Tuesday, March 13, 2007
By Mark Belko, Pittsburgh Post-Gazette
The puck stays here.
The Pittsburgh Penguins have reached an agreement with state and local officials for construction of a new arena that will keep the team here under a 30-year lease.
The basics of the agreement were reached in a make-or-break meeting last week in Philadelphia, where both sides reported that significant progress was made. Most remaining details were worked out over the weekend, according to sources close to the negotiations.
A formal announcement will be made later today, prior to the Penguins 7:30 p.m. home game against the Buffalo Sabres. Gov. Ed Rendell is expected to be on hand for the announcement.
The arena, which will cost about $290 million, is expected to be ready for the 2009-2010 National Hockey League season. The Penguins will continue to play at Mellon Arena under a short-term lease extension until the new arena is built.
Under terms of the deal, the Pens will pay $3.8 million per year toward construction and will add another $400,000 per year for capital improvements.
A meeting had been scheduled here for tomorrow, where Penguins co-owners Mario Lemieux and Ron Burkle were supposed to meet with Mr. Rendell, Mayor Luke Ravenstahl and County Chief Executive Dan Onorato.
It was not clear last night whether that meeting would still be held. It may only be needed to go over details of a deal that officials have been seeking for months.
Chuck Ardo, the governor's spokesman, said last night that he could not confirm there was a deal.
Neither Mr. Lemieux nor Mr. Burkle could be reached for comment last night.
But there was growing optimism that an agreement was near after Thursday's meeting in Philadelphia that lasted more than four hours.
The mood following that meeting was quite a turnaround from the climate only four days before, when Mr. Lemieux and Mr. Burkle sent a letter to the politicians declaring an impasse in the talks and saying they would aggressively explore relocation.
What followed was a trip to Las Vegas, which is pursuing professional sports teams, and a sweetened offer from Kansas City, where the $276 million Sprint Center will be ready this year. The new offer improved on a deal that included free rent and half the building revenues.
With the Penguins' future in Pittsburgh hanging in the balance, Thursday's session in Philadelphia apparently significantly narrowed the differences between the two sides.
Neither Mr. Onorato nor Mr. Ravenstahl were available for comment yesterday.
Even before Thursday's meeting, the two sides did not appear to be far apart. In addition to paying for a share of the construction costs and capital improvements, the Penguins also agreed to pay $500,000 a year for a parking garage.
The rest of the funding would come from Pittsburgh casino licensee Don Barden, who would contribute $7.5 million a year, and from a gambling-financed state economic development fund, which would contribute $7.5 million annually..
One unresolved issue going into Thursday's meeting was how to pay the extra $20 million that was added as a contingency to a proposed arena bond issue, increasing it from $270 million to $290 million. Another sticking point was who would bear construction cost overruns.
The Penguins and the state have agreed to split the cost of any additional costs exceeding $290 million, up to a maximum of $310 million, sources said.
Even as negotiators were working on a final deal, the city-county Sports & Exhibition Authority has fallen behind schedule in demolishing 11 buildings in the Fifth and Centre Avenue corridors in Uptown for the new arena.
The work probably won't start for another two weeks, said Doug Straley, authority development manager. The authority originally had hoped to begin in early February.
Despite the delay, Mr. Straley said the authority still expects to have the site cleared by Sept. 1, when construction of the arena is expected to start, with hopes of opening it in 2009.
He said demolition of the 11 buildings -- nine on Fifth Avenue and two on the Epiphany Church campus -- is expected to take four months. Empire Dismantlement Corp. of Grand Island, N.Y., received a $926,419 contract to do the work.
"This demolition can get done well within the time frame to deliver the site," he said.
In explaining the delay, Mr. Straley cited the Feb. 5 collapse of a section of flooring at the authority-owned David L. Lawrence Convention Center, saying that diverted staff time away from the arena. He also said it took longer than expected to remove asbestos from the buildings to be razed.
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(Mark Belko can be reached at mbelko@post-gazette.com or 412-263-1262. )
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