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Notorious Pennhurst hospital campus gets Pa. grant toward rebirth as business park

The $4 million state grant and a $6 million loan will be used to prepare some of Pennhurst's 23 buildings for reuse, while others will be demolished. The Halloween haunted house is expected to continue operating for the foreseeable future.

Buildings on the Pennhurst campus in 2009 photo.
Buildings on the Pennhurst campus in 2009 photo.Read moreCourtesy of Sarah McConnell

An operator of the yearly Halloween attraction at the former Pennhurst State School and Hospital for the disabled in Chester County wants to restore the infamous property to year-round use as a complex of offices and industrial buildings.

Those ambitions got a boost last week when the Delaware-based developer Derek Strine's plan for the 111-acre site in East Vincent Township was awarded a $10 million grant-and-loan package from a state program aimed at funding early site preparation for big projects.

Two other Philadelphia-area projects received funding from the "Business in Our Sites" program: the redevelopment of Cyprus Foote Mineral Co.'s former ore-processing facility in Chester County's East Whiteland Township into a complex of data centers, and the conversion of a former Rohm & Haas chemicals research-and-development campus in Lower Gwynedd Township, Montgomery County, into an office and lab park.

Statewide, $19 million in grants and $34.1 million in loans were awarded for seven projects in six counties, which are projected to create more than 3,300 jobs, the office of Gov. Wolf said in a release.

The plan being pursued by Strine and his brother Andy for the former Pennhurst hospital campus calls for "a large distribution facility" and other industrial structures, new office development, and the renovation of six existing buildings for additional commercial use, amid ample open space, according to a funding request provided by the governor's office.

Derek Strine said his venture, Pennhurst LLC, decided to focus on commercial uses in its $100 million to $130 million plan for the property after market studies revealed that potential residents may be repelled by its troubled past as a mental hospital where patients were mistreated. The campus housed people with physical and mental disabilities for eight decades until 1987, when it closed after courts found conditions there unsanitary, dangerous, and inhumane.

"It's notorious, so we kind of decided we couldn't go with residential," said Derek Strine, who with his brother owns the Wilmington-based Investors Realty Inc., a developer and owner of single-family and mobile-home communities and self-storage facilities.

Derek Strine said he became involved with the Pennhurst property after he and a partner who had been operating the Valley of Horrors corn maze near Kennett Square relocated their Halloween attraction to an administrative building on the campus, which became home to the yearly Pennhurst Asylum haunted house. Some critics have called for the attraction's closure, saying it disrespects the suffering of former patients and presents a distorted image of the mentally ill.

Pennhurst LLC acquired the property by taking over a $7.5 million mortgage on the land from an affiliate of Dallas billionaire Andy Beal's Beal Bank, Strine said. Beal had assumed that debt in 2014 during a selloff of assets previously held by Nova Bank of Berwyn, which went out of business, according to records filed with the Chester County recorder's office.

The newly awarded state funding, consisting of a $4 million grant and a $6 million loan, will be used to begin reversing some of the damage caused to the site's 23 buildings by vandals over the years, with structures beyond repair being demolished, Strine said. That preliminary work, which will also include grading, infrastructure, and street construction, will likely begin some time next year, he said.

While final plans for the site are still being devised, it will likely include for-sale office space for professional users such as doctors, for which there is strong demand in the area, Strine said. Development will consist of newly built structures and the reuse of existing buildings that can be salvaged, he said.

Strine said a museum or other venue to recognize the site's history and display artifacts from active use is planned for the property, but the Halloween haunted house is expected to continue operating for the foreseeable future.

"As a commercial real estate project, it's very well-situated" along U.S. Route 422 and Pennsylvania Route 724, Strine said. "As a haunted attraction, it has the bones of being the top attraction in the country."

Elsewhere in Chester County, a development team involving the West Chester-based Walters Co. and Roskamp Management Co. of Sarasota, Fla., was awarded a $4 million grant and a $6 million loan through the state funding program to prepare the 98-acre Cyprus Foote Mineral site for two 360,000-square-foot data centers. The power-generation firm Calpine Corp. also plans to build a solar plant at the site to help supply the data facilities' electricity.

In Montgomery County, the planned redevelopment of Rohm & Haas's former research campus into what is being called the Spring House Technology Park was awarded a $4 million grant and an $8 million loan. The Horsham-based MRA Group purchased the property for $10 million in March from the Dow Co., which acquired Rohm & Haas in 2012.