How State Redevelopment Projects Really Work

Member Group : Citizens Alliance of Pennsylvania

We have long been critical of "economic development projects". Many times, the projects amount to little more than corporate welfare. Project backers frequently over promise, and under deliver in terms of jobs and an impact on the local economy. Using state funds to benefit private interests is a breeding ground ripe for crony capitalism and corruption. A project in Montgomery County provides an example of another problem, the bait-and-switch.

In 2008, the General Assembly and Governor Rendell authorized an expenditure of $15 million for the "[a]cquisition, infrastructure, rehabilitation, construction and other costs related to the redevelopment of the Ardmore Train Station, including the abatement of hazardous materials." Seven years later the project has yet to break ground. Making matters even worse, the redevelopment of the Ardmore Train Station no longer includes redeveloping the actual train station.

While in the planning stages, Lower Merion Township drastically expanded the scope of the project to include the creation of "mixed use" property and a parking garage adjacent to the train station. Because of funding issues the train station project and mixed-use project were separated. As time went on less emphasis was placed on rehabilitating the train station, and more attention went into the private development. However, the state funding source never changed.

Although the funds were earmarked for redeveloping the train station, the township ultimately approved using the funds for a parking garage. In December of 2013, Governor Corbett’s Office of the Budget rescinded $12 million in funding. As noted by an extensive article from the Main Line Times, the Office of the Budget correctly recognized that the scope of the project had shifted markedly and, as a result, the funding would be reduced and made for the train station only.

The Office of the Budget was correct in its decision. Although the rehabilitation of the train station would have had a minimal impact on the economy of the area, it was at least a project for the "public good". In contrast, the bulk of the benefit from the multi-use and parking portion of the project would have been to the bottom line of the property developer: Dranoff Properties. The decision to rescind the money did not stand long. After lobbying from Dranoff, the project had $10.5 million in funding reinstated by the Office of the Budget. As an interesting coincidence, Carl Dranoff made $10,000 in campaign contributions to Governor Corbett’s re-election campaign over the course of 2014.

The legislative language explicitly tied the original funding to the rehabilitation of a train station. However, the project has shifted focus entirely to a private development, and that is a wholly inappropriate use of public funds. A local organization, the Save Ardmore Coalition, has filed a lawsuit against the township and Governor Wolf regarding this matter. They were also kind enough to bring this issue to our attention. We will monitor the lawsuit as it progresses, and we would also encourage members of the General Assembly to revisit the appropriateness of the project given the explicit authorization language.