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Patty Kleban: Is It Too Late to Ask for a Revote on the TIF Approval for Fraser Centre?

by on June 18, 2012 6:45 AM

Every once in a while, I see a really cool house in downtown State College that is for sale. For a brief second, I think about moving closer to town.

I love the quaint neighborhoods. The historic houses. Walking distance to town and campus. Less frequent need for a car. Shorter commutes to activities for my kids.

I picture a warm summer evening, dinner downtown and then a walk back home through the streets of State College.

And then I remember. It’s the Borough of State College.

For many who live outside the city limits of downtown State College, the decisions and regulations imposed by those who oversee what goes on in the Borough can sometimes seem sort of silly.

The latest is the Fraser Centre.

A partnership between a private entity and the Downtown Improvement District, working with the support of Borough Council and their many advisory boards, decided that bringing in a high end condominium project with street level retail and movie theatre space would attract more people and subsequently more business to the downtown.

That was five years ago.

Almost immediately after Fraser Centre was approved in 2007, the economy tanked. The housing market took a downturn. It took a while to get to State College but even the relative security of our little economic bubble has seen some tough times. According to the developer, Susquehanna Real Estate, sales of the condos or the retail space has not moved as quickly as hoped.

As a result, the project was redesigned with fewer condos and different retail space.

Then, with changes in Harrisburg and several new sets of eyes looking at budgets for Penn State, university administrators decided to withdraw from their agreement to rent some of the space at the Fraser Centre (including the movie theatre). With the loss of the PSU tenant and their guaranteed use of theatre space, the movie theatre company pulled out of their agreement too.

Another redesign so the proposed “art house” movie theatre - condo project now has fewer condos and no movie theatre.

A commercial development is impacted by the economy and groundbreaking is delayed or a project is redesigned. Why should we care?

The answer is taxes.

Fraser Centre was approved for Tax Increment Funding (TIF) and that means an impact on our taxes.

What is Tax Increment Funding? TIF offers incentives for developers to build projects in geographical areas that might not otherwise see growth by allowing the developer to basically delay their property tax payments. TIF has been used all over the country to boost areas, particularly in urban centers, that are in need of an economic shot in the arm.

In 2007, the Centre County Board of Commissioners and the State College Area School Board (SCASB) both approved Tax Increment Funding for Fraser Centre in what was seen by some to be “a borough cocktail party” decision.

At the time, many questioned how a movie theatre and high priced condos in a thriving university community met the criteria for specialized tax incentives for development in a “blighted area.” Despite serious questions from the public, both the SCASB and the County Commissioners approved diverting taxes to support the Fraser Centre project.

Let me say that again. Approximately $3 million in taxes diverted from the SCASD and $600,000 diverted from the county as incentive to build apartments and a movie theatre in downtown State College.

A lot has happened since 2007. First, the removal of the theatre and repeated redesign of the project could indicate that the TIF approvals for a “theatre project” are no longer valid. Should the TIF agreement with the SCASD and County Commissioners have to be reconsidered given the significant changes in the project description since it was approved?

Second, the reduction in funding from Harrisburg and the double whammy of the depressed housing market (reduced property taxes) and the retirement system mandates for school districts and local governments, may suggest that in today’s climate, those boards would not approve the diversion of much needed tax dollars.

More importantly, with tighter budgets, cutting of programs, reductions in staff, and proposed tax increases, would the Harris, Patton, Ferguson and Halfmoon township residents of the SCASD and county residents in areas like Phillipsburg or Penns Valley agree to the use of their tax dollars to support a condominium-retail project in the Borough of State College?

The delays in this project may be to our collective advantage. Most of the school board officials who voted to support the TIF for Fraser Centre were voted out in 2007, after a similar waste of over $4 million in SCASD tax dollars in the troubled high school renovation plan.

The faces of the county commissioners have changed since 2007 as well. Both of these boards have shifted in the direction of fiscal responsibility and prioritizing the public voice in decisions that impact spending. Can we ask them to take a look at where we stand with this project and our tax dollars?

Is it too late to ask for a revote on the TIF approval for Fraser Centre?

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Patty Kleban is an instructor at Penn State, mother of three and a community volunteer. She is a Penn State Alumna. Readers of State College Magazine voted her Best Writer of 2010 and 2012. She and her family live in Patton Township. Her views and opinions do not necessarily reflect those of Penn State.
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