3 Pittsburgh construction projects hang in the balance in 2014

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This year could be a pivotal one in the development of the former Civic Arena site in the lower Hill District, the LTV Coke Works in Hazelwood and the Strip District produce terminal.

Both the arena redevelopment and the Buncher Co.'s plans for the produce terminal not only have the potential to generate drama but could pose the first development-related challenges for Mayor-elect Bill Peduto, who takes office Monday.

Nearly two years after the Civic Arena came down, 2014 could bring the first wave of new development to the site, which is considered among the most valuable pieces of real estate in the region.

But there's a potential fight brewing.

After nearly a year of talks, the Pittsburgh Penguins, which secured the rights to the 28 acres of publicly owned land in the 2007 deal to build the Consol Energy Center, still haven't been able to win the backing of Hill leaders for the proposed residential, office and commercial redevelopment.

The big stumbling block has been affordable housing. Hill leaders want 30 percent of the units priced low enough to be within the means of lower-income residents. The Penguins and their residential developer, St. Louis-based McCormack Baron Salazar, have set the limit at 20 percent.

Angry Hill residents assailed the team's proposal at a public meeting in November, forcing it to delay the submission of a preliminary land development plan and a request for a new zoning district to the city while it tried to work out the differences. Travis Williams, the Penguins' chief operating officer, said he expects to submit both for approval soon.

The Penguins have been talking to various city and county officials, including members of Mr. Peduto's staff, about the implications involved in increasing the level of affordable housing from 20 to 30 percent. They have said it likely would require some form of public aid to bridge the funding gap.

"If you're going to add affordable housing to the project, it generally requires some form of subsidy," Mr. Williams said.

That could pose a challenge for Mr. Peduto, who has been trying to limit the amount of public money that goes into the development. Neither Mr. Peduto nor Kevin Acklin, his incoming chief of staff, could be reached for comment.

While Mr. Williams still hopes to reach an agreement with Hill leaders, he noted the team at some point may have to press ahead if it is to meet an October deadline to start development. Under the 2007 Consol deal, the Penguins must take down at least 2.8 acres of land in the fall or risk losing the rights to the parcels. The longer negotiations take, the tougher it becomes to meet the deadline, Mr. Williams said.

"How the process unfolds over the next couple of weeks will be telling," he added. "McCormack Baron and the Penguins are certainly doing everything we can to be in position to meet that deadline."

Marimba Milliones, president and CEO of the Hill Community Development Corp., said Hill leaders are working to make sure the arena development is "catalytic" for the entire neighborhood, not just part of it.

She advised the Penguins against moving ahead without Hill support. "I think it would be unfortunate and a mistake for them to proceed without assuring there's an agreement," she said.

Another big development facing a pivotal and possible confrontational year is the Strip's Pennsylvania Fruit Auction and Sales Building, or produce terminal, part of Buncher's $450 million Riverfront Landing residential and office project.

The fate of the Strip landmark could be decided by Valentine's Day, the deadline for City Council to vote on whether to designate the 1,533-foot-long building as a city historic structure.

A vote in favor of the designation would make it far more difficult for Buncher to raze the western third of the building to improve access to the Allegheny River as part of the overall development.

Under the plan, Buncher also intends to spend more than $20 million to upgrade the rest of the terminal, once the hub for vegetable and fruit wholesalers, and convert it into office and restaurant space.

The terminal controversy could prove to be an early test of Mr. Peduto's leadership. On Dec. 23, council delayed a vote on the historic designation for a third time at the urging of the mayor-elect. Mr. Peduto said at the time he needed a few more weeks to work with Buncher, preservationists and neighbors to reach a compromise. He also has been talking to developers from Texas, Ohio and Pennsylvania as well as Downtown architect Rob Pfaffmann about possible reuses.

Buncher has an option to purchase the building from the Pittsburgh Urban Redevelopment Authority for $1.8 million. The company has said that if the building is designated historic, it may be forced to walk away from the terminal project, although not the rest of the development.

Councilman Corey O'Connor, who opposes the historic designation, believes that if the building is not deemed to be historic, it gives Mr. Peduto more flexibility in working with Buncher and other developers. He expects a vote by council by the third week of January.

"We need to give them the flexibility to open it up to outsiders or have Buncher work with outsiders to get a good result, not only for the Strip District but the region as a whole," he said.

Opponents of the designation have said that even if it is not granted, the city still would have control over what happens to the terminal. That's because the sale of the building would have to come before council for approval. Buncher has pledged not to raze any part of it until the sale is finalized.

While the arena and terminal projects may draw the most controversy this year, perhaps the most highly anticipated development involves the former LTV Coke Works in Hazelwood, the last of the city's brownfields.

Site grading on the 178-acre tract should be completed in the first quarter, while construction of interior roads and utilities should start in the second quarter and be finished by the end of 2014.

"It should be possible for vertical development to start in '14," said Don Smith, president of the Regional Industrial Development Corp., which is managing the site for owner Almono LP.

RIDC currently is working with three potential developers -- Trek Development Group, NRP Group LLC of Cleveland, and the team of McCaffery Interests of Chicago and The Community Builders of Pittsburgh -- to revise the proposals they offered months ago for the first phase of residential development at the northern end of the site.

Since then, a "well-known local developer" also has expressed interest in the residential phase, possibly Washington, Pa.-based Millcraft Investments. Lucas Piatt, Millcraft's president, could not be reached for comment.

Mr. O'Connor said U.S. Steel, whose lease in U.S. Steel Tower Downtown expires in 2017, and energy companies also have talked about the site.

Mr. Smith said interest in the $1 billion redevelopment along the Monongahela River has been high since the city, county and Pittsburgh school district approved up to $80 million in tax increment financing for infrastructure improvements, adding that people now have more confidence that "it's going to be ready to go."

If there's a worry, it's that RIDC and Almono still haven't secured an estimated $10 million to $12 million needed for off-site road improvements that Mr. Smith sees as critical to the success of the project. Without them, bottlenecks could develop around the property, he said.

The proposed development would feature more than 2 million square feet of office and research and development space and as many as 1,30 units of housing.

Mark Belko: mbelko@post-gazette.com or 412-263-1262.

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