The U.S. Postal Service on Friday backed out of plans to build a sprawling 800,000-square-foot distribution center in Bond Hill.

        Citing financial problems, postal officials told Mayor Charlie Luken they are scrapping the expansion and will keep 2,300 employees working at the facility on Dalton Street in the West End.

        “They don't have any money,” Mr. Luken said. “From the city's point of view, it's not a bad deal.”

        Not only will 2,300 jobs stay in Cincinnati, but the city will save $10 million it had pledged to the project.

        The Postal Service has also promised to repay the city $2 million to $3 million for improvements made to the Bond Hill site in anticipation of the move.

        The new center was supposed to be the cornerstone of a plan to revitalize Bond Hill and pump millions into the Seymour Avenue Business District.

        “The post office was the driving force,” said Councilwoman Alicia Reece, who crafted the revitalization plan last year. “Certainly with the additional 2,300 jobs, we planned to attract more retail.”

        The relocation plan had already brought in new businesses and had helped to keep old ones from leaving, she said.

        While she was disappointed, Ms. Reece said the key was keeping the post office in Cincinnati.

        Postal officials confirmed the decision to pull out was made for financial reasons.

        In a letter to Mr. Luken, Rudy Umscheid, vice president of facilities, said the “projected deficit for the current fiscal year has made it necessary to reduce capital expenditures on new facilities.”

        Deputy City Manager Richard Mendes said Friday's announcement came as a surprise.

        “But first and foremost, we keep the jobs here,” he said. “The post office made a real commitment to keep them here.”

        Those jobs are what pushed officials to broker a deal three years ago with the Postal Service to move onto the grounds of the former Pauline Warfield Lewis Center, a state mental hospital.

        The plans had called for construction of the $116 million facility to be finished by 2004. The current hub processes between 5 million and 8 million pieces of mail daily.

        But in March, postal officials announced they were pulling the plug on all new construction and leases for the rest of the year, affecting more than 800 planned projects in all states.

        Even so, city officials remained optimistic about the local project.

        Mr. Luken said the city still has reason to be optimistic.

        “I imagine people in Roselawn will be happy not to get the truck traffic,” Mr. Luken said, referring to several resident complaints that the new facility would generate too much noise.

        He said the city will be repaid for its work and that the Bond Hill site is ready for a new tenant.

        It also gets to “reprogram” $10 million it had set aside for the project.

        While Mr. Luken initially said the money could go for neighborhood development, no plans have been made to spend it.

        For now, the money will likely be funneled into the general fund, which faces a $17 million shortfall next year.

Children's Hospital to keep booming
Owner takes blame for mishap
Postal Service can't deliver new facility for Bond Hill
Bad year for raise, UC faculty advised
Fuller's funds lag Luken's
It's St. Rita Fest weekend
Jobs initiative failed 1,000, organizers say
Metro sprawl above average
Officers trained on traffic stops
Pleasant Ridge tower dismantled
Police to confer on sprayings
Sparks fly over Norwood station
Thief's day of wine and roasts
Tristate A.M. Report
Volunteer patrol on uneasy street
Center gets funds from United Way
Edgewood coach converted dream to fieldhouse
HOWARD: Neighborhoods
MCNUTT: Ultramarathon
Airships' future beyond ads
Program to help Appalachia
Taft plans 'energy summit' for Ohio
All shelter records sought
Cincy-Louisville route still quirky
Former governor's ecampus.com sold
Immunizations being delayed
Kentucky News Briefs
Western Ky. devours phone numbers