- Associated Press - Saturday, February 22, 2014

NORRISTOWN, Pa. (AP) - The project to transform an old Norristown shopping center into a movie studio was supposed to bring the glitz and fortune of Hollywood to the sagging seat of Montgomery County.

Build it and filmmakers will come. Build it and jobs will come and lift Norristown to prosperity.

That dream fizzled like a box-office bomb last May, when the project’s investor filed for foreclosure against the developer.

The forlorn shopping center, Logan Square, sits half-empty, its fate likely to be announced in the coming weeks. The county is grappling with how to recoup the $25 million it sank into the project - including $10 million in federal funds it must repay - and its lawyers are preparing a lawsuit against the developer. And prosecutors are scrutinizing the deal to see if more than bad luck and poor judgment were to blame.

Interviews with former and current county officials, along with county and state records, provide a clearer glimpse of the project’s rise and fall.

The pinch on taxpayers is already being felt. Some interest payments were made last year, and this year’s county budget includes a $510,000 payment on a $6.2 million debt - with similar sums due every year until 2030.

The $24.5 million in grants, loans, and loan guarantees the county invested was projected to kick-start the economy and create jobs. That money was supposed to bring, if not a tour de force, at least a happy ending.

“We got caught up in the possibilities,” James R. Matthews, former chairman of the county commissioners, said last month. “Possibilities don’t come to Norristown every day.”

THE BEGINNING

Logan Square opened in the mid-1950s, two miles north of downtown Norristown, where there was plenty of free parking. Sears Roebuck & Co. soon moved there from Main Street, then left in the 1980s for King of Prussia.

As other stores came and went at Logan Square, owner Joseph F. Butera put the property up for sale, recalled Jerry Nugent, executive director of the county’s Redevelopment Authority.

In January 2008, developer Charles Gallub created a corporation called Johnson & Markley Redevelopment, named after the two streets where the shopping center stands, and bought the property for about $18 million, according to county records. Most of the money Gallub used to buy it came from a private investor, Logan Lender L.P.

Even before the purchase, Gallub had pitched the project - Studio Centre - to the county, figuring the plan could benefit from tax credits then-Gov. Ed Rendell backed to promote moviemaking.

The plan and the tax credits were attractive enough to encourage Raleigh Studios in California and some homegrown filmmakers to partner with Gallub: “The vision is to … create one of the best film studios on the East Coast of the United States,” the developer said in 2007.

“There was a great amount of enthusiasm,” Nugent said. “Studio people would fly in from California and spout their excitement.”

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