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Mayor willing to use grant funds outside city

| Saturday, Feb. 23, 2002

Penn Hills officials say the proposed use of $350,000 in federal grants to spruce up a Pittsburgh housing complex to lure a Wal-Mart will not jeopardize current housing projects in Penn Hills.

Penn Hills has been asked to divert the grants over the next three years to make improvements to federally subsidized housing that borders the proposed EastGate Commerce Center.

To attract anchor tenants such as Wal-Mart to EastGate, the appearance of more than 300 units in Pittsburgh's East Hills housing project must be improved, Penn Hills Mayor William DeSantis said.

"What's behind all this is a move not just to improve the housing in Pittsburgh but (also) to spur development at EastGate," DeSantis told Municipal Council during a workshop Wednesday.

Straddling the borders of Penn Hills, Wilkinsburg and Pittsburgh, the property that once was East Hills Shopping Center is being cleared for an economic renaissance being overseen by Operation Nehemiah — the business arm of Petra Ministries. The Allegheny County Redevelopment Authority also is participating in the project.

"The key to success is an anchor tenant, and although this housing development is totally within the Pittsburgh city limits, Wal-Mart is not going to commit to EastGate unless something is done," DeSantis said.

Late last year, Penn Hills and Wilkinsburg both offered support — none of it financial — to Telesis Corp. — an affordable-housing consulting firm based in Washington, D.C. The firm's goal is to revitalize the neighborhood without tearing down existing housing, said Laura Lazarus, a vice president at Telesis. She said the improvements would include heating and air-conditioning upgrades.

Local officials said development at EastGate would open employment opportunities for residents of the complex.

DeSantis told Penn Hills Council that he has met with Allegheny County Executive James Roddey and Pittsburgh Mayor Tom Murphy, who already agreed to commit $350,000 apiece to help make up for a $1 million shortfall in funding to hire Telesis.

The county so far has provided a $2.5 million grant for demolishing the existing buildings.

"We have been working to develop a cooperative effort to meet the $1 million funding gap needed by Telesis to make this whole revitalization project happen," said John Dowling, spokesman for the county Department of Economic Development.

Roddey and Murphy — who plan to meet with Wal-Mart officials at the retailer's headquarters in Arkansas — have asked Penn Hills to apply $350,000 of its federal funding through the Housing Opportunities Made Easy program toward the Telesis project, DeSantis said.

Penn Hills draws about $140,000 a year as part of a HOME funding consortium that includes the county and the city of McKeesport. The money, however, has been committed to a number of projects, including the Lavender Heights senior-citizen development and, most recently, the rehabilitation of abandoned townhouses on Chaske Street.

"I explained to Mr. Roddey that, technically, we're broke in terms of our HOME funding account," DeSantis said.

Roddey has told DeSantis the lack of funding would not be a problem.

"The county would be willing to advance us the $350,000 in HOME funding, and we could pay them back with our future annual allocations," DeSantis said.

Penn Hills principal planner Christopher Blackwell said that sometimes for several years, Penn Hills has no housing projects lined up on which to spend its HOME funds. He said the situation existed with the Chaske Street townhouses, whose developers late last year received approval from Penn Hills Council to receive up to three years of the accumulated HOME consortium money.

"As for potential projects down the road, the fact is that we do often get inquiries about HOME funding from developers," Blackwell said. "And if there's an application that meets the criteria, there's a strong possibility that we can go back to the county and ask if we can use another portion of the HOME consortium funding. Our consortium money generally remains in the county's bank anyway."

Although Wal-Mart and other "big-box" retail officials have stated that they will not proceed with EastGate until the Telesis housing-revitalization program is funded, Penn Hills would have an escape clause if the retail deal would fall through.

"If Wal-Mart or other anchor tenants say no, our commitment goes away," DeSantis said, explaining that the contract with Telesis is contingent upon EastGate's securing an anchor tenant.

Spending HOME funding on housing outside Penn Hills is unusual, but the project is appealing to the municipality because of the intergovernmental tax-sharing agreement already in place for the 45-acre EastGate development.

Based on the acreage, Penn Hills would receive 75 percent of future business-generated taxes. Wilkinsburg would get 24 percent; and Pittsburgh, 1 percent. The formula will apply no matter where the commercial buildings ultimately are located on the site.

"If it wasn't for the fact that 75 percent of the EastGate property is in Penn Hills, I wouldn't be in favor of this," DeSantis said of the deal with Telesis. "The ancillary benefits to Penn Hills will be immense."

Howard Davidson, director of community planning and economic development for Penn Hills, said council probably will have to pass a resolution supporting the HOME-funding allocation for Telesis. In turn, Councilman Anthony DeLuca Jr. is seeking a "letter of understanding" from Roddey and Earl Hord, director of the county's Department of Economic Development, that future HOME funding and projects in Penn Hills will not be jeopardized.

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