Plans to convert a former State College fraternity house into a new home for the nonprofit agency Centre Helps can move forward following approval of a loan by borough council on Monday night.
Council authorized a $1.5 million loan to the State College Redevelopment Authority for the rehabilitation of the former Alpha Chi Sigma house at 406 S. Pugh St., which the authority has owned since 2021.
The loan will come from the borough’s cash reserves. The authority, which is an independent government entity, will pay it back over 15 years at 5% interest, which would match what the borough is currently earning on investment of the reserves, Borough Manager Tom Fountaine said.
“The borough doesn’t incur any loss of revenue because those funds are currently invested at that rate or higher,” Fountaine said. “We would be recovering any lost revenue from that so there’s no real impact on the borough’s funds.”
The total project cost is about $3.2 million, including a $500,000 contingency for any unexpected issues that may arise resulting from the requirement to install an elevator in the century-old building, borough senior planner Adrian Ott said. Nearly $250,000 in work has already been paid for, and Centre Helps, which will lease most of the first two floors, will contribute $150,000. After the borough loan, the authority will pay for the remaining $1.2 million from its available funds.
A separate borough project is being planned to convert a space at the back of the first floor and the entire third floor into four ADA-accessible affordable housing units.
“That’s the next phase and we haven’t even looked at that yet to see what has to be done to finance that,” Fountaine said. At a meeting in September, Ed LeClear, State College planning director, said the borough will be pursuing grants for the project.
The Redevelopment Authority acquired the building three years ago using borough loans totaling $1.67 million. It was offered to State College by the fraternity organization “at really a bargain price,” Fountaine said last month, with the condition that it must be preserved for housing or human services purposes.
A request for proposals was issued to the borough’s nonprofit housing partners and low-income tax credit housing developers. No formal proposals were received, with organizations citing the cost and low financial return.
With no development partner and ongoing costs for maintaining the vacant property, the Redevelopment Authority began identifying potential tenants from among local human services agencies. Centre Helps —which operates a 24-hour crisis hotline, provides basic needs case management and assistance and more — indicated a need for significant additional space, but must be out of its current offices on South Fraser Street by April 2025.
So the Redevelopment Authority contracted with architectural firm Weber Murphy Fox to design the renovations and solicit bids for converting the first two floors of the house into office space.
Because the building is owned by a government entity, installation of an elevator is required as part of the work. Work associated with installing the elevator added $400,000 to $450,000 to the project cost, Anna Childe, of Weber Murphy Fox, said in September.
Budgeted contingency funds related to the elevator already appear as if they will be needed, Ott said. A permit recently issued by Centre Region Code Administration requires that concrete blocks be used around the elevator instead of metal studs as architects had planned, adding $50,000.
“So already it’s $50,000 and we haven’t even opened up the building yet,” Ott said.
Ott noted that an environmental assessment was conducted early on, and while mold was found in the basement and removed, the house has no asbestos.
