URA board OKs Oakland office project, pushes for more minority involvement
The city’s Urban Redevelopment Authority board cleared the way Thursday for the construction of a $47.5 million office and flex tech building at the Pittsburgh Technology Center while pressing the developer to do more in terms of minority involvement in the project.
Members voted to sell the 4acre parcel needed for the Elmhurst Innovation Center to Elmhurst Development LLC for $1 million plus costs, while raising concerns about the 4.7% and 4.6% participation by minority and women-owned businesses, respectively, in the work.
“This is good to see, important to see, but also, let’s get those numbers up,” URA board Chairman Sam Williamson said.
Also at Thursday’s meeting, the board agreed to lease for up to 99 years four URA-owned garages and 262 spaces in a fifth at South-Side Works to Somera Road, the new owner of the complex.
In south Oakland, the Elmhurst project will feature 175,000 square feet of space, with 60% devoted to office space and 40% dedicated to flex tech, light manufacturing or research. There also will be 116 enclosed parking spaces.
Elmhurst plans to construct the building in two phases, with the west side facing Downtown to be built first. It hopes to begin the work in February. It will be starting without a signed tenant.
“We’re excited. This will be the first project to offer this type of space in the park,” said Brian Miller, Elmhurst’s director of development. “This has been one of our premier products throughout the county so I can’t see why it wouldn’t succeed in this area.”
While URA board members generally supported the project as a whole, they expressed disappointment in the minority- and woman-owned business participation.
Member R. Daniel Lavelle, a city councilman, called the numbers “pretty low.” URA Deputy Executive Director Diamonte Walker said they “can and should be higher.”
Mr. Lavelle said he’s willing to work with the company to improve the numbers. Elmhurst is open to that and has been trying to boost the percentages, Mr.
Miller noted.
“That’s our challenge, to find the contractor that has both of those requirements in their books. The project’s a sizable project. There were a couple of contractors that looked at it initially and the scope is just too big for them. They just haven’t done anything to this level,” he said.
Overall, Mr. Lavelle said he is both surprised and encouraged that Elmhurst is prepared to start the project without a signed tenant in the middle of the COVID-19 pandemic.
“During these days and times, that’s challenging,” he said. “But I’ve also seen some of the work you’ve done in the past so I’m confident you can pull it off.”
At the SouthSide Works, the URA generates revenue from the four garages — Hot Metal, Ingot, Ladle and Furnace — and the spaces at Open Hearth. At the same time, Somera Road is interested in gaining more control over the facilities, URA officials said.
The new master lease will give Somera that ability, while continuing to provide the URA with a revenue stream. The agreement allows the URA to “set a floor” for income every year, said Kryn Sausedo, director of business solutions.
“I think the floor is comfortable enough for us to feel good about engaging and moving forward with this discussion,” he said.
According to the URA, the master lease would generate $1.3 million a year until 2025 and $1.5 million thereafter, with a 1.5% annual growth. Somera Road will maintain and operate the garages and pay any related taxes.
About $ 330,000 in deferred maintenance costs will be split between the URA and Somera.
Mr. Williamson said the garages are now a “moneymaker” for the URA. The new agreement, he said, would provide similar revenues, while removing some volatility, particularly given the pandemic when fewer people are parking.
“This action would continue to provide ongoing income to the URA, at least as much as what we have historically been used to while removing that degree of uncertainty,” he said.
The agreement also is “hedging against” some potential downward trends in office and retail leasing, URA Executive Director Greg Flisram said.
Also Thursday, the board removed a Dec. 10 expiration date on the preliminary approvals it previously granted for the development of a live music venue and 850-space parking garage at the former Civic Arena site.
URA officials called the decision a technical correction, noting that the overall agreement between the Pittsburgh Penguins, the city and Allegheny County doesn’t contain such an expiration date.
However, the URA and Sports & Exhibition Authority, both of which own parts of the 28-acre site, have rejected a request by the Penguins to extend the deadline for buying the first 6.45 acres needed for development to April 30. The team missed an Oct. 22 deadline.
As a result, the Penguins, who hold the development rights, must hold 20% of the parking revenue they generate from the site in escrow until they can get back on track. If they don’t, they will lose the money for good.