A rendering by internationally-acclaimed Bjarke Ingles Group, hired by the Pittsburgh Penguins to create an open space plan for the former Civic Arena site.

A tentative agreement between the City of Pittsburgh and the Pittsburgh Penguins means redevelopment of the former Civic Arena site will begin within three years.

Mayor Bill Peduto’s office says the parties agreed to amend their option agreement to jumpstart the stalled development of the 28-acre Lower Hill District site, where the Pens plan to construct office, retail and entertainment space along with 1,000 residential units.

“This agreement will pave the way for $750 million in private investment that will be truly transformative for Pittsburgh, creating a dynamic development that the region can be proud of — in addition to jobs, small business opportunities, affordable housing and community programs,” David Morehouse, the hockey team’s president and CEO, said in announcing the deal.

The amendment needs the approval of the city’s Urban Redevelopment Authority and Sports & Exhibition Authority (SEA), which is expected to happen at their November 9 board meetings.

The agreement comes as taxpayer-funded crews finish work on roads and utilities at the site. An energy plant to serve the future development is under construction behind PPG Paints Arena.

Under the deal, the Pens will forgo a $15 million credit toward the purchase of the property. The original option agreement had taxpayers on the hook to pay the Pens even if the team didn’t use the land.

The team must develop 6.25 acres by 2020 or lose some parking revenue. Previously, the team would have forfeited its development rights by missing its deadline. Peduto’s office said the city pushed for forfeiture of parking revenue to move the development forward.

“This has been a complex negotiation, and we reached an agreement that makes the option agreement better for the public,” Peduto said in a statement. “The Penguins agreed to eliminate the public’s obligation to pay $15 million, and we agreed to reasonable adjustments to allow more flexibility to deliver development on site.”

The city agreed to eliminate its land valuation procedures and revise its development deadlines to match deals the Pens have in place. The team has retained national developers McCormack Baron Salazar and Clayco for residential and office development, and have an agreement with an unnamed minority developer for the residential portion who will be announced soon.

The Pens had internationally-acclaimed Bjarke Ingels Group create an open space plan for the site, and are working on destination entertainment for the site. The Pens’ development rights will be extended by one year to October 22, 2025, and the team can seek to pay for an additional two years of extensions.

The agreement returns a parcel of land to the URA and SEA to build a parking garage of up to 1,000 spaces. Twenty percent of the housing developed must be affordable to those with more modest incomes, earning 60 percent of the area median income.

Sandra Tolliver

Sandra Tolliver is a freelance writer, editor and public relations professional in Upper St. Clair.