Making a Bid: Lawrenceville businesses weighing pros and cons of tax district | News | Pittsburgh | Pittsburgh City Paper

Making a Bid: Lawrenceville businesses weighing pros and cons of tax district

"It's gotten to a point where there is real value in this neighborhood."

Lawrenceville property owner Chip Desmone, whose family renovated the National Bank, says paying a bit more in taxes to improve the neighborhood is a good investment.
Lawrenceville property owner Chip Desmone, whose family renovated the National Bank, says paying a bit more in taxes to improve the neighborhood is a good investment.
The shaded blocks along Butler Street and Penn Avenue represent propertes that would be included if Lawrenceville's new Business Improvement District is approved.

In 1992, when his family began renovating the iconic former Pennsylvania National Bank building at the corner of Penn Avenue and Butler Street in Lawrenceville, Chip Desmone remembers picking up trash in the parking lot every day. 

"Very unsavory trash — booze bottles, needles, condoms. It was ugly stuff," he says. 

By the early 1990s, buildings that had housed, or catered to, the city's once-thriving steel industry were boarded up. Lots were overgrown. Cars were often broken into. Desmone remembers the day the owner of the bar across the street was shot. 

"It was a ghost town in many ways," he says.

That, of course, has changed. Artists and developers drawn to the area's stock of large, cheap, historic properties have helped to craft a vibrant neighborhood. According to the Lawrenceville Corporation, a community-redevelopment group, more than 230 buildings have been renovated, and since 2010, more than 36 new businesses have opened throughout the community. 

"It's really become the most sought-after neighborhood in Pittsburgh right now," says Joe Kelly, the owner of Kelly Custom Furniture and Cabinetry and another early developer, like Desmone, who remembers when the streets were barren. 

They hope to keep the momentum going. Both are supporters of an effort to create a Lawrenceville "business improvement district," a designation that allows the neighborhood to raise money from property owners to enhance services ordinarily provided by local government, such as street cleaning and light-pole maintenance. 

Urban planners often tout improvement districts as a way to encourage revitalization, and districts can take different forms. Business-improvement districts tax only commercial properties, while neighborhood-improvement districts tax homeowners in the area as well. 

But the districts have been controversial — in part because property owners are assumed to favor the proposition unless they speak out against it. Pittsburgh today has only two such districts, in Oakland and Downtown, which tax businesses only. Other attempts at creating districts have failed in places like Mount Washington, the Strip District and, most recently, the South Side. 

 "This is a difficult process," says Josette Fitzgibbons, the city-wide Main Street coordinator for the Urban Redevelopment Authority. "It requires communities to be extremely well organized, to have a level of consensus."

In Lawrenceville, the process is well underway. Matthew Galluzo, the Lawrenceville Corporation's executive director, says his group has spent two years working on the plan. The group envisions charging $10 per foot of commercial property fronting on Butler Street and Penn Avenue. Roughly speaking, the district encompasses Butler Street between 34th and 57th streets, and portions of Penn around Doughboy Square, as well as a stretch of Penn between 40th Street and the Allegheny Cemetery. In all, the tax would affect 350 property owners — all commercial or industrial properties — and raise roughly $174,400. The average property owner owns about 20 feet of frontage and will pay about $200 a year for the services, Galluzo says. 

"It is as bare-bones in its approach as you can get," Galluzzo says, adding that the $10 fee is low. He also says that using street frontage offers an advantage compared to Oakland's and Downtown's approach of charging all businesses in their districts by assessed value. Since the improvement district focuses on street-level improvements, he says, charging on the basis of street footage provides an "even playing field." 

In addition to street cleaning and sidewalk maintenance, the money would help pay for removing graffiti and snow, as well as seasonal displays like flower baskets in summer and holiday lights in winter. (Decisions about how to spend the money will be made by an advisory group of taxed property owners.) Supporters say such amenities will draw more business into the neighborhood and increase property values. 

Brian Mendelssohn, principal of the Botero Development firm, says one advantage of the proposal is that it gives the neighborhood power to chart its own course. Other neighborhoods, he says, "have a lot of outside money — corporations and big city plans telling them how to develop." By contrast, the board that decides how tax proceeds will be invested "is made up of ourselves. We get to decide what we do." 

Still, not everyone thinks the proposal is fair. For one thing, critics point out, businesses and property owners already pay to have their streets taken care of — in the form of city taxes.

"It is simply wrong to ask property owners and business owners, who are already taxed through the roof, to pay more taxes to put up holiday lights and other redundant services," says Ryan Barton, government-affairs director for the Realtors Association of Metropolitan Pittsburgh. 

Among the staunchest opponents are a handful with the most to lose. Barton says his group has been speaking with nine property owners who together hold 2,000 feet of street frontage — roughly 11 percent of the total.  

Among them is Stephen Sobina, owner of Em-Bed-It, a manufacturer of custom corporate mementos and tombstones on the 5600 block of Butler Street — the upper end of the proposed district. With 143 feet fronting Butler, the tax would cost him about $1,400 a year, and he says he won't get much in return.  

"We have no amenities in front of our property — no benches, no garbage cans, no trees planted," he says. "Holiday lights, that's nice for those down in the commercial district, but up here? It's not reasonable." 

Kelly acknowledges that the increased service levels may not help all the district's businesses directly, particularly those like Sobina, who don't rely on walk-in traffic. 

"But it will improve the value of their property," he says.

"I think this is being forced down property owners' throats," counters Sobina. "They tried this on the South Side, and it was put down by the people."

Organizers say they've learned lessons from the failure of the South Side's proposal, which flamed out in the face of resident opposition before the formal process even started.

  "It reinforced our decision to not include residential properties," in the improvement district, says Galluzzo. "We really wanted to make this focused on the business community and the interests of a healthy commercial district." 

That may, indeed, give the idea more of a fighting chance. 

Once proposed, improvement districts fail only if owners of 40 percent or more of the affected properties actively object by registering their disapproval with the city clerk's office. Otherwise, the owners are assumed to support the proposal. That means such districts can potentially be created by a determined minority with the time and motivation to invest in the process. 

"A non-answer is a yes. That's wrong," says John Bauer, owner of Mobile Radio Service, which has been on Butler Street since 1970. Levying the tax only on those businesses with street frontage is unfair, he says. "I just think they've really stacked the deck." 

Shouldn't property owners have to opt in to a tax, rather than opting out? 

"It's an interesting and unusual question," says Pittsburgh City Councilor Patrick Dowd, who represents the area. The rules governing improvement districts were set by the state Legislature in 1990. About 42 such districts have since been created across the state.

"I think it's about forcing participation," Dowd says of the process.

That level of participation is about to become clear. Some 1,300 letters were sent out last fall to property and business owners within the proposed boundaries; the second of two public hearings was held on Jan. 14. Property owners now have until Feb. 28 to "vote" by sending a letter of objection to the City Clerk. At least 140 property owners will have to speak in opposition for the proposal to be halted. Otherwise, it can go to the city council for a vote.

Dowd says he favors the improvement district in concept, but that he will support the results of the votes. 

"It's your decision," he told about two dozen people who attended Jan. 14's public hearing.

At that forum, those speaking in support of the district outnumbered opponents by 12-6. Efforts to change that dynamic are underway, with the Realtors Association promising to rally opposition. 

But for Desmone, whose company owns about 1,000 feet of frontage combined within the proposed district's boundaries, the $10 per foot charge is worth it, he says. 

"It's gotten to a point where there is real value in this neighborhood," he says. "It's really incumbent on everyone to make sure that that keeps going, and the best way to ensure that it keeps going is to pull together our resources." 

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By Mars Johnson