Within several months, the long-delayed Fraser Centre is likely to start taking shape in downtown State College, the project developer told State College Borough Council on Friday.
Susquehanna Real Estate President Jack Kay said occupants are lined up for 70 percent of the 160,000-square-foot complex. But the project needs to reach the 80 percent threshold — another 23,000 square feet — before it can secure the construction financing needed to break ground, he said.
That is ‘not something that can be achieved in a matter of weeks,’ but more likely a goal that Susquehanna can achieve within a few months, Kay said.
And to allow Susquehanna extra time ‘sufficient to … get all of these things pinned down,’ Kay asked the council for a year-long deadline extension for a $1.8 million land payment.
The payment, currently due by Dec. 31, would finalize the developer’s acquisition of borough land needed to build the 12-story center. The $51 million project is expected to be built along the 100 block of South Fraser Street.
Susquehanna has already made an initial, $1.475 million payment toward acquiring the land, which covers just more than an acre between West Beaver Avenue and Calder Way. Construction on Fraser Centre was to have started in 2008, but project leaders said the rocky economy has made it dramatically tougher to secure occupants and financing for the effort.
‘We have tried to stay consistent with and loyal to the intent of why this project is being put together in the first place,’ Kay said Friday. Those goals, he said, include new land uses in the downtown, more economic vitality in the downtown and a strengthened tax base. He estimated Fraser Centre would bring 30 to 40 families into State College as residents and 200 new employees into the downtown.
Council members did not make an immediate decision Friday on the deadline-extension issue. Kay said Susquehanna would provide the borough a substantial interest rate if the council agrees to delay the $1.8 million payment deadline. He also said the arrangement would include incentives for Susquehanna to fulfill the obligation sooner rather than later.
But complete terms of the Susquehanna request — including the exact interest rate offered — were not immediately disclosed Friday. Council members are expected to discuss the issue at a closed-door executive session before voting on it. A public vote could come as soon as Dec. 6.
‘I would be reluctant to say that we should accept new promises to extend the viability of the project and not help you by terminating the project,’ council member Silvi Lawrence said.
Of the seven council members, she appeared to be most critical of Fraser Centre and the evolution of its planned business model. Kay outlined several tentative changes in the project plans, including a hoped-for addition of a boutique hotel and an expansion of a planned cinema operation. The changes would reduce the number of condominiums available in the complex and add a dining component to the cinema space.
‘To me, the whole scope of the project has changed tremendously’ over the past five years, Lawrence said, lamenting the erosion of anticipated residential units. ‘You have repackaged the building totally differently. … I’m greatly concerned that we’re going to delay this whole project for another year.’
One non-council-member borough resident, Mary Marino, spoke at the Friday gathering and aired a similar sentiment. ‘This taxpayer says it’s time to cut our losses’ and move on, Marino said.
Other council members sounded more optimistic about Fraser Centre. Theresa Lafer credited Susquehanna for being ‘flexible to changing needs and changing economics. You didn’t simply walk away, leaving us with an empty corner. …
‘There is a very slow and very steady uptick to the larger economy, and I think it will take only one or two really good leases to be signed for us to have a date when this will be done,’ Lafer said.
Likewise, council member Tom Daubert said that ‘I’m still as much with (Susquehanna) as I was five years ago. … I certainly will support them for an extension of time in order to bring this to fruition. I really want to see it.’
If council were to deny a deadline extension for the upcoming land payment, and if Susquehanna were to miss the payment, the borough could begin proceedings to reclaim the Fraser Street property.
But Kay, meeting with reporters, said Susquehanna could borrow money to make the payment if the council does not extend the Dec. 31 deadline. He emphasized that Susquehanna has been paying property taxes on the unimproved Fraser Street land.
The development group also has allowed the borough to continue operating a public parking lot there until Fraser Centre construction begins. Overall, to date, Susquehanna has invested just more than $6 million of its own money in Fraser Centre. In addition, the plans have received $4 million in state funding, to be used for the cinema or other public spaces, and $2.5 million in local tax-increment financing, or TIF money.
That TIF money will be put toward the $13 million cinema portion of the project, Kay said. Tax-increment financing allows a portion of the new tax revenue created by a project to be directed to its debt service.
Among the evolving project details that Kay shared with the council and reporters on Friday:
- The number of owner-occupied condominiums included in the plans has declined from its original number — 54 — to 32, accounting for about 30,313 square feet.
- The amount of space included for a 10-screen cinema has grown by about 25,000 square feet, to a total of some 82,800 square feet. The expanded cinema space claims some of the area once designated for retail. Planners are looking to incorporate some restaurant space and advanced, family-oriented entertainment attractions there, to make movie-going more of a drawn-out experience, Kay said. He declined to comment on whether Cinema Center is still the designated cinema operator, but he said the cinema component of the project is ‘in better shape than it was.’
- Two retail spaces are available in the project — one each at Beaver Avenue and Miller Alley and at Fraser Street and Calder Way. Together, those spaces house about 4,000 square feet. Occupants have yet to be finalized for those areas.
- A two-story boutique hotel could occupy two stories of Fraser Centre — if project planners can secure a commitment from a hotel operator. Those two stories had once been designated for condominiums. Susquehanna has talked with multiple hotel franchises, ‘a couple of which are national chains,’ but has yet to solidify a hotel deal, Kay said. He told reporters that any hotel operator would likely want a liquor license in the space.
- About 15,000 square feet of office space has been committed for use. Susquehanna is working to secure office occupants for an additional 15,000 square feet. Penn State has shown interest in using some of the complex’s office space, Kay said.
- Susquehanna is still considering prospects for a pedestrian bridge connecting Fraser Centre to the Beaver Avenue parking garage. Kay said the developer would look at a variety of funding sources, including state funds, if the idea were to gain traction. But the concept didn’t appear to have overwhelming support on the council. ‘As a taxpayer in Pennsylvania, a state which is unable to fund libraries, I would be really, really upset if it funds a bridge to a garage,’ said council member Peter Morris.
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