Salvation Army expects to begin building new regional HQ this year with $5M tax credit
After nearly a decade of planning and three years of fundraising, the Salvation Army Harrisburg Capital City Region is poised to break ground this year on a new regional headquarters in Harrisburg.
A key piece fell into place this spring when the nonprofit organization recently was awarded a $5 million tax-credit allocation from the Lancaster-based Community First Fund for the project. The larger facility is designed to replace the Salvation Army’s longtime home on Green Street in Harrisburg.
Kathy Anderson-Martin, the Salvation Army’s director of resource development, said the tax credits will allow the organization to move forward with construction on the 38,700-square-foot building — more than double the size of its current home.
The new facility will help the Salvation Army better serve about 20,000 people annually in Cumberland, Dauphin and Perry counties.
“We have told people all along that when we raise the money, we’ll build it,” Anderson-Martin said. “We now have the ability to go back and say, ‘What you invested in is coming to life.’ It’s huge.”
The Salvation Army plans to erect the new headquarters on a seven-acre site it owns at the corner of South 29th Street and Rudy Road, formerly home to a Weis Markets store.
Weis closed the store in 2009. The Salvation Army purchased the vacant property in 2015 for $1.25 million.
The organization, Anderson-Martin said, is hoping to break ground on the $12 million project by the end of summer or early fall. Construction will take about a year, according to Harrisburg-based Pyramid Construction Services Inc., which is overseeing construction.
The new building will include a service and worship center, commercial kitchen and food pantry. It also will include a family services suite with private intake offices, a client reception and information center, and classrooms for programs run by the organization.
A dedicated education wing will include classrooms for youth programs, adult education and career-training programs, as well as pre-K classrooms with a play area, a nutrition education kitchen, gymnasium and work stations, and private offices for organization staff.
“It’s a total game changer in terms of efficiency and depth of programming,” Anderson-Martin said. “We currently do youth programs at 20 different sites. It’s not very efficient.”
With the new facility, the organization will serve more than 2,800 children in one central location. The additional space also will help the organization expand some of its programming to support the community.
For example, Anderson-Martin said the larger facility will allow the Salvation Army to extend a nine-week summer youth enrichment program throughout the year. The pre-K program will be a new addition, and afterschool programs also are expected to grow because of the new space.
The facility design — by Harrisburg-based Murray Associates Architects — also includes outdoor areas with sport and recreation fields, a children’s playground and pavilion, a vegetable garden and a wooded nature trail.
The former grocery store and other vacant structures on the site, including an old pharmacy and a building that was last used as a restaurant, were demolished last year to prepare the site for construction.
In addition to the tax credits, the Salvation Army has raised more than $7.5 million toward its goal of $12 million.
The money includes a $500,000 grant from Impact Harrisburg, a nonprofit created in 2014 in the wake of Harrisburg’s recovery from near-bankruptcy. Another $500,000 recently came from the state’s Redevelopment Assistance Capital Program, or RACP.
Fundraising is always a challenge, Anderson-Martin said, mainly because the Salvation Army also has to raise money every year to support its $3 million operating budget.
The federal tax credits for the Salvation Army project are coming from a credit allocation awarded to Community First Fund. The Lancaster organization received $45 million in tax credits in 2016 under the New Markets Tax Credit program operated by the U.S. Treasury Department. The $5 million for the Salvation Army is part of the organization’s remaining tax-credit balance.
Community First Fund and Harrisburg-based Commonwealth Cornerstone Group, which also administers the New Markets program in Central Pennsylvania, received no new tax credits in the most recent 2017 round.
These entities apply for the tax credits and, if the credits are received, work with developers to fund construction projects.
The credits are designed to encourage investments in low-income communities. Community First Fund CEO Dan Betancourt said the hope is that the investments will serve as a catalyst for other community development projects.
The program works by taking private equity from investors, usually banks, and turning that money into gap financing for redevelopment projects selected by entities like Community First Fund.
The investors receive tax credits in return, which count against their federal income taxes.
While the construction project at 506 S. 29th St. helps the Salvation Army address its space needs, the new facility also could spark new real estate investments along South 29th Street, which connects to Derry and Paxton streets.
There are some retailers and restaurants in the area, including a Rite Aid store and a hardware store. The property also is close to a lot of homes.
The new Salvation Army headquarters could attract other businesses, said Bo Mangam, a commercial real estate agent with Landmark Commercial Realty Inc. She handled the sale of the Salvation Army property.
Mangam said she has been fielding inquiries from retailers, car dealerships and garages, as well as medical service companies searching for locations in that part of Harrisburg. The site is on the city’s border with Paxtang.
“Some businesses that were for sale already increased their asking prices or completely removed their properties from the market, as they desire to continue their presence,” she said.
The construction effort also will create jobs, said Mike Klinepeter, executive vice president for Pyramid Construction.
Pyramid expects to have more than 20 subcontractors and 50 to 100 people working on the site on any given day.
New business activity could open up other construction jobs, while new businesses locating in the area will need workers to run retail stores, restaurants and other service businesses.
“A building like that can reinvent an entire community,” Klinepeter said.