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Court fight over Produce Terminal building begins

| Thursday, Jan. 31, 2013, 6:00 p.m.

Rail lines that carried 100-ton freight-car loads of potatoes from Idaho to the doorstep of the Strip District's trademark Produce Terminal disappeared decades ago.

With them vanished Allegheny Valley Railroad's right to control valuable land next to the terminal along the Allegheny River, lawyers for the city's Urban Redevelopment Authority told an Allegheny County judge Thursday during the opening of an expected two-day trial. The land in question runs between 16th and 21st streets.

The Oakmont-based railroad sued the URA in September to stop it from selling the Produce Terminal to The Buncher Co., the largest private development firm in the Strip District. Buncher wants to demolish about one-third of the 80-year-old building and renovate the rest to market it to retailers as part of a larger development.

The railroad's case hinges on the interpretation of a single paragraph in a 1981 agreement the URA struck to buy the building from Conrail. It says the URA must use its “best efforts” to provide retail space to the wholesale produce industry and “rail-oriented use” in the Produce Terminal.

“Conrail pulled its cars right up to the door and unloaded into the building,” said James McLean, an attorney representing the URA. “But it formally abandoned its Smallman rail line.”

That decision pre-dates Allegheny Valley Railroad's acquisition of some Conrail lines in 1995.

Jonathan Kamin, an attorney representing the railroad, told Common Pleas Judge Robert Colville that city development officials negotiated the agreement that contains the clause and even sought to enforce it when Conrail moved to shut down service.

“The city has consistently taken a position to protect the covenant,” Kamin said, adding that the URA has worked to relocate produce wholesalers who were Allegheny customers.

“‘Best efforts' is a very nebulous standard in the law,” said John Murray, chancellor of Duquesne University Law School and an acclaimed contract law expert who is not involved in the case. “It does not mean that you have to achieve a certain goal. It just means that you have to use your most reasonable, diligent pursuit of that goal.”

Murray said if the URA can show it is no longer feasible to provide access to railroads and wholesalers because tracks were removed and produce sellers relocated, the authority could win.

The outcome of the court battle could shape Buncher's plans to create a mixed development on a 55-acre stretch. The property runs from the Veteran's Bridge to 21st Street. Buncher officials have said owning the Produce Terminal is essential to making its plan work.

Jeremy Boren is a staff writer for Trib Total Media. He can be reached at 412-320-7935 or jboren@tribweb.com.

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