Norristown aiding redevelopment project despite no proof tenant is paying business taxes

     Protesters outside of 9 W. Main St. in Norristown, Pa. Efforts to fix up the historic PNC building have attracted scrutiny from labor, town officials and the press. (Laura Benshoff/WHYY)

    Protesters outside of 9 W. Main St. in Norristown, Pa. Efforts to fix up the historic PNC building have attracted scrutiny from labor, town officials and the press. (Laura Benshoff/WHYY)

    Norristown, the poor county seat of one of the richest counties in Pennsylvania, has struggled to attract businesses to revitalize its Main Street.

    In an effort to do just that, Municipal Council Member Marlon Millner believes the city may be picking bad investments — and leaving money on the table.

    In 2012, developer Michael Alhadad of Ambler bought a historic PNC Bank building at 9 W. Main Street, and turned the top floors into condos. When Alhadad needed a first floor business tenant, local soul food restaurant Diva’s Kitchen was tapped to move in.

    Fixing up the space was going to be a big job, so Alhadad asked for help. To sweeten the pot for a developer who was spending millions on a marquee property, Norristown’s borough council voted to spend $250,000 in federal economic development funds, called Community Development Block Grant (CDBG), on the build out.

    With all of that public money going towards one space, Millner requested business privilege tax records for the restaurant.

    “It seems to me, there’s something to be learned from who’s above average, who’s below average” in the amount of revenue they bring in, said Millner. The city’s business privilege tax is based on the amount of revenue a business brings in every year, $1 for every $1,000.

    After four months of waiting, the councilman got a response. 

    Diva’s Kitchen filed taxes under the name of the owner’s spouse, and “there is no record of payment for the business privilege license fee or business privilege taxes” by the restaurant, according to the emails provided to Millner by Norristown administrators.

    Not only that, but records for many area businesses were missing. Of 50 non-franchise business records pulled from 2012, 2013 and 2014 by finance director Chenora Burkett, only 30 reported gross revenue under the entity name, according to emails exchanged between Burkett and Millner. In the spreadsheet shared with NewsWorks, many restaurants’ reportings were simply left blank.

    Without that information on Diva’s Kitchen, “my contention is that we picked a very poor business to invest in,” said Millner, who was the only member of town council to vote against the CDBG grant.

    Owner of Diva’s Kitchen, Temeka Murray, insists she’s been paying her taxes. “I have all of my paperwork. All of it,” she said. She said the developer reviewed her financial records before the two decided to partner. Murray had been operating Diva’s at a location on West Johnson Highway, before closing earlier this year in anticipation of the move to Main Street.

    She’s also frustrated by how much attention the project has received.

    “[The CDBG money] is not going into my pocket, so nobody should be digging into my business,” she said.

    Municipal administrator Crandall Jones said record-keeping hasn’t been perfect, but that Norristown isn’t alone in that.

    “It’s not about trying to get Diva’s in particular,” he said. “The system needs fixing but that’s not necessarily a Norristown issue,” referencing a possible reporting lag from third party tax collecter Berkheimer. A spokesman from Berkheimer said they can’t disclose information about a particular payee, but that Norristown officials receive reports on collections every month.

    Now, with a list in hand of those who may not be paying taxes, “We will pursue collecting just as every municipality pursues delinquent taxes — if they are delinquent,” said Jones.

    As for whether these taxes should be a factor in giving out economic development grants, Jones said it’s secondary to attracting investment in Norristown.

    “It’s about partnering with a developer who is actively interested in investing in Norristown,” he said. The PNC building’s owners are reported to be investing $3 million on revamping the historic building.

    “At the end of the day, even if it didn’t work, we still have a viable property that another place, another restaurant can come into,” said Jones.

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