Allegheny County officials are working on a $2 billion initiative to expand public transportation between downtown Pittsburgh and its Oakland neighborhood — the city’s academic and cultural hub — and to boost mass transit within Oakland itself.

Creating a direct link of either light rail or rapid-bus transit between downtown and Oakland could pave the way for mixed-use development along the two- to three-mile route.

New development would involve the region’s three largest employers, the University of Pittsburgh Medical Center, Carnegie Mellon University, and the University of Pittsburgh.

It include office space, classrooms, laboratories, residential development, and commercial activity, according to Dennis Davin, executive director of the Redevelopment Authority of Allegheny County.

The RAAC is overseeing the transit initiative.

“What [the universities and UPMC] have told us is that they would be amendable to locating there, into leasing those sites,” Davin said. “And we believe this corridor is ripe for development.”

Davin estimates the downtown-Oakland connector would cost approximately $1 billion.

Increasing mass-transit in the Oakland area would cost another $1 billion.

Officials say UPMC and the higher educational institutions are looking for more space to grow as the Oakland area, where they are currently located, is already at capacity.

The aim is to allow those entities to expand between Oakland and downtown Pittsburgh to tap into the university’s collaborations with private businesses and the research and development dollars that those institutions bring in.

“Carnegie Mellon has been very active in developing partnerships with major corporations like Google and Apple Inc. and Disney, and so forth, to establish research facilities, and in Google’s case a large applied-research center,” said Dennis Yablonsky, executive director of the Allegheny Conference on Community Development.

“They’re virtually out of space in Oakland. Oakland is almost 100% leased right now, which is pretty unusual.”

The ACCD is a private, nonprofit organization of private sector leadership that aims to improve the economy of the region.

Yablonsky and Davin are co-chairs of the Transportation Action Partnership, which Allegheny County executive director Dan Onorato created to help assist in the transit developments.

Serving as TAP co-chair is Yarone Zober, chief of staff to Pittsburgh Mayor Luke Ravenstahl, and chairman of the city’s Urban Redevelopment Authority.

In addition, TAP includes local business leaders, public officials, community groups and foundations, among other stakeholders.

The authority has identified three potential transit routes between the downtown area and Oakland, with the Pittsburgh Penguin Arena located along one of the routes. Officials are considering a light-rail line or a bus-rapid transit system to better connect downtown Pittsburgh with Oakland.

Yablonsky and Davin said the potential of creating a mixed-use development between the two urban areas, and the possibility of involving transportation developers in those projects along the mass-transit route, could help generate interest from the transportation industry.

“The development of the land surrounding it has value and has potential revenue flows associated with it from rent and so forth,” Yablonsky said. “So we specifically don’t believe just doing the transit link is going to be attractive enough. We think the combination of the transit as well as the development of the land that surrounds it is what really makes this interesting.”

The RAAC last month released its prospectus of the transit proposal to link downtown Pittsburgh and Oakland and increase mass transit in Oakland. Expressions of interest are due by April 30.

The procurement process will happen in two stages, with the authority releasing a request for qualifications later this year. Selected firms would then be able to participate in a request for proposals.

While the goal is to promote private-sector investment in the city’s transportation improvements, officials said that tax-exempt borrowing would probably play a role in the development’s financing.

“There will definitely be bonding involved in the projects, but we do not know to what degree at this point in time,” county executive director Onorato wrote in an e-mail. “The bonds will either be issued by an existing authority, such as the RAAC, or by a new single-purpose authority created to advance this specific initiative.”

Davin said officials would look into tax-increment financing and the RAAC’s prospectus indicates that the government entity charged with overseeing a development, called the owner, may opt to create special taxing districts. Officials could leverage revenue generated from the special districts.

“Owner may consider establishing special taxing district encompassing the parcels-lots for which long-term lease and development rights are made available, and utilize a portion of these proceeds to provide gap guarantees, and also issue tax-exempt bonds on behalf of the project,” the prospectus reads.

Tax-increment financing has already been used in Allegheny County, Davin noted.

The transit development does require legislative action to approve specific public-private-partnership legislation that would allow the combining of private and public funds to be used for the development, according to Onorato.

Officials are open to different transportation routes, and various modes of mass transit be it light rail, rapid-bus lines, or automated people movers, which are used at many airports.

“We’re really trying to be as flexible as possible in seeing what ideas come back to us,” Davin said.

“First of all, if there’s interest, and then what type of ideas come back to us. We understand that we might not get much interest, or we might get a lot of interest. I think that the hope here is that if we get a lot of interest we can generate some competition for this development.”

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