State College Council Approves Agreement to Buy Addison Court for $15.75M

State College Borough Council on Monday unanimously approved an agreement for the borough to purchase a downtown apartment building for $15.75 million and ensure it continues as low-income housing for senior citizens and people with disabilities for decades to come.

Under the terms of the deal, the borough will acquire Arnold Addison Court, 120 E. Beaver Ave., from current owner PrimeCore. It will then ground-lease the building to PrimeCore, which will apply to the Pennsylvania Housing Finance Agency for Low-Income Housing Tax Credits to operate and manage the building as low-income housing for a program-required period of 40 years.

If and when the tax credits are awarded, State College will receive an estimated payment of $2 million to $3 million, Borough Manager Tom Fountaine said. If the project does not receive the tax credits by Feb. 1, 2031, the borough can retain ownership of the property, require PrimeCore to buy it back or sell it to another owner.

The deal promises to bring an end to months of angst and uncertainty for Addison Court’s dozens of residents after State College-based developer PrimeCore, which completed its purchase of the property from Beaver Court Associates LP for $6.95 million in June, according to county records, initially proposed razing the building and replacing it with a new student apartment complex. PrimeCore CEO Ara Kervandjian then said he would instead pursue tax credits to preserve the property as low-income housing — but with the caveat the company would return to its original plan if that effort was unsuccessful.

Borough ownership effectively puts an end to the possibility of it becoming a student high-rise.

“I’m certainly in complete support of our acquisition of Addison Court,” Council President Evan Myers said on Monday. “It serves an underserved part of our community and should stand as a building block of affordability and care for the community.”

State College will make an initial payment of $250,000, followed by $5 million at the time the LIHTC application is filed and the remaining $10.5 million at closing in 2027.

The borough will use a still-to-be-determined amount from its inclusionary housing fund toward the acquisition and “will also continue to work with other partners to attempt to acquire additional funds in support of the project,” in addition to the LIHTC payment it will receive, Fountaine said.

Borrowing may be needed to support the purchase in 2027, and repayment of the debt would begin in 2028. While the amount of borrowing is “difficult to estimate” at this point, Fountaine said the maximum real estate tax increase in 2028 to cover the debt service payments would be two mils, if no other funding mechanisms materialized.

“We’re hopeful and optimistic that we have the ability to reduce that number before 2028,” Fountaine said.

The 30-year affordability period of the Low-Income Housing Tax credits used to support the construction of Addison Court in 1994 expired at the end of 2024. Because the tax credits are still in a “wind-down” period, PrimeCore attorney John Haschak said the company can apply for the LIHTC preservation program, which gives preference to existing low-income properties that demonstrate tax credits are necessary to extend long-term affordability.

Preservation eligibility will make the application “a little bit easier,” Haschak said.

LIHTC is competitive and awards are not guaranteed, but Kervandjian has a strong track record with the program. The developer of multiple affordable housing projects in Centre County, Kervandjian said earlier this year that he has applied for LIHTC funding for seven projects since 2012 and has been successful each time in his first application.

PrimeCore has agreements with architectural, engineering and LHTC consultants ready to execute as early as this week to get to work on the complex application process.

“The first round of intent to submit is due approximately two months from now, and there’s a lot of information to gather in the interim,” Haschak said. “We’re willing to move forward as quickly as possible and hopefully take advantage of this first round while it’s still a preservation project.”

Haschak added that the management fee for the property won’t be charged, but rather “baked in” to the borough agreement, rents collected and LIHTC funding.

Kervandjian noted earlier this year that Addison Court has not had any significant renovations and expects it will require substantial rehabilitation, some of which would be mandated by the tax credit program. While not stated in the information presented on Monday night, it appears likely PrimeCore would be responsible for those renovations.

The new deal marks a major turning point in what has been a whirlwind nine months for Addison Court’s residents, where 50 of the 89 mostly one-bedroom apartments are leased.

A year after the original tax credits expired, PrimeCore reached an agreement to purchase the property and submitted a land development plan to construct a seven-story mixed use building mirroring the neighboring Pugh Centre, with first floor commercial space and six floors of apartments geared toward Penn State students.

Tenants received a letter in December from property manager Calibre Residential informing them that all current leases would have an end date of Nov. 30, 2026. Borough and PHFA staff subsequently reviewed legal documents related to the property and said they believed a deed covenant prohibits the eviction of tenants who resided there as of Dec. 31, 2024 without cause before Dec. 31, 2027 because of a required three-year wind-down period after the affordability requirements expired.

Kervandjian vowed his company would assist Addison Court residents with finding new homes. In May, however, following months of criticism from community members and concerns from the building’s tenants, Kervandjian said his “plan A” was to pursue Low-Income Housing Tax Credits that would subsidize rehabilitation of the existing building and require that it remain income-limited and rent-restricted for another 40 years. (LIHTC affordability term requirements have generally increased since Addison Court was first built.)

Myers revealed in early August that the borough was nearing an agreement with PrimeCore to acquire the building and extend the tax credits. Local governments cannot apply directly for LIHTC, but often partner with private entities to do so.

Council member Susan Venengoni said such partnerships will be important in the future development and preservation of affordable housing.

“For affordable housing, we are going to need our own funds,” Venegoni said. “We are going to need partnerships. We need to work together. It’s the only way we’re going to get more affordable housing in the borough, for whatever demographic we’re talking about. It doesn’t just come on its own. Most of the affordable housing we’ve had has been federally funded, so keep this in mind as the 21st Century Road to Housing Act comes into play. We need a housing policy, and we need our own funds so we can work together to create more affordable housing.”

The borough has already asked three neighboring townships to make relatively small financial contributions toward the effort to preserve Addison Court, with Patton Township committing $5,000 and College and Ferguson townships expected to consider the request at upcoming meetings.

Council member Kevin Kassab said he hopes Centre County Government also “can come aboard to help us pay for this important decision.”

Resident Vicki Fong, meanwhile, pointed out that the inclusionary housing fund that the borough will use to support the acquisition exists largely due to fees-in-lieu paid by student housing developers in place of providing a designated number of affordable rental units within their new construction.

Council member Gopal Balachandran said that demonstrates a need for balance of private development and local government initiatives to make affordable housing possible.

“To me, it’s a reminder of the power of government to be able to make and do something really positive in the community,” Balachandran said. “On the other end, it’s also a reminder to me that if the free market was left to its own devices, this would just be purpose-built student housing, and it really required the intervention of the government to be able to do something better that was needed for our community. And yet, at the same time, a deal like this is also possible with a lot of the private development that has occurred in downtown. So I think a balance is what this agreement really points to, and hopefully, is a model for what we try and do and plan in the borough in the future.”

Council member Matt Herndon said his only disappointment is that the inclusionary housing fund has not already brought in enough to cover the entire cost of the acquisition.

“I know there’s consternation on those [student high-rises], but when we weigh that with the consternation of literal seniors being thrown out on the street, I think one is the clear winner, and that would be helping seniors,” he said. “… I just think senior housing is truly a public good. It’s something that private enterprise just won’t provide at this price point. And so, I hope that people in State College can agree, as we heard many comment on, that we should be banding together as a community through our local government to keep this as affordable housing for seniors and the disabled.”

Council members Nalini Krishnankutty and John Hayes both applauded Addison Court tenants who regularly spoke out and local residents who fiercely advocated for them since December.

“The community came out and made it very clear what their wishes were, and council listened,” Hayes said. “And I want to compliment everyone in our community for doing that, because in 2026, show me another town or another place or another community that has said ‘yes, please raise our taxes so we can take care of our most vulnerable citizens.’ And you were very clear that you wanted us to do this and to make the right thing happen. And now tonight, it is going to.”