State College Council Extends Payment Deadline for Fraser Centre Land
State College Borough Council voted 5-1 Monday night to extend a critical payment deadline for the planned Fraser Centre project.
Council member Don Hahn cast the sole dissenting vote. Only council member Silvi Lawrence, a vocal critic of the project, was absent.
The borough staff had recommended that the council approve the one-year extension, which will give the project developer -- led by York-based Susquehanna Real Estate -- until Dec. 31, 2011, to make a $1.8 million payment to the borough.
That payment will finalize the developer's acquisition of just more than an acre of borough property on the 100 block of South Fraser Street, where the $51 million Fraser Centre is to take shape. The 12-level, multi-use project is two years behind schedule, and Susquehanna President Jack Kay has said the developer needs extra time to finalize the evolving project details and line up financing. Rocky economic conditions have taken a toll on the plans, Kay has said.
Project supporters have applauded Kay for sticking with the project and for being flexible. Skeptics have questioned the planned use of government funds to help support the project, as well as its prolonged time line.
Hahn said he voted against the payment-deadline extension for two reasons. For one thing, he said, he would like to see the agreement force more immediate payment of at least a portion of the principal amount. He also thinks a full year-long extension "seems a bit much," and would have preferred a three- or six-month extension instead, he said.
As agreed to, the extension will require the developer to pay the borough a five-percent interest rate during the first six months of 2011. A $45,000 interest payment will be due in early January.
If the $1.8 million principal isn't paid in full before July, the developer will be required to make another interest payment, "in advance, on the outstanding amount due," borough Manager Tom Fountaine said.
The prescribed interest rate for the second half of 2011 will jump to six percent if the developer does not secure building-foundation permits by mid-year; otherwise, the rate will remain at five percent. The developer retains the right to pay the $1.8 million in full or in part at any time.
"Prepaid interest will be prorated as a credit toward the unpaid balance of $1.8 million for any months during which no monies are owed to borough and interest has been paid," the agreement reads.
Fountaine said the interest revenue will be directed to the borough's capital reserve fund. (Earlier Monday, in an e-mail message, Fountaine indicated that the borough is paying a 3.23-percent interest rate on its own outstanding debt.)
The delay in $1.8 million payment will have no immediate budgetary impact on the borough, Fountaine wrote, as "we have estimated conservatively that the funds would not be available until 2012." Once the money does arrive, he noted, it will be directed to the parking fund and the capital reserve fund for future projects.
Kay has aired optimism that construction on Fraser Centre could begin in a matter of months. The developer has lined up occupants for 70 percent of the planned project, and it needs to reach the 80-percent threshold in order to secure key financing, Kay has said.
In other news at the Monday council meeting:
- The council voted 6-0 to name the brick plaza in front of the State College Borough Municipal Building, 243 S. Allen St., the Mayor Welch Plaza. The designation is meant to honor the late Mayor Bill Welch, who died Sept. 4, 2009. Council members have talked about incorporating some public art as part of the designation, to make the space more personally reflective of Welch. "Let's not forget about that," council member Peter Morris said. "Let's try to make that happen."
- The council voted 6-0 to name Penn State sophomore Ben Pugh the interim student liaison from the University Park Undergraduate Association. Council members agreed in October to create the nonvoting liaison position, designed to improve communications between Penn State students and the borough government. Pugh, a State College Area High School graduate, will serve as the initial liaison from January through April. Later, UPUA Assembly will nominate a liaison to serve for the entire 2011-2012 academic year.