A bid to secure an $18 million federal grant to help install streets and utilities at the former Civic Arena site has failed, complicating the efforts to prepare the land for a proposed residential, office and commercial redevelopment.
Pittsburgh-Allegheny County Sports & Exhibition Authority officials learned Thursday that the arena project was not among the 52 in 37 states to be awarded a federal Transportation Investment Generating Economic Recovery grant.
The SEA, the Penguins and local political leaders had hoped to use the $18 million to help pay for the construction of streets, utilities and other improvements at the 28-acre site in the lower Hill District. Part of the work involves re-establishing a street grid that was lost half a century ago when the Civic Arena was built.
"It's a disappointment and a setback," SEA executive director Mary Conturo said.
SEA officials wanted to couple the federal grant with $15 million in state redevelopment capital assistance to pay for most of the infrastructure work, estimated at close to $40 million.
The publicly funded site work is paving the way for the redevelopment being proposed by the Penguins, one that is expected to include 1,200 residential units, 621,962 square feet of office space and 200,101 square feet of commercial space.
Without the federal funding, the SEA may have to take a more piecemeal approach to the infrastructure, Ms. Conturo said.
"We'll have to re-prioritize what parts of the project we're doing and in what order," she said.
The SEA will continue to look for other ways to pay for the improvements. Ms. Conturo said the agency wouldn't have been in the position to start the infrastructure work until the first quarter of next year even if it had received the grant.
City Councilman R. Daniel Lavelle, who represents the Hill District, said the SEA may have to start the site work on the lot closest to Crawford Square and work its way down the hill toward Downtown as more funding becomes available.
"It's a disappointment. However, we have the state funding that will allow us to get started on the upper portion of the site as soon as we get a developer on board to start the housing," Penguins CEO David Morehouse said.
City Councilman Bill Peduto, the Democratic nominee for mayor, added that there are "other tools in the toolbox" that could be used to help with the infrastructure.
But he added that having the Penguins pay for part of the improvements could become "part of the formula." He also noted it may be possible to apply for another TIGER grant when the next round of funding becomes available.
On Wednesday, Mr. Peduto, the prohibitive favorite to become the city's next mayor, said that if the SEA and the Penguins secured the $18 million grant, he didn't want the team coming to the city asking for more public funding.
He noted the SEA and the team already have received the $15 million in state help and are seeking a state loan. He also pointed out that the Penguins are getting $15 million in tax credits to buy the land needed for redevelopment.
He also urged the team to use a portion of whatever money it does receive to make improvements to other parts of the Hill, particularly the Crawford Street corridor and Fifth Avenue.
The team fired back Thursday, saying that while it hasn't committed any of its own money to pay for site improvements, it has spent millions of dollars on market studies, planning activities and building community consensus to lay the groundwork for development.
"There's a host of activity that goes into the front end of this that requires a lot of investment by us to get it ready for development," said Travis Williams, the team's chief operating officer.
Mr. Morehouse said the public infrastructure funding that the Penguins have asked for is no different than what other developers have gotten, including those in Mr. Peduto's East End district and on the South Side and North Shore.
Mr. Peduto said those that have received public aid in his district have gone through a community-based development process. He said it's one reason his district has seen population and economic growth and higher property values.
Even if the SEA had gotten the TIGER grant, the Penguins would not have ruled out requesting more public help, Mr. Morehouse said.
"We wouldn't close off any opportunity to try to find public money to help induce development. Our overall goal is to develop that site. If it's going to take some kind of incentive to develop that site, we're for the incentive," he said.
As for using funding to pay for improvements beyond the arena site itself, Mr. Morehouse said the TIGER grant would have paid for improvements to Crawford Street and Bedford and Centre avenues and Washington Place.
But he ruled out putting the team's own money into making infrastructure improvements on Fifth across from the Consol Energy Center, an area Mr. Peduto wants to see improved.
"We'll put money into private investment. We're not building streets. That's not required of any other developer," he said.
Mr. Morehouse said the team already has been reinvesting in the Hill by contributing $1 million to a grocery to open this fall, lining up $3 million from corporate sponsors to invest in the Hill, and ensuring that 40 percent of the jobs at the new arena and a new hotel and restaurant went to Hill residents. He said he is not opposed to extending benefits beyond the 28 acres and is willing to meet with Mr. Peduto to discuss the issues that have been raised.
Mr. Lavelle feared that if Mr. Peduto, as mayor, tried to limit the amount of public funding that goes into the arena site, it could deter development and relegate the space to parking.
But he agreed that mechanisms like tax increment financing should benefit more than the 28 acres itself. Mr. Peduto reiterated that he wanted to see public benefit beyond the site in return for public investment.
"If the Penguins were to go to a bank and ask it for a loan, the bank would have certain requirements to benefit its shareholders. If you're going to the public asking for public subsidies for private development, it would only make sense that there would be something that would be able to come back to benefit the community," he said.
Mark Belko: firstname.lastname@example.org or 412-263-1262. First Published September 5, 2013 1:45 PM