Penguins to get Melody Tent development rights

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The Penguins' bid to develop 28 acres adjacent to the Hill District as part of the new arena deal could clear a key hurdle this week with an action by the city's Urban Redevelopment Authority board.

   

Graphic: Melody Tent site

   

Board members are expected to vote tomorrow on a 10-year option agreement with Pittsburgh Arena Real Estate Redevelopment, a Penguins affiliate, that would give the team control over the URA-owned Melody Tent site, now used as a parking lot.

The parcel is part of the 28 acres the Penguins won the right to develop in the agreement reached with state and local leaders in March to build a new arena. Those 28 acres include the land on which Mellon Arena sits and the arena's lower and upper parking lots.

Under the March deal and the proposed URA agreement, the Penguins' 10-year option on the land would start one year after the new arena is completed.

The team is required to develop 10 percent of the land each year, or face the risk of losing all or a portion of it. The Penguins must pay fair market value for the land, but will have access to $15 million in credits to offset the purchase price as a "further incentive to development," according to a URA report discussing the Melody Tent site.

"This agreement reflects a material part of the overall agreement reached to keep the Penguins in Pittsburgh and to finance the new arena," the report says.

As part of the March deal, the team also must negotiate in good faith with Pittsburgh casino license winner Don Barden about his potential participation in development of the 28 acres. Those talks have yet to start.

Last week, the city-Allegheny County Sports & Exhibition Authority board gave Executive Director Mary Conturo authorization to enter an option agreement with the team regarding development of the Mellon Arena site. Ms. Conturo said, however, that probably won't be finalized for at least six months, as officials focus first on arena construction.

The development rights could provide the Penguins with another revenue stream once the new arena is up. The team also has the option of using some of the land for parking before it is developed.

As part of the Isle of Capri Inc. bid for the Pittsburgh casino, the Penguins had teamed with Nationwide Realty Investors of Columbus, Ohio, to redevelop the 28-acre site with offices, housing, restaurants, retail and entertainment facilities, and to re-establish a street grid to reconnect the Hill with Downtown.

Nationwide dropped out of the picture after Mr. Barden won the casino license.

The Penguins have yet to select a new developer as part of the arena deal, but are expected to look at similar uses for the land.

Hill groups and residents are pushing for a say in the redevelopment and a community benefits agreement with the Penguins on issues that could include jobs, housing and givebacks.

In other matters tomorrow, the URA board is expected to consider:

$910,000 in Pittsburgh Development Fund loans to the Ferchill Group as part of the financing for the $46 million Bridgeside Point II wet lab/office building at the Pittsburgh Technology Center in South Oakland.

An agreement with the Soffer Organization and Development Opportunity Corp. for development of a 140-room hotel, plus 23 condominiums, in a building of up to 13 floors at the SouthSide Works complex.


Mark Belko can be reached at mbelko@post-gazette.com or 412-263-1262.


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