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HOSPITAL CHALLENGES KOZ

A Washington County hospital is challenging the constitutionality of economic development legislation that state officials say has saved or created some 5,200 jobs since it was enacted a year ago.

Monongahela Valley Hospital is trying to stop a group of doctors from building a clinic and housing complex for the elderly while creating about 200 jobs in a region still reeling from the collapse of the steel industry.

The 14-acre tract has been designated as part of a Keystone Opportunity Zone, one of a dozen such economically distressed regions in the state where businesses are virtually tax exempt.

Carroll Township supervisor Lou Resovich said the issue is competiton for the hospital, which is located less than two miles away from the proposed complex.

"It puts us in an awkward position," said Resovich, who said the municipality of 6,200 people is trying to stay neutral in the dispute.

"What we need is work around here."

Ron Paglia, spokesman for the 277-bed hospital, declined comment.

Attorney Mark E. Mascara, who represents the developer, CPSR Associates, said the partnership wanted Mon Valley Hospital to be part of the project, but negotiations collapsed.

Mascara said CPSR is continuing to try to find a hospital partner for a comples that will include doctors' offices, same-day surgery center and assisted living center for the elderly.

Mascara worried the hospital's lawsuit may cut a lifeline for economically depressed pockets of the state.

"It's one thing to try to eliminate your competition," said Mascara. "It's another thing to attack a program that is designed to create jobs."

The hospital and its parent corporation, the Mon-Vale Health Resources Inc., filed the lawsuit in November in Commonwealth Court and amended the complaint in December.

David E. Black, a deputy secretary in the state Department of Community and Economic Development, said the hospital's challenge was the first since the law creating the special zones was enacted last year.

Keystone Opportunity Zones are located in 54 of the state's 67 counties, including Philadelphia.

Businesses that move into these areas are virtually tax exempt for as long as 12 years, Black said. The zone where the CPSR complex is proposed is among the biggest and most economically distressed in the state.

Designation of the tax-exempt zones is unconstitutional because the tax breaks are not given to all businesses, regardless of where they locate, according to the hospital's complaint.

The state constitution also requires that the public be allowed to comment on matters as important as taxation, which was not part of the establishment of the zone.

Monessen Mayor Ted Harhai said the state's tax incentives are key to the rebirth of the Monongahela Valley, which was once dominated by steel makers.

"This is going to be our bread and butter," said Harhai, who is also a state House Representative from Westmoreland County.

"The tax abatement is going to bring business here. I feel badly it has come to this."

NOW READ ABOUT THIS GREAT DEAL IT'S IN THERE!

Westmoreland News - March 3, 2000

On-line auction draws one bid for Derry site By Jennifer Reeger TRIBUNE-REVIEW While online bidding on a vacant Derry Borough industrial site ended Wednesday night, a deal finalized on paper is still a long way off.

Inlander Ltd., a Nevada holding company that owns the former Industrial Ceramics Inc. plant, placed the 20-acre property on the Internet auction site eBay on Feb. 20 in hopes of marketing the plant to potential buyers, partners or tenants.

Ronald Gdovic, chairman of the board of directors of Development Strategies, a Harrison City-based nonprofit company that has been working to develop the site for Inlander, said Thursday that one bid of $875,000 had been received.

Gdovic said he has been in contact with the out-of-state bidder and has determined the bidder to be legitimate. He declined to provide further information about the bidder.

"We're talking through some details," Gdovic said. "Closing on something like this, be it a partnership, a lease or a sale, is far off. However, I can say response in general to the auction was very good. Not only from that bidder but from other parties. We'll just have to flesh things out over the next week or two."

About six parties with various levels of interest in the property contacted Gdovic during the auction.

"We're very pleased with the interest it generated, and we're following up on the contacts now," he said. "I expect we'll be hearing from them soon."

Gdovic said earlier this week that the complex was put on eBay to gauge the market and get in touch with potential buyers, partners or tenants for the property.

Unlike other transactions on eBay, Inlander is not required to sell the property to the highest bidder.

Real estate bids are nonbinding and a "means of introducing interested potential sellers to interested potential buyers," the site states.

Gdovic purchased the plant and an adjacent parcel of land on behalf of Inlander in December 1999 for $133,700 in a free-and-clear tax sale.

The money from that tax sale was earmarked to pay part of the $362,000 in back taxes owed to Westmoreland County, Derry Borough and Derry Area School District, so the property has no back taxes or liens against it.

It is also a Keystone Opportunity Zone, one of 12 such sites in the state that are free of state and local taxes for 12 years in an effort to stimulate job creation.

The plant, vacate since 1995, is now called the Porcelain Park Industrial Complex.

Gdovic said earlier this week that 100,000 square feet of the 567,000-square-foot property has been cleaned. Gdovic is waiting for area utilities to provide service to the site before interested tenants will commit.

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