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Tax dollars keep Pens off thin ice

| Sunday, Sept. 9, 2007

Taxpayers already have paid $19.7 million for a new hockey arena that wasn't supposed to cost them a dime.

In March, Gov. Ed Rendell and local politicians said revenue from slots would cover the public's expenses to build a new Uptown arena for the Pittsburgh Penguins. Slots money also would repay a multi-million dollar state loan the city-county Sports & Exhibition Authority needed to prepare the site.

But the so-called loan has turned into a grant -- a $19.7 million gift to the Sports & Exhibition Authority courtesy of state taxpayers.

A spokesman for Rendell said the $290 million arena project will be financed exactly the way officials said it would be in March -- with a $290 million bond issue to finance construction -- to be repaid by the Pens and with revenues from casino gambling

"However, the site had to be acquired prior to the completion of negotiations with the Penguins and demolition of the old arena, and site preparation for the new one had to proceed, so the Commonwealth stepped in to help," said Rendell's press spokesman Chuck Ardo.

Public records show Rendell signed off on a $9.2 million grant to the sports authority Oct. 16, 2006, months before officials were sure the Penguins would stay in Pittsburgh.

The ink was barely dry on the agreement to keep them in town with a new arena when the Rendell administration approved another $10.5 million in taxpayer largess, record show.

Frank Gamrat of Allegheny Institute for Public Policy said that raises questions about state priorities.

"Every dollar of tax money spent on the Pens can't be spent on other needs like roads and bridges," he said.

"It always seems that this administration is not completely forthcoming with the details behind transactions," said state Rep. Mike Turzai, R-McCandless. "The citizens deserve full disclosure. With this administration it never seems to matter what pot of taxpayer dollars is used."

SEA executive director Mary Conturo said such grants are the state's mechanism for financing projects such as the preliminary work on the arena.

To date, the authority has spent $15.8 million. Authority records show the state grants largely went to buy land, remove asbestos and relocate former landowners.

The SEA received the grant without putting up a dime, even though that's a requirement for funding from the Redevelopment Assistance Capital budget, commonly known as R-CAP. The guidelines require the grant recipient to come with an equal amount of money.

Instead of dollars, the SEA offered the land around the Mellon Arena as its "match." A recent appraisal valued the arena parking lots alone at about $50 million.

With the latest round of spending, the full price tag for the new arena should come to at least $306 million if the facility comes within the $290 construction budget.

The deal calls for the state and the team owners to split any construction overruns up to $20 million. Rendell has said the state could tap the R-CAP fund to cover such costs.

The state finances R-CAP grants by issuing 20-year bonds. The legislature sets the debt limit on the bonds and the governor doles out the cash.

Legislators vie for R-CAP grants in a multi-billion dollar wish list known as the Capital Budget bill.

In 2002 the capital budget bill included three line items totalling $135 million for a new arena in Pittsburgh. An administration spokeswoman said Rendell tapped the 5-year-old bill for authority to release the $19.7 million.

While supporters tout R-CAP as an engine for economic development, critics call it political pork.

Rendell handed out more than a half billion dollars in R-CAP grants last year when he was running for re-election. In the first six months of 2007, he disbursed $63 million.

The $10.5 million arena grant was the largest one released the first half of 2007.

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