Penguins on the clock for Civic Arena site

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The clock is about to start ticking on the Pittsburgh Penguins. But this one has nothing to do with the National Hockey League draft this weekend at the Consol Energy Center.

It has everything to do with development.

When a new parking lot opens on former Civic Arena land at the end of July, the Penguins will have exactly two years to begin their first piece of development on the property.

The Penguins won the right to develop the 28-acre publicly owned tract, which borders Downtown and the lower Hill District, in the 2007 agreement with state and local leaders to build the new arena.

Under the terms of the deal, the team will have a decade to develop the entire 28 acres at the rate of 2.8 acres a year. The clock starts to run on the 10-year timetable one year after the completion of the arena demolition and preparation of the parking lot. The team will then have one year to begin work on the first parcel it targets for development. If it fails to develop at least another 2.8 acres a year after that, it could forfeit the rights to the parcels.

"I think that's a fair timetable," said Jake Wheatley, a state legislator who represents the Hill District, which borders the site. "It's similar to what was happening on the North Shore. We want to push ourselves to do something great [on the property]."

The city-Allegheny County Sports & Exhibition Authority moved to get the ball rolling last week when it agreed to pay Noralco Corp. $542,984 to build the 800-space lot where the Igloo once stood. The SEA expects the lot to be ready by the end of July. The parking is supposed to be temporary, giving way to development as it takes place.

While the Penguins have two years to start development, they already have hired the real estate firm Jones Lang LaSalle to begin marketing the land to potential developers and tenants. They also have been working with city planners to create a specially planned district that would serve as the blueprint for developing the housing, offices and commercial activity envisioned on the 28 acres.

The Penguins consider the site, which includes the arena property and the Melody Tent parking lot above it, a "perfect storm of opportunity," given its location adjacent to Downtown.

JC Pelusi, a managing director at Jones Lang LaSalle, said he is having conversations with a variety of potential office and residential prospects.

"We're encouraged by the level of interest," added Travis Williams, the Penguins' chief operating officer.

One source of speculation has been U.S. Steel, which may be interested in moving into a new headquarters either in the city or the suburbs once its lease expires at U.S. Steel Tower in September 2017.

The Penguins reportedly already have had conversations with the steelmaker about the site, which would be large enough to accommodate the campuslike headquarters U.S. Steel seems to want.

Neither Mr. Williams nor Mr. Pelusi would comment on U.S. Steel. But the team does have a connection to the company in John Surma, U.S. Steel CEO and chairman. He acquired a $2 million stake in the hockey club last year.

Mr. Wheatley said he has been hearing "rumors and whispers" that U.S. Steel may be interested in moving into the site.

"I think that would be a great coup if we could get U.S. Steel there. That would be a great addition to our Hill family. I know I would love to have them there," he said.

Charles Rice, a U.S. Steel spokesman, would only say that "we are exploring alternatives in order to arrive at the best long-term business solution for our company when our lease in the U.S. Steel Tower expires in 2017."

The Penguins also apparently have had conversations with housing developers about the property, including McCormack Baron Salazar, which was the company behind the Crawford Square residential development in the lower Hill adjacent to the 28 acres.

Mr. Williams and Mr. Pelusi refused to discuss specific developers, and McCormack Baron officials could not be reached for comment.

The Penguins still don't know whether they will start with a residential or office project. They hope to be in the position to select one or multiple developers within the next year.

While much of the focus has been on the timetable for development, the team insisted that the more important issue is getting roads, utilities and other infrastructure in place to accommodate housing and office buildings.

Although the SEA has begun design work on the infrastructure, it has yet to raise the estimated $40 million needed for construction. One option under consideration is creating a tax increment financing district to help generate money for that purpose.

"Infrastructure is a really key component. Without it, development can't happen. No developer is going to come in without infrastructure being in place," Mr. Williams said.

But there does not appear to be anything in the 2007 agreement that requires infrastructure to be in place before development can start, meaning that the team could be held to the two-year timetable regardless of what roads or utilities are in place.

Nonetheless, SEA executive director Mary Conturo said all parties are working hard to get the infrastructure funded and in place. She said it could be done in phases and prioritized depending on what development is ready to go.

"We all know that the faster the infrastructure gets in, the better the development is likely to be," she said.

The Penguins are proposing 1,200 units of housing, 600,000 square feet of office space and 200,000 square feet of commercial space on the property, which sits across from the Consol Energy Center.

Mr. Wheatley said he would like to see a sustainable development that incorporates and builds on the redevelopment that has been taking place in the Hill District.

"I want to see an integrated development that isn't separated from the community but is a continuance of what we've been doing," he said.

Mr. Pelusi envisions a development that can be a driver for the region. "This is a once-in-a-lifetime opportunity to do something special," he said.

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Mark Belko: or 412-263-1262. First Published June 21, 2012 4:15 AM


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