Pittsburgh Penguins face deadline in Civic Arena redevelopment project

The Pittsburgh Penguins must buy at least one section of the former Civic Arena site by month's end or risk losing development rights to 2.1 acres there, officials said.

Penguins Chief Financial Officer Travis Williams said the team plans to request an extension based on environmental issues that have delayed architectural design work.

Environmental testing on the 28-acre site in the Lower Hill District revealed some contamination on the property exceeds residential standards, Williams said. The Penguins' agreement with the city permits a deadline extension on that basis.

“We think based on what we've learned it will not be a major undertaking, but it will require some remediation,” Williams said, adding that the team can't move forward with architectural design work until the state Department of Environmental Protection approves the remediation plans.

Kevin Acklin, Pittsburgh's chief development officer and Mayor Bill Peduto's chief of staff, said the team's last deadline for starting development on the former arena site expires Oct. 31. The Penguins have exclusive development rights to the property.

“If we're not able to come to an agreement by the end of the month it would be the public's right to reclaim a parcel,” Acklin said. “That being said, we have rights to do that, but I think what we're trying to do is get this development moving. Whether or not we would actually avail ourselves of the right to reclaim that property ... I think we much favor moving forward with a deal.”

Others, including the Hill Community Development Corp. and City Councilman R. Daniel Lavelle of the Hill District, said they favor reclaiming the property.

“My perspective is that the site should revert back to the city, or to public agencies, with a specific goal of showing that those parcels are developed in alignment with the goals we outlined in our agreement,” said Mirimba Milliones, president and CEO of the Hill CDC.

Lavelle agreed.

“There was an agreement that was negotiated by all of the parties,” he said. “If they don't meet the deadline then there's an automatic forfeiture.”

The agreement with the Pittsburgh-Allegheny County Sports and Exhibition Authority and the city's Urban Redevelopment Authority calls for the team to buy at least 2.1 acres per year over a decade. The Penguins have obtained four six-month extensions to push back the deadline to buy the first parcel, at a cost of $75,000 per extension.

The team is in the final weeks of the last extension. The Penguins could choose which parcel to forfeit, Acklin said.

The Penguins and St. Louis-based developer McCormack Baron Salazar earlier this year submitted a letter of intent to begin the first phase of a 1,000-unit residential project.

Williams said plans for housing are moving forward, including an application for low-income housing tax credits, and the team hopes to present the plans to the URA and SEA in a few months. The team also is working with a retail and entertainment developer, whom Williams would not name, and has several potential tenants for the site.

Williams said the Penguins also brought developers in to help the Hill CDC with its New Grenada Theater project on Centre Avenue.

“We're making good progress,” Williams said. “It's just that until we get shovel in the ground there's not visible progress, and it's hard to demonstrate that to the community. This project is already bringing tangible benefits to the community.”

Acklin said the city and Penguins have engaged in “very positive negotiations” about the deadline and offering the site as a possible location for Amazon's second headquarters.

“We obviously don't just want to kick the can down the road and agree to delays, and that's not what's being requested here,” he said, adding that another extension is possible. “We're engaged in good faith negotiations around the evaluation of the land. Whether or not we want to agree to an extension if it's part of an overall kind of negotiation that's good for the overall development then that's a decision we haven't made yet, but that is a discussion we're having.”

State Sen. Wayne Fontana, D-Brookline, who chairs the SEA, said the Penguins would likely have to submit a detailed plan with a definitive start date for the board to consider another extension. He noted that the city has listed the property as a possible location for Amazon, and said that would be a good reason for a delay.

“If that doesn't happen, they're out of extensions,” Fontana said. “I think they need to follow the contract. If that means reverting back, then it needs to revert back.”

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