Thursday, May 20, 2010

Galleria at Pittsburgh Mills - the white elephant in the room

I mentioned my disdain for the Pittsburgh Mills in an earlier post about the "re-imagining of Pittsburgh" and how it was an example of poor planning and the need for land development to be done on a county level. This seemed like a good time to expound on exactly why this development bothers me so acutely and why I will never go to it.

Back in the early 2000's, the plans for a regional "destination" shopping center were announced. It was to be built in Frazer Township, which left everyone who didn't live within 5 miles of the border of Frazer Township scrambling to find a map to see where Frazer Township was. Turns out it's up Route 28 north of Fox Chapel, but before New Kensington. This mall, situated on 340 acres of green space, would have 1.1 million square feet of space when completed.

Now my opinion, and one shared by every other land use professional, is that you only need to add regional destination centers if you have a corresponding increase in population to justify it. Back in the early 2000's, the Pittsburgh metro area did not have that increase (and only today is experiencing the tiniest of bounce backs). This specific area along 28 did not have any hints of a growing population to justify such a mall, either. So instantly, I was against this idea on the basis that it would siphon revenue away from existing malls in its vicinity such as Ross Park, Waterworks, and even Monroeville Mall.

In essence, it would be playing the shell game with competing consumer dollars.

Then as 2003 came around, more news about the mall and its environmental impacts became public. It would be impacting multiple acres of prime wetlands (wetlands act as nature's filtering kidneys) and would require significant infrastructure improvements at its entrance and exit with Route 28. Why again did we need this mall? Well, at least the Texas-based developer was promising a range of stores and restaurants that would be unique to the Pittsburgh region. The mall and the site preparation were under construction in 2004 with a June'ish 2005 opening date scheduled.

It was then publicized that the Pittsburgh Mills would be receiving Tax Increment Financing (TIF) through Allegheny County and Frazer Township. For those that don't know, a TIF is a way for developers to offset their costs way down the line by scamming local governments. A TIF projects what the local and county governments will receive in taxes during the post-development of the project and subtracts off what the land is worth pre-development in taxes. The difference is the Tax Increment to be financed. But the kicker is that the developer can pay back the debt first until it is paid off; the local and county governments don't reap the tax benefits until the debt is paid --- they continue to get the pre-development revenues. For the Mills, the TIF was $50 million dollars. The idea is sound as long as the development is successful.

Uh oh.

Shortly before the Pittsburgh Mills was scheduled to open, the Texas developer (The Mills Group) declared bankruptcy. The developer was purchased by Johnstown-based developers, the Zamias Group. The Zamias group is not really known for their vision; they are standard strip mall developers and not fancy ones at that.

The mall itself cost $226 million dollars to construct with another $62 million in site prep costs. Among those costs:
$21.7M for the interchange improvements to Route 28 (ramps and such)
$9.3M for roads in the development and within Frazer
$7.1M for design fees
$2.6M for the land costs
$1.4M for offsite utilities
$16.3M for onsite utilities
$0.8M for environmental work (2.89 ac of replacement wetlands and 11,000 LF of stream work)
$3M for field office costs

And that $50M TIF for a $285M project? It was larger than any TIF in recent Allegheny County history for a commercial development. The Waterfront was $29.4M ($305M total cost), The Mall at Robinson was $28M ($245M total), and Mt. Nebo Pointe was $6.8M ($44M total).

Many of the scheduled tenants lured by the Mills either vanished into thin air or pulled out of their leases. Today, the destination mall that would have stores unique to the Pittsburgh area, has the following roster of stores unlike any you will find in the Pittsburgh region, such as:
JC Penney's, Macy's, Sears, Best Buy, Radio Shack, Lowe's, Spencer's (stay classy Pittsburgh), Hallmark, American Eagle, Hot Topic, Dress Barn, and Victoria's Secret among others.

It also has not one, not two, but three Hair Salons, 2 Nail Salons, and 2 Massage Parlors. Probably from when you get a stiff neck looking at all the vacant storefronts in this disaster.

But maybe it has restaurants to make up for the fact the stores are bland/generic stores....

Olive Garden, Applebee's, Chili's, Eat N Park, Red Robin, and a little coffee place from Seattle called Starbucks.

At a seminar in 2008, Allegheny County Economic Development officials used the Galleria at Pittsburgh Mills (current name) as a successful case study, if you can believe it. They anticipated $452M of total revenue, with $10.4M of Sales Tax. Suffice it to say, they're a little short.

The latest attempt to roll this beached whale back into the ocean involves the building of a year round water theme park, similar to the kind constructed in Erie. Who knows if it will help revive this monstrosity of a symbol to greed, poor planning, and short-sightedness.

The humorous/redeeming part to this story is that it forced Ross Park Mall to re-evaluate and re-invent itself. In recent years, Ross Park Mall has become the upscale destination mall with stores unique to the Pittsburgh region. In other words...exactly what the Mills was supposed to be. Stores such as Nordstrom's, Kate Spade, Burberry, LL Bean, Apple (coming soon) and restaurants such as Cheesecake Factory and California Pizza Kitchen (soon) have revitalized this North Hills mall.

Just because a space has green grass growing on it, does not mean it needs a mall -- no matter what size -- parked on it. Think about that the next time you're driving up Route 28 on your way to get a Starbucks at the Mills.

1 comment:

  1. another pittsburgh area mess.. but dont worry.. theres a walmart right down from the as to finish off the shoppers if the galleria doesnt do it first.. just filled with walking, cell phone carrying teenagers everytime i go in.. class?? no one here has the slightest concept as to what that means.. great article... but, nothing changes does it?? look at the butler clearview mall..almost empty at this time of its exhistance.. a shame again!