Councilman Wilson pitches latest idea to fill Pittsburgh's Downtown buildings

Pittsburgh leaders are eyeing a new proposal to jump-start development Downtown by cutting property taxes, marking the latest effort to address the city’s gloomy fiscal outlook.

The measure would offer a 10-year real estate tax break for developers who transform empty office space into housing or put them to other new uses in the city’s Golden Triangle.

Spearheaded by Councilman Bobby Wilson, D-North Side, the measure aims to fill the area’s vacant buildings — many of which have been partially deserted since the covid-19 pandemic spurred a widespread shift to remote work — and reinvigorate Downtown with more residential space and new businesses.

Only Pittsburgh’s portion of the real estate tax bill would be affected. Wilson’s plan would not pause the property taxes assessed by Pittsburgh Public Schools or Allegheny County.

The proposed tax break would apply only to the portion of the building’s assessed value that increases because of new construction or improvement.

Qualified projects could receive up to a 100% tax abatement on that portion, though there also are options to receive a portion of the tax abatement if a project wouldn’t qualify for the full amount.

Projects could get the tax cut by earmarking a percentage of residential units as affordable housing or increasing the number of full-time employees working at a commercial site.

Currently, about 30% of Downtown office space is vacant, Wilson said Monday at a press conference announcing his proposal.

“And that number is only projected to get worse,” he said, citing statistics that indicate more than half of Downtown’s offices could be vacant by 2028.

Wilson and other local leaders said it’s imperative to revitalize Downtown, a neighborhood that accounts for nearly a quarter of the city’s total real estate tax revenue — or about $35 million of a projected total of $152 million in 2025. That revenue helps fund the city’s operating budget of $686 million.

Officials estimated the assessed value of Downtown’s commercial property could fall by nearly 50% in the coming years as property owners appeal assessments, and dozens of buildings are at risk of foreclosure.

Reassessments on Downtown’s skyscrapers have already started this year. The U.S. Steel Tower, Three Gateway Center and the Tower at PNC Plaza received a combined assessment reduction of more than $193 million, according to Wilson’s office.

“Real estate tax is the most stable source of revenue the city of Pittsburgh is able to collect,” City Council Budget Director Peter McDevitt said in a statement.

“With each Downtown property getting its assessed value slashed by millions of dollars, that revenue source becomes less stable. The city would be wise to utilize the resources it has to incentivize investment in Downtown Pittsburgh, to try and stop the values of those properties from decreasing any further.”

This proposed new tax abatement program would build on an existing citywide Local Economic Revitalization Tax Assistance program and similar tax abatement offerings from the county and school district.

The city also has streamlined its processes for converting Downtown office space into housing and launched a pilot program to incentivize such projects.

Currently, there are about 7,000 people living Downtown, Wilson said. He’d like to see that number grow.

“This is going to be transformational,” said John Valentine, executive director of the Downtown Neighbors Alliance.

“It’s also going to have a domino effect. When you see 7,000 residents, and this bill may create another 7,000 residents, what will happen is other businesses will want to be there. As more businesses come in, that will create more amenities, which will then create more desire for new residents, but also retain the residents that are here.”

The effort could bolster the city’s tax rolls while creating local jobs, injecting confidence into the Golden Triangle’s real-estate market and creating much-needed housing, local leaders said.

Officials said it also provides an opportunity to reimagine Downtown, upgrading the neighborhood from a sea of office buildings to a vibrant neighborhood with unique amenities.

“No matter what Downtown looks like — corporate hub, cultural mecca, residential district or any combination thereof — the city and the region are dependent on a thriving Golden Triangle,” Councilwoman Erika Strassburger, D-Squirrel Hill, said.

Olga George, a spokeswoman for Mayor Ed Gainey, said in a statement the administration looks forward to working with City Council.

“While no one tool is the answer, the administration is supportive of bringing additional resources to bear to further the stabilization and growth of Downtown Pittsburgh,” she said.

Wilson is expected to formally introduce the bill at Tuesday’s City Council meeting.