A lawsuit brought by the developer of Homewood's newest retail complex against its intended anchor tenant has been settled, but the result may not please the neighbors.

While terms of the settlement between Hampton developer RSSI-Homewood LCC and discount retailer Family Dollar were not disclosed, the primary question for Homewood's residents has been answered.

"At this time, Family Dollar has no plans for a store in Homewood," Family Dollar spokesman Josh Braverman wrote in an e-mail to the Post-Gazette yesterday.

The developer sued Family Dollar last spring, after the Matthews, N.C.-based retailer failed to take occupancy in 2007 of an 8,000-square-foot space in Homewood Plaza, a single-story building at 7258 Frankstown Ave. The building also contains four spaces for smaller shops, each covering 1,150 square feet.

Family Dollar first signed a lease for the primary space in April 2003, long before RSSI broke ground for the complex three years ago. That lease helped the developer secure financing for the project, including $480,000 from the Urban Redevelopment Authority.

But in August 2007, workers removed Family Dollar's signs from the building, and the retailer notified RSSI that it was terminating the lease. The store never opened.

In response, the developer sued the retailer for breach of contract, fraudulent misrepresentation and negligent misrepresentation, and sought $2.5 million in damages.

RSSI attorney Rolf Patberg said Family Dollar's decision not to move in upon the building's completion meant the developer lost two other potential tenants who had leases for the smaller spaces. The building continues to sit vacant.

"There would have been a brand new retail area for Homewood," Mr. Patberg said. "Obviously those tenants would only want to move in if they could get the foot traffic [from the Family Dollar store]."

According to the lawsuit, the retailer began a campaign to abandon the site as a potential store location almost as soon as construction began. A series of internal Family Dollar e-mails included with RSSI's complaint sketch out a narrative of second thoughts and divided opinions.

An e-mail dated Jan. 15, 2007, noted that RSSI was expected to begin construction "very soon." On Feb. 19, Tom Gasperini, identified in the suit as "a management level employee" at Family Dollar, expressed concerns about the new location:

"I am afraid that we will not be able to staff this location; and I am afraid that employees could come to serious harm in this area," the e-mail said. It concluded unambiguously, "We don't want the site."

That launched a series of e-mails over a three-day period, during which at least one of Mr. Gasperini's recipients disagreed with him, pointing out that the deal had been put together using conservative financial projections.

Another Family Dollar executive, Jim Cain, noted that discount chain Wal-Mart had just announced plans to open a supercenter in the former East Hills Shopping Center on Robinson Boulevard by early 2009, and suggested that Family Dollar kill its Homewood Plaza deal "with 'extreme measure.'"

While the internal conversation continued at Family Dollar, the construction of Homewood Plaza progressed. On June 1, 2007, RSSI faxed Family Dollar a notice of possession, saying that it expected to deliver the plaza, "substantially complete," by June 29.

Changes requested by Family Dollar, including additional lighting and a roll-down gate at the store's entrance, delayed completion, but plans were made for Mayor Luke Ravenstahl to attend a ribbon-cutting on Aug. 8.

On Aug. 3, Family Dollar removed its signs from the building. On Aug. 15, it sent the developer a letter by express mail saying it was terminating its lease.

Unlike many of the vacant houses scattered throughout Homewood, Homewood Plaza has not been devalued by vandalism.

"I actually commend the people of Homewood," Mr. Patberg said. "It's been sitting 2 1/2 years ... there's no graffiti, no broken windows."

RSSI has sought other tenants for the building, including Downtown-based Brightside Academy, an early care and education provider.

Brightside spokeswoman Sarah Horn said the building fits several of Brightside's criteria for new locations, including proximity to elementary schools and public transportation and "densities of under-resourced families."

However, the 8,000-square-foot anchor space is smaller than Brightside's norm.

"We typically do deals that are about 10,000 square feet," Ms. Horn said.

The Urban Redevelopment Authority extended $400,000 in mortgage financing toward the building's $1 million price tag, subject to a first mortgage by Dollar Bank, and $80,000 in grants, said Robert Rubinstein, director of economic development. The agency also holds a mortgage for RSSI's purchase of the land, which it previously owned.

But $140,000 of the financing has not been disbursed, Mr. Rubinstein said, because the URA stopped writing checks on the project after Family Dollar pulled out. "We've basically been in a holding pattern," he said.

"It could have done really well," said URA Executive Director Rob Stephany. "We still think there's a real strong demand for this kind of service."

Besides the financing, RSSI still owes money to some contractors who worked on the building. One of them, East Liberty-based Astco Construction Inc., has filed a mechanics lien for $106,430. Astco's attorney, David A. Scotti, said last week that the parties might be close to a resolution.

Councilman Ricky Burgess, whose 9th District includes Homewood, said finding a tenant for the building was "one of the priorities of my council activity."

"I think it's important that that building be occupied," he said, "and occupied by tenants who are conducive to what we're trying to do in that community."

"Money Q&A" and "Company Town" are featured exclusively at PG+, a members-only web site of the Pittsburgh Post-Gazette. Our introduction to PG+ gives you all the details.