Hotel closing shocks leaders: Renewal project used $1 million

The sudden closure of an anchor in the downtown Philipsburg business community comes fewer than three years after its owners secured more than $1 million in state taxpayer money for renovations.

The Philips Hotel in downtown Philipsburg surprised customers this month when it silently went dark. A note posted to its front door announced the closing. Owner Faith Lucchesi and her husband, Tony DeBoef, State College attorneys, have not returned phone calls.

It was just a few years ago, in January 2008, that an ownership group including Lucchesi surprised the community in another way. The group purchased the building, which had been shuttered after decades as a retirement home, for $200,000.

They sought to return the one-time hotel to its former grandeur by renovating the ballroom and lobby and opening a fine-dining restaurant. The move was expected to be a key piece of Philipsburg’s downtown revitalization.

Local leaders bought into the project and helped secure a $1 million grant in 2010 after the building’s owners committed to match those funds. Now at least one official who helped secure the money is expressing his disappointment.

“Renovation and revitalization was a prime concern to us,” said Centre County Commissioner Steve Dershem. “We wanted to see the Philips Hotel brought back in some form for economic development. We didn’t want to have a major anchor like that sitting empty.”

In 2008, the county commissioners voted to ask the state to release $1 million to help restore the hotel. The state had earmarked $3 million for redevelopment of downtown Philipsburg after a 2005 fire destroyed three buildings and left a void in the town.

Several organizations sought a chunk of that fund, but only one could afford to come up with money to meet requirements for matching funds — the new owners of the Philips Hotel. Local officials worked with state Sen. John Wozniak, D-Westmont, and made the grant a reality for the hotel in 2010.

Dershem said owners presented their case to various authorities, including the county commissioners, and appeared to have a strong business plan.

“I think the plan was pretty clear — renovate several floors and try to put the building back (in order),” he said. “Taking a landmark and restoring it was probably as sound of an investment as anything. Who knew what its fate would be?”

So what changed in just a few short years? Dershem said the downturn in the nation’s economy may have played a part.

“There is always a risk to economic development,” he said. “Not everything goes as planned.”

Jan McDonald, Philipsburg borough manager, said the group used every bit of the grant money, and more than $1 million of their own funds, to restore the building.

Funding came from the Redevelopment Capital Assistance Program, a grant program administered by the state Office of the Budget for the acquisition and construction of regional economic, cultural, civil and historical improvement projects.

But to receive any of money, the owners first had to spend, said Sue Hannegan, assistant director of county planning.

Hannegan said the funding comes in the form of a reimbursement program. The owners would submit renovation costs to the state, which would then reimburse 50 percent. She said the owners spent at least $2.3 million on the project, and will get $1 million back.

Both Dershem and McDonald expressed optimism, despite the closure, that work put into the building will make it more attractive for potential buyers. The listing agent for the property is Re/Max Centre Realty. The listed price is $1.7 million.

“They have done a lot of work on the building,” McDonald said. “It isn’t flashy, but it’s a very acceptable building. You could move in today and run a restaurant.”