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The Long Delayed $104 million Headquarters Hotel Next
 to the Pittsburgh Convention Center May Get
 Funding from the State's New Gambling Law
By Mark Belko, Pittsburgh Post-Gazette
Knight Ridder/Tribune Business News

Aug. 10, 2004 - The proposed $104 million headquarters hotel to be located Downtown, next to the David L. Lawrence Convention Center, long stalled by a $34 million funding shortfall, finally appears to be ready to move off dead center.

The city-county Sports & Exhibition Authority plans to meet Friday with Cleveland developer Forest City Enterprises to put together a game plan to get the 500-room hotel built.

"We're very anxious to get the project moving," authority Executive Director Mary Conturo said.

The impetus for the meeting comes from the state's new gambling law. With slot machine revenues, the state plans to create a new $2 billion tourism and economic development fund, with $44 million of that earmarked for the hotel. Another $150 million is expected to go to reduce debt at Pittsburgh International Airport.

Friday's meeting will be the first between the authority and Forest City, the firm selected by Mayor Tom Murphy and former Allegheny County Chief Executive Jim Roddey in April 2003 to build the hotel.

The $44 million should be enough to cover the $34 million funding gap that has stymied the hotel's construction and reimburse the authority for $10 million in preparation and foundation work already done at the site, at Penn Avenue and 10th Street, Downtown.

Forest City and the Sports & Exhibition Authority are nearly a year behind schedule in breaking ground for the hotel, originally planned for fall 2003, and still have not finalized a formal development agreement for the project.

Jim Richardson, Forest City vice president of development, said he is hoping Friday's meeting will get the ball rolling toward a development agreement and establish timetables for completing final design, bids and construction.

"Hopefully, we can start establishing a game plan to move this thing forward as quickly as possible," he said.

One of the trickier aspects could be timing the construction to coincide with the availability of the revenues tied to slots gambling. While the state has approved such gambling, none of the venues is expected to be up and running and producing revenue until 2006 or 2007.

Conturo said the authority and Forest City also need to talk about traffic and operational issues relating to the construction. She said she is not expecting a development agreement to come out of Friday's meeting.

"It's just an organizational meeting to get the project moving forward again," she said.

Still, the fact the authority and Forest City are talking again is good news to many local tourism officials who believe the lack of a headquarters hotel is preventing the convention center from reaching its full potential.

Members of the Greater Pittsburgh Hotel Association have been split on the need for a new hotel, however, with proponents believing it will help bring more conventions into town and opponents fearing it will create a glut of rooms and drive down rates.

County Chief Executive Dan Onorato said he was pleased the hotel project was moving forward but added that he wants to see final agreements on financing and design before he signs off on construction. Onorato said he does not want to see design sacrificed in order to keep the cost at the estimated $104 million.

Richardson said the delays have not increased the cost. Under the proposed financing, Forest City will contribute nearly $60 million in equity and a first mortgage and also will be responsible for repaying a low-interest $10 million loan. The other $34 million will come from the state.

The lack of hotel space near the convention center has been an impediment to some groups considering Pittsburgh for conventions.

The United Steelworkers of America, headquartered in Pittsburgh, decided against its hometown for its 2005 convention, in part because there were not enough union hotels to meet its needs.

The American Association of Museums also decided against Pittsburgh for its 2007 convention, in part because of inadequate hotel space near the center.

The National Rifle Association, which held its national convention in Pittsburgh in the spring, also has said it would like to see more hotel space at a central location Downtown.

-----To see more of the Pittsburgh Post-Gazette, or to subscribe to the newspaper, go to http://www.post-gazette.com.

(c) 2004, Pittsburgh Post-Gazette. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

 
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