A recent agreement between two East End community groups and developer Walnut Capital that includes 100 “affordable” for-sale houses has yet to satisfy Mayor Ed Gainey’s expectations, stalling a potential expansion of Bakery Square.

In September, the Pittsburgh-based company reached a Community Benefits Agreement [CBA] with two neighborhood organizations, the Larimer Consensus Group and the Village Collaborative, to fund new housing construction with an affordability component as part of a larger effort to expand Bakery Square. 

The company bought the former Nabisco bakery in 2007, redeveloping the site into retail, office and hotel space. Walnut Capital now seeks to expand the Bakery Square footprint 14 acres west along Penn Avenue at the site of a Trader Joe’s grocery store and surrounding retail cluster. 

The expansion would require approval from city panels appointed by Mayor Ed Gainey.

With the CBA signed, City Councilor Ricky Burgess in September formally notified the city’s departments about the agreement. The Zoning Board of Adjustment, though, hasn’t taken up the issue for consideration. In an effort to advance the project, Burgess proposed a Specially Planned District that would allow Walnut Capital to begin their planned expansion. He said the zoning legislation is being reviewed by the Department of City Planning but he didn’t know when the City Planning Commission plans to vote on it. 

Asked about the development during an October interview with PublicSource, Gainey said his administration isn’t treating the Bakery Square expansion differently from any other proposal.

“I’m not asking Walnut Capital to do anything different than any other developer has done throughout time. Period,” Gainey said. “We know that if we want to stabilize these neighborhoods we need affordable housing. I’m not slowing [down] development. If you want something from me you should understand that I’m going to want something in return.”

CBA aims at affordable housing, ‘brighter day’

Walnut Capital’s expansion plan calls for the complete redevelopment of the site with a new and enlarged Trader Joe’s on the former Club One site occupying the ground floor of a building with apartments on top. According to Walnut Capital, the grocery store would only move from its current building into the new one once it’s complete so that the store’s services would not be interrupted.  

A map of the proposed expansion of Bakery Square (Courtesy of Walnut Capital)
A map of the proposed expansion of Bakery Square (Courtesy of Walnut Capital)

Walnut Capital said the ultimate goal is to transform the 40% vacant strip mall into a mixed-use development with green space throughout the site. The parcel is currently zoned for highway commercial development, and Burgess’s special zoning would allow Walnut Capital the flexibility to build, make improvements to public infrastructure and establish right of ways for pedestrians.

The agreement reached between the Larimer Consensus Group, the Village Collaborative and Walnut Capital requires that any new apartment building constructed by Walnut Capital that is bigger than 20 units devote 5% of units to people making between 80% and 120% of the area median income for 20 years. 

The agreement also calls for $25 million to fund 100 homes in specified areas outside of the expansion area in Larimer and East Liberty. Walnut Capital would contribute $6 million with a commitment to raise another $19 million from other sources. To help the community groups to find a consultant and raise funds to complete the construction, Walnut Capital will contribute $50,000 annually for up to four years, to be administered by a nonprofit. 

The deal would offer reimbursements of up to $100,000 each to the two community organizations for their work. A board will be created to ensure that the terms of the agreement are followed. 

Gainey didn’t respond to emailed follow-up questions about the CBA and whether it satisfied his call for more affordable housing.

Burgess said that he supported the development effort and was satisfied with the CBA.

K. Chase Patterson, the Larimer Consensus Group’s chairman, said the funding wouldn’t solve all of the problems related to community investment in the neighborhood.

“The CBA our community negotiated was designed to serve as a catalytic spark for interest and large-scale community development at an accelerated rate,” Patterson said. 

Patterson noted that like other predominantly Black communities in the city and country, Larimer has a history of disinvestment, against which they are hoping to leverage market interests for the benefit of the community. 

“Not only is there an interest in affordability, but folks usually want to get into the new restaurant on the block or the one with an updated menu, and I believe that we as a community, Larimer, are advertising a brighter day for our community.”

Developer asks for ‘vocal support’

In order for Walnut Capital to begin their planned redevelopment of Bakery Square, the city’s zoning board must first approve the special zoning application, but the board’s upcoming meeting agenda does not include this issue.

Bakery Square overlooks a section of East Liberty that Walnut Capital wants to redevelop as part of an effort to make the area more urban. (Photo by Eric Jankiewicz/PublicSource)

Walnut Capital’s leaders suggested the city should consider the proposal.

“Right now, we are living in one of the toughest economic times and financing projects is difficult,” said Todd Reidbord, Walnut Capital’s president, in a prepared statement. Cities, “from Cleveland to Charlotte, are collaborating more than ever with the private sector to attract investment.” 

He said that the CBA reflects the company’s critical role in growing the city’s population, job opportunities and tax base, and urged readers to consider “the importance of public-private partnerships to drive growth.”

Reidbord said that the project will create an estimated $7 million in local taxes for the city, along with union jobs. 

He said that revenue would come as the city’s Downtown property tax revenue is declining. 

“Development is needed to counteract this so that all residents receive basic services that keep their streets clean and safe,” he said. “Our city must grow and many people are confused as to why a community-supported development that transforms a 40% vacant suburban strip mall into a vibrant economic generator doesn’t have the vocal support of everyone in our city.”

Burgess said that he isn’t involved in talks between Walnut Capital and the mayor’s office but would be happy to contribute if invited to the table. 

“I’m in favor of creating more affordable housing,” the councilor said. “If that’s our priority then we should fund it and I’m in favor of that … I support the project and this should be negotiated between all parties to make it even better.”

The Giant Eagle model for Bakery Square?

Skip Schwab, deputy director of East Liberty Development, Inc., said he wasn’t surprised that there’s tension over Walnut Capital’s proposal.

“People worry about density and traffic,” he said. “If any area should be dense, it should be the East End. It’s where the population is, cultural institutions, universities, medical facilities.”

However, he added, Walnut Capital should slow down and see the work of redevelopment as “a much slower process.” 

“Everybody needs to back up a little. What Walnut is attempting to do, they were trying to expedite the process,” Schwab said. “Everything has to move to the middle  – it’s about compromise.”

By leaning too heavily on the community benefits agreement, Schwab said, Walnut Capital is missing out on input from other parts of the community that aren’t represented by the two community organizations that signed the pact.

“Developers cannot not engage the broader community,” he said.

Schwab suggested Walnut Capital look to Giant Eagle’s real estate company ECHO Realty’s efforts to demolish the grocery store on Shakespeare Street and replace it with a new store and housing, as a possible model to be replicated. Like the Bakery Square expansion, the Giant Eagle plan was also contentious, and a zoning change was denied in 2020.

“They went through a very sincere several-year process, talking to the communities and neighborhood and various advocates – food access, transit, circulation, parking folks,” Schwab said. “That’s what [Walnut Capital] was trying to get around by getting a CBA going.”

Reidbord emphasized the community work Walnut Capital has already done. 

“Two years of listening to community stakeholders, fact-finding and problem solving to address residents’ top challenges, like historic vacant properties, to a hemorrhaging of the East End’s Black working class population, has led to one of the nation’s most transformational community benefit agreements,” he said in the prepared statement. “In 20-plus meetings, we heard loud and clear that residents want the opportunity to rise up, to build generational wealth, and to live in safe communities, free from blight and vacant lots.”

Mayor Gainey, in his interview, said his goal is simple. 

“My philosophy is this: I want affordable housing. That doesn’t slow down development.”

He continued, “If that’s slowing you down then you’re using that as an excuse to get what you want. But that’s not my interest. My interest is making this city affordable so people want to be here.”

Eric Jankiewicz is PublicSource’s economic development reporter, and can be reached at ericj@publicsource.org or on Twitter @ericjankiewicz.

This story was fact-checked by Erin Yudt.

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Eric Jankiewicz is a reporter focused on housing and economic development for PublicSource. A native New Yorker, Eric moved to Pittsburgh in 2017 and has since fallen in love with his adopted city, even...