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A $36,000 subsidy toward next year's operation of the Palisades Ballroom will be withheld until the non-profit board that runs the landmark dance hall provides an audited statement of its finances.

Furthermore, several council members are angry over rumors that the Redevelopment Authority of the City of McKeesport wants to sell the Palisades after the city has invested more than a million dollars in community development money towards the building's improvement.

If neither the Redevelopment Authority or the non-profit corporation that runs the Palisades can provide audited financial reports, said Councilman Darryl Segina at Wednesday night's meeting, "then why are they requesting any money from this council?"

A one-page summary emailed to city council by the Palisades before the meeting was not adequate, he said.

"I've been involved in events at the Palisades, and I know how important it is to the city," Segina added, "but there is such a thing as accountability. We have asked for three years for these reports and have not gotten them."

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A sometimes-testy argument over the future of the Palisades and the adjoining McKees Point Marina caused some sparks at an otherwise routine city council meeting.

Both the marina and Palisades are legally owned by the Redevelopment Authority; the marina is operated by the city and its finances are audited annually.

Council as expected passed the 2010 budget on a 6-0 vote; outgoing Councilman Paul Shelly Jr. was absent.

The budget reduces spending by about $1 million and includes no tax increases, but is being balanced with the help of an expected $720,000 "host fee" payment from the city's sewerage authority.

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City officials expect to end 2009 with between $250,000 and $500,000 in a reserve fund, and will be able to make a $658,000 payment into McKeesport's municipal pension fund before Dec. 31 to avoid late fees and penalties, City Administrator Dennis Pittman said.

But the budget includes a caveat --- on Segina's suggestion, $36,000 of a proposed $48,000 subsidy toward the Palisades will be withheld pending a detailed statement about the ballroom's operations from the non-profit McKees Point Palisades Performing Arts Corp.

"The taxpayers have a right to know," Segina said. The summary sent to council on Wednesday, for instance, shows the Palisades breaking even or making a small profit, he said, but doesn't indicate where the city's subsidy was spent.

If the $36,000 isn't reflected in that statement, he said, then the Palisades is running at a loss.

The remaining $12,000 of the $48,000 line item represents part of the salary paid to marina manager Ray Dougherty, who also serves as the city's information systems administrator.

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Mayor James Brewster said the Redevelopment Authority may not legally sell the Palisades or the marina without city council's consent.

Furthermore, the mayor said, he would be opposed to selling the Palisades or the marina unless the city realized a significant profit.

"If someone were to offer us $3 million, then we should listen," Brewster said. Otherwise, he said, council should treat them as "valuable attractions" that "add to the viability" of McKeesport.

"There's not a week that goes by that you don't hear the McKeesport Palisades being mentioned on the radio," Brewster said. "It has brought a great deal of notoriety to the city of McKeesport. And it has really flourished in the last couple of years.

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"Between the Palisades, the marina and the new bike trail, if you don't think that part of the city has received a complete makeover, then I don't know what your vision is for the city," he said.

Brewster said council should not be overly eager to sell either the Palisades or the marina, predicting that the eventual arrival of riverboat gambling in Pennsylvania will only increase their market value.

"You've got two rivers and somebody's going to want to make money down there," he said. "There is huge potential on that site."