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Funding gap for proposed Hill District grocery store widens

| Saturday, Oct. 6, 2012, 12:19 a.m.
The site of the new grocery store to be built in the Hill District is shown in this photo from April. File photo

The gap in funding needed to begin work on a long-awaited Hill District grocery store nearly doubled this summer to $3.9 million.

A report from the Hill House Association, which intends to build the Shop 'n Save on 2.4 acres at Centre Avenue and Held-man Street, put a new $11.6 million price tag on the project and said organizers were looking for at least $1.6 million more in public money.

Hill House Executive Director Cheryl Hall-Russell in June estimated the total cost at $10 million. On Friday, she said the July 31 report that contains the new price and funding gap is out of date, but she declined to comment further and would not explain the delays and increased costs.

Hall-Russell said she would have a more accurate idea on total funding by the end of next week after her final meetings with funding partners.

The funding gap increased from a projected $2.2 million in March to $3.9 million because previous estimates were not complete and drew conclusions “without the benefit of all design team and construction team input,” the report states.

Hill House announced in June that it hired Massaro Corp. of O'Hara to guide the project as construction managers and get it back on track. One of its first jobs was to revise cost estimates and prepare the project for bid.

According to the July report, the funding gap widened because of a $1.1 million increase in costs and materials after Massaro completed its estimates. Consulting fees, which increased by $170,000 because of a change in the exterior finish of the store, and a $425,000 increase in the project contingency fund added to the deficit.

Officials initially estimated the store, delayed for a decade, would cost $8.5 million. Private developers told the Tribune-Review in June that the cost should be no more than $8 million.

Jeff Ross would operate the store, his fifth Shop 'n Save in the Pittsburgh area. Ross could not be reached for comment.

Yarone Zober, who chairs the Pittsburgh Urban Redevelopment Authority, said the store is the closest it has been to reality. The URA pledged $1 million for the project and is selling Hill House property for the store under a mortgage agreement.

“It's long been a dream of the Hill District to have a grocery store,” Zober said. “It's going to be important for the continued rebirth of the Hill District.”

The last full-service grocery in the Hill closed in the 1980s.

The development includes a 30,401-square-foot grocery and all necessary equipment with 6,793 square feet of retail. At least $2.5 million has been promised in government funding and donation of public land.

If Hill House secures $1.6 million in public funding, the balance will come from charitable foundations, loans and property equity, the July report states. The Penguins are kicking in $1 million as is Ross, who would rent the store from Hill House.

Jake Haulk, president of the Castle Shannon-based Allegheny Institute for Public Policy, said he is concerned that the project includes only $1 million in private investment from Ross. He noted that discount grocers Aldi and Save-A-Lot offered to build on the land but withdrew under public pressure for a full-service store.

“I would feel a lot better about the future of this project if there was a private firm willing to put up at least half the costs,” Haulk said. “I just hate to see government continue to pour more and more money into this store when they could have had a decent grocery store years ago up and running.”

Bob Bauder is a staff writer for Trib Total Media. He can be reached at 412-765-2312 or bbauder@tribweb.com.

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