Train station sale rankles Greensburg business leaders

Debra Erdley
| Saturday, Feb. 13, 2016, 11:36 p.m.

Less than two decades after a $3.5 million public investment transformed Greensburg's train station from a crumbling pigeon roost into a historic showplace, the Westmoreland Cultural Trust sold the building and its liquor license for $525,000 — barely covering an outstanding mortgage, records show.

Selling what many consider an iconic community asset has raised questions about why the station — with a book value listed in the trust's annual report at $2.26 million — was sold for less than 25 percent of its worth to a Greensburg investment group, StoneKim Properties LLC.

Some people, saying they were stunned by the deal, question why there was no public notice that the property was on the market.

Prominent Greensburg businessman Bill Mohler, president of Sendell Motors, said he is incensed about the sale.

“No one knew anything about it. I think that train station is worth a lot more than that,” Mohler said, adding that he or other business people might have been interested in the property.

Trust President and CEO Michael Langer said his group had to eliminate the staggering cost of maintaining the train station to focus on the nonprofit's centerpiece, the Palace Theatre, the renovated 1926 venue that hosts performances by national theatrical and musical acts and local arts groups.

Langer said the Palace posts annual operational losses and needs about $300,000 in maintenance, but it has greater community value than the station, which carried a $518,000 mortgage at the time of its sale, according to Westmoreland County records.

Concentrating on the Palace instead of the station makes sense, Langer said, citing a study showing the theater attracted 76,000 people to more than 100 events last year and injected $9 million into the local economy.

It was never the trust's mission to turn the theater into a profit-maker, but rather to “break even,” an often-elusive goal for the Palace and the trust, he said.

Federal tax documents show the trust lost money on operations in 11 of the past 17 years, most recently losing $883,014 in 2013 before posting a profit of $658,399 in 2014.

Seven years ago, the trust was sued by its original train station tenant, the Red Star Microbrewery, when its partners, Ernie Vallozzi and Dale Cordial, were evicted as they tried to renegotiate their lease, records show. They were awarded $178,000 in 2013.

“I was shocked when I saw the price and that it was a secretive deal. It's hard to say what a building is worth if you don't know the condition of it, but at that price, I know some people would have been interested in it,” Cordial said.

Shock and awe

Perhaps no one was more surprised by the December sale of the station than Debra Driggers, owner of The Supper Club, a farm-to-table restaurant that has leased space in the station since 2010.

Just nine months before the sale, Langer had offered the station to Driggers — who said she invested more than $500,000 into the facility — for $800,000. Driggers consulted her accountant and the St. Vincent College Small Business Center but didn't consider it a sound investment at that price.

“To think that they sold it for less than I put into it, I'm shocked,” said Driggers, whose restaurant does brisk business on theater nights. “We should have had an opportunity to renegotiate our rent and had the opportunity to look at purchasing it at the lower amount.”

Driggers pays $6,700 a month in rent, plus utilities. Her lease runs through the end of the year.

Driggers said she might have been interested in making a deal with Langer for $525,000 — $470,000 for the building and $55,000 for the liquor license.

Langer said the $800,000 price was based on an old appraisal and noted that Gary Hayden of South Greensburg signed off on a new one for $525,000.

“I was quite surprised it wasn't on the market,” said David A. Reese, a Murrysville real estate broker who has specialized in commercial property for 25 years.

Given the public investment in the building, Reese said he thinks notice that the facility was on the market was warranted, either through an advertisement, an auction with a reserve (a minimum bid) or a public announcement.

Langer said his group didn't place the station on the market because of restrictions attached to it, including that its historic façade be maintained and that an Amtrak passenger gate be manned twice a day.

The trust included a clause requiring the new owners to offer it the first right of refusal should they decide to sell.

Langer defended the sale as an arms-length transaction, but he would not rule out the possibility that the buyers had prior dealings with members of the trust's board.

“It's a small town. Everyone knows everyone else,” Langer said.

The beginning

By all accounts, the train station renovation in 1998 — funded by local, state and federal grants and donations — was viewed as a win-win for Greensburg.

Once it was complete, the Jacobean Revival-style station, listed on the National Register of Historic Places, housed a restaurant and professional offices, a far cry from the days when the rundown structure was a haven for vagrants.

A wave of upgrades in the surrounding area followed, breathing life into that section of town.

It seemed the train station's stock was rising two years ago when PNC awarded the trust $300,000 to attach its name to the building.

But Ron Sofranko, a Pittsburgh-based consultant dealing in restaurants and liquor licenses, said the station's value is compromised because its location is off the main drag of a town that empties at the end of the day when the county courthouse and businesses close.

“It's a tough location for a restaurant,” he said.

Langer said the building did not generate significant income.

In addition to Driggers' rent, the trust collected $15,000 a year from former state Rep. Tim Krieger for his office in the station, state records show. Rent was paid on three other office suites.

Langer declined to disclose specifics, but he said the station netted the trust just $18,600 last year and $21,000 in 2014 from rentals.

He said the trust had serious discussions with two potential buyers it approached, as well as two who approached the nonprofit. StoneKim Properties — led by Kirk Kim, owner of the Olde Spitfire Grille in South Greensburg, and Greg Stone, owner of Stone and Co., a construction supply firm — was in the latter group.

Driggers and Kim concede they had a bitter parting six years ago when Driggers, who operated the Spitfire Grille, left to start The Supper Club.

“I want to make it clear there is no animosity on my part toward her,” Kim said.

Kim said he and Stone paid cash for the station.

“I said, ‘We're going to offer you $525,000 and close by end of year so you can have it off their books,' ” said Kim, adding that the building's basic look will remain. “We want to preserve the station the way it is. I've always liked to go in and refurbish things. We have no grand plans to change anything.”

Debra Erdley is a Tribune-Review staff writer. Reach her at derdley@tribweb.com.

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