Former theater's future in doubt
The future of the former Penn Theater is in question following the state's rejection of a grant application by the city Redevelopment Authority.
The authority also may be forced to sell its 115 E. Cunningham St. office building due to issues with the grant.
Representatives from the authority met with state officials in Harrisburg Wednesday to discuss the delays in $300,000 of 2013 Community Development Block Grant funding.
The state Department of Community and Economic Development has not allocated the money to the authority due to concerns on how some of it would be spent.
Executive Director Art Cordwell said at the authority's Thursday night meeting that most of the concerns are in the process of being resolved, but added the state will not allocate money to the authority to spend on mortgage payments for the Penn Theater and for the authority's office building.
The authority requested $80,000 of the CDBG funds be spent on acquisition of property. About $14,000 of that would go to mortgage payments on the Penn Theater and about $10,000 would go to pay for its office building.
The CDBG program is administered through the state but also is federally regulated by the U.S. Department of Housing and Urban Development, and is intended to support low-income families.
The state sent a letter to the authority April 22 addressing its concerns with the application.
Here were the issues the authority discussed regarding the grant:
The state told the authority it will not allocate any money to the Penn Theater because there is no identifiable project set to be completed within three years, a requirement of the CDBG program.The authority bought the building in 2007 for about $250,000.Cordwell was not optimistic on the outlook of the theater following the decision by the state.“We're really in a tough position here,” he said.Cordwell said the authority has few options. He said it will have to find other income to support the mortgage or find a buyer to take over the structure.Cordwell said the authority is seeking a nonprofit or a private business to take over the structure.“We had people inquire about it,” he said. “But we haven't been able to work out any details.”The authority's mortgage on the building is about $15,000 per year, authority solicitor Don Graham said.
The authority likely will have to sell its office building as a result of a failed application for a state grant as well.Graham said even with a sale, the authority could stay in the building by leasing it.It also could stay by finding another source of money to pay for it.“We have two choices, but one isn't very viable,” Graham said, adding the authority has limited revenue.The state told the authority that CDBG money is allowed to be spent on the acquisition of property, but not for governmental offices.The authority bought the property Dec. 31 from Cumberland Development for $140,000.Cordwell said the state previously told the authority buying the property was OK.“The state approved us buying the building in the past,” he said. “Someone at the state made a mistake.”Cordwell said the authority did not fight the state on the issue because the federal regulations specifically state the money can't be used for office space.Cordwell said he is confident the authority will find a buyer for its office building, especially since it would already have a tenant lined up.
The Centre City Project also was a focus of the state's concerns, but Graham said the authority seemed to explain the project well to the state.“We addressed their other concerns,” he said.The authority requested $50,000 designated to street improvements for the Centre City block, which is surrounded by South Main, South McKean, East Cunningham, and East Jefferson streets. Part of the $80,000 for property acquisition also was designated for the project.Graham said the public improvements would benefit low- to medium- income residents because the new hotel and Rite Aid set to be built would offer a combined 35 new jobs for them.Cordwell said he does not expect the delays in funding to impact the Centre City Project, which is expected to bring an 80-room Marriott Springhill Suites hotel, a new Rite Aid Pharmacy, and a 225-lot parking garage downtown.
Cordwell said the state will be contacting the authority within a couple days with another questionnaire to clarify a couple items. After the authority completes the questionnaire, the state will send a contract to the city that would begin to start allocating money from the fund, starting with administrative costs.The authority requested $50,000 of the grant for administrative costs. It is allowed to request 18 percent of its funding for that purpose.In addition to Centre City work, property acquisition, and administrative costs, the authority also budgeted $48,000 for city fire equipment, $20,000 for demolition costs, $30,000 for single unit residential rehabilitation, and $15,000 for code enforcement. The state had no concerns with those expenses.At least 70 percent of CDBG funds must directly impact low-income residents.Graham said he believes the $275,000 not dedicated to the Penn Theater and the office building ultimately will be available.The authority also held a special meeting for its 2014 CDBG application at Thursday's monthly meeting.Cordwell said the authority expects to receive about $288,000.“We used to receive about $600,000 a year,” he said.Cordwell said the authority's plans for allocation of the money would likely be similar to the 2013 proposal, including more money to be spent on acquisition of property and street improvements for Centre City.City treasurer Jeff Smith asked the authority to consider spending more money to directly help low-income families during a public comment section of that meeting.“The true purpose of the grant is to help low- to moderate-income people,” he said, suggesting the authority explore improving parks or fixing sidewalks rather than investing it in administrative costs and land acquisition. “I would ask that the authority use a large portion of the grant for tangible projects that benefit low income people.”Smith added he felt that the authority has started to use the grant simply as an additional revenue stream over the years.Mayor Tom Donaldson suggested the authority use some of the money to help the homeless population in the city during the public comment.
