Developer Seeking Tax Abatement for Auto Dealerships, Other Potential Commercial Developments on Shiloh Road

The real estate arm of a Pennsylvania-based auto dealer is looking to develop two parcels on Shiloh Road near I-99 for commercial uses and is hoping to get a tax abatement program for a portion of the properties to assist with the cost of basic infrastructure for the site.

Ron Ferris, the CEO of Bobby Rahal Automotive Group and owner of Ferris Land Development, gave a preliminary overview of the proposal on Monday night to the State College Area School Board, which controls the largest piece of local taxes for the properties in question. He asked the board to consider hearing a more formal presentation at a later date for a Local Economic Revitalization Tax Assistance (LERTA), a program intended to phase in taxes on improvements to a property over a period of up to 10 years.

The two properties involved total 61 acres — the 45-acre Rogers farm on the west side of Shiloh Road and 16 acres of the Clair farm on the east side. Both are located in Benner Independent, the section of Benner Township that is served by and pays taxes to State College Area School District. They were rezoned from agricultural to commercial in 2007 following the opening of I-99, but infrastructure and utilities including sewer, water and gas have still not been extended to the properties.

“It made great sense to rezone these two parcels commercial being that they are now right at an interchange of I-99, but what failed to happen was the rest of the infrastructure,” Ferris said. “So these parcels have sat commercial without infrastructure since 2007.”

Rahal wants to move its State College Honda and Lewistown Lexus dealerships to approximately eight to 10 acres at the northern end of the Rogers farm, which Ferris said his company has a contract to purchase. He also intimated that an unnamed big box store may have interest in building on the site.

“If my plan goes through, about two weeks ago I signed a deal with a big box down in Harrisburg,” Ferris said. “They’re buying 22 acres of commercial land from me. I would love to bring them up here and have them take the other side of my 45 acres.”

Ferris said he is working with the Clair family because they are not developers but also need utilities brought to their property, which they’ve had interest in selling.

Much remains to be determined about how the development would move forward and how the LERTA would be implemented, but Ferris said he expected the tax abatement would need to apply to about 24 of the 61 acres.

LERTA, which has been available to local taxing authorities in Pennsylvania since 1977, provides an incentive for revitalizing industrial and commercial properties defined by a municipality as “deteriorated.” Taxes continue to be paid on the assessed value of a property before improvements are made, but the property owner then has a phased implementation of taxes on the increased value created by the redevelopment. Municipal, county and school taxing authorities choose independently whether to participate.

Ferris’s preliminary proposal is a typical LERTA structure, starting with no taxes paid on improvements in the first year then phasing in 10% each year until reaching the full value.

He estimated that the two dealerships alone would result in about $100,000 in school taxes per year. Over the 10-year abatement period, the school district would collect about $450,000 before starting to collect the full amount in year 11.

Ferris noted that the district currently collects little in taxes from the two properties and by year two of the abatement schedule it would already be getting a boost. Any development on the parcels beyond the LERTA area would be taxed on 100% for improvements up front.

“The dealerships are roughly going to be one-eighth of the commercial land here,” he said. “So if you multiplied it out, realistically there could be $800,000 a year in school taxes generated.”

Infrastructure and utilities for the site are expected to cost about $1.5 to $2 million, Ferris said. While the Spring Benner Walker Joint Authority was recently granted approval to extend sewer service on Shiloh Road, Ferris said there are still significant infrastructure needs. Water and gas lines need to be extended to the area, while Spring Valley Road, which currently functions as an access drive, would need to be converted to a proper road and a traffic light would likely need to be installed at the Spring Valley-Shiloh intersection.

“The costs here, you’re looking at a couple million dollars of infrastructure needed, which is really quite large for any one developer,” Ferris said. “That’s why I’m coming to you and working with the Clair family to put together a partnership so that we can bring the utilities, and thus we can develop this area.

“If you’ve done any commercial development, there are very few people who are willing commercially to come in and spend this kind of money on infrastructure unless they’re doing an extremely large project. So far, these parcels have been up for sale and no one has offered to do that.”

Two LERTA programs are currently in effect in Centre County: one for the Bellefonte Waterfront area spurred by the planned hotel and condominium project there and one for 25 historic buildings in downtown State College.

While the borough and county adopted the downtown State College LERTA in 2019, the State College Area School Board at the time rejected it. The Scholar Hotel in the Glennland Building was set to be the first project to benefit from that LERTA, and while it still moved forward and opened in 2021, the developers said they had to retool their plans after losing out on the biggest piece of the tax abatement.

SCASD Finance and Operations Officer Randy Brown said on Monday that the Shiloh Road proposal “looks a little bit different to me,” compared to the downtown State College request, though he said he wasn’t prepared to elaborate further.

Ferris asked the board to consider hearing a formal presentation from Delta Development Group, a Harrisburg-based consultant that developed the LERTAs for State College and Bellefonte.

Board member Deborah Anderson said if the board does receive a formal presentation, she wants it to include detailed specifics, while Amy Bader and Gretchen Brandt questioned whether the two parcels could even qualify as deteriorated properties.

Ferris said Delta Development Group is familiar with the properties and seemed confident it would qualify for a LERTA. Brown asked Ferris to provide confirmation from Delta that the properties fit the scope of LERTA before setting up a formal presentation, “to make sure we’re not spinning our wheels.”

Board member Dan Duffy suggested the LERTA could also be phased over a shorter time frame.

“There’s a lot that would need to be defined in this for it to begin to make sense in terms of what we might be getting ourselves into,” Duffy said.

Responding to a question from Brandt, Ferris said that without the LERTA the dealerships remained a possibility because they could be developed with less infrastructure needs, but the broader development would be unlikely.

“That would be too great of an expenditure… It would cost almost the cost of the land,” he said. “It would not be to the scale and it might take a long time to occur.”

Ferris said Monday’s overview was meant to gauge interest, and he hoped that the board would hear more details from Delta’s presentation, “so that you can start to recover some of your tax dollars. Otherwise I don’t know how much longer you are going to be waiting for these tax dollars.”