Title
Ordinance amending and supplementing the Pittsburgh City Code, Title Two: Fiscal, Article IX: Property Taxes, by creating a new Chapter 268: Real Estate Tax Exemptions for Construction or Adaptive Reuse of Buildings in Downtown Pittsburgh.
(Briefing held 3/20/24)
(Public Hearing held 4/29/24)
Body
WHEREAS, after the COVID-19 pandemic, demand for commercial office space in Downtown Pittsburgh has dropped significantly, particularly in older buildings with limited amenities; and,
WHEREAS, per CBRE, as of March 2024, in Downtown Pittsburgh, many users of commercial office space have reduced their footprint by 60%, and there is 5.5 million square feet of office space available today, meaning that the current office vacancy rate Downtown is about 27%, and with an additional three million square feet of 'dark space' becoming available in the next five years, the projected office vacancy rate Downtown could increase to 46% by 2028; and,
WHEREAS, many of the largest leases for office space in Downtown Pittsburgh are coming due in the next few years, potentially accelerating a trend where Downtown office buildings stand empty following the COVID-19 pandemic, thus losing out on needed revenue, at exactly the moment when building owners are confronting high interest rates that make refinancing their mortgages and paying for necessary but expensive improvements difficult if not impossible, leading to widespread underutilization, assessment appeals, and foreclosures, all of which would significantly reduce the real estate tax revenues owed to the City of Pittsburgh; and,
WHEREAS, as of January 2024, three Downtown Pittsburgh skyscrapers - the U.S. Steel Tower, Three Gateway Center, and the Tower at PNC Plaza - won huge reductions in their 2022 and 2023 property assessments, with the U.S. Steel Tower getting its assessment slashed by $91.6 million, Three Gateway Center getting its assessment slashed by $27.2 million, and the Tower at PNC Plaza getting its assessment...
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