Penguins get first approval to delay work on Civic Arena site

Darrell Sapp/Post-Gazette
Rooftops in the Hill District stand above the remains of the Civic Arena, during demolition in 2012

The Pittsburgh Urban Redevelopment Authority took the first steps Thursday toward creating the largest tax diversion district in the city's history as part of the proposed redevelopment of the former Civic Arena site.

At the same time, the URA board and the city-Allegheny County Sports & Exhibition Authority, in separate actions, gave the Pittsburgh Penguins hockey team another year to get started on the development.

URA board members unanimously gave authorization Thursday to develop a preliminary tax increment financing plan that is to serve as the centerpiece of efforts to use the arena redevelopment as a stimulus for the entire Hill District and adjacent Uptown.

The TIF plan will cover all of the Hill District and Uptown -- 1,178 acres in all, making it the largest such district in the city's history.

Under the plan, 65 percent of the new property tax revenue generated by the residential, office and commercial development being proposed by the Penguins for the arena site in the lower Hill will be diverted to pay for improvements in other parts of the Hill and Uptown.

It will produce an estimated $22 million to $50 million in revenue over its 20-year life.

Robert Rubinstein, URA acting executive director, said the TIF is unique not only in the size of the district but in the types of things the money can be used for, including grants for housing down payments and closing costs and property stabilization.

The tax increment financing plan was part of a broad agreement reached earlier this week between local political and Hill leaders on issues like community reinvestment, affordable housing, and minority participation that cleared the way for the redevelopment to move forward.

"In some sense, this makes up for the mistakes of the last century," said Kevin Acklin, URA board chairman and chief of staff to Mayor Bill Peduto, referring to the devastation of the lower Hill by the construction of the Civic Arena in the early 1960s.

Also Thursday, the URA and SEA boards, approved a revised option agreement with the Penguins that sets the deadline for the start of development at Oct. 22, 2015.

The Penguins originally were supposed to start developing the site next month under the 2007 deal to build Consol Energy Center.

Under the revised agreement, the Penguins will be required to develop at least 10 percent of the 28-acre site by every Oct. 22. They are required to pay market value for the land, not the appraised value, as was part of the original agreement.

The team does have the right to delay the development of each parcel for up to two years if it pays what is being called a "pause fee" equal to $12,500 a month. That would amount to $300,000 over two years.

Mary Conturo, SEA executive director, said the Penguins would be able to use $15 million in credits negotiated as part of the Consol Energy deal to pay the fee. The credits were part of the original option agreement and remain in effect.

The Penguins are proposing to build 1,100 units of housing, 500,000 to 600,000 square feet of office space and 250,000 square feet of commercial space on the former arena site. It also has agreed to devote three acres to green space.

Travis Williams, the Penguins' chief operating officer, said the team intends to move quickly to submit a preliminary land development plan to the city now that the revised option agreement and the broader community deal have been negotiated.

The team likely will start the development near Crawford Square with housing. It has hired McCormack Baron Salazar, the same developer that did Crawford Square, as its residential developer.

SEA board member Sala Udin, a former city councilman whose family was displaced when houses were demolished in the lower Hill to make way for the Civic Arena, said the development has the potential to "restore the Hill District to its former historic glory."