Governor Tom Corbett announced a $4 million Economic Growth Initiative (EGI) grant for the restoration of the Henry W. Oliver building and the conversion of the Saks Fifth Avenue site on Monday. The project is intended to jumpstart the revitalization of the Smithfield Street Corridor.

McKnight Realty Partners, a local redevelopment firm, estimates the Oliver building’s restoration will cost $74 million. The upper reaches will be home to an Embassy Suites Hotel and offer 250,000 square feet of office space below. In partnership with Millcraft Investments, McKnight will convert the old Saks Fifth Avenue site into a multi-modal transit hub with 30,000 square feet of retail space and eventually 100 residences.

Smithfield Street is one of the city’s vital arteries; running across the Monongahela River from the South Side, it connects commercial districts and enables cross-town travel. Despite its centrality, the corridor hasn’t reached its potential for decades says Izzy Rudolph, a principal for McKnight Realty Partners.

“If you sit on Smithfield Street–you’d have to bring your own chair with you because there aren’t any on the street right now–and you watched the people, you’d see people always bustling through,” he says. “No one is stopping and shopping. As busy as it is, no one is spending time hanging out.”

Spending time is crucial for generating revenue to strengthen Pittsburgh’s economic viability. Market Square is evidence of residents’ willingness to live, shop, and spend money downtown says Rudolph, a willingness that bodes well for redevelopment of the Smithfield Street corridor.

Jay Pagni, Governor Corbett’s press secretary, says the Smithfield Street project demonstrates what strategically awarded grant monies can do. EGI is a 2012 redesign of the Redevelopment Assistance Capital Program (RACP) begun in the late 1980s. Over time, a backlog of funding was tied to stalled projects that failed to secure non-state funding. Despite some of those projects’ slim chance of revival, the money stayed on the books and couldn’t be used for anything else.

“We don’t want state dollars committed to just sit there and languish,” says Pagni. “Now we look at things and ask what the economic or cultural impact will be; what’s the source of non-state dollars and how shovel-ready is this project? These two [Henry W. Oliver building and Saks Fifth Avenue site] will be anchors of a much bigger revitalization of downtown.”

McKnight will restore the 104-year-old Henry W. Oliver building to its original glory, working with the URA and the History and Landmarks Foundation says Rudolph.

“You can’t replace these buildings. They were built by people who really cared for the city, and to keep them up is a testament to the history Pittsburgh has,” he says. “We have to keep an eye on the past to continue into the future. These are absolute treasures and we have to keep them around.”

The two projects are expected to create 234 full-time and 64 part-time jobs, and some 1,250 construction positions. Rudolph estimates that the development will annually produce $2,263,425  in state taxes, as well as generate local tax revenues. McKnight has committed to opening by year end 2015.