PITTSBURGH -- The Pittsburgh Penguins and a local real estate development company have announced a big deal: plans to build a Hill District hotel.

The hotel will be the first major development in the new arena agreement between the Pens and Horizons Property Group.

The Penguins organization believes its vision for this hotel project next to the team's new home will help the team, the city, and the neighborhood prosper.

"We're very excited about it. It's the first step in the arena being a revitalization for the entire region. We're excited that we're moving forward this quickly," said Pens president David Morehouse.

With arena construction in gear, county executive Dan Onorato is encouraged by news of the arena hotel.

"The small boutique hotels tell you that there's a lot of vibrancy happening around this area. And that's a good sign for the economy," Onorato said.

The Penguins' just-signed letter of intent for the project calls for 135 rooms, a full-service restaurant, a barista bar, and conference facilities. The team hopes to bring a new look to downtown Pittsburgh along Centre Avenue by the start of the 2010-2011 hockey season.

"It calls for a reconnection of the uptown area with downtown and, doing so, reconnecting the hill with downtown Pittsburgh," Morehouse said.

"This hotel will create jobs. it's one of the things that we talked about when we were talking to the community and the public officials. This will create jobs, will create an expanded tax base. the next step for us will be the fifth avenue retail space that will be built into the arena," said Morehouse.

Even so, Joe McGrath of "Visit Pittsburgh" said the city still needs a mega-hotel linked to the convention center to compete for national conventions.

"A headquarters hotel that matches the size and demand of that convention center…Pittsburgh still needs that," McGrath said.

So far there's no word on which chain will operate the new hotel.

Onorato said the city hasn't given up on the idea of a larger hotel near the convention center, and will be seeking a new round of proposals for such a project.

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