A Downtown building that houses low-income and near-homeless people could be headed for foreclosure because Allegheny County moved its Mental Health/Mental Retardation offices out of the building, says Tom Mistick, part owner of the Wood Street Commons.

The 17-story building at 304 Wood St., the former YMCA at Third and Wood streets, could be in financial trouble. Wood Street Shelter Inc., the nonprofit group that operates and partly owns the building, may not be able to make a $200,000 mortgage payment due to PNC Bank on Dec. 1. County officials say they are working with Pittsburgh on a plan to turn it over to a new nonprofit organization.

Mr. Mistick, an owner of construction company Mistick PDP, oversees the nonprofit that operates Wood Street Commons, which was converted into a shelter in 1986.

He said the financing problems for the building, which houses about 260 residents at any given time, started when the county moved out its MH/MR offices in September. The offices occupied the first six floors of the building.

That decision, Mr. Mistick said, crippled the nonprofit's ability to make mortgage payments because the county's $90,000 rent payments made up about 90 percent of the building's monthly interest and principal payments on the mortgage, which will be paid off in 2018.

"The only reason we're having this problem is because the county made this decision [to move its MH/MR offices out of Wood Street Commons]," said Mr. Mistick, who controls an 11 percent stake in the building, which has 270 rooms. Fannie Mae controls the other 89 percent.

When it was initially proposed as a shelter, the first six floors of the approximately 100,000-square-foot building were designated as commercial leasing space, where the county agreed to house its MH/MR offices as a means of subsidizing the shelter.

"The idea was to utilize the income from the commercial leasing to maintain and pay the mortgage on the building," Mr. Mistick said. By taking up office space for its MH/MR department, the county, he added, in essence agreed to subsidize the shelter because much of its MH/MR funding comes from the state.

That changed in 2006, however, when the county decided not to renew its 10-year office-space lease and remained on a temporary basis until September. The county moved from Wood Street Commons as part of a plan to consolidate human service offices in the One Smithfield Street building, which is owned by the county's Industrial Development Authority.

"That put us in this predicament because the understanding was that the county would remain a tenant in the building at least until we paid off the mortgage," Mr. Mistick said. "They have now created a huge problem. People who live in the building are nervous about this. They don't know where they are going to be by Christmas because we might not make that big payment."

But Dennis Davin, director of the county's Department of Economic Development, said the county has no intention of letting the building fall into foreclosure.

County officials are working with the city, he said, to put together funding to cover operating costs as well as needed capital improvements until a tenant is found to occupy the commercial space.

"We are taking steps to put the financing in place in conjunction with the Urban Redevelopment Authority," he said. "We look at this as a city-county partnership to make sure the building is secure until a tenant is found."

Mr. Davin stressed that none of the residents in the building will be displaced or forced into the street because of the situation. He said both county Executive Dan Onorato and Mayor Luke Ravenstahl intend to address residents to assure them that their housing is safe.

"We don't want any problems for the residents right now. For us that's the biggest issue," he said.

Mr. Davin said the county and the city hope to have an arrangement in place by mid-November in which Action-Housing Inc., a Downtown nonprofit that deals with housing issues, would take over as the building's managing partner as part of the formation of a new nonprofit to oversee the structure.

That plan, however, would require Mr. Mistick, who has operated the building since 1986, to relinquish his part ownership of the building.

Larry Swanson of Action-Housing and Mr. Davin say Mr. Mistick has agreed to the change in ownership, but Mr. Mistick tells a different story.

"[Mr. Mistick] has given every indication he would [transfer ownership]," Mr. Davin said, adding that one reason the building is facing potential financial troubles is that Mr. Mistick never marketed the commercial space after the county moved out. That, he said, could have helped to mitigate the situation.

But Mr. Mistick said he has not agreed to transfer ownership and will not do so until the county can come up with a financing plan that would pay off the building mortgage.

"The county has no money to pay off the mortgage. We are not at a point where [Mr. Davin] has a resolution to this problem," Mr. Mistick said, adding that so far, he has no reason to believe the county will secure a funding package before December.

Mr. Swanson of Action-Housing said he believes a refinancing package can be worked out before the critical deadlines in December and beyond.

"[Mr. Mistick] is legitimately worried, I think, because it's taken a long time to figure out a solution for this," he said, adding that the Redevelopment Authority recently committed about $1.2 million as part of a $4.5 million financing package, which will be needed to pay off the building's mortgage.

"The county asked us to put together a new ownership and financing deal, and we have been working with the city as well. They tell me this is going to get done," he said, "even though we have a short window to act."