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Murphy to meet with Cranmer on Penguins deal

Saturday, August 07, 1999

By Mark Belko, Post-Gazette Staff Writer

Allegheny County Commissioner Bob Cranmer will meet Monday with Mayor Murphy to air concerns about the county's role in helping the bankrupt Penguins, but Cranmer stood firm yesterday in his objections to the deal.

At Monday's meeting, Cranmer wants to discuss alternatives to a deal negotiated by the Public Auditorium Authority. It commits the city and county to picking up the amounts the team and Civic Arena manager SMG still owe on $37.5 million in bonds, some dating back to 1978. The Penguins still owe $14.5 million and SMG about $1.5 million.

Cranmer opposes the plan because it would have the county use its general fund money to pay off the debt. He said he wanted to explore using Allegheny Regional Asset District money, which comes from the 1 percent county sales tax, to pick up the bond costs. RAD funds are being used to help build stadiums for the Pirates and Steelers.

Also yesterday, John Brabender, a spokesman for former superstar Mario Lemieux, who is trying to buy the Penguins, said Lemieux hopes to meet soon with Cranmer to discuss Cranmer's objections to the deal.

"We haven't talked to Bob yet but hope it will happen sooner rather than later," he said.

Brabender, who has also done political work for Cranmer in the past, said he doesn't think his former client is holding up the deal as some sort of "political grandstanding."

"He has some legitimate questions," Brabender said. "I think Bob is committed to keeping the team in Pittsburgh. This is a large deal. The county has a large investment in it. He wants to be 100 percent happy with it."

Cranmer also has objected to part of the agreement that calls for the city and county to have financing in place by 2002 for a new arena to replace the Civic Arena. He said he did not want to bind the new executive-council form of government, which replaces the board of commissioners in January, to a new facility.

Cranmer's objections could jeopardize Lemieux's bid to buy the ailing franchise. His vote is crucial to the plan in the existing three-commissioner system. While Commissioner Mike Dawida has been willing to help the Penguins, Commissioner Larry Dunn said it is "highly unlikely" that he would vote for the Penguins' package.

Cranmer, Dunn and Dawida all leave office in January. Brabender thinks Cranmer's objections stem, at least in part, from a "lack of communication" with the auditorium authority, which is a city-county agency.

"This is Bob's way of reminding people he is a hands-on commissioner," Brabender said. "He wanted to send a loud and clear message of where he stands on this. It's his way of making sure that people understood he wasn't going to be left behind on this."

Also yesterday, the two candidates for county executive, Republican Jim Roddey and Democrat Dr. Cyril H. Wecht, had broadly similar reactions to Cranmer's stance. Either Wecht or Roddey, as county executive in January, will have to deal with the financial aftermath of the Penguins' talks.

They both were cautious about using general tax revenues in any deal, but both also said they would have a sympathetic attitude toward other means of county support for the franchise.

"I would not want to commit general funds ... That's not right," Wecht said, but added he would like to see "what could be developed by way of different formulas."

Roddey said, "I think the county should play a role. There are things we can do in areas such as infrastructure."

Cranmer said the financially strapped county, still struggling because of the 20-percent property tax cut enacted in 1996, isn't in the position to take on additional debt. Even without the Penguins deal, the county's debt payments are expected to increase by $12 million next year.

Cranmer said if the county were to commit to greater debt, it should be to help fund the proposed $530 million maintenance center for US Airways at Pittsburgh International Airport, not the Penguins.

"I didn't run [the Penguins] into bankruptcy and I don't see it as my responsibility to get them out," he said.

Murphy spokesman Douglas Root was trying to arrange the meeting with Cranmer and possibly others.

"The mayor is very interested in smoothing this out, making sure the deal goes through as it was originally presented and is working to mediate that," Root said.

Auditorium authority officials have said that because of lower interest rates, the city and county could float new bonds and take over the Penguins debt payments of $1 million a year, together with their own debt payments of $800,000, and end up still paying just $800,000 a year.

But county budget Director Carmen Torockio said that the deal -- over the 20-year life of the bonds -- would cost the city and county an additional $4.8 million.

The payments are lower in the years from 2000 to 2005 but higher from 2006 to 2019, he said.

The $4.8 million in extra principal and interest will be in addition to the $16 million in combined debt the city and county would take over from the Penguins and SMG, Torockio said.

Cranmer said that auditorium authority Director Stephen Leeper had committed county operating money for debt payments without consulting him, Dawida or Torockio.

Cranmer said he had made his objections known to Leeper and Murphy weeks ago and only decided to go public after he learned that neither the Penguins nor SMG had been told of his concerns, which he said were "basically ignored."

Post-Gazette staff writers James O'Toole and Tom Barnes contributed to this story.

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