Discussions to have a private buyer take over the former Penn Theater progressed Wednesday, but talks remain in the early stages.

Representatives from the city redevelopment authority, the Pittsburgh History and Landmarks Foundation, Mayor Tom Donaldson and a private firm met to discuss the firm potentially taking over the mortgage.

The authority is seeking a way out of the $250,000 mortgage on the theater after the state said it could not use state grants to make payments on the property earlier this year.

The Pittsburgh History and Landmarks Foundation holds the mortgage. The authority used funding through the foundation’s loan program in 2007 to buy the vacant building in the 100 block of Main Street.

Arthur Ziegler Jr., the foundation president, said Thursday the conversation was positive, but stressed it was too early to comment on any potential deal.

“I couldn’t tell you what is feasible with the theater now,” he said. “We just had a walk-through of the structure.”

Ziegler said the theater, which many consider an eyesore, is not in terrible shape.

“It was surprisingly solid,” he said. “It needs a good cleaning.”

While the building might be better than expected, Ziegler said facade restoration, electrical work and roof repairs are among the renovations required.

He said it is too early to estimate what it would cost to renovate the building.

Art Cordwell, the executive director of the authority, said a private firm is interested in buying the property, but does not want to make the same monthly payments the authority is obligated to make.

The authority is supposed to pay about $2,200 a month on the property, but has not made payments in several months.

Cordwell would not name the potential buyer.

Ziegler also would not comment on any potential buyer, but said the foundation wants to help restore the theater.

“We all want to save the theater,” he said. “We all want to be as flexible as we can.”

If a buyer were to take over the building, it could be renovated into a theater or some other community center, Cordwell said.

Once reopened in some capacity, revenue from the building could be used to pay off the mortgage.

The redevelopment authority cannot make renovations to the structure due to restrictions by the state preventing it from spending any grant money on the building.

Cordwell said the parties hope to meet again in 10 days.

“They seem like they want to move on it,” Cordwell said of the foundation. “They think they can put together some kind of deal.”

Ziegler said there is no timetable for how long discussions could take.

“We don’t set timetables,” he said. “We’ll just continue to move further along.”

Donaldson attended the meeting on behalf of the city. While the city is not involved financially in the theater, he said it is an important aspect of the downtown district.

“The time for talking needs to be over,” he said. “We need a plan to go forward.”

Donaldson said he felt it was a successful first step to restoring the structure.

“I think what was discussed is viable,” he said. “I’m very hopeful based on the preliminary meeting.”

Cordwell also is optimistic something can be done, but said the financial analysis on the potential sale is still in the early stages.

One of the biggest questions is whether the potential buyer of the building could generate enough revenue to pay the bills.

Centre City financing

The redevelopment authority also is awaiting a verdict on the financing for the Centre City project hotel.

J.S. Capitol Construction, the developer of the project, expected NexTier Bank to make its decision Tuesday on whether to finance $3 million for the construction of the proposed 80-room Marriott Springhill Suites hotel.

However, Cordwell said the bank did not get all its information in line for the bank board to review by that date.

The bank will instead have another committee meeting with the developer today and will then present the proposal to the board of directors on July 29 for a final decision.

The redevelopment authority will pledge $2 million in state grants to the project, and will be 40 percent owners of the structure when completed.

The hotel is expected to join a 225-lot parking garage and a new Rite Aid Pharmacy as part of the Centre City project on the block between East Jefferson, East Cunningham, South Main and South McKean streets.

Construction on the Rite Aid is under way. The pharmacy is scheduled to open in October.

The fate of the parking garage is dependent on the hotel.

Cordwell said if NexTier bank does not approve financing, then the hotel would almost certainly be delayed until next year, as the developer would have to go through the loan process again with another bank.