raised new capital
by bringing in some new partners.
Why was the project ‘needed?’
Apparently back in the 1970s Pennsylvania, and many would say the same thing about Pittsburgh, was considered under-retailed,
if you believe that. The metric seems to be based on the number of big regional malls per capita, or so I infer.
And so, in 2005, after over a quarter century in the works, the mall finally opened to great fanfare. More than a few things had changed in the county from the time the mall was conceived and when it opened. There was this little tempest in the steel industry that impacted local jobs. The under-retailed Allegheny
County over that period saw its population decline by ~370K people, and the opening of entirely
new retail developments at projects including The Waterfront, South Side Works,
Robinson Town Center (1998), Galleria in Mount Lebanon, the Mall at Robinson (2001), and expansions over
that period at Ross Park Mall, the Waterworks, Settlers Ridge, and I am sure many
As the project development continued on, more than a few other mall
developments in Allegheny county failed.
1979 Allegheny Center Mall was… well, an actual mall
, as was Parkway Center Mall (sort
of a mall?), and there was the long forgotten Eastland Mall
(now returned to
fallow in North Versailles).
market was taking down the major retail developments, Pittsburgh Mills
proceeded unabated. The project proceeded pretty much under its own inertia because nobody was willing to question the underlying premise that public money was needed to push Pittsburgh Mills forward.
There is a big point here that gets to economic growth across southwestern Pennsylvania and the region's future. Long a region suffering from the loss of manufacturing jobs, most any new development was seen as worth doing no matter. Questioning whether any project made sense was virtually impossible, and any possible opportunity cost left unaccounted for. Was the public effort put into building the Pittsburgh Mills Mall the best use of the money, let alone the public money, and effort involved? Was there any alternative that could have had a better chance to catalyze long term economic growth? I propose no answer to that here, but do speculate the question was never asked. The project was projected to produce over 6,100 jobs, by one public document I have seen. I don’t know the current job count out there
these days, but it’s not 6,100 permanent jobs. Even the jobs that were 'created' there have to be just retail jobs that were likely displaced from somewhere else in the region. Retail is retail and not ever really considered value creation in the long run.