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Pittsburgh officials debate $40 million purchase of Downtown building

July 24, 2018

Representatives of the Pittsburgh Housing Authority, Urban Redevelopment Authority and Mayor’s Office briefed City Council Monday during a public meeting on plans for the purchase and renovation of a building at 420 Boulevard of the Allies, Downtown, for $40 million.

Several Pittsburgh officials expressed sticker shock Monday at the $40 million price tag to buy and renovate a Downtown building for government offices.

The Pittsburgh Housing Authority, Urban Redevelopment Authority and city plan to split the costs of converting the nine-story building at 420 Boulevard of the Allies, which most recently housed the Pittsburgh Art Institute.

City Council is expected to vote Wednesday on whether to approve the purchase and issue a bond. The URA’s board approved the purchase last week. The Housing Authority board has scheduled a vote for later this month.

Several council members and city Controller Michael Lamb voiced concerns about the cost during a public meeting.

Lamb called it “the most expensive real estate in Downtown Pittsburgh” based on the cost per square foot. Pittsburgh would pay $27.5 million for the 154,000-square-foot building owned by M&J Wilkow of Chicago, which equals $178.57 per square foot. The remaining money would be spent on renovating it for authority and city offices.

M&J Wilkow purchased the building in 2014 for $10 million.

Lamb noted the 17-story Federal Home Loan Bank Building at 601 Grant Street sold in June for $10.1 million, or about $61 per square foot. The building totals about 163,700 square feet.

“It’s a bigger building,” Lamb said of the Federal Home Loan Bank Building. “It’s more square footage, yet it sold for a quarter of what we’re talking about paying for this building. The fact is when you look at comparables, and you look at buildings that sold this year, it’s a very high price.”

Representatives of the two authorities and mayor’s office argued in favor of the purchase, saying there were no buildings in the Golden Triangle that met the requirements.

The authorities and directors of city departments, including Permits Licenses and Inspections, Planning and Zoning and Fire Bureau administration described their current headquarters at 200 Ross Street as a firetrap with chronically malfunctioning heating and cooling systems, broken down elevators and a dysfunctional floor plan prohibitive to providing public services.

“Within the central business district, I don’t believe that there were any buildings that met our requirements,” URA Executive Director Robert Rubinstein said. “They were either too small or they were too inefficient (in the) floor plan. There was no ability for a one-stop shop. That’s really what we we’re looking for.”

Officials said the city would have to renovate 200 Ross and add onto the building to make it functional and meet current building codes. Pittsburgh Budget Director Jennifer Presutti said it would cost $22.7 just to renovate the building. It would cost $35.8 million for renovations and a four-story addition and $39.2 million for renovations and a 12-story addition, she said.

Councilwoman Darlene Harris of Spring Hill and Lamb said they were concerned the city was moving too quickly on the building purchase. Lamb said he was aware of the problems at 200 Ross and supports moving offices to a new location but was convinced Pittsburgh could find cheaper accommodations in other city neighborhoods.

“It’s troublesome to me that there’s been no process, there’s been no discussion of this purchase, and we’re being pushed into it in a very short timeframe to make it happen,” he said. “I don’t think its necessary to be in the central business district.”

M&J Wilkow, which originally intended to lease the building, set a date of Aug. 1 for the purchase to be approved, according to Rubinstein.

Rubinstein and Housing Authority Executive Director Caster Binion said keeping their offices Downtown was key for clients to have easy access to public transportation and a public parking garage across the street. They said the new building would allow them to group together offices now split among multiple floors for easier access.

Others expressed concerns about building security and safety. Fire Chief Darryl Jones said 200 Ross does not meet fire safety requirements.

“The fire safety of the building is also a chief concern of mine. The alarm system is at best antiquated. The building does not meet the current requirement of the code as far as not having a sprinkler system,” Jones said.

Councilman Anthony Coghill of Beechview was concerned about the price but said acquiring the building could be in the city’s best interest.

“I feel real estate is a good safe investment,” he said. “I’m not against the sale of this property.”

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