When the deed for the North Catholic High School property in Cranberry came across the counter of the Butler County Recorder of Deeds last month, it wasn't the $4.5 million price tag that caught the attention of Michelle Mustello. As the county's deeds recorder, she sees smaller parcels of land in the county's booming southern tier going for higher amounts.

What stunned her was the fact that the same 29-acre parcel had been sold three weeks earlier for a fraction of that price - $1.2 million.

"That's one heck of a flip," Ms. Mustello commented on the apparent $3.3 million profit.

But is it?

What looked like a bad bargain actually was a balanced business deal with charitable overtones, the qu intessential case of "appearances are deceiving," says the original property owner.

The Catholic Institute of Pittsburgh, the real estate arm of the Catholic Diocese of Pittsburgh, has purchased roughly 71 acres on the north side of Route 228, across from the St. Kilian church and school property, in hopes of developing a new campus for North Catholic High School.

It unfolded like this:

North Catholic in Troy Hill has seen declining enrollment for years, mirroring the decreasing residential base of the city. After a decade of demographic study, the decision was made a few years ago to shift the school to the suburbs where it could capitalize on rising population and room to grow. A search for land commenced.

On Dec. 29, the Catholic Institute bought 29 acres for $4.5 million from Fred W. Hespenheide. Mr. Hespenheide had bought the land Dec. 11 from Frank Mandl for $1.2 million.

Then, by virtue of a deal arranged by Mr. Hespenheide, the institute bought another 26 acres Feb. 2 for $1.5 million from Fortuna Daltorio Real Estate Development and a 14-acre parcel for $2 million from Joseph F. and Vicky M. Urban.

But there were questions.

It wasn't just Mr. Hespenheide's profit on the first land transaction. There also was the matter of the township's long-range plan.

R-1 zoning allows schools

The 71 acres is zoned R-1 residential, the least valuable of zoning categories. The primary use in R-1 is single family-homes on an acre or more of land. A school also is an acceptable usage under that zoning. Commercially zoned land is usually considered worth more money.

Although the township's long-range plan, adopted in April 2009, called for consideration of a higher-intensity zoning in the future, John Trant Jr., the strategic planner for Cranberry, and manager Jerry Andree said no plans had been in the works to rezone the property.

"If anyone was counting on a rezoning commencing at the direction of the township, that wouldn't be wise," Mr. Trant said. "The [long-range] plan is a vision, nothing more."

Attorney Christopher Ponticello, associate general counsel for the diocese and secretary of the institute, said a team of independent experts verified what the Catholic Institute believed: $8 million was a reasonable price for 71 acres fronting Route 228 in Cranberry.

While three separate parcels were bought, the diocese evaluated it as a single deal assembled by Mr. Hespenheide, who owned one parcel outright and held the purchase options on the other two pieces. Option rights generally give a prospective buyer exclusive opportunity to purchase a property within a certain time frame in exchange for payment. The sale also included engineering and wetlands work as well as rights of way, which Mr. Hespenheide procured while preparing the land for eventual sale, an investment he valued at $750,000.

But, what if the school fundraising campaign withers? "We can resell the land," Mr. Ponticello said.

And almost certainly at a profit, said Cranberry developer Don Rodgers, who is behind some of the township's largest developments, including those that line both sides of Route 228.

Mr. Rodgers said he has conducted recent studies on land value in the corridor and called the transaction between Mr. Hespenheide and the Catholic Institute "a very good deal for the church," especially since the diocese can "land-bank," a proposition that involves holding onto property for a long time.

That has happened before. The Catholic Institute bought about 15 acres for $75,000 for the St. Kilian project in 1986 and didn't choose to develop the property until a few years ago. An adjacent 15 acres was bought in 2002 for about $325,000.

Even by current market standards, Mr. Rodgers said, the price on the Hespenheide property is fair. Should the school project fail, he predicted that the diocese could wait until the land is rezoned to a higher intensity district, something he considers an eventual certainty.

"[The Catholic Institute] can land-bank it and watch its value go up," he said.

Original owner, buyer friends

Mr. Mandl laments that the sale may give the appearance that Mr. Hespenheide has taken advantage of the diocese when he actually extended a helping hand.

"I was in a little bit of a pinch," explained Mr. Mandl, a retired baker. Six or seven years ago, his late wife, Mildred, was ill and required expensive care.

Mr. Hespenheide offered $1.2 million for the vacant Mandl property, "a good price" at the time, Mr. Mandl said. Mr. Hespenheide began paying the sum in installments to give Mr. Mandl immediate access to cash.

In addition, Mr. Mandl said, Mr. Hespenheide agreed that, once he paid off the property, he would donate $2 million to St. Kilian, the church to which they both belong.

Mr. Ponticello confirmed that Mr. Hespenheide has pledged to donate $2 million over 10 years to St. Kilian Church. He said the diocese is grateful for the donation, but it was not calculated into the property valuation.

"People talk, but what they've been saying is wrong," Mr. Mandl said. "And that hurt [Mr. Hespenheide]. And that's just plain wrong."

Mr. Hespenheide, a Butler County businessman who restores antique cars, said he's been a "little stung" by all the talk he has heard about the North Catholic land transactions.

"I thought I was doing something good for everybody. I thought we all came out on top. I never expected it to end up [with me looking bad]," he said.

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