Kossman Development Co., owner of the largely vacant Parkway Center Mall, is asking Pittsburgh's Urban Redevelopment Authority to take a 60 percent stake in the property in lieu of $6.2 million in loan payments that come due June 1.

Paul Kossman, the company's chief executive, notified the authority last week that the company won't immediately repay the balance on two loans that date to the mall's construction almost 30 years ago. Instead, Kossman has opted to turn over a 60 percent stake in the property to the authority — a step that essentially refinances the loans, URA spokeswoman Megan Stearman said Monday.

Kossman has "looked at different scenarios" for the mall site off the Parkway West, said Vice President Steve Weisbrod, adding the mall eventually may make way for a development that mixes retail with offices, residences or other uses and adds parking.

"We are not trying to sell the property. We want to redevelop it as best we can," Weisbrod said.

Kossman's move occurs after Greentree Parkway Associates, a partnership that owns seven office buildings and a parking garage in the Parkway Center complex, recently put its holdings up for sale for $49 million, citing financial problems.

The URA's Stearman said terms of the authority's new agreement with Kossman still must be worked out. "We will not have any management or ownership role in the mall. We will be a secured creditor."

Essentially, that means the authority would get 60 percent of the proceeds if the mall is sold, she said. Kossman got approval from the authority in 2005 to defer payments on the loans until this year, as it tried to make improvements and attract new tenants.

Parkway Center Mall — with about a dozen retailers, based on a count last month — has a market value of $3.25 million, according to Allegheny County's real estate Web site. As a result, 60 percent of that would be $1.95 million.

Kossman originally took out two loans to help build the mall — $2 million that went toward developing the site in the Greentree section of the city, and another $6.9 million for ramps along the highway that route vehicles between Downtown and the complex, according to authority records.

Since the payments were deferred, the company has continued to pay around $150,000 a year on the interest and principal, Stearman said.

Weisbrod said Kossman intends to fully repay the loans.

He said Kmart opted about a year ago to keep its store at the mall for another five years, and Giant Eagle — the center's other major tenant — is on an extended lease.

Kmart representatives were unavailable yesterday, and Giant Eagle spokesman Dick Roberts said the O'Hara-based grocery chain doesn't discuss lease terms.

David Glickman, vice president of Grubb & Ellis Retail Group, said Parkway Center Mall is in a good location, but more modern retail complexes surrounding it gradually drew customers away.

"It will end up evolving into more of a mixed-use," he said. "Kossman is a very sophisticated company — I'm sure they'll figure out the highest and best use."

Meanwhile, Greentree Parkway Associates, facing more than $500,000 in mechanics' liens and court judgments, is selling Buildings 1, 2, 4, 6, 7, 9 and 10 at Parkway Center, along with a 365-car garage.

Gregg Brougos, a principal with NAI Pittsburgh Commercial, which is marketing the complex, said yesterday that local and national investors had a "very, very strong" response.

The seven buildings, with a total 622,771 square feet of office space, have a 84 percent occupancy rate, he said. The Greentree partnership includes Frank Gustine Jr., Edwin Pope, Louis Molnar and the William Baierl estate.

"Buyers have the option to either purchase the property or buy into the partnership that owns the buildings," Gustine said.

If they purchase the partnership, Gustine would like to retain at least 25 percent ownership, but may have to lower that to 11 percent, he said.

When contacted about the liens in February, Gustine said, "This is something we can work out ... but it is difficult."

He said the partnership has been having difficulty convincing a lender to grant a second mortgage to cover costs.

Central Maintenance & Service Co. was awarded $181,811.78 for unpaid janitorial and maintenance services in a consent judgment issued in January in Allegheny County Common Pleas Court.

At least three other liens have been filed.

The owner purchased the seven buildings in 2006, in two deals worth $40.6 million, from Rubenstein Co. of Philadelphia, according to deeds filed in Allegheny County.

The purchase included a 28-acre golf driving range that was later sold to another developer for a housing development.

Four other buildings are owned individually by separate owners.

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