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Penguins hope new lot will pave way for development

| Thursday, June 14, 2012, 11:54 a.m.

An 800-space parking lot where the Civic Arena once sat will be the first visible sign of progress toward remaking the lower Hill District into a mix of offices, stores and homes.

Officials say they expect to finish work on the parking lot in July, allowing it to open in August, well in advance of the Pittsburgh Penguins' first home preseason game on Sept. 26 across the street in the Consol Energy Center. Its completion triggers the start of a two-year period for the Penguins to develop the first of up to 10 development sites of 2.8 acres -- a plan designed to encourage development in a prime spot overlooking the Golden Triangle.

"These are the next logical steps," Tom McMillan, a Penguins spokesman, said on Thursday. "Other than the arena coming down, this will be the first physical step of the next phase, then comes the infrastructure and then the vertical construction."

The city-county Sports & Exhibition Authority authorized paying $543,000 to Penn Hills-based Noralco Corp. to pave the lot once the contractor finishes demolition work that began in September on the arena, known for its signature domed stainless steel roof.

Revenue from the new lot will go to the Penguins, as it does from nearby lots that offer about 2,200 spaces.

McMillan would not estimate the expected revenue. He said parking prices would likely mirror those in place for daily, commuter parking: $7 in the nearby North and South lots and $6 in the East lot; and for Penguins game-day parking, $20.

The number of parking spaces in the lot will decline as the site is developed, McMillan said.

The team proposes a mix of retail, housing and office space for the site. It is working with commercial real estate firm Jones Lang LaSalle to plan the first phase of development.

The Penguins make a lease payment of $5.56 million a year as the primary tenant of the $321 million Consol Energy Center. Under the terms of a 2007 agreement that paid for the arena's construction, the lease payment will increase by $200,000 once the lot opens, Conturo said.

The SEA will split parking tax revenue from the lot with the city's Urban Redevelopment Authority, under an agreement City Council established that expires in 2016 and is limited to $2 million a year. Tax revenue beyond that amount would go to the city's general fund.

SEA Executive Director Mary Conturo said the authority would use its share to pay for costs associated with installing utility lines, roads and other public infrastructure. The URA's share would be used to spur development in the lower Hill.

Conturo said the SEA is using a $500,000 state development and tourism grant to pay engineering firm Michael Baker Corp. of Moon to design the site's utility and street layout. The authority is awaiting a second $500,000 grant to pay for the site design, which she said is challenging because there's a 120- to 150-foot change in elevation from the top of the site to the bottom.

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