The blighted Motormart/Keystone Building Products structure.
What is fair?
Last month, during National Night Out, I raised that question while chatting with Harrisburg council members Shamaine Daniels and Ben Allatt.
Standing at the corner of Green and Muench streets, amid neighborhood children downing hot dogs and sketching with chalk on the sidewalk, we briefly discussed the council’s fall agenda, which includes renewing a tax abatement program in the city for property improvements.
That’s how the issue of fairness came up.
Some people see tax abatement as unfair. Why should some new arrival, living in a just-restored house, they argue, pay less in property taxes than they would normally? Or less than a neighbor does?
Others, however, believe the issue of fairness is a distraction. Without abatement, they say, those properties would not be developed at all, leaving the city under-populated and marred with empty lots and blighted buildings—with everyone worse off.
This month, it will be fascinating to see which council members bend to which argument. Each time tax abatement is raised, a verbal battle ensues between those in the community who argue for fairness and those who argue for growth. The issues of class and race become part of that conversation, as well.
As council members consider this issue, they would do well to keep in mind the last time they were faced with a similar choice—and what happened then.
No, I’m not talking about what occurred in 2011, when the city last tried to reinstitute a tax abatement program. Back then, council tried so hard to please all sides that the result was a Frankenstein’s monster of a bill, so tortured and convoluted that Dauphin County declared it illegal and refused to sign off on it.
I’m talking about what happened a year later.
In 2012, Harrisburg had a buyer—an eager, respected buyer—for a prominently located, city-owned property that had been vacant for decades, inhabited by squatters and vermin and falling to pieces.
The buyer had a need for it, a plan for it and had even received some outside funds to help put it back into productive use. Then, falling to City Council, which wanted the fairest deal it could get, the sale hit a wall.
A Crazy Notion
In the 1920s, Harrisburg was a growing, bustling place. The auto industry, in particular, was booming, and car dealers, repair garages and gas stations sprung up all over, with a particular concentration along the industrial Cameron Street corridor.
The Harrisburg Motormart was one of those businesses. Housed in a sturdy, one-story stone structure at 38-40 N. Cameron St., the Motormart debuted as part of the Appleby used car chain, an industry that already had acquired an unsavory reputation.
“A number of the automobile dealers of the city are interested in the Motormart and are endorsing it as a means to overcome the present used car evil in a way that will be of advantage to the public and dealer alike,” said a photo caption introducing the new business in the March 22, 1922 edition of the Harrisburg Telegraph.
The Motormart didn’t last long. By 1925, the building housed another car-related business, Duco Co. auto refinishers. A second floor was added soon afterwards and, eventually, it became part of the sprawling Keystone Building Products complex, which occupied much of the block for decades.
By 1990, Keystone had abandoned its Cameron Street properties, and the city took over the aging buildings. In his typical grand style, former Mayor Steve Reed proposed converting the large site into something he called the Paxton Commons Retail Complex, a touristy, kitschy collection of restaurants and shops with a canal-related theme. A developer and funding were announced, but the project never got off the ground. Embarrassingly, the fading, 20-year-old sign (“Bill Clinton, President”) announcing the imminent arrival of Paxton Commons remains affixed to the building to this day.
The city did have success unloading another part of the old Keystone Building Products complex. In 1995, a few guys had the crazy notion that Harrisburg would like some newfangled thing called “craft beer.” So, they bought the building at the corner of Cameron and Walnut streets from the city for a buck—that‘s $1—then invested $1.2 million over the next two years to build the Appalachian Brewing Co.
With seven brewpubs, ABC now is one of the most successful businesses to come out of Harrisburg in recent decades. Its growth has been so rapid that it’s straining to find places for its production, distribution and warehousing.
By happy coincidence, there’s a big, fat lot with a long-abandoned structure sitting right next door—the old Motormart/Keystone Products building. It has a willing buyer. It presumably has a willing seller—the city. So, then what’s the hold up?
Negative Value
In 2012, ABC told the Thompson administration that it was interested in taking 38-40 N. Cameron St. off its hands, with hopes of constructing a warehouse there. The administration seemed eager to let the property go to relieve the city of ownership, to get the property back on the tax rolls and to remove a dangerous, blighted building before it collapsed.
Then the proposal went before City Council.
By ordinance, council has the right to put a city-owned property on the open market. So, with ABC expressing interest, it passed a resolution to do exactly that with 38-40 N. Cameron. It ordered an appraisal done, a marketing plan developed and a real estate agent hired. The appraisal pegged the value of the property at $140,000, and the city put it on the market for $150,000.
And, to this day, there it sits, having received no offers.
Simply put, ABC doesn’t believe the property is worth $150,000—or anything close to it.
“It has negative value,” said Dave Black, the president of the Harrisburg Regional Chamber of Commerce and CREDC, which actually would acquire the building and perform site work before selling it back to ABC. “They (ABC) need to get it at a reasonable price point.”
Black estimates that it will cost $600,000 to $700,000 just to demolish the large, existing stone, brick and wood building, remove an underground storage tank and perform site remediation. In other words, the tumbledown building, which makes up much of the council-mandated appraisal, has no use or value at all.
“It just wasn’t in anyone’s mind worth $150,000,” said Black.
CREDC had even secured $125,000 in gaming funds from Dauphin County to help offset some of the cost of the project. After the deal went nowhere, it had to return the money.
Dangerous Mess
It’s easy to paint City Council as the bad guy in this story, but it’s not that simple.
To a person, council members enthusiastically supported a sale when they introduced the resolution in November 2012. In fact, the resolution itself said the following:
“Whereas, the property has been vacant and deteriorating for approximately three decades; and
Whereas, the property is a liability, is in a state of disrepair, and does not generate revenue; and
Whereas, the Appalachian Brewing Company (ABC), in an effort to maintain and grow their business presence in Harrisburg, has expressed a need to acquire the property and
“Whereas, ABC has asserted that an inability to physically expand their business operation at their 50 North Cameron Street . . . location will result in continued loss of business on their part and will, thus, require that ABC seek other regional space for expansion; and
Whereas, ABC has estimated that their envisioned expansion of their North Cameron business operations will result in seven to 10 additional jobs, bringing their employee total to approximately 65; and
Whereas, the sale of the property will allow the property to return to the tax rolls and generate revenue for the city . . .”
In other words, council never intended to put the kibosh on this deal. Members regarded a property sale as an unalloyed good, a welcome development after decades of blight at that site. They just wanted fairness, a fair price for city-owned land. As Councilwoman Susan Brown-Wilson said at the time:
“Council has the final say as to whether or not we accept what even the administration will bring down in terms of what the administration says is a reasonable [offer].”
So, returning to our original question, what is fair?
In its quest for fairness, the city erected barriers to this deal. So, two years later, it has nothing. It doesn’t have any property tax revenue or additional income taxes or business tax revenue that the expansion of ABC would have brought. It certainly doesn’t have its $150,000. Nor has it endeared itself to ABC or to other businesses that might consider locating or expanding in Harrisburg.
What does it have?
It has a blighted, dangerous mess of a building with a sign indicating that Bill Clinton is still president. It has liability for whatever illicit and perilous activities go on inside, on the other side of the crumbling stone and brick façade. And, when the building finally collapses, it will face a stiff bill for demolition and removal.
Tough Choice
The old Motormart property has one thing going for it to this day—proximity to a thriving business, which gives it an advantage shared by few other blighted properties in Harrisburg.
Because of that, ABC remains interested in acquiring the parcel, said CEO Jack Sproch. Yes, ABC would like the land for future expansion, but, in the short term, the company, at least, would like to eliminate the blight and squatters next to its flagship brewery.
“Beautification of this block is very important to us,” Sproch said. “And it’s dangerous. It’s beyond just an eyesore.”
Like Black, Sproch doesn’t fault the city for wanting a maximum price for its land. But he hopes that, after nearly two years of futilely trying to sell the property on the open market, city officials will come to understand that a buyer won’t pay $150,000 for a property that will take another half-a-million dollars or more just to return to an empty lot.
“The obstacle is that the building is such a liability,” said Sproch. “I realize that it’s hard for people to understand this, but, as it stands, it has negative value.”
Harrisburg is loaded with properties with similar upside-down economics. In theory, land and buildings should be worth something. In reality, the cost of owning a property often vastly exceeds its value to a buyer.
So, council is faced with a tough choice. As it examines tax abatement and other economic development strategies, it must choose between an idealistic notion of fairness and the hard—seemingly unfair—truth of what actually might work to redevelop the city.
Does council want everyone to feel fairly treated—or does it want the city to advance? In all likelihood, it can’t have both.
It’s a case of fairness versus re-development or even fairness versus wisdom. In the case of the blighted Motormart/Keystone property—which should have sold two years ago for a nominal sum and already would be back on the tax rolls—fairness has won out, so far.
Lawrance Binda is editor-in-chief of TheBurg.
Many thanks to Ken Frew, the librarian at the Historical Society of Dauphin County, for providing historical research for this column.
