One could go back over the whole month and really find a trove of parsable stuff still worth poking at, but best to stick to the present. Recent news is the spate of Downtown buildings that are up for sale or disposal by various means. As always, the real stories go deeper than the headlines.
Maybe there is a silver lining lurking out there in all of this? Some of those large Downtown transactions will likely not be able to escape the exorbitant transfer taxes levied by both the City and School District of Pittsburgh. Nominally the city gets 2% of the transaction value, while the school district gets 1% (and the state its own 1%). In reality, the tax is rarely paid on large corporate owners because the buildings in question are typically ‘owned’ by their own holding company which stays the same. The ownership of the shell company changes hands, and that transaction is not taxable in itself. I wonder if a creative lawyer might be able to challenge the veil so to speak for some of the impending transactions downtown and find a way for the city to collect on more of those potential transfer taxes. Must be some lawyer willing to work on commission on this?Imagine though. If, as is reported in the news, the Steel Building is being sold for $250 million, in a highly leveraged deal mind you, there would theoretically be a $7.5 million payment to the two public entities. $5 mil to city and $2.5 to school district. Not going to happen of course (or could it?), but lots of the buildings formally going through sheriff sales will not find it as easy to escape the tax. The steel building has been a boon for city finances in the past. In 1987 its nominal transaction value was a cool $billion even. The city didn’t get its $50 million in transfer tax, but it did wind up with $4.4 million from the 1984 sale of the building. The city had to sue to get an additional 444K which pushed that haul up to nearly $5 million. Adjusting for inflation that would be worth almost $11 million today which would not be underappreciated given the fiscal climate on the 5th floor.
Yet that is just one of the many buildings up for sale Downtown. Take for example the Old Alcoa Building, which literally is in foreclosure and will literally change ownership at some point after the sheriff’s sale. That transfer tax will likely be paid, but of course it is not worth what the Steel Building is worth. The price listed on the sheriff’s sale notice is $10mil, nearly identical to what the building was said to cost before it even was finished… skip the 60 years of inflation adjustment and it is not such a bad deal. I found amazing this version of the story in the Trib which suggested the building is worth around what it's scrap metal content is worth. That gives a whole new meaning to demontage and I am not sure Construction Junction could handle so much new inventory.
It's a bigger story than the building value of course. Now go and read Neal Peirce’s snippet history of the Alcoa Building’s transfer from Alcoa to the Southwestern Pennsylvania Commission. Technically it wound up being owned (reluctantly it seems)by the Southwestern Pennsylvania Corporation which is now being dragged into bankruptcy itself as a result. That part of the story is the real story here. A bad real estate deal is par for the course over the last few years. This deal, however, is dragging into bankruptcy what was meant to be the center of regional planning for the entire region. The Southwestern Pennsylvania Corporation is the alter ego of the Southwestern Pennsylvania Commission and in some sense the successor to the Southwestern Pennsylvania Regional Development Corporation (SPRDC). Over the decades many keep trying to drag SPC, the region’s Metropolitan Planning Organization(MPO), into being something that it is not. This one episode should be a big lesson why that may not be such a good idea and one might want them to stick to their knitting. It’s not like transportation planning for the region is not hard enough in itself. How they got dragged into this whole real estate imbroglio is an important story at the core of our perpetual, and generally unsatisfying, debate over regionalism.
In other words, this isn’t about the building. But since we are talking about the building, who remembers the original XPlorion built into the first floor. Not the current version, but the original Google-Earth'ish-Before-Keyhole virtual reality Autometric powered one?