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Shopping Centers Today -> May 2002
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FROM RUST TO RETAIL
Public-private venture replaces old steel plant with mixed-use project
By Donna Mitchell
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| Locals who came to this site to work the furnaces will have an altogether more pleasant time there now. |
The Waterfront, a mixed-used redevelopment along the Monongahela River near Pittsburgh, is not only another valuable piece of rust belt revitalization, but also a triumph for public-private partnership.
Three communities in Allegheny County plus the state of Pennsylvania have joined forces with a private developer to bring the riverfront alive again on the site of the old Homestead Works steel plant, whose furnaces went cold almost 16 years ago.
The project will stretch for two and a half miles along the river, snaking past Homestead, West Homestead and Munhall. Already open is a power and lifestyle center portion called The Streets. The two areas will eventually provide more than 1.2 million square feet of retail and restaurants. The project will also contain offices, residences and light industry.
The Waterfront, brainchild of Continental Real Estate Cos., Columbus, Ohio, has received $35.5 million in public funding and has also benefited from the support of the Steel Valley School District, which serves the three communities.
The site has quite a history. When it was a steel plant, Homestead produced girders for the Empire State Building in New York City and armor plating for battleships. It was also the scene of the infamous 1892 clash between striking steel workers and Pinkerton guards hired by the plant; the conflict flared into a half-day gunfight that saw casualties on both sides.
The negotiations between the developers and the communities were more peaceable, though there were moments.
“They were most cooperative, but were skeptical that we could get this done,” said Frank Kass, chairman of Continental, which originally partnered with Cleveland-based Park Corp. in 1996 to redevelop the site. In 1998 Park opted out, and Continental brought in Nationwide Realty Investors, also of Columbus; both companies set about securing zoning approvals from the municipalities for the various components of the site.
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Continental and Nationwide arranged a two-piece financing system involving tax increment financing (TIF) and a tax-revenue-sharing agreement between the communities and the development. Allegheny County issued the $26 million TIF in the form of 20-year municipal bonds, using the proceeds to help pay for infrastructure improvements on the site, said Kass. The bonds are secured by real estate taxes generated by The Waterfront and will be retired in 20 years.
State and county grant funds were used to pay for ramps off the nearby Homestead Hi-Level Bridge and for roads for the site itself.
Piggybacked onto the TIF arrangement is the revenue-sharing agreement with the school district and the municipalities; after the TIF financing is retired, each of the communities will get the full tax benefit of whatever tenant is built within their jurisdictions for the next 10 years, said Kass.
“They couldn’t have land grants, or say, ‘Please put so-and-so on our property,’” Kass said. “Wherever a [particular] building sits, that is who gets the tax revenue from it.”
It wasn’t easy to get all three towns to agree to such terms, acknowledged Jim Rodney, Allegheny County’s chief executive, expressing his admiration for the way Continental handled the deals.
“We are a highly fragmented county, with 130 municipalities,” Rodney said. “To bring three together to bring tax revenues and zoning was a testimony to how persuasive and effective the group can be.”
Necessity played a part, too: The county had no other viable development option for the old Homestead site aside from The Waterfront, said Rodney. The project is expected to increase the site’s fair market value from $8.5 million in 2000 to $179.3 million when it is completed in 2004 and to generate up to $6.5 million in real estate taxes, according to Continental.
In developing the retail portion, Continental is making the power and town centers distinct from each other. The power center, which opened in 2000, is located along the eastern portion of the project. Extending back from the banks of the river, it contains three of The Waterfront’s main anchors: a Giant Eagle supermarket, featuring an expanded produce section, an in-store bakery, day care and numerous checkout lanes; a Lowe’s Home Improvement store; and a Target. Other tenants include Bed, Bath & Beyond; Filene’s Basement; and a T.J. Maxx. Tenants are still moving in; a Dick’s Sporting Goods is slated to open this fall.
A 22-screen Loews Cineplex Theater anchors the lifestyle center, which opened in October, on one end. The theater features reserved balcony seating, where patrons are served food and beverages. Anchoring the opposite end is a 60,000-square-foot Dave & Buster’s restaurant and entertainment complex, which steers shoppers in from the power center. Tenants include American Eagle, Ann Taylor and Victoria’s Secret, plus some of Pittsburgh’s well-respected local retailers, including Gordon’s Shoes and Linton’s, which sells women’s apparel.
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| The Waterfront will offer a mixture of lifestyle and power center retail. |
Some of The Waterfront’s features reflect the existing and past architecture of Pittsburgh, said David Meleca, president of David Meleca & Associates, the Columbus-based design architect for the project. The power center’s Target store, for instance, looks like a meatpacking plant from the 1920s.
The town center’s stores are housed in smaller-scale buildings, with each shop front designed differently to create the look of a small town, Meleca said.
“The idea was to have a lot of major tenants face the town square, which would be a gathering place,” said Meleca. Customers can scout for their next shopping targets in its open-air setting or mill around and wait for community activities, such as live band performances in the evening.
The Waterfront retains some reminders of its industrial past; there are 12 brick smokestacks, each 130 feet high, which make the center visible for miles around.
Remaining portions of The Waterfront include up to 500 riverside apartments and townhouses, 200 boat slips and a park with walking and bike paths. A nighttime entertainment district will feature a nightclub, comedy club and dueling piano bar.
The office portion will have small and large companies. Major employers will include Continental Office Furniture, a division of the Columbus-based Herman Miller furniture dealership. Another, German electronics and electrical engineering group Siemens, will operate a fuel cell development facility on the site and employ about 1,000 people, said Kass.
Where once the site offered people in the surrounding communities employment in front of stifling, roaring furnaces, it now will provide them jobs of another kind, a place to shop and enjoy themselves, and sorely needed tax revenues.
“Many communities are economically challenged, and there are not any top-of-the-line stores at all,” Rodney said. “This is the single most exciting development in our county in 25 years.”
 | Current Issue February 2012 |