(AP) — United States Steel Corp. has announced that it will build its new world headquarters in Pittsburgh as part of the ongoing redevelopment of the former Civic Arena site by the NHL's Penguins. Company, team, local and state officials made the announcement at the Consol Energy Center, the hockey arena which opened in 2010 across the street from the site where a team-controlled subsidiary will break ground in August or September.
U.S. Steel Chief Executive Officer Mario Longhi said the new headquarters will open by September 2017, by which time the company's 50-year lease will expire at the 64-story U.S. Steel Tower downtown, the city's tallest building. The new five-story building "will serve as a cornerstone in the revitalization of this community and our company," Longhi said. It will house U.S. Steel's 800 headquarters employees for at least 18 years, with an option to extend the lease beyond that. The plan solves several interlocking problems for U.S. Steel, the Penguins and Pittsburgh.
A New York investment firm bought the skyscraping headquarters building for $250 million in April 2011. A year later, U.S. Steel announced it would likely move out.
What concerned Pittsburghers is whether U.S. Steel would follow Alcoa out of town or greatly reduce its presence, as happened when ketchup-maker H.J. Heinz Co. moved production out of the city years before being sold to Berkshire Hathaway and 3G Capital last year. Heinz headquarters remain in Pittsburgh. When he took office earlier this year, Mayor Bill Peduto met Longhi and said, "I will not be the mayor that lost U.S. Steel."
Enter the Penguins, who have been trying to redevelop the former Civic Arena site a few hundred yards up the hill from U.S. Steel's downtown headquarters, but a world away economically. The Penguins didn't exist when the arena was built in 1961, but the team, which moved into the building as an expansion franchise in 1967, has borne the negative legacy of that development. Some 8,000 black residents were relocated to build the arena, which effectively cut off the rest of the predominantly black Hill District from the city's downtown economic engine. The resulting blight became the sad inspiration for the TV drama "Hill Street Blues."
The Penguins finally reached a deal in the fall on a $440 million redevelopment plan that will include retail shops, housing and office space on the former arena site. The development will be partially funded by more than $30 million in state grants and a local tax incentive program that will funnel some development revenue to infrastructure improvements, job training and other programs to benefit the Hill District. A fixed percentage of the new housing spawned by the development will be affordable, too.
"Development of the former Civic Arena site is truly a transformational opportunity for U.S. Steel, the city of Pittsburgh, the Hill District and the Pittsburgh Penguins," Longhi said. "We usually say it's a great day for hockey," Penguins president and CEO David Morehouse said, referring to one of the team's marketing slogans, "but today I want to say it's a great day for Pittsburgh."
Longhi and the others won't say how much the new headquarters will cost, but it will occupy 250,000 square feet in a 268,000 square-foot building, the rest being retail shops, Morehouse said. The site will also include a steel museum, to chronicle the company and city's role in the industry worldwide. James Craft, a business professor at the University of Pittsburgh, said U.S. Steel's decision is a "very excellent statement" as the city continues its transition from a manufacturing giant to a medical, high-tech and service-oriented economy.
"It gives a statement of where we were and remain in part now," Craft said. "And it shows Pittsburgh has an ability to serve a large, international corporation even as we're emerging in this new economy."