2 retired Boscov's execs to buy chain's assets

Two retired Boscov's executives are preparing to buy the assets of the regional department store chain that filed for bankruptcy protection in August.

Albert Boscov and Edwin Lakin, the son and son-in-law of company founder Solomon Boscov, will buy the 39 remaining stores, including locations at Beaver Valley Mall in Monaca and Clearview Mall in Butler. Boscov's announced the deal Tuesday but didn't disclose terms.

The deal "maximizes the value of our business and the return to our creditors," said Ken Lakin, Boscov's CEO and Edwin Lakin's son.

As its restructuring process is completed, he said, "Boscov's will be well-capitalized and have the resources to build a stronger and more competitive business."

Reading-based Boscov's said it terminated an earlier agreement to sell its assets to Versa Capital Management Inc., a Philadelphia-based private equity firm.

Financing for the deal has yet to be completed. Boscov's said it aims to close the transaction by the end of November. The deal is subject to the approval of a Delaware bankruptcy judge.

The chain Solomon Boscov founded in 1911 expanded aggressively in 2006 by acquiring former Kaufmann's at Monroeville Mall and South Hills Village, along with eight other stores from Macy's parent Federated Department Stores Inc.

A weak retail climate and tighter credit pushed Boscov's into Chapter 11 bankruptcy, listing $538 million in assets and $479 million in debts as of May 3. The two Pittsburgh area stores and five other former Federated sites that converted to Boscov's were among the 10 to close this fall as part of the restructuring.

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Technology belt plans grow

Economic development groups and others want to expand a Pittsburgh-Cleveland technology belt initiative that is already helping to connect companies and investors in the two regions.

A Pittsburgh-Cleveland Technology Corridor would encompass a "mega region" with 2.7 million residents and represent "134 miles of economic opportunity," say leaders who are pushing the interstate initiative.

Their new idea is use an existing Biosciences Tech Belt initiative as a model to help other segments -- such as manufacturing -- of the economies of the former Rust Belt cities.

"When it comes to economic development in a global economy, what tends to get the attention of investors and venture capital companies are mega regions," said DeWitt Peart, executive vice president of the Allegheny Conference on Community Development on Tuesday.

Peart is involved in creating the initiative that backers say would create the fourth largest industrial/technical region in the nation.

It would include the Cleveland and Pittsburgh, and the Youngstown-Warren region that lies in between.

The initiative began two years ago when John W. Manzetti, CEO of the Pittsburgh Life Sciences Greenhouse, and Baiju R. Shah, his counterpart at BioEnterprise, a similar organization in Cleveland, began discussions.

"Baiju and I met, we talked, and we thought we should start working together, create some excitement, get funding from the federal government and build our regions so we can attract capital and talent," Manzetti said.

As a result, the Biosciences Tech Belt initiative was born.

Together, the two regions have $1 billion in combined National Institutes of Health and industry heath care research; more than $350 million in health care venture investment; and more than 700 bioscience companies employing more than 25,000 people.

In a recent progress report, they said the joint effort has yielded "numerous cross-introductions of venture capital firms and initiated the exploration of 18 company collaborations." Several venture capital firms from one region opened offices in the other, including Chrysalis Ventures, Draper Triangle Ventures and iNetworks.

In September 2007, U.S. Reps. Jason Altmire, D-McCandless, and Tim Ryan, D-Niles, Ohio, started a push to expand the initiative to other industries, including manufacturing.

Peart said the next step is to hire a consultant to help write a strategic plan. Work on proposals and funding from local foundations is progressing.

"I think this is a brilliant idea," said Virginia Pribanic, CEO of MedRespond LLC, a South Side-based health care information technology company whose software simulates conversations online. People who type medical questions on a computer can view videos providing answers, she said.

At a recent meeting arranged by the Life Sciences Greenhouse, Pribanic said she learned of three companies in Ohio that could help to enhance her business.

"For entrepreneurs, it can be hard to make connections from region to region," she said. "Thanks to this meeting, I was able to learn of three companies that could be a great match for us."

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Quecreek owner, engineering firm fined

An administrative law judge fined the owners of the Quecreek Mine and an engineering company the maximum -- $55,000 each -- for playing "Russian roulette" with the lives of 18 miners who barely survived an underground disaster in 2002.

In a stinging decision released Monday in Washington, Federal Mine Safety and Health Review Commission Judge Robert J. Lesnick said that PBS Coals Inc. and Musser Engineering knowingly submitted to state and federal regulators inaccurate maps of Somerset County's Quecreek Mine.

And they later failed to take prudent precautions to safeguard the lives of 18 miners as they mined coal blocking millions of gallons of water stored in a nearby abandoned tunnel, Lesnick said.

On July 24, nine miners waded through in-rushing water to escape the flood, but nine others were trapped for three days before they were saved by a rescue mission Lesnick termed "miraculous." Lesnick fined each company $55,000 and overruled a previous federal decision to consider the companies' actions "moderately" negligent.

The judge labeled the two Somerset County companies "grossly negligent."

Downtown attorney Douglas C. Lasota said client Musser Engineering would appeal the fines. PBS Coals' attorney Vincent J. Barbera in Somerset echoed Musser's plan, adding that he "strongly disagreed" with Lesnick's findings.

"PBS Coals has always considered the safety of miners to be the utmost of importance," Barbera said.

Barbera and Lasota declined to comment on a separate case pitting the miners against PBS and Musser. That lawsuit continues to wind its way through Allegheny County Common Pleas Court. But the attorney for eight of the nine trapped Quecreek miners, Howard Messer, Downtown, said the federal ruling "has vindicated our work to find justice."

"It's really a total vindication of what we've been saying for six years. The miners have had to wait six years for confirmation of what we knew to be true in 2002," Messer said.

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7-story office complex OK'd

A Pittsburgh developer's two-year effort to build an office building in Oakland took a major step forward Tuesday when the City Planning Commission approved downsizing the facility to seven stories.

Originally, the Elmhurst Group, Downtown, wanted to build a 10-story building on a parking lot adjacent the First Baptist Church at Ruskin Avenue and Bayard Street.

The project was delayed after neighborhood groups and residents objected to the building's size. No local residents appeared at yesterday's session to express objections.

Commission member Paul Dick, who lives in the neighborhood, said the original objections included concerns about having another hospital facility as a tenant in the building. Select Medical Corp. of Mechanicsburg in Cumberland County, eventually dropped plans to put a medical care facility there.

The new building, to be called Schenley Place, will have a three-story structure in the front along Ruskin, connected to a seven-story building behind, with underground parking for about 122 vehicles, said Robert Moro of Burt Hill, architect on the project.

"We have no tenants for the building at this time and plan to begin construction next spring with occupancy in the fall of 2010," said Bill Hunt, Elmhurst president.

The commission also approved redevelopment of a GetGo gasoline station at Baum Boulevard and Morewood Avenue in Bloomfield. Giant Eagle plans to reduce the entry points from four to two into the station; double the pumps from eight to 16; increase on-site parking spaces; enlarge the existing food and beverage building with a larger structure featuring indoor seating for about 20; and to place a sign identifying the site as Bloomfield.

Several commission members disagree with the station being in Bloomfield, claiming instead it is part of Shadyside.

It also approved conversion of the vacant South Hills High School on Ruth Street, Mt. Washington, into 106 apartments, a 15,000-square-foot YMCA fitness facility and a child care space. Ken Doyno of Rothschild Doyno collaborative, architect on the project for developer a.m.Rodriguez Associates Inc., said construction of the $20 million project could begin next spring and be completed by December 2010.

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Kuhn's scales back plans for Hill grocery store

Kuhn's has nixed a 100,000-square-foot retail shopping center anchored by a full-service grocery store in the Hill District, Pittsburgh's development chief said Monday.

The Urban Redevelopment Authority is scheduled to decide Nov. 13 whether to sell land on Centre Avenue to locally based Kuhn's or St. Louis-based discount chain Sav-A-Lot, as both vie to build the first Hill District grocery store in nearly 30 years.

"(Kuhn's) is proposing a stand-alone grocery store with a suburban-style setback and a field of parking along Centre Avenue," said Rob Stephany, executive director of the Urban Redevelopment Authority.

Kuhn's original proposal envisioned converting the AUBA Triangle Shops into retail stores, a coffee shop and other offerings with the 40,000-square-foot grocery store nearby, Stephany said.

"This (proposal) keeps the AUBA shops intact and builds a grocery store box only," he said. "It was a neat project. But they decided they wanted to make a go at something more straightforward."

Dan Sakala, spokesman for the independently-owned eight-store Kuhn's chain, declined to discuss the changes.

URA Board members Tonya Payne and State Sen. Jim Ferlo, D-Highland Park, said Hill District residents must have an opportunity to scrutinize any changes.

The URA and the Pittsburgh Penguins have committed $2 million -- $1 million each -- toward construction of a new grocery store in the Hill District. The funding is part of a community benefits agreement negotiated by Hill District residents who wanted neighborhood improvements in exchange for living next to a new $290 million arena.

"I don't want to put my money down for a Mercedes and then find out that we ended up with a Hugo," said Payne, who had not reviewed the new plans.

If it's not vetted publicly before the authority's Nov. 13 meeting, she would likely vote in favor of Sav-A-Lot's smaller, 16,000-square-foot store, which does not include a pharmacy and some other amenities that residents have requested.

"The worst thing that could happen is not to have full public disclosure," Ferlo said.

Save-A-Lot says keeping the deadline set by URA board members last month is critical because delays keep mounting for a new store it first proposed for the neighborhood nine months ago.

Most recently, the URA was expected to make a decision Oct. 16, but it pushed back action for another month when Kuhn's and its development partners asked for more time to work on their proposal.

"This thing has dragged on a long time," said Rick Meyer, Save-A-Lot's vice president of market development. "The reason November is so important is because there are other things that have to get done from a governmental standpoint. We need to get certain approvals, and there will be zoning issues. There is a lot of detail involved."

It will take about six months from the start of construction to complete a new store, Meyer said. "Our goal is to get this thing started as soon as the weather is normal. That's the big thing and why we are pushing to get this done."

Save-A-Lot wants to put a 16,850-square-foot store along Centre Avenue. Prices would be 40 percent less than those in a regular grocery store.

The Kuhn's proposal is being made in conjunction with Hill House Economic Development Corp. and developer McCormack Baron Salazar.

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Allegheny Energy profit dives

Allegheny Energy Inc. said Monday that third-quarter profit fell 23 percent on higher costs for coal, the primary fuel for its power plants, and on milder weather.

Net income fell to $89 million, or 52 cents a share, from $115 million, or 67 cents, a year earlier, the Greensburg-based company said. Sales rose less than 1 percent to $849.6 million.

Coal accounts for 93 percent of the output of Allegheny's generating plants. The average price of coal delivered to the plants will rise 18 percent this year to $47 a ton, Allegheny Energy said in an August investor presentation.

"A lot of it has to do with weather, and their fuel costs rose while sales were flat," said Gordon Howald, an analyst in New York for Calyon Securities USA who rates the stock "buy" and doesn't own any.

Fuel costs rose 22 percent to $299.2 million, mostly for coal, Allegheny Energy said. The benchmark power price in PJM Interconnection LLC, the market for Allegheny Energy's plants, rose 25 percent from a year earlier to average $94.87 a megawatt-hour during the third quarter, according to data from IntercontinentalExchange Inc. compiled by Bloomberg.

Profit fell to 54 cents a share excluding quarterly adjustments to the value of contracts used to lock in commodity prices, Allegheny Energy said. That missed by 13 cents the average estimate of six analysts compiled by Bloomberg.

Net income from power generation and marketing fell 17 percent to $834.7 million on coal costs and reduced output, which dropped 1.1 percent from a year earlier, the company said. The combined capacity of its plants is about 9,700 megawatts. One megawatt is enough power for about 800 average U.S. homes, according to the Energy Department in Washington.

Profit from delivering power fell 66 percent to $4.3 million on milder weather that reduced energy demand for heating and air conditioning and on higher prices for power purchased to supply Virginia customers. Net income from the segment also dropped as the company lost the ability to recover the lower value of plants after market deregulation.

The average residence used 5.7 percent less electricity in the third quarter than a year earlier, Allegheny Energy said. Weather-driven demand for air conditioning fell 22 percent from a year earlier, the company said.

Allegheny Energy cut this year's capital spending budget by $200 million to $1.1 billion because the installation of some pollution-control equipment will be delayed to next year, Chief Financial Officer Kirk Oliver said yesterday on a conference call.

Allegheny Energy's stock dropped 76 cents, or 2.5 percent, to $29.39 yesterday. It has fallen 53 percent this year.

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Home sales in region decline 6.3 percent

Home sales in the Pittsburgh region fell 6.3 percent in September compared with the same month last year -- capping the largest single three-month sales decline in at least 20 years, according to a report from RealStats.

The South Side-based real estate information company also said median home prices dropped in the July-September period, which might mean the end of an unusual period in which prices increased despite a slowdown in sales.

The median home price dipped to $123,958 in the third quarter, down from $125,000 in the third quarter of 2007, RealStats Vice President Daniel A. Murrer said. The median price is the point at which half the homes sold for more and half for less.

Murrer also said the dollar volume of residential sales slipped for the sixth consecutive three-month period, marking the longest continuous period of declining sales in RealStats' database, dating to 1987.

The decline in September marked the 18th consecutive month there has been a drop in home sales. There were 2,311 home sales, compared with 2,467 in September 2007, RealStats said. This September had two more sales days than in September a year ago.

Allegheny County experienced a 7.8 percent drop in homes sold -- from 1,472 to 1,357 -- while Westmoreland County endured a 7.2 percent decline, from 387 to 359. Sales in Beaver County remained unchanged at 170. There was a 4.2 percent drop in Washington County to 228 compared with 238 a year ago, while Butler County, with 197 sales, was down 1.5 percent from 200.

September's median price was unchanged at $118,000, but September's average price rose 2.5 percent to $149,440 from $145,831 a year ago.

The 6.3 percent sales decline in September matched sales reported by West Penn Multi-List, the region's largest home listing service, said Tony Mete, president of the Realtors Association of Metropolitan Pittsburgh.

West Penn Multi-List, which reports sales by its members, reported 1,687 sales for the five counties, compared with 1,800 in the same month last year, Mete said.

George Hackett, president of Coldwell Banker Real Estate/Pittsburgh, expects a similar decline in sales during October and November.

"That's not so bad when one compares the Pittsburgh region with other areas of the nation where house sales are down from 15 to 30 percent," Hackett said.

To combat slow sales, Hackett said Coldwell Banker held a nationwide 10-day price reduction event in October. In the Pittsburgh market, 1,000 of the firm's 3,000 listings had price reductions, and 130 of those homes sold. He expects more to sell in November and December.

"I expect single-digit declines in sales for each of the remaining months of 2008. This is the right time to buy with prices down and mortgage interest rates in the 6-percent range," he said.

RealStats said there were 7,634 sales in the third quarter of 2008, down 22 percent from the 9,030 in the third quarter of 2007.

All counties, except Butler, had double-digit declines in dollar volume, ranging from 14.9 percent in Allegheny to 19.8 percent in Washington. Butler dropped 5.6 percent.

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