Peduto: Pittsburgh has "agreement in principle" with Penguins over Civic Arena property

After four years of negotiations, all it took for the city to reach “an agreement in principle” with the Penguins over development of former Civic Arena land was some Italian food in a Strip District restaurant.

Mayor Bill Peduto said he met for about an hour Tuesday with Penguins President and CEO David Morehouse over sandwiches at DiAnoia's Eatery. He called the meeting “very positive” and said the two sides should finalize a new development agreement within 24 hours.

“We have an agreement in principle over the main issues,” Peduto said Tuesday afternoon. (It's) a plan that will allow development to occur, but will also protect public investment.”

The Penguins declined comment.

Peduto said the biggest stumbling block was a $15 million credit that the Penguins could draw on to purchase parcels that make up the 28-acre Hill District property. The current agreement requires the city to pay the Penguins any money left over after the entire site is developed.

“As they looked at this site they viewed it as being worth about $7 million,” Peduto said. “We obviously viewed it as being worth a lot more than that. The difference would have had to be made up by taxpayers.”

Kevin Acklin, Peduto's chief of staff, who also chairs the Urban Redevelopment Authority, and Penguins Chief Operating Officer Travis Williams opened talks 30 minutes after the meeting ended.

In addition to a reduction of the $15 million, Peduto said, negotiations will center on a timetable for developing the property, construction benchmarks, penalties for missing deadlines and construction of a parking garage. The city is also looking for final resolution on the Penguins' promise to build a public art display known as the Curtain Call along Centre Avenue and money from the team to help pay for a cap over the Crosstown Expressway.

Peduto said he doesn't want the Penguins to replicate the design of bars and eateries between North Shore stadiums.

“We want to see green space and the connection to the Hill,” he said. “We want to see a combination between entertainment, office space, housing, retail, all put together and connecting Downtown and the Hill once again. We want to see it done in a certain density that is what you'd expect to see in a city and not a suburban mall.”

Peduto and other city officials had expressed frustrations in recent weeks over the Penguins failure to start work. Peduto last week was highly critical and accused the Penguins of reneging on a promise to develop the property. The two sides were at loggerheads over a new agreement.

The Penguins have until Nov. 9 to complete the agreement or risk losing 2.1 acres. Pittsburgh's Urban Redevelopment Authority and the city-county Sports & Exhibition Authority, which share joint ownership, have approved repeated extensions of a deadline requiring the Penguins to purchase 2.1 acres annually over 10 years.

“I think that what happened is last week we hit the wall,” Peduto said. “I think at that point it became serious about not only the city taking the land back, but the Penguins' commitment to working with us in a sincere way that would benefit the public and not just their own bottom line.”

The SEA and URA have ability to take back the property if the Penguins fail to meet development deadlines. Peduto said the city would likely drop that under the new agreement.

“I think that within the next 24 hours the option for taking back the land will be traded for the option of seeing the land developed,” Peduto said. “There is no doubt that there is going to be give and take in this final negotiation, but there was a willingness to negotiate on the give from the Penguins that we hadn't see to this degree before.”

Bob Bauder is a Tribune-Review staff writer. Reach him at 412-765-2312 bauder@tribweb.com or @bobbauder