Development Agreement Extended for Ardmore Revitalization Project

The Lower Merion Board of Commissioners on Wednesday night approved an extension of the development agreement with Dranoff Properties for the , and a “term sheet” which forms the basis for a revised agreement.

Commissioners Jenny Brown and Lewis Gould voted against the extension and term sheet.

Financial constraints are causing the township to lean toward a scaled-back version of the project. It would retain a parking garage near the train station and mixed-use development on Cricket Avenue, but would curtail a new train station and transit improvements.

The Agreement

The development extension with Dranoff is for 90-days, running through Jan. 31—the third time the agreement has been extended. Originally, the board’s approval of the term sheet included language authorizing the township manager to sign off on the revised agreement, but that was removed after Gould-proposed amendment passed. (Gould said he wanted the revised development agreement to come back before the board for approval.)

David Scolnic, the attorney representing the township in the development agreement, told the board that the term sheet includes a new date: Sept. 30, 2012. On or about that day, the township or Dranoff can terminate the agreement without cause, said Scolnic, an attorney with the law firm Hangley, Aronchick, Segal, Pudlin and Schiller.

Brown asked Scolnic, “Have you done anything to tighten up the language so we would get our costs back if the project doesn’t come to fruition?” Scolnic said yes—Dranoff is on the hook for all of the township’s out-of-pocket expenses from March 1, 2008 (in an amount not to exceed $1 million).

However, under the new agreement, Dranoff will become a “turnkey” developer of the Ardmore Revitalization Project, rather than being the developer of mixed-use development on Amtrak land and the provider of development services for the public project on township land. In the revised agreement, the township will work to obtain an Amtrak agreement.

(“Turnkey,” traditionally defined, means delivering a project ready for occupation, and includes all site design, procurement, negotiations, space planning, construction and completion. “Turnkey can fast-track a project by overlapping design work with construction and installation, saving as much as 30-40 percent of time required for a traditional sequential project,” according to the CBS Interactive Business Library. It can also “generate further cost savings through the greater flexibility available to the contractor,” and offers “greater opportunities for innovative private sector financial participation in projects.”)

Rosenzweig said he was “particularly pessimistic” about the Amtrak portion of the project and wanted to know what Amtrak’s current position on the project was.

Township Manager Doug Cleland said, “Amtrak has responded they would prefer a different project here or one similar to one of the other options the township discussed but didn’t have the money for. ... We intend to meet with them soon and continue our dialogue.”

Another change to the agreement is Dranoff’s compensation fee. It will drop from 5 percent of costs to 3 percent of costs—with the potential to earn up to an additional 2 percent if enough contingency funds remain after township costs are paid.

Criticism, Praise

The Ardmore Revitalization Project itself, as well as the development agreement and the term sheet, were met with opposition and favor from residents and business owners Wednesday.

Bob Guzzardi of Ardmore said “taxpayers are putting money into a deal that is clearly not for profit,” and the township “is giving millions to a millionaire developer.”

Owner Carl Dranoff was among the first developers to take advantage of Philadelphia’s tax abatement program in the late 1990s, which encouraged the redevelopment of scores of abandoned factories and warehouses into apartments and condominiums. He later developed Symphony House on South Broad Street, Venice Lofts in Manayunk, several projects near Camden’s waterfront, and the Left Bank and World Café Live in West Philadelphia, among others.

Hugh Gordon of Ardmore said he supports the project but added, “Mr. Guzzardi is right.  There’s not going to be any money left over to reimburse the township, so why should we kid ourselves?”

Gordon also questioned the township’s estimates on how much tax money the project might generate and how many jobs it would create, saying “phony numbers” were not necessary. “Support of this project is strong in the community.”

John Iannacone, owner of Giannini Jewelers, Inc. in Ardmore, said he supported extending the agreement.

The enthusiasm for the project is evident in the retail community, he said—vacancies in Ardmore are down to 5 percent. That’s much better than the rate in other retail districts, “because people want to come to Ardmore,” Iannocone said.

Grant Funds

In a separate action, the board voted 10-3 in favor of supporting the application to the U.S. Department of Transportation for a $25 million TIGER (Transportation Investment Generating Economic Recovery) Grant for transit improvements for the Ardmore Revitalization Project.

Rosenzweig, Brown and Gould voted against supporting the application. Commissioner Jane Dellhiem was again not present at the time of the vote.

Before the vote, Gould proposed an amendment to require that the final grant application be brought back before the board for approval before it is submitted on Oct. 31, but his amendment failed because it only received two votes of support—his own and Brown’s.