The Borough of Munhall told a court it would use the land as a public park.
Its intention is documented in the December 2016 eminent domain petition the town used to gain ownership of 7 acres of undeveloped land in the bustling Waterfront area. But less than a year after a judge granted the land to Munhall, the borough council is considering selling it for a fraction of what Allegheny County assessors say it’s worth following an unsolicited offer from a politically connected construction company.
Council President Rob Falce said he posted the land for sale “just to get feelers out there and see if there is interest and what that interest was.”
The idea to sell, instead of creating a public park, coincides with the town receiving a proposal from Franjo Construction— which, despite several requests for comment, did not respond to questions for this story. In August, Franjo President Joseph Leonello sent an attorney who works for Munhall an unsolicited “formal proposal” to purchase the land for $75,000 and build a headquarters there. Allegheny County assessors last estimated the land’s value at $275,000.
A public records request to the Borough of Munhall didn’t turn up any other proposals to buy the site besides the offer from Franjo, which is based in the neighboring town of Homestead. It also appears from the records request and interviews that Munhall has not had the land appraised and, when it did advertise the intent to sell the property, legal notices were placed in two newspapers with strictly local readerships.
When the deadline to submit bids passed in December, only one company submitted a bid. Its name was JLFL RE Holdings, LLC. According to the Pennsylvania Department of State, it had existed for less than three weeks at the time of the bid. Several council members assume the LLC is connected to Franjo. Its first letters are the initials of the two brothers, Joseph and Frank Leonello, who own Franjo, and the concept art in its proposal is similar to art that Franjo sent in August, according to two council members. JLFL’s offer for the town coffers: $125,000.
“I do not understand why we are even selling the land,” said Rick Brennan, who is the borough’s newly sworn-in mayor. “We petitioned for it as park space and that’s what the town truly needs.”
The hilly terrain of Munhall and its already-occupied land leaves the town with few large spaces suitable for a public park. And now the council is deciding if it should transfer this 7 acres to a tax-generating business, in a district already full of them. The situation has brought discord to the council that governs the borough of about 11,000 people.
Brennan goes so far as to accuse others on the council of purposefully underselling the property. “I think it’s quite obvious they are not giving the property the exposure to get the property to the highest [possible] bidder,” he said. He questions why the town did not hire a real estate broker. “I think people want to protect their friends.”
Falce said the land was not set aside for Franjo. “I never heard that’s what they were going to offer or that they were going to offer anything at all,” he said.
“I’ve never met anyone from the company,” he added. “They don’t know me either.”
The council meets the third Wednesday of each month, but this issue has not yet been put on a public meeting's agenda.
The previous council president, Daniel Lloyd, who left office in 2015, had formulated the plan to take the 7 acres from a nonprofit that was looking to offload the land because of its tax burden. He had planned to create a public park. Munhall’s green space is limited to a few pocket parks, the size of a street block, and a recreation center dominated by a sports field. Munhall has had “enough people coming in to buy property,” Lloyd said. “We needed something to make this a more livable community.”
West Field, home of Munhall’s recreation center, “is way overbooked,” Brennan said. The field is shared by several sports leagues for youth, high school athletics, adult amateur and even those of local universities, Carlow and Chatham. A look at its public schedule shows that several teams are booked there nearly every day from March through September, splitting up various parts of the park. Brennan said he hoped to move some of the activities to a new park and assumed the town would start raising money to put in sports facilities and playgrounds, etc.
But after receiving Franjo’s offer, the borough council backtracked and put the land up for sale.
The parcel at the heart of the issue was, like all the property that became The Waterfront, owned by U.S. Steel for decades. The 430-acre development was once the site of the Homestead Steel Works. After its closure in 1986, a group of developers turned the land into a shopping and entertainment district and it has grown like a SimCity.
Stretched along the Monongahela River, across the shorelines of three towns — Munhall, Homestead and West Homestead — The Waterfront has a cluster of big-box stores, including Marshalls, Barnes and Noble, Dick’s Sporting Goods, Lowe’s, Macy’s, Target and Costco. Chain restaurants also dot the landscape, and the 22-screen movie palace ensures it’s a frequent weekend destination for many in Pittsburgh and its southern suburbs. Hotels, apartments and office buildings have also sprouted up there. When up for sale, property at The Waterfront can fetch several million dollars and attract buyers outside the state. Of course, these businesses are major tax generators for the three municipalities on which they sit.
But as construction clattered through the decades, one parcel at the southernmost edge remained undeveloped.
U.S. Steel donated that land to Junior Achievement of Western Pennsylvania, an education nonprofit, according to Lloyd, council president from January 2014 until December 2015.
Junior Achievement wanted to put a headquarters there, “but it never really worked out for them,” Lloyd said. In 2013, Allegheny County started aggressively collecting taxes from nonprofits on their assets that did not have a strict charitable use (a plan meant to reap more revenue from behemoths like UPMC). This meant Junior Achievement would owe money for land it wasn’t using.
Lloyd said he engineered a solution whereby the borough submitted an eminent domain petition to acquire the land for use as a park, asking the Allegheny County Court of Common Pleas to strike down the tax liens the county and Steel Valley School District had placed on the property. Junior Achievement submitted a statement in court voluntarily waiving all rights to the property. Dennis Gilfoyle, CEO of Junior Achievement, said he couldn’t comment for this story.
On Feb. 2, 2017, the court granted the petition. Junior Achievement was off the hook, and the land belonged to the town.
Then, Gregory Evashavik, a private-practice attorney contracted as solicitor for Munhall, received a letter from Joseph Leonello. Dated Aug. 28, 2017, it was a “formal proposal” to purchase the land for $75,000. Leonello wanted to build a two-story office building with a warehouse and equipment yard. He touted the occupational, property and parking taxes Munhall would receive if Franjo Construction, with its 160 employees, relocated there. The letter “request[ed] an emergency meeting to consider this offer” and a response “no later than September 14.”
Evashavik found the letter baffling. “I told him you can’t offer to buy this land,” he said. State law requires that sale of real estate owned by a municipality be posted in a newspaper’s legal notices. “It’s not appropriate. …I told him I couldn’t even [formally] respond to it.”
Although headquartered in Homestead, Franjo is no stranger to Munhall or its political leadership. In 2014, the town was beleaguered by the apparent financial mismanagement of a borough manager. It faced a funding gap and couldn’t access some of the usual financing options for municipalities in distress because yearly audits were missing. Police pensions were threatened, and layoffs were a possibility. Joseph Leonello, described in a Feb. 12, 2014 Post-Gazette article as “a longtime friend of Munhall police Chief Patrick Campbell,” stepped in and offered a loan of $500,000 with an interest rate of 5.25 percent, the lowest the borough was offered. The town approved taking it, but ended up not doing so. Instead, they shored up the money by asking for municipal taxes early.
Leonello was not so generous in his bid for The Waterfront land. The $75,000 initially offered is a fraction of the county’s assessment of $275,000 and peanuts compared to recent Waterfront deals. In 2015, a real estate consortium bought an office building on 3.33 acres across the boulevard from Dick’s and Target and paid $6.55 million. (Eat ‘n Park’s corporate headquarters is now there.) In 2014, National Retail Properties Trust, a company that buys restaurant buildings and leases them to chain eateries, purchased a drive-through restaurant on 43,560 square feet near Lowes for $1.55 million and houses a Steak ’n Shake there. In 2013, GAI Consultants, an engineering firm, bought a building on 6.1 acres to act as its headquarters for nearly $15.6 million.
All of these parcels included buildings, whereas the one Franjo wants only has land. But none of them sold for dramatically less than their county assessment. In the case of the last two deals, they sold for 50 percent more.
Evashavik forwarded Leonello’s letter to the town’s leadership with his legal input that the land couldn’t be sold without posting its sale in newspapers. At the very next council meeting, on Sept. 13, an item appeared on the agenda to do just that.“This was all brought on by four or five people who showed interest” in the land, Falce said.
In November, the borough fulfilled its legal requirement of publicly posting the land for sale — specifically, in the legal notices sections of two papers with limited readerships: the southern edition of the Pittsburgh Post-Gazette (for a day) and The Valley Mirror, a weekly community paper reaching 19 square miles in the southeastern suburbs (in two issues). Thirty-four days passed between the first posting and the deadline to submit bids.
At the Dec. 13 council meeting, the secretary brought in an oversized manila envelope with the bids. Its size was deceiving: Only JLFL RE Holdings submitted a bid. It had just sent identical folders to each council member, and a few extra for town staffers.
Falce said he isn’t sure why the bids, $75,000 from Franjo and then $125,000 from JLFL (assumed by four of six council members to be associated with Franjo), have been low compared to the county assessment. He said he wouldn’t vote to accept them, “but I’m only one vote.” If Munhall council rejects the bid, Falce said they can hire a real estate broker or advertise further to “sell it a little better.” The town could also return to the plan to build a park.
If it did sell, Munhall would have to pay 11 percent to the taxing agencies that lost their claims in the eminent domain decision.
“I need to give it some more thought,” said Councilman Jason Stein. “I wish there had been more bids.” He added that sale price is not the only deciding factor, as a business with more employees and revenue would provide greater tax revenue. “But you never want to sell low in real estate.”
Brennan said he is committed to the idea of a public park and will see if, as mayor, he has any power to veto a sale by the council. “Parks bring towns together, bring people together, bring pride to a neighborhood,” he said. “None of the effort to do that has been put in [by the council]. Nowhere in the borough do we have a property like this, that’s 7 acres on level land. That’s its true value.”
This story was fact-checked by Oliver Morrison.
Nick Keppler is a Pittsburgh-based freelance writer who has written for Reuters, Slate, Mental Floss, Vice, Nerve and the Village Voice. Reach him at email@example.com.