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Editorial: Borough Should Sell Verizon Building

by on July 21, 2010 3:10 PM

The State College Borough Council needs to stand up, admit to its mistakes and resolve them.

The council purchased the former Verizon Communications building, 224 S. Allen St., with little to no input or discussion from the community and has now been sitting on this dilapidated building for three years. This building was not in good condition when it was purchased for the full listed price of $750,000. The borough hoped to use it for the Discovery Space Children's Museum, but a museum official said in today's article on StateCollege.com that she is happy not to be going into this building.

Had the museum organizers been fully consulted, demonstrated a realistic plan and outlined their resources before the purchase? How much thought was put in to this before taxpayer funds were spent?

The Verizon space had been sitting empty for quite a while when it was purchased, showing that the market-dictated price should have been much lower.

The council owes it to the taxpayers to recoup the money that has been spent on this building -- not only the $750,000, but also interest and lost tax revenue for the last three years. By August 2010, approximate interest alone would amount to an extra $125,289.55 -- using six percent borrowed and amortized over 30 years.

County tax records show the Verizon building, if it weren't owned by the borough, would generate an additional $17,256.03 in property tax revenue this year alone. That would be split among the school district, the county and the municipal government. Since the borough purchased the building, it amounts to approximately $48,000 in lost tax revenue.

The mortgage payments on $750,000 at six percent over 30 years (a very good rate for commercial property, and probably better than attainable) would be at least $4,496.63 per month not including taxes, utilities and upkeep, according to Bankrate.com.

According to many commercial developers, rent for a commercial property should at least equal one percent of its value in monthly rent, which would be $7,500 per month or approximately $270,000 since the borough purchased the building.

The property has been rented out to the local Democratic party for the past couple of years. The current tenants are the Centre County Democratic party, the Joe Sestak senatorial campaign and the Michael Pipe campaign for Congress, and all those leases will end in November, according to the borough. The total rent received by the borough for the former Verizon building from these three tenants is currently $1,739.80 per month, which barely covers the annual lost tax revenue.

The question is: Is the borough adequately trying to mitigate the expenses or is the Democratic party unfairly benefiting from taxpayer funds?

In today's economy, if we (the taxpayers) are to recapture those funds, council will probably need to rezone that area and possibly make other concessions, like removing the parking-space restrictions to increase the property value. We, the taxpayers and citizens, need to recoup the more-than $900,000 we're owed. Borough Council needs to put a plan into place to recoup those funds and divest itself from this property.

Borough Council, like many other government entities, has freely spent our money on pet projects. Consider the current borough building (known to some as the Taj Mahal), which was to be funded in part by the sale of the old borough building on Fraser Street. Instead, the council essentially bought the Medical Arts Building on the corner of Beaver and Fraser, supported tax incentives for the property (more lost tax revenue) and encouraged taxpayer funding for an out-of-town business to re-develop the site, which will compete with other local businesses and is asking for more state funding (from you, the taxpayer). That project is currently still a pile of dirt. But that is another topic. (See more details here.)

We need to hold our representatives accountable for the financial decisions that they make on our behalf.

I welcome your comments and feedback.

Related coverage: Discovery Space Children's Museum In Need Of Donations, Organizers Say; Museum Plans Move To Foster Avenue



Dan Myers is the president and publisher of StateCollege.com. He can be reached by email at [email protected] or you can follow him at http://www.twitter.com/danielmyers
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