Jan. 19, 2006 - The 200-room convention style hotel proposed for the 700 block of Penn Street got $2.5 million in federal funding Wednesday but still needs funds for an adjacent garage -- as well as a hotelier.

The U.S. Department of Housing and Urban Development announced a $1 million brownfields grant and a $1.5 million federal loan for the hotel, which is expected to cost $32 million.

"It's very good news indeed," Reading Mayor Tom McMahon said. "It could accelerate the project, which could be a boon to the city as well as be very complementary to the Sovereign Center."

Sketch plans show an overhead walkway connecting the hotel with the Sovereign Center arena across the street.

"We have enough to do the hotel, but not the garage," said Albert R. Boscov, the chairman of Boscov's Department Stores Inc. who is working on behalf of the city to get the hotel. "I'm looking at the state, the Salvation Army and anywhere else I can find the money.

"I'm trying to pick up the missing pieces."

The multi-level garage would have to be big enough to more than make up for the 440 spaces in the parking lot where the hotel and garage would be built, Boscov said, and is expected to cost up to $16 million.

Another missing piece is the developer, American Pacific Financial Corp., San Bernardino, Calif., with which the city still is negotiating a deal.

"That's not a problem," Boscov said, adding that American Pacific is not the holdup. "I don't want to sign any agreement until I have all the money in place.

"When we achieve that, we'll have another wonderful thing in the city."

The hotel would create 110 jobs, and include 9,000 square feet of flexible meeting space, club dining, a pool and spa, a fitness center and a 17,000-square-foot ballroom, larger than any other in the Reading area.

"It would be a way we could recruit a lot more conventions, with the breakout and meeting space in the hotel," McMahon said.

Berks County's Republican contingent in Congress -- Sens. Arlen Specter and Rick Santorum, and Reps. James W. Gerlach and Joseph R. Pitts -- announced the HUD funds and said they were pleased to see the money aid the city's economic turnaround.

Brownfields sites are former industrial or commercial sites that are abandoned or underused and may have been contaminated, and the grants are used to get them ready for new development.

The funds announced Wednesday are contingent on getting the rest of the hotel package completed, officials said.

The 700 block of Penn Street was once a series of storefronts, but they were razed in the 1970s to make room for another development that never materialized.

The site has been a parking lot ever since.

Contact reporter Don Spatz at 610-371-5027 or [email protected].

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