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Complex a go despite lawsuit over tax breaks

| Sunday, July 27, 2003, 12:00 p.m.

Construction is set to begin within weeks on a retail-and-office complex in Ohio Township, despite a pending lawsuit filed by residents riled over tax breaks given to the developer.

The $40 million Mt. Nebo Pointe project will be under way by September at the latest and will forge ahead no matter what the outcome of the suit, vowed Ralph Conti, vice president of Cleveland-based Developers Diversified Realty Inc.

"We are planning to execute leases and start work," he said.

But residents claim in a lawsuit filed in Allegheny County Common Pleas Court in February that nearly $7 million in tax-increment financing for the project was based on the Mt. Nebo site being wrongly designated as blighted.

Ohio Township and the Avonworth School Board approved the break for Mt. Nebo Pointe last fall, and Allegheny County Council followed in January. Residents filed their lawsuit against County Council and county Chief Executive Jim Roddey.

Tax-increment financing allows money that would have been paid in property taxes to be used for infrastructure improvements for a development. The break is supposed to target blighted land -- such as dormant industrial sites and rundown city lots.

The 79-acre site at the intersection of Mt. Nebo and Camp Horne roads doesn't match that designation, residents say, and they point to the land's $4 million sale amount as proof.

"That does not sound like a price you would pay for a blighted site," said Jim Georgalas, of Ben Avon. "What we have done here is give corporate welfare to a company from Cleveland."

Developers Diversified refused to reveal how much it paid West Penn Allegheny Health System for the land before tax-increment financing was approved, said Gary Short, one of four Avonworth School Board members who opposed the tax break.

He tried to require the company to disclose the price as a condition of approval of tax-increment financing, but the motion failed.

The use of tax-increment financing in undeveloped suburban areas is increasingly common, said Eric Montari, a policy analyst with the Allegheny Institute, a conservative think tank that opposes many of the uses for the breaks.

"I think what the developer paid for this land indicates that it is something more than worthless," Montari said. "Essentially, taxpayers are helping to pay for this land."

Like other critics of the project, Montari questions whether more retail development is needed in the North Hills.

"Analysis of this suggests it will hurt retail along McKnight Road and in Bellevue and Avalon," he said.

The tax-increment financing approved for the project is $6.7 million over 20 years. The Mt. Nebo site is supposed to generate $69,000 a year in property taxes. Once the project is complete and the space fully occupied, the complex should generate $628,000 in annual taxes.

Developers Diversified says the complex will produce 800 jobs when finished and 200 to 250 during construction. Developers Diversified manages 345 retail properties in 43 states.

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