It’s been more than three years since State College Borough authorized the sale of two South Allen Street properties to a developer with an agreement for the long-discussed Town Centre redevelopment project. Since then, with COVID-related delays and efforts to acquire additional parcels, there had been little in the way of public updates on the development.
That changed on Wednesday when Alex Sahakian, president of developer Highland Holding Group, spoke at a State College Planning Commission meeting to request a zoning amendment that would allow the project to qualify for incentives for additional building height and to offer an update on the timeline and vision for the development on the 200 block of South Allen Street.
Planning commission unanimously recommended the zoning amendment for approval by borough council. It effectively would remove the requirement to include residential uses to qualify as a mixed-use development.
Sahakian said architects and engineers currently are working “very seriously,” on a land development for the project that is now expected to include a hotel, street-level restaurant, rooftop bar and “some other retail, perhaps food service and maybe even some office uses.”
A land development plan could be submitted to the borough as early as within the next two months, Sahakian said.
In June 2019, borough council authorized conveying the borough-owned former Verizon Building at 224 S. Allen St., most recently leased for Penn State’s Happy Valley LaunchBox, and the metered parking lot on Allen Street to the State College Redevelopment Authority, as required by the state for certified redevelopment projects. The authority then entered into the development agreement with Highland Holding Group, which was selected in 2017 as the project developer.
The borough received $1.93 million from the sale, with $1.098 million going into capital reserves, and $832,000 to the Parking Fund to replace the 32 spaces located on the Allen Street Lot (tentatively with a lot on Nittany Avenue).
The Town Centre concept is meant to develop around and complement nearby existing properties such as the Municipal Building, Schlow Library and Sidney Friedman Park.
Established in 2015, the redevelopment area was designed to also encompass the First National Bank property at 222 S. Allen St., the U.S. Post Office distribution facility off Fraser Street, and the Verizon central switching facility at the corner of South Allen Street and West Foster Avenue.
The switching facility was almost immediately off the table because it’s the hub of phone and data wiring in State College and the cost redeveloping it would be nearly impossible. Sahakian said on Wednesday that the post office, which “is not something that has been easy to work with,” and the bank, which is “not really willing” to be included, are also no-gos.
Town Centre Development Group, the LLC formed for the project, did, however, acquire for $387,000 and subdivide the parking lot behind the Jeramar Building, 228 S. Allen St., to be included in the project. (Another LLC associated with Highland Holding Group also acquired the Jeramar Building itself in 2022 for $6.1 million, but Sahakian did not indicate it would be part of the Town Centre development and a borough official said last year it was expected to remain in place.)
In total the redevelopment area comprises about .85 acres.
“So it’s time for us to pull the trigger and move forward with the development plan for the parcels we were able to assemble for this project,” Sahakian said. “And we’re doing that right now.”
Throughout the process, Sahakian said, a hotel has been envisioned as “being sort of a cornerstone to making a non-student-housing project work in downtown State College.”
“We’re in that business. We love it,” he said. “We want to be a host to visitors to town. We think we can raise the bar and provide a really good project on that front. The location is fantastic for that as well and we think it could succeed in doing a number of different things. Number one: activating that block of town which right now has some uses that are not all that active — a parking lot and a vacant building. We can create activity there.”
The restaurant, he added, “would be a signature restaurant, not a sports bar, not a chain restaurant, something a little bit on the higher end.”
Sahakian didn’t go in-depth on details at the planning commission meeting. His 2018 proposal when Highland was selected as developer for the project envisioned a seven-story hotel on the municipal parking lot site, underground parking, and a six-story building for multiple retail and restaurant uses on the former Verizon Building/LaunchBox parcel.
The base maximum building height in the Commercial Incentive District (CID), where the redevelopment area is located, is 65 feet, but by meeting certain incentives such as underground parking and green certification, developers of a mixed-use project can build as high as 95 feet and can reduce parking requirements. Mixed-use developments in the borough’s zoning code, however, currently are defined as having a residential use and a commercial use.
Plans for the Town Centre project do not contain any residential units, Sahakian said.
“We have a project where we don’t believe we need residential to be part of the project,” he said. “We don’t think it’s additive to what we’re trying to do.”
The project could add a single apartment unit to meet the definition, but Sahakian said it would be “suboptimal” for both the resident and the other uses of the building.
“It’s as foolish as it sounds,” borough Planning Director Ed LeClear said.
LeClear and planning commission member Ron Madrid both said when the CID was created in 2005 the intent was to drive commercial development downtown but it assumed developers wouldn’t build or redevelop without residential units included.
The change recommended for approval redefines mixed use as “a building that contains non-residential uses in combination with residential uses where the residential use is located above the ground floor or that contains two or more non-residential uses.”
It will require final approval by borough council before going into effect.
Sahakian, meanwhile, said he is looking forward to presenting a land development plan.
“We’re very excited by it and hope the community feels the same way,” he said.
