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Funds committed for new arena in move to help keep Penguins here
City, county announce deal with casino bidders, state
Friday, July 14, 2006

City and county officials yesterday announced they have firmed up financing for a new arena, a move they said should help keep the Penguins in Pittsburgh.

Allegheny County Chief Executive Dan Onorato said officials yesterday obtained written pledges from two bidders for a casino license to help fund the arena construction. Officials said they also have gotten a state commitment to advance funding for site preparation.

The latest developments, Mr. Onorato said at a news conference yesterday, put the region in position to keep the Penguins, regardless of who ends up buying the team, which could be sold within days.

"We believe we can be as competitive as any city in the United States when it comes to a new building," he said.

He made the statements after two of the bidders for the Pittsburgh casino -- Forest City Enterprises and PITG Gaming LLC -- committed in writing to providing $7.5 million a year for 30 years toward the arena construction, contingent on winning the license.

Representatives for both groups signed confirmation letters from the city-county Sports & Exhibition Authority outlining the basic terms. The commitment of the $7.5 million is part of Gov. Ed Rendell's alternative plan for building an arena if the third slots bidder, Isle of Capri Casinos Inc., doesn't get the casino license.

Isle of Capri, in partnership with the Penguins, has pledged $290 million toward a new home for the team as part of its formal bid. The Penguins are required to stay in town if Isle of Capri wins the license.

In the past, Forest City, which wants to build a casino at Station Square, had said it liked Plan B, but would not commit to a dollar amount, and first wanted to see a pledge by the Penguins to stay in Pittsburgh.

That changed yesterday.

"We want to secure the Penguins' future in Pittsburgh and we believe that now, assuming the Pittsburgh Penguins ownership group is willing to stay in the city, they have every opportunity to do that," said Abe Naparstek, Forest City development director.

Forest City decided to commit to a specific dollar amount, he said, because "the public officials -- the mayor, the county executive and the governor -- felt it was important to have all the pieces in place for an arena funding plan."

Also committing in writing was Detroit businessman Don Barden, president of PITG Gaming, who previously had pledged verbally to supply the $7.5 million requested by Mr. Rendell. Mr. Barden, who is proposing a casino on the North Shore, also has said he committed in writing to the state Gaming Control Board, which will award the casino license.

The pledges would be the cornerstone to Mr. Rendell's so-called $315 million Plan B to build an arena. The plan also includes $7 million from a slots backed development fund, and $4.1 million a year in team contributions. The Penguins also would have to commit $8.5 million upfront.

The Isle of Capri plan would not require any contribution from the team, and Penguins President Ken Sawyer yesterday once again urged local leaders to get behind it, saying it was "by far the best one for the city and the region."

Also yesterday, Mr. Onorato and Mayor Bob O'Connor released a letter from Mr. Rendell committing $26.5 million in state funds toward arena site acquisition and preparation. The money should be available by September and would be paid back once slots revenues begin rolling in.

The SEA already has started negotiations with 10 property owners in Uptown to secure land for the building and hopes to get deals by the end of the summer. The city and county would like to start construction in 2007. SEA Executive Director Mary Conturo said the $290 million price tag for the building appeared to be realistic.

Mr. Sawyer described the site assembly as "tremendous news," saying it fulfills a pledge the SEA made last year.

Mr. Onorato said the bidder and state pledges remove a lot of the question marks surrounding Plan B, putting the city and county in position to keep the team. He said he updated National Hockey League Commissioner Gary Bettman on the developments yesterday afternoon.

"I informed the commissioner that the mayor and I and the SEA are prepared to get this done and that if he had any doubt that there was any commitment from the local elected officials, he can wipe those doubts away right now. This is the real deal," he said.

He quoted Mr. Bettman as saying his preference is to keep the team in Pittsburgh.

Mr. Onorato said the city and county pushed to get the commitments in anticipation of a possible sale of the Penguins. Four to five groups are bidding for the team.

While two have pledged to keep the team in Pittsburgh, the future is not as certain with the others.

However, Mr. Onorato believes Plan B gives the city and county the ability to compete with other cities trying to woo the team. With gambling money being used to build the arena, the city and county have the flexibility to offer the Penguins virtually all building revenues.

"We believe we can be as competitive through the lease term and the arrangement we create for the Penguins," he said.

First published on July 14, 2006 at 12:00 am
Mark Belko can be reached at mbelko@post-gazette.com or 412-263-1262.