Harristown to purchase, renovate historic property that once housed iconic Harrisburg hotel, restaurant

June 28, 2018 | by Lawrance Binda

Harristown plans to purchase the historic Fox Hotel, converting it to a small apartment building.

A small but historically important project.

That’s how CEO Brad Jones describes the plan by his company, Harristown Enterprises, to breath life back into the long-empty Fox Hotel in Harrisburg, located at the seam of the downtown and Shipoke neighborhoods.

Jones today confirmed that Harristown expects to purchase the 112-year-old property at S. 2^nd and Washington streets from UPMC Pinnacle, turning it into an eight-unit apartment building.

“We’re very interested in preserving the history of that building,” Jones said. “It will become entirely residential.”

Hotelier Otto Fox built the distinctive, cupola-topped, 7,000-square-foot brick structure at 236 S. 2^nd St., in 1906. Many Harrisburg residents may best remember the building as home of Santanna’s Seafood House, long one of Harrisburg’s most popular restaurants, which operated on the ground floor starting in the 1930s.

Pinnacle purchased the property in 1987, and it has been mostly empty since. The building has been on Historic Harrisburg Association’s “Preservation Priority” list since 2011, as some grew concerned that it could be razed.

“In terms of preservation, obviously, this is good news,” said historian Jeb Stuart, Historic Harrisburg’s preservation advisor. “We applaud Harristown for this. It is an important part of the built environment in that area.”

Jones said that Harristown and the hospital began discussing a sale last year, following the announcement that a UPMC Pinnacle-affiliated doctor’s office would open inside Strawberry Square, which is owned by Harristown.

Harristown plans to convert all three floors to apartments. The ground floor would become two, two-bedroom, two-bath units of about 800 square feet each. Both the second and third floors would consist of three, one-bedroom apartments measuring about 550 square feet apiece, Jones said.

Rents are expected to range from about $1,000 a month for the one-bedroom units to $1,295 for the two-bedroom units.

The building, Jones said, needs extensive structural repair, as well as a total interior restoration, as it’s been unoccupied for decades. He expects Harristown to invest about $1.4 million into the project.

Jones said he expects to start the project in September, with construction planned to take six to nine months.

Over the last few years, Harristown has bought and renovated numerous rundown and empty buildings downtown, converting them to higher-end apartments. In fact, just today, Harristown closed on the purchase of two buildings downtown—116 Pine St. and 124 Pine St.—both due to become apartment buildings.

Unlike for those buildings, Harristown will not need to file a land use plan for the Fox Hotel conversion, due to its small size, Jones said. So, Harristown, he said, will not require approvals from the city’s Zoning Hearing Board and City Council.

“Rapid Response” measures proposed, meant to improve pedestrian safety on State Street

June 27, 2018 | by Lizzy Hardison

Attendees (and some media) from tonight’s Vision Zero meeting in Harrisburg.

The 17,000 drivers who traverse Harrisburg’s State Street every weekday could soon see changes to the busy thoroughfare.

Harrisburg’s Planning Bureau tonight unveiled new data from its State Street “rapid response” project, which aims to curb pedestrian fatalities on the five-lane road that connects the city to Penbrook. Pedestrians could see new safety features on State Street as early as September, said city Engineer Wayne Martin.

Martin also confirmed that the State Street project won’t be curtailed by the recent austerity measures imposed by Harrisburg Mayor Eric Papenfuse, which include a freeze on all non-essential spending and some capital expenditures.

The stretch of State Street east of the Capitol Complex was the site of four pedestrian fatalities and one cyclist fatality in the past year.

The spate of accidents was part of a citywide uptick in traffic-related deaths. Vehicle-related fatalities have quadrupled in the city in the last four years, according to PennDOT data, rising from two deaths in 2013 to eight deaths in 2017.

In April, the city announced a partnership with Eluminat, a Washington-D.C.-based planning firm, and Wallace Montgomery, a construction engineering company in Mechanicsburg, to roll out Vision Zero, a plan to eliminate traffic-related deaths in Harrisburg in 10 years.

The first step of that long-term project is the State Street rapid response, which aims to determine the causes of pedestrian accidents and implement data-driven solutions.

With one pedestrian dying every three months on the five-lane road, the city couldn’t wait any longer to take action, Martin said.

Members of the city’s Vision Zero team presented preliminary data tonight at the fire station at 16^th and State streets.

Among other findings, the team determined that almost half of State Street north of the Capitol has “undesirable” low-light levels.

They also found that speed violations increase as vehicles travel eastbound – 90 percent of vehicles travel at below the speed limit while crossing State and Academy Streets, but only 43 percent obey the speed limit by the time they hit 19^th and State.

After collecting more public input at tonight’s meeting, the Vision Zero team will recommend low-cost, “quick build” solutions to increase pedestrian safety.

According to Andy Duerr, an associate at Wallace Montgomery, those fixes could include median refuge islands – simple, protected spaces in the center of the road where pedestrians can wait for traffic to pass mid-crossing.

The city could also install more high-powered street lamp bulbs to increase visibility, re-program stoplight sequences or create raised crosswalks to calm traffic.

The team hopes to submit recommendations to the city within the next six weeks. They expect that the new infrastructure won’t cost more than $25,000.

“When I say low cost, I mean low cost,” Martin said. “These are quick-hit, emergency projects.”

Harrisburg Council disburses federal development funds, approves apartment projects

June 26, 2018 | by Lizzy Hardison

$250,000 of CDBG money will go to Tri-County HDC, an affordable housing developer that has partnered with the city on the MulDer Square revitalization project. The ribbon cutting for the first MulDer Square house was held in February.

Harrisburg City Council approved its annual allocation of federal development grants to local service groups on Tuesday night, but not before making one significant change to a proposal from the city’s administration.

In a rare close vote, council voted 4-3 to direct a $15,000 grant to Breaking the Chainz, a nonprofit that works with at-risk youth and released offenders.

The funds come from the city’s annual Community Development Block Grant (CDBG), a program of the federal Department of Housing and Urban Development.

The city’s Department of Community and Economic Development, which screens and ranks grant applications, did not recommend Breaking the Chainz for any funding this year. Romulus Brown, a project manager in the city’s housing bureau, said that the group submitted an incomplete application.

But economic development committee chair Dave Madsen advocated for Breaking the Chainz to receive funding. He said that council has previously strayed from its application ranking system to provide funds to worthy organizations and argued that Breaking the Chainz provided valuable youth enrichment activities.

Brown confirmed that Breaking the Chainz was an eligible program under CDBG guidelines. Council tried to award the organization CDBG funds last year, but determined it did not meet program requirements.

This time around, council President Wanda Williams and council members Ben Allatt and Ausha Green agreed with Madsen and voted to carry his amendment. Council members Cornelius Johnson, Westburn Majors and Shamaine Daniels voted against it.

“This organization does great work,” Johnson said before casting his vote. “I just believe our process should be transparent… and we should set clear expectations for a competitive grant process.”

In order to give $15,000 to Breaking the Chainz, council reduced a proposed grant to TLC Work Based Training from $45,000 to $30,000. Other grant recipients include:

Christian Recovery Aftercare Ministries (C.R.A.M.): $40,000
A Miracle 4 Sure: $50,000
Latino Hispanic Community Center: $25,000
Fair Housing Council: $25,000
PPL/IN HOUSE: $20,000
Shades of Greatness: $15,000
Heinz-Menaker Senior Center: $25,000
Neighborhood Dispute Settlement: $5,000
TriCounty HDC: $250,000
Habitat for Humanity: $100,000
Housing Rehabilitation Programs (city-run): $321,642

As in past years, almost $600,000 of the city’s $2 million CDBG grant will go to debt service. They city is still repaying federal loans it backed for development projects under former Mayor Steve Reed, including the disastrous Capitol View Commerce Center project, which went bankrupt before being completed years later by a new owner.

In addition, $408,000 will go to CDBG administration.

Council also approved two new downtown apartment projects on Tuesday night. The first, proposed by the Executive House Apartments, will convert commercial space at 101 S. 2nd St. into 15 residential units.

Another project, proposed by Harristown Development CEO Brad Jones, will convert an office building on Pine Street into 45 residential units and retail space. Williams, who has been critical of Harristown’s downtown redevelopment efforts, cast a vote against the project.

Mayor’s communication on Act 47 “irresponsible,” HBG councilman says, as 14 jobs affected by hiring freeze.

June 26, 2018 | by Lizzy Hardison

City Councilman Ben Allatt, center, had some tough words tonight for Harrisburg’s mayor.

A Harrisburg City Council member had stern words for Harrisburg’s mayor on Tuesday night.

Ben Allatt, council vice president and budget and finance committee chair, criticized the mayor’s recent, failed attempt to secure Harrisburg special tax provisions from the state legislature and his subsequent decision to declare a fiscal crisis in the city.

Allatt called the mayor’s public statements “irresponsible,” saying they caused unnecessary alarm and confusion among residents.

He also criticized the mayor’s falling out with House Speaker Mike Turzai, who blocked a special provision for Harrisburg from coming to vote on Friday.

“The exchanges between the mayor and the speaker were less than professional,” Allatt said. “We do not need greater tension between the city and the state.”

Allatt said he is committed to working with the legislature to help the city exit Act 47, a state program for financially distressed municipalities. Harrisburg’s Act 47 designation expires in September.

Papenfuse declined to respond to Allatt’s remarks. He reiterated that Harrisburg is facing dire financial problems if the state legislature does not grant it special taxing authority and spare it from entering an Act 47 extension.

He also elaborated on the hiring freeze and spending freeze that he declared on Monday. He said that 14 positions have been frozen and will remain unfilled, including seven represented by bargaining units:

Data Tech
Landscape Specialist
Central Support Specialist
Park Ranger
Auto mechanic
Plumber
Secretary

The remaining seven positions are categorized as management roles:

Background investigator
Confidential secretary
Analyst
Deputy director for planning and zoning
Archivist
Arborist
Deputy fire chief

Papenfuse said that the city expects at least a dozen employees to retire by the end of the year. They will not be replaced as long as the city remains in a hiring freeze, he said.

City officials met today and yesterday to evaluate spending on capital improvement projects, but Papenfuse declined to say which ones could be curtailed.

Papenfuse introduced the austerity measures to prepare Harrisburg for the eventual loss of $12 million in annual revenue from its earned income tax and local services tax. Act 47 allows the city to levy those taxes at extraordinary rates – a power that Harrisburg will lose if it exits the program.

Harrisburg can keep its current taxing authority if it obtains a one-time, three-year extension to stay in Act 47. But that extension will also require the city to adopt a new recovery plan, developed jointly with the state Department of Community and Economic Development.

That plan must be based on current state law, which means it will likely recommend the city draw down its fund balance and cut spending to prepare for a mandatory Act 47 exit in 2022.

Marita Kelley, the city’s Act 47 coordinator, declined to comment today on the details of the recovery plan. It will be released as a draft on July 9.

City officials, including Allatt, have said that Harrisburg cannot pass a balanced budget without augmented taxing authority. The only way for the city to have a sustainable future outside of Act 47, they say, is for the state legislature to pass a special provision exempting Harrisburg from the standard state tax code.

Harrisburg entered a yearlong, $60,000 lobbying contract this year in hopes of securing legislative change.

The city intends to renew its lobbying in September when the legislature returns from recess.

Burg Blog: The “Right” Stuff

June 26, 2018 | by Lawrance Binda

Artist’s rendering of the new federal courthouse at N. 6th and Reily streets.

A large, white tent dominated the corner of N. 6^th and Reily streets yesterday, raised to shield VIPs and their guests from June’s mid-afternoon sun.

Inside, 100 or so chairs were arranged in an arc in front of a makeshift stage, where local and federal officials would go on to speak for more than an hour.

It was the groundbreaking for the new federal courthouse, one of the most-anticipated events in recent Harrisburg history. It certainly was one of the longest in coming—10 or 15 or 20 years, depending on how you counted it.

Naturally, everyone inside the tent was happy, as this was an occasion for celebration. Speaker after speaker told of the struggle to reach this day, and both Reps. Lou Barletta and Scott Perry took deserved credit for their success in securing funding for the project.

However, as I looked around the large crowd assembled underneath that tent–at the people I mostly didn’t know–I perceived a glaring absence. Something was missing, and that something was easily identifiable—the Harrisburg community.

I first came to Harrisburg about a decade ago, and some of the first people I met were members of an ad hoc group that called itself, “Right Site Harrisburg.” These were residents who had grown weary of watching Harrisburg’s historic heritage crumble around them—building after building razed, mostly downtown, replaced by large, modernist office buildings and, even worse, parking lots and garages.

And, now, it was threatening to happen again.

The U.S. judiciary wanted out of its boxy, 1960s-era Ronald Reagan Federal Building at N. 3^rd and Walnut streets, deeming it insufficient and insecure. Over the years, numerous sites had been considered, but the judges and their staffs had one principal requirement—they wanted to remain downtown, near all of their favorite lunch spots and bars and restaurants.

Now, I can’t fault them for not wanting to stray too far from McGrath’s and Café Fresco. However, following 9-11, security requirements meant that a new building needed much more land so that, to stay downtown, entire city blocks would have to be leveled.

“No,” said the residents of Harrisburg.

In meeting after meeting, they spoke out against proposed sites at N. 3^rd and Forster, at N. 2^nd and Locust, at N. 3^rd and Pine. Reluctantly, the U.S. General Services Administration considered sites just across Forster Street, but that would have entailed razing public housing. Again, the people said, “No.”

In 2007, this activism, rooted in the neighborhood groups Capitol Area Neighbors and Friends of Midtown, coalesced under Right Site Harrisburg, which began promoting an out-of-the-box solution. There’s plenty of empty land in Harrisburg, the members said, if you just go a little farther uptown. They identified a patch of bleak, unpromising grass and gravel with little than a few bedraggled buildings, a drop-off point for donations and a boarded-up fast-food joint. It was N. 6^th and Reily.

Quickly, the coalition, backed by Mayor Steve Reed, sprung into action, amassing an 8,000-signature petition and uniting the city’s local politicians and congressional delegation behind it. Three years later, GSA selected Right Site’s right site.

In April 2010, the first tent went up at the corner of N. 6^th and Reily streets. This one was much smaller than yesterday’s and, on a chilly, rainy morning, Right Site members gathered to celebrate their unlikely victory, listening as that era’s pols (Reed, Sen. Arlen Specter, Rep. Tim Holden) made their own speeches, as the site selection was made official.

They all hoped to gather again in two or so years, when groundbreaking was expected.

That, of course, didn’t happen. Eight long years passed and, by then, the critical effort by this group seemed to have been largely forgotten.

Right Site member Don Barnett said that he learned about the groundbreaking just last week, when TheBurg reported it. He then found out that the event was invitation-only, and he had not been invited. Member Judy Forshee tried to go, but was turned away at the entrance by guards from the U.S. Department of Homeland Security. Her name was not on the list.

Several Right Site members gathered across the street, toasting their unappreciated victory as close as they could get to the site—at the bar of Café 1500. As a classic movie fan, I immediately thought of Barbara Stanwyck in the final scene of “Stella Dallas,” an ordinary woman who made sacrifice after sacrifice for her daughter, only to be barred from her lavish wedding into a wealthy family.

Yesterday, a small, yet significant, injustice was done to the activists who agitated for years to bring the new federal courthouse to N. 6^th and Reily streets. Without them, this day—this groundbreaking—likely never would have occurred. In all probability, the judges would have gotten their way, and another swath of history would be missing from Harrisburg’s already frayed urban fabric.

A blog post can hardly undo this slight, but perhaps it will give a small measure of recognition to those who were shut out yesterday, whose efforts were critical in bringing about the new courthouse—at the right site. It seems that a little thoughtfulness, a little research and a few extra seats underneath that tent would have been easy to do and entirely appropriate.

Pictured above: Members of the Right Site Harrisburg coalition on the future courthouse site at N. 6th and Reily streets, 2010. These members included Craig Peiffer, Roy Christ, Don Barnett, Reggie Guy, Judy Forshee, Jane Allis, Lori Raver and Robert Disabella.

Harrisburg imposes austerity measures, hopes for legislative action as it faces hard realities of Act 47

June 25, 2018 | by Lizzy Hardison

Harrisburg Mayor Eric Papenfuse takes a question outside city hall during today’s press conference.

Harrisburg is enacting an immediate hiring freeze and reevaluating all capital improvement projects as it braces for $12 million in spending cuts over the next three years, the mayor announced today.

The austerity comes as the city faces the expiration of its Act 47 status as a financially distressed municipality. That designation has granted Harrisburg special taxing authority for the past five years, which can continue until 2021 under a one-time, three-year extension.

But as Mayor Eric Papenfuse explained today, Harrisburg will lose its current taxing power in 2021 unless the state legislature intervenes. That would cost the city $12 million in annual revenue from its earned income tax (EIT) and local services tax (LST).

According to Papenfuse, the city must start preparing for that loss at the start of the new fiscal year in January 2019.

“The drawdown has to happen next year,” he said. “We cannot wait until the three-year extension expires.”

The city will develop new three-year budget projections starting this week, but has already implemented a hiring freeze and scrutinized its supplies and services expenditures. Papenfuse said all capital improvement spending from the city’s fund balance may be in jeopardy, but declined to name specific projects.

The mayor hopes the city can avoid layoffs by cutting jobs through attrition. The city will not replace anyone who retires, including police and fire personnel, or fill any of the 11 job vacancies currently posted on its website.

“These are perilous times for the city,” Papenfuse said on Monday, when he addressed reporters and a crowd of citizens in front of city hall. “Without legislative action, the city will suffer dire consequences.”

The announcement follows news last week that the state legislature would not pass a provision codifying Harrisburg’s current tax rates. Lawmakers have previously granted special taxing power to Act 47 cities, including Pittsburgh, which exited the oversight program this year.

Harrisburg officials have long said that the city cannot leave Act 47 without a change to state laws. Papenfuse explained that the Harrisburg Strong Plan, which was adopted in 2013, was written with the assumption that the state legislature would help the city with its financial recovery.

That plan addressed the city’s debt, but did not repair the conditions that created its structural deficit, Papenfuse said. Harrisburg cannot pass balanced budgets under the state’s current tax code, he said, since its small, highly impoverished tax base cannot support its large commuter population and tax-exempt state properties.

The only way to avoid a structural deficit is to expand the city’s taxing power, he said. Papenfuse’s administration entered a 12-month, $60,000 contract with a lobbying firm this year in hopes of securing a victory in the statehouse.

That moment appeared to be close on Friday, when Papenfuse announced that the legislature had secured the votes to pass a special tax provision for Harrisburg. But that provision, a proposed amendment to the state’s fiscal code, never came up for vote.

The defeat dealt a blow to the city’s leadership, which must adopt a new, state-sponsored recovery plan in September to secure an Act 47 extension. Since the state can only make recommendations based on current laws, the plan will likely assume the loss of $12 million of revenue in 2021.

Marita Kelley, the city’s Act 47 coordinator, could not be reached for comment on Monday.

The mayor hopes that the city can extend its lobbying efforts into September, after the legislature returns to session and before city adopts a new recovery plan.

According to Papenfuse, that’s the only way Harrisburg will avoid catastrophe.

“This does not have to be cataclysmic or fatal if we work on legislation together,” he said. “But make no mistake – the city cannot cut $12 million.”

Papenfuse reiterated today that the city has very few expenses it can cut. He said that personnel and associated costs, such as pensions and healthcare, make up 92 percent of the city’s budget. The remaining 8 percent of supplies and services spending covers utilities and other mandatory expenses, he said.

If the city must trim 20 percent of its expenses, it has no choice but to cut personnel, including police officers and firefighters.

The mayor is confident that most legislators understand Harrisburg’s plight and wish to help the capital city. He laid most blame with House Speaker Mike Turzai, R-Allegheny County, who recently called on the city to curb spending and surrender its taxing authority.

Papenfuse and Turzai reportedly clashed in talks last week, and the mayor said today that the Speaker bucked the will of his own party by blocking the Harrisburg provision on Friday.

“[Turzai] did not want to understand Harrisburg’s situation, and he stopped something with strong bipartisan support,” the mayor said.

Turzai has not responded to requests for comment.

Speeches & Shovels: After years of delays, officials break ground for new federal courthouse in Harrisburg.

June 25, 2018 | by Lawrance Binda

U.S. Rep. Scott Perry (middle) and Harrisburg Mayor Eric Papenfuse were among the officials at today’s groundbreaking for the new federal courthouse.

“I was giving up hope.”

“Will it ever happen?”

“A long road.”

Under a large, white tent set up in a field at the corner of N. 6^th and Reily streets, a succession of federal and local officials described an arduous, two-decade-long journey that led to the groundbreaking today for a new federal courthouse in Harrisburg.

Mayor Eric Papenfuse joined three area congressmen, a couple of judges and several federal officials in a ceremonial groundbreaking at the four-acre site, where the $194 million courthouse will rise over the next 3½ years.

Papenfuse reflected on the meetings he attended years ago as a private citizen, when numerous sites were suggested and then rejected for the new courthouse. Finally, people settled on an unlikely patch of ground across the street from the Bethesda Mission.

“Fourteen years ago, I participated in those public meetings, in those visioning sessions,” he said. “A lot of sites were considered. Eventually, it was decided to put the courthouse here. It was a site that was slightly out of the region’s comfort zone.”

But the battle didn’t end there. After the 2010 site selection, the project languished, unable to get funding from Congress. But, eventually, the area’s congressional delegation turned up the heat, leading to a full appropriation in the 2018 federal budget.

“It was too long in coming, but God serves those who are patient, right?” said Rep. Scott Perry, who represents much of the city in the U.S. House of Representatives.

In fact, construction machinery was already on site today, as site preparation and utility work were set to begin. Actual construction of the 243,000-square-foot building isn’t expected to start until early next year, with a completion date estimated for the fall of 2021.

The 11-story federal courthouse will provide eight courtrooms, 11 judges’ chambers and 42 interior parking spaces. Following relocation of workers, the federal government plans to sell the current Ronald Reagan Federal Building at N. 3^rd and Walnut streets.

An artist’s rendering of the new federal courthouse in Harrisburg.

Rep. Lou Barletta, whose district includes a small portion of Harrisburg, recalled the day in 2015 when the project was added to the federal courthouse priority list.

“It’s been a long road, but one worth the fight,” he said. “Our persistence has finally paid off.”

A keynote address by Hon. Christopher Conner, chief judge for the U.S. Middle District of Pennsylvania, capped off the hour-long groundbreaking ceremony.

“Many of you did not believe this day would ever arrive,” he said, reiterating the point made by every speaker before him.

Perhaps the only people not happy today were those who wanted to witness the long-time-in-coming occasion, but were turned away. This included some Harrisburg residents, people with significant investments in the area and, notably, members of Right Site Harrisburg, which, for years, advocated and agitated for the selection of the site at N. 6^th and Reily streets.

If your name was not on the invite list, the U.S. Department of Homeland Security, which was performing security checks, turned you away.

Inside the tent, several speakers, including Conner, mentioned that they expected the courthouse to help revive the area. More than a century ago, the neighborhood was built largely for working-class, railroading families, who lived in small houses on small lots. It later became blighted, and, over the years, most of the houses were torn down.

Papenfuse pointed to projects like 1500 Condominium, Café 1500, the courthouse and the planned state Archives building as the first signs that the area is coming back.

“This is a transformative project,” he said, using the occasion to put in a funding pitch for his next priority—a bridge the city wants to build over the railroad tracks in Uptown Harrisburg.

Harrisburg headed toward fiscal “catastrophe,” budget cuts, says mayor

June 24, 2018 | by Lawrance Binda

Mayor Eric Papenfuse with members of the city’s police and fire bureaus last week.

Harrisburg’s financial crisis is back, and that could lead the city to impose dramatic budget cuts, according to the mayor.

Mayor Eric Papenfuse plans to hold a press conference tomorrow afternoon declaring the city to be back in a state of fiscal emergency following the state legislature’s refusal last week to allow the city to retain its extra taxing authority and leave Act 47, the state’s program for fiscally distressed municipalities.

“With the state legislature’s failure to act Friday to extend Harrisburg’s taxing authority beyond Act 47, the city now faces a looming financial catastrophe that will require immediate implementation of austerity measures to begin to close a projected $12 million budget deficit over the next three years,” Papenfuse said in a statement.

He did not immediately reveal what those austerity measures might include, nor did he immediately return a phone call asking for additional comment.

On Friday, the House and Senate declined to consider a measure that would have allowed the city to keep its special taxing authority, enabling it to exit Act 47 without sacrificing tax revenue.

That amendment never made it into the appropriations bill that the Senate subsequently passed.

As part of Harrisburg’s current financial recovery plan, the Commonwealth Court permitted the city to raise those taxes beyond what is allowed in the state tax code. The city doubled its earned income tax (EIT) in 2012 and tripled its local services tax (LST) in 2016. Those taxes bring in about $12 million in annual revenue for the city.

The city’s current, five-year financial recovery plan under Act 47 expires in September. The state likely will grant the city a three-year extension. However, a new plan would have to be drafted and approved and, with it, the city may lose those extra taxes and that extra revenue, Papenfuse has said.

Last week, Papenfuse said that he believed the city had the votes in the legislature to retain the current, elevated EIT and LST, as well as the support of Gov. Tom Wolf. However, House Speaker Mike Turzai has been publicly opposed to allowing the city to retain the current EIT and LST, advocating a three-year extension and saying that “the city had not completely addressed its financial issues.”

“Just as we did with Pittsburgh, we need to get Harrisburg on track to exit Act 47 on strong financial footing, instead of allowing it to simply continue to tax those who live and work in the city at a higher rate,” Turzai said in a June 13 statement.

With Turzai opposed, the measure to allow the city to retain its EIT and LST, and exit Act 47, never came up for a vote.

Legislature denies Harrisburg special tax power, making Act 47 extension all but inevitable.

June 22, 2018 | by Lizzy Hardison

Harrisburg will likely spend another three years in the Act 47 program for financially distressed cities, thanks to a decision by the state legislature today.

The House and Senate declined to consider a measure that would have granted the city special taxing authority, enabling it to exit Act 47 without sacrificing tax revenue.

Mayor Eric Papenfuse expressed confidence this morning that a provision embedded in the state’s fiscal code had enough support to pass before the legislature adjourns for recess tonight.

But that amendment never made it into the appropriations bill that the Senate passed this afternoon.

Papenfuse, who could not be reached for comment after the vote, described this outcome as a “financial catastrophe” in a press conference this morning. He said that the Act 47 extension would require a new financial recovery plan, which could jeopardize the city’s current earned income tax (EIT) and local services tax (LST) rates.

As part of Harrisburg’s financial recovery, the Commonwealth Court permitted the city to raise those taxes beyond what is allowed in the state tax code. The city doubled its EIT in 2012 and tripled its LST in 2016.

Those taxes bring in $12 million in annual revenue for the city. Papenfuse insisted today that Harrisburg could lose that revenue under a new recovery plan.

But City Council budget and finance chair Ben Allatt said that that gloomy forecast won’t necessarily come to pass.

The mayor’s statements this morning marked the first time any city official had raised concerns about the city’s future in Act 47, and Allatt said that the “alarmist” narrative was new to him.

He believes that the city will be allowed to maintain its status quo tax rates when it appears before the court with a new recovery plan in September.

Allatt was hopeful that the legislature would pass the special provision for Harrisburg today, but he does not think that its inaction will derail the city’s financial recovery.

For months, Harrisburg officials have insisted that they will not exit Act 47 without legislative action by the state. The administration entered a year-long, $60,000 contract with Harrisburg-based lobbying firm Maverick Strategies to coax special taxing conditions out of the statehouse.

Allatt said that many lawmakers do not understand the unique challenges of funding a capital city. Harrisburg is home to large swaths of tax-exempt property (occupied by the state or nonprofit groups) and a population with a 40-percent poverty rate. The city’s median home value is just $44,000.

Harrisburg cannot balance its budget and provide basic services with the tax rates currently authorized by state tax code, he explained.

“This city has always had a revenue problem,” Allatt said. “It’s a math equation, and, at the end of the day, the math doesn’t add up.”

Allatt said that one goal of the city’s lobbying effort is to convince legislators that state laws, and not political ineptitude, constrain Harrisburg’s finances. He singled out House Speaker Mike Turzai, R-Allegheny County, who clashed with the mayor yesterday over the city’s recovery status.

In a statement last week, Turzai blasted the idea that Harrisburg should retain its taxing authority after exiting Act 47. He called on the city to remain in the oversight program until it could cut its costs.

Papenfuse and Allatt said separately that Turzai did not comprehend the extent of Harrisburg’s financial recovery over the past five years. By reducing its personnel costs and privatizing its parking and trash assets, Harrisburg has passed balanced budgets and run surpluses every year Papenfuse has been in office.

Turzai did not respond to a request for comment today.

Allatt still believes that the city will need legislative action to exit Act 47, but he does not think that today’s failed lobbying effort portends intransigence for the next three years.

“Our legislature moves very slowly, but I do [think] they can help us,” Allatt said.

Following public outcry, PennDOT rethinks plan that would oust train station newsstand.

June 22, 2018 | by Lizzy Hardison

Harrisburg’s favorite newsstand might not be closing its doors after all.

Weeks after TheBurg reported that Transit News would be forced out of the Harrisburg Transportation Center under a new PennDOT plan, the store’s proprietor has been invited into talks with PennDOT executives.

They’ve pledged to discuss potential design options that would keep the newsstand in the train station, PennDOT press secretary Erin Waters-Trasatt said on Thursday.

William Cologie, who has owned Transit News since 1991, met with PennDOT executives last week after mounting a campaign to save his business. A PennDOT plan published in March called for evicting Transit News from its current retail space to make room for Amtrak offices, part of a $15 million overhaul of the train and bus hub.

At the meeting, PennDOT apologized for not including Cologie in early stakeholder conversations. They also reported that the renovation plans must be revised and offered to include him in the upcoming planning process, he said.

PennDOT has not guaranteed that Transit News will keep its current spot in the renovated station, but Cologie is heartened that they have listened to the opinions that he and his customers have raised.

“It has been incredibly gratifying to read the messages sent to PennDOT and to see how much Transit News means to so many,” Cologie said in a letter to his supporters. “We work hard, have always worked hard, and will continue to work hard to remain, what many consider us to be, the world’s best transit center newsstand.”

Cologie bought Transit News in 1991, when it had $3,000 of inventory and occupied a small office in the train station lobby. He oversaw an expansion of the store and its move into a larger space. Today, Transit News has $54,000 of inventory and generates more than $500,000 in annual sales.

Cologie said that many travelers and Harrisburg residents sent messages supporting Transit News to PennDOT in the days after the story broke, and shared some of those comments with TheBurg. Customers who commute to Harrisburg by train said that the station enhances their work week, while city residents said that they rely on the station for to buy a daily newspaper, coffee or books.

Waters-Trasatt confirmed that PennDOT has received emails and calls from the public asking them to preserve the newsstand.

Nonetheless, Cologie remains concerned that Amtrak, a key stakeholder in the remodeling process, has not confirmed its participation in the next round of planning. Amtrak owns the train station, but PennDOT is paying for its remodel.

The renovation is on hold until PennDOT and Amtrak executives decide who will manage the remodeled space. That responsibility currently lies with the Harrisburg Redevelopment Authority.

PennDOT will not have a timeline for advancing the project until the two parties reach that agreement, Waters-Trasatt said.

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