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County Commissioners OK Tax Assistance Program for Redeveloping Older State College Buildings

by on June 05, 2019 1:00 PM

Centre County commissioners agreed on Tuesday to include county taxes in an abatement program aimed at revitalizing historic properties in downtown State College.

Commissioners voted unanimously to approve the the Local Economic Revitalization Tax Assistance (LERTA) ordinance, following a request from the borough, which in May approved a LERTA ordinance for local taxes on improvements to designated properties.

The LERTA applies a graduated increase on tax payments for the value of improvements made to about two dozen aging buildings. The property owner would continue to pay taxes on the assessed value of the building before rehabilitation, but would have a phased implementation of taxes on the increased value created by the improvements, adding 10 percent per year for 10 years.

It can only be applied for commercial use, not residential, and a minimum of $75,000 in improvements will be required to be eligible for the LERTA, which has been available to local taxing authorities in Pennsylvania since 1977 to help revitalize aging buildings.

To maximize the incentive for adaptive reuse of historic properties instead of demolition and new building, the borough asked the county and State College Area School District to consider enacting a LERTA program as well. The school board has not yet set a date to consider the measure.

"It really is something the borough has given long thought to," Commissioner Steve Dershem said. "Normally I would question this a little harder, but I really get the idea that you’re going to take some areas that really need a shot in the arm and give it to them. I think it will be good for the State College Borough community."

Commissioner Mark Higgins said the program is limited to 25 downtown core properties and that in the long-run will increase tax revenue while revitalizing aging buildings.

"In the short run, it’s really not costing the county, the school district or the borough any tax revenue," Higgins said. "Over the longer term it actually will increase property tax revenue from those renovated historic structures."

The properties are mostly included in an area bounded by College Avenue, north of Beaver Avenue, and between South Burrowes Street and Locust Lane, along with several properties south of Beaver Avenue between Fraser Street and South Allen Street and north of West Fairmont Avenue.

Among the properties is the 86-year-old Glennland Building at 205 E. Beaver Ave., currently home to apartments and offices. Scholar Hotel Group has submitted plans to convert the Glennland to a 72-room boutique hotel with professional offices in the basement area.

Gary Brandeis, president and founder of Scholar Hotels, explained at a State College Borough Council meeting in April that a LERTA program helps alleviate some of the financial risk involved when starting the process of redeveloping old buildings.

"In this case, in redeveloping a historic building, a lot of the risk is unknown until we actually get into the building and start the actual process," he said. "That means interior demolition, looking at the inside of the façade, looking under the roof and the parapet and really understanding the true viability of the redevelopment. The LERTA program gives us the opportunity to take on those additional risks."

Also among the properties is the school district's Fairmount Building, which currently houses the Delta Program. If the district decides to sell the building after Delta moves to the new high school North Building on Westerly Parkway next school year, the LERTA would then be available to encourage a buyer to redevelop it commercially.

Some properties, like several fraternity houses on East Beaver Avenue, currently have residential uses and would need to be converted to commercial uses for LERTA eligibility. Many others currently have mixed uses, like the Glennland or 123-127 W. Beaver Ave., which houses Saint's Cafe and Penn Pide on the first floor and apartments on the upper floors. Only improvements made to the commercial portions or conversion of the residential portion to commercial use are eligible.

"We’ll be very excited to see some of the projects in those areas revitalized and invested in," Commissioner Michael Pipe said. "Even though there is an abatement and the schedule is over 10 years, it will bring in more revenue at the end of that decade."

Geoff Rushton is managing editor for Contact him at [email protected] or find him on Twitter at @geoffrushton.
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