A proposed partnership between McKeesport city government and a Pittsburgh developer could bring $2 million in improvements to the mostly vacant Midtown Plaza mall and parking lot.

Built in 1976, the Midtown Plaza is a group of two buildings on opposite sides of Fifth Avenue. Until a year ago, the buildings were joined by a parking lot deck, now dismantled, that crossed above Fifth Avenue.

The smaller building, now known as the Midtown Plaza Shops, is between Lysle Boulevard and Fifth and has gained some new businesses recently, after being bought last year by Pittsburgh developer Barry L. Stein. The building now has a new Dollar Bank branch with a drive-through lane, a Jackson Hewitt Tax Service, a Pizza Hut and a Subway shop. All of these new businesses face Lysle Boulevard.

The larger building, on the south side of Fifth, spans a city block between Fifth and Sixth avenues. Stein has an option to buy its 60,000 square feet of first floor retail space and is working on the parking lot partnership, which could result in his ownership of the second- and third-floor parking lot.

He explained the deal to McKeesport council members at a recent agenda meeting.

The Midtown complex was built to help revitalize the city's retail district, but it has become representative of downtown's overall decline. Twenty years after it was built, most of the mall's tenants have left because of water problems coming from the parking garage above the indoor mall. Now just a handful of businesses are there. The strange combination in the larger building of ground-level retail, two levels of parking -- on top of which sits an 11-story apartment building -- and the combination of government and private ownership of the complex (the apartment building is owned by a Virginia company, while the other two parts of the building are city-owned) may have slowed progress toward revitalization of the building in the past. Most of the once high-end apartment units there are now subsidized housing.

A Stein-McKeesport partnership to fix and manage the parking lot could leverage more funding for revitalizing the empty retail space. Stein said last week that he was working on closing a loan from a bank, which will be accompanied by a state grant for the project.

Stein said he expected to close on the loan within two weeks.

These days, the ground floor retail mall is mostly empty. But when Stein signed an agreement to buy the Lysle Boulevard building last year, he received an option to buy first-floor retail space the south building, between Fifth and Sixth avenues. He expects to spend about $1.5 million on renovations to the indoor mall.

"The garage needs some repair, and we believe we can get state funding," McKeesport Administrator Dennis Pittman said. "One of the state's concerns was the ongoing maintenance, and their funding is dependent upon us having shared ownership."

Councilman Darryl Segina said he liked the plan. "I think we'll get more people using the garage if it's fixed up. Especially if there's retail there," he said.

Stein said he would use the refurbished parking lot as a draw for customers patronizing businesses in the mall.

"When we took off the deck above Fifth Avenue, the loafers disappeared," Stein said. "Taking down that deck created an optimistic attitude among the people in the area."

Mayor James Brewster and Stein recently met with a member of the Governor's Action Team to talk about funding for the garage renovation, which is estimated to cost $500,000, Pittman said.

The city asked McKeesport solicitor Jason Elash to set up the paperwork for an operating agreement with Stein that would have him operate and maintain it on a lease, with an option to buy it.

The garage has 287 spaces and will have 300 spaces when renovations are completed.