The city-county Sports & Exhibition Authority awarded a $926,419 contract to demolish 11 Uptown buildings along Fifth Avenue and behind the Epiphany Church, where a new arena would be built.

Board members voted to enter into contracts to design the demolition of the former St. Francis Hospital building on Centre Avenue. Penguins co-owner Mario Lemieux's development group bought the site for $7.5 million in 2001.

The latest arena offer by Gov. Ed Rendell and local officials could include having the sports authority pay $8.5 million for the hospital site. The Penguins would use that money as a down payment on the arena.

Executive Director Mary Conturo declined to comment on the negotiations but said the design contract for the hospital site does not include any actual work on the building.

"We're just getting ready," she said.

State Sen. Wayne Fontana, D-Brookline, who serves on the sports authority board, said he remains optimistic about working out an arena deal with the Penguins.

"The only good point I know is they continue to talk," Fontana said. "That's always a good sign in negotiations."