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Mt. Lebanon eyesore persists

| Wednesday, Jan. 22, 2014, 9:48 p.m.

Another proposal for a large, vacant property at the entrance to Mt. Lebanon's main business district has fallen through with no clear replacement, and the state has been left paying $1.78 million for the developers' debt, officials said.

Mt. Lebanon Manager Steve Feller said Downtown-based Zamagias Properties went into default at the beginning of 2013 on tax-backed loans it used to purchase property at Washington and Bower Hill roads.

Because those loans were guaranteed by the Commonwealth Financing Authority, the state purchased the $1.78 million in principal and interest that the developers owed.

Zamagias gets to keep the land.

“Zamagias has no financial obligation to the state. They own the land free and clear,” said Department of Community and Economic Development spokeswoman Lyndsay Kensinger.

The most recent proposal, to build townhouses on the site, fell through last month when Mt. Lebanon's zoning board denied the developers' request for exemptions from parts of the zoning code. The deadline to file an appeal has passed.

“We haven't heard anything about an appeal, which is concerning,” said Commissioner Kelly Fraasch, who represents the ward where the property is located. “People are concerned; the property is unsightly.”

David Martens, CEO of Zamagias, declined to comment on the loan beyond calling it “a complicated situation.”

He declined to comment on any plans for the site, saying they still were being discussed.

The $3.69 million loan was backed by a tax-increment financing deal, of TIF, in 2007, under which increases in tax revenue from developing the site were to be used to pay back the debt.

But after several proposals never were built — including luxury condos, a retirement community and now townhouses — there was no new tax revenue to keep up with the payments.

Although Zamagias still owns the property, Mt. Lebanon has an option to buy back a portion of it that once was owned by the now-defunct municipal parking authority.

The state now will get any tax revenue generated by new development at the site and use that to pay down the debt, until the original TIF designation for the property expires in 2027, Kensinger said.

Neither Mt. Lebanon nor the school district lost money in the project, aside from any tax revenues that both agreed to give up as part of the financing. They continue to collect taxes on the undeveloped land.

Matthew Santoni is a staff writer for Trib Total Media. He can be reached at 412-380-5625 or msantoni@tribweb.com.

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