A major development that officials hope will set off a "domino effect" of investment in the Strip District depends on getting state approval to knock down a block of the iconic Pennsylvania Produce Terminal building.

The Buncher Co. wants to demolish the portion of the building near the 16th Street Bridge to extend 17th Street toward the Allegheny River and provide better access to 35 acres Buncher owns between the produce terminal and the river. The company wants to develop that site, which the Urban Redevelopment Authority of Pittsburgh sees as the first step toward reviving six miles of riverfront.

Before it can buy the Smallman Street building from the URA, relocate tenants and start demolition, Buncher must get approval from the state Historical & Museum Commission, which must sign off on alterations to historic properties that involve federal funding. The URA purchased the building, which dates to the 1920s, with federal money in the 1980s and leased it to Buncher in December with the option to sell.

The demolition would require relocating wholesalers and the Pittsburgh Public Market, which was added to the 16th Street end of the building last year at a cost of $1.3 million in city, state, federal and foundation grants.

"If this becomes a reality, I think you'll see a lot of pent-up demand," said Buncher CEO Tom Balastrieri, who said he helped his uncles buy fruit from the produce terminal as a boy. "People who own properties on Smallman, on Penn (Avenue) will start making improvements, do warehouse conversions, bring in new restaurants. ... If we can't take that (block) down, then our vision, our dream is really damaged."

The portion of the building that could be demolished was added in the 1930s. The addition was shortened slightly in the 1980s so trucks could drive around to the back, and it sits on top of sewer lines Buncher hopes to replace.

"Part of the building will be lost, and of course we regret that loss, but we understand it's part of a larger goal of moving the rest of the project forward," said Dan Holland, president of the Young Preservationists Association of Pittsburgh. "We are pleased they've made a commitment to restoring the remaining portion of the building."

The Pittsburgh History & Landmarks Foundation, though, considers the produce terminal "the defining building of the Strip and an extraordinary work of architecture for our city," said President Arthur Ziegler.

"Our hope is to find a way to save the entire building and at the same time give the Buncher Company the access it needs for their development effort that will greatly enhance Strip and the use of the riverfront," he wrote in an e-mail message yesterday.

The Allegheny Riverfront Vision Plan that city officials released last month noted the importance of "demonstration projects" like Buncher's in attracting more private investment to the waterfront, which the study noted was blocked off from surrounding neighborhoods by vacant land and industry.

Balastrieri said purchasing the property would put the produce terminal back on the tax rolls and developing it would put more taxable office and retail space along Smallman Street.

URA Executive Director Rob Stephany said the project could generate at least $6 million in real estate taxes, plus wage taxes of any residents moving in from outside the city. A more complete economic study is under way, he said.

The produce terminal project received a $15 million state grant in the last month of Gov. Ed Rendell's administration.

Buncher plans to submit its application to the Museum Commission within a month and could start utility work within six months if approval appears to be moving along quickly, Balastrieri said.

According to concept plans shared with the Tribune-Review, the developer would build at least 75 apartments along the water; an office and retail building would go in along Smallman Street next to the bridge; and the remaining five blocks of the terminal would be renovated and updated as either modern warehouse space or retail and restaurants, said Michael E. Kutzer, director of business development for Buncher. Railroad Avenue would be extended behind the terminal, and large public plazas would lead toward the river, Kutzer said.

Several wholesale businesses occupy about 75 percent of the building. They could either relocate to the renovated space or move with URA assistance to other space in the Strip District or Lawrenceville.

Brad Kokowski, owner of Superior Produce, said he was initially upset by the prospect, but the alternative could be a larger, more modern space.

"Nobody's really happy about having to leave the Strip. ... We get a lot of people who just walk in off of Penn," he said. "But I've been trying to keep positive about it; I could get a lot more parking, fit more people."

The Public Market would move to the 21st Street end of the building adjacent to the Society for Contemporary Craft. The move could give the market more space for vendors and features like a demonstration kitchen, said Becky Rodgers, executive director of the group Neighbors in the Strip.

The project would strive to maintain the Strip District's character, like finishing the office building with brick, keeping parking along Smallman Street to encourage shoppers, and improving pedestrian connections to the hustle of Penn Avenue and the tranquility of the riverfront trail, Kutzer said.

"With the development of additional residences, you'll be bringing more people to the river, new residents will be using the existing shops on Penn Avenue, and it brings more to the Strip," Rodgers said.

"The Strip is a wholesale area, not just here at the produce terminal. ... It'll be important to maintain that. That's what gives the Strip its special appeal."

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