Pittsburgh developer backs down on opposition to ticket fee for concerts, to be used for area improvements

In my writings on stadiums and arenas ("Framework of characteristics that support successful community development in association with the development of professional sports facilities"), I was intrigued by how a community organization in the Hill District of Pittsburgh had proposed a surtax on parking at NHL hockey games, to support community improvements, as a way of mitigating the negative effects resulting from an arena in their community.

It was never approved, but I put that in the framework, as something that should be pursued everywhere.

The Hill District was "abandoned" by the Pittsburgh Penguins for a site in Downtown, but they still own and are redeveloping the property.  One of the elements will be a concert venue, and Hill District groups proposed a ticket fee for community improvements, which the developer opposed, as I wrote about in October:

-- "Parking fees/admissions fees for arenas, stadiums, concert facilities to fund neighborhood improvements: Fee proposal for Live Nation Pittsburgh opposed by developer"

Now, they've agreed to it, according to the Pittsburgh Post-Gazette, "Penguins propose $2 ticket surcharge for music venue events at former Civic Arena site."  From the article:

In addition to the letter touting the ticket surcharge and other investments related to the arena redevelopment, the package included a 101-page response to concerns that had been raised by an executive management committee that makes sure that Penguins live up to the promises and commitments they made to the community as part of the $1 billion arena redevelopment. ...

Before Tuesday, the Hill Community Development Corporation had been pushing for the $2 ticket fee as well as a $2 surcharge on each vehicle parked in the garage as a way to help fund infrastructure improvements and development activities in the neighborhood.

Buccini Pollin and the Penguins have flatly refused to impose a parking surcharge, stating it could put the garage at a “competitive disadvantage” particularly given that many such facilities are still struggling to attract customers in the age of COVID-19.

But in its letter Tuesday to the commission and others, including Mayor Ed Gainey, the team and its developer said they “are prepared to deliver an exciting new recurring revenue stream” in the form of the $2 ticket surcharge.

The letter stated that the money would be deposited into the same Hill District reinvestment fund that was the conduit for nearly $7.2 million in anticipated tax revenues advanced by First National Bank as part of the construction of a new 26-story office tower to be anchored by FNB. The money is to be used to help build up other parts of the Hill.

This is an important precedent that can be referenced by other communities.

2.  Related are admissions taxes on tickets more generally.  Groups always fight them, including nonprofit groups receiving subsidies.  They say it will discourage attendance.  I think they are a reasonable fee for the privilege of receiving public monies for the development of such facilities.

And sometimes they are the only way communities get anything back financially from arenas and stadiums.  For example, the admissions tax on the Washington Commanders NFL games is the only revenue that Prince George's County generates from the FedEx Stadium presence.

3.  General discussion about the progress of the redevelopment in dealing with community development concerns.  Interestingly, the article discusses the back and forth between the community and the development group on their provision of various community benefits, which the community says has been laggard.

The documents submitted to the Planning Commission included a 101 page response.  I haven't tracked it down yet.  It probably makes interesting reading.

4.  Privately managed public spaces.  Concern was also expressed by the community in terms of management of the public spaces on the site, which the developer plans to put into a third party nonprofit conservancy. It would be interesting for the community to suggest that the conservancy be run by the community development corporation, not the developer.

See:

-- "The layering effect: how the building blocks of an integrated public realm set the stage for community building and Silver Spring, Maryland as an example," 2012

Other models are community improvement districts and public improvement districts such as the Green Benefits District in San Francisco and other types of special assessment districts for community improvement.

Parking fees/admissions fees for arenas, stadiums, concert facilities to fund neighborhood improvements: Fee proposal for Live Nation Pittsburgh opposed by developer

Updated 1/11/23 here, because the developer has acquiesced to the imposition of a ticket fee to support community improvements in the Hill District of Pittsburgh

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Marimba Milliones is president and CEO of the Hill Community Development Corporation. (Photo by Maranie Rae Staab/PublicSource)

The African-American neighborhood of the Hill District ("The Story Of The Pittsburgh Neighborhood That Inspired "Fences"," NTHP, "The Hill District, a community holding on through displacement and development," Public Source) in Pittsburgh was ripped apart by urban renewal.  

One of the projects was an arena for the Pittsburgh Penguins, called the Civic Arena, which opened in 1967 and was torn down in 2010.  

Wikipedia photo.

At one time, it was proposed a new sports arena would be built there, but instead other development plans are moving forward.

But at the time of the second arena proposal, in 2015, the Hill District Consensus Group made a startling proposal, that there should be a parking fee/tax on each car parked for events, as a form of mitigation, with the monies to be used for improvement projects elsewhere in the community ("A dollar a car for the Hill," Hill District Consensus Group).

It wasn't approved, but it's a concept that I refer to in "Framework of characteristics that support successful community development in association with the development of professional sports facilities" as one of many mitigation steps that should be adopted in developing broader community improvement programs associated with such facilities. 

The Hill District Community Development Corporation is proposing something similar in association with a concert facility proposal run by Live Nation ("Hill District group pitching a plan for parking and ticket surcharges at former Civic Arena site ," Pittsburgh Post-Gazette) but the developer is opposed ("Developer rips proposal for $2 parking surcharge at former Civic Arena site," PPG).  From the second article:

Mr. Buccini’s comments came in response to a proposal by the Hill Community Development Corporation to impose a $2 surcharge on each car parked in the garage and another $2 surcharge on each ticket sold at the music venue.

The Hill CDC wants to see the revenue generated by the fees redirected to other parts of the neighborhood to fund infrastructure improvements and development activities.

Craig Dunham, senior vice president of development for the Pittsburgh Penguins, who hold the development rights to the 28-acre lower Hill site, said a parking surcharge at one time was considered as a way of generating revenues for other parts of the Hill.

But he added that idea eventually was replaced by a plan to divert tax revenue generated by development on the lower Hill property to other parts of the neighborhood.

The parking surcharge could create a “competitive disadvantage” for the garage, Mr. Dunham said.

The same thing comes up all the time with such facilities.  Owners-developers oppose ticket or parking taxes saying it will reduce patronage.  Well, that's a great way to build a source of funds for mitigation, unless the owner-developer wants to pay separately, which they rarely do.

Interestingly, if Prince George's County Maryland didn't charge an admissions tax on tickets for the Washington Commanders football team they would get zero revenue from games.

As it is, concert goers pay exorbitant fees on tickets ("Why Ticket Service Fees Are so Annoyingly High — and How to Avoid Them," Money Magazine).  The likelihood of the fee being a significant hindrance is minimal, especially as it should be built into the cost of the ticket.  The big issue is the cost of tickets generally ("Collier’s Weekly: Concert Ticket Inflation Is Out of Control," Pittsburgh Magazine).

Community benefits agreement.  From the first PPG article:

The Hill CDC also is pushing for a benefits agreement known as the Community Collaboration and Implementation Plan, or CCIP, to be incorporated into the formal preliminary land development plan for the venue.

The $4 in proposed surcharges would be in addition to a proposal by the Penguins and developer Buccini Pollin Group to divert an estimated $8.2 million in parking tax revenues to other parts of the Hill to support housing stabilization efforts.

Ms. Milliones did not have an estimate on how much the surcharges would generate. But she said such funding is needed because it can cost as much as $40 million to develop just two blocks in the Hill.

She noted that the one-block New Granada Theater redevelopment on Centre Avenue will cost about $60 million. What’s more, there are about 600 acres of vacant land in an 1,100-acre neighborhood, Ms. Milliones explained.

“We have major infrastructure issues,” she said, adding that the recent award of a $11.3 million grant to refurbish the Centre business district and several nearby streets “will not fix everything.” ...

Ms. Milliones noted that the CCIP calls on the Penguins to make “commercially reasonable efforts” to identify potential revenue streams that could lead to additional reinvestment in other parts of the Hill, including a $1 per car surcharge on structured parking.

The Middle and Upper Hill already are expected to benefit from more than $7 million advanced by First National Bank in anticipation of tax revenue to be generated by development at the arena site. FNB will anchor the 26-story office tower currently being built there.

That money is to be used for projects in other parts of the Hill. But Ms. Milliones noted that the funding is not a “generous contribution” from the Penguins but a transfer of tax revenue that otherwise would have gone to the city, county, and school district.

 A Community Collaboration and Implementation Plan has been developed for the Lower Hill District.

 -- document

A similar plan was developed in association with the new Atlanta Falcons football stadium.  It's not miraculous, but it does a bunch of interesting things ("Building a Stadium, Rebuilding a Neighborhood," New York Times).