Arcade helps give PA borough extra life, but hefty tax could mean game over

By Andrew Staub | PA Independent

The small borough of Hanover has long been championed as the Snack Food Capital of the World, but there’s no such grand proclamation about the small York County town’s nightlife.

These days, though, a blast from the past is helping change the downtown dynamic, but local officials could derail the momentum. The borough wants the TimeLine Arcade, which moved into a former bank building just off the borough square last October, to pay a massive amusement tax.

The owner of the arcade, Brandon Spencer, declined to pay what he said would be a nearly $6,000 fee. That’s left the borough council pondering whether it should change a four-decade-old ordinance to make sure it applies to a more modern world.

The disagreement largely centers on two words in Hanover’s amusement tax ordinance, specifically that the borough can charge $50 for every “coin-operated” amusement device. Spencer’s 130-plus machines — from pinball machines to classic arcade games — don’t accept quarters or tokens. Instead, TimeLine Arcade patrons pay flat rates for each half-hour of play.

“The law’s the law, but for them to take this law and change it all of a sudden just because of me, it’s pretty scary,” Spencer said in an interview with Watchdog.org.

Before he opened an arcade in Hanover — with an initial location at the local mall — Spencer said he looked at the borough’s ordinance and decided against coin-operated machines. Instead, he wanted to create a nostalgic, museum atmosphere, he said.

It’s been successful, with people coming all the way from California to peruse his downtown shop.

The massive tax, which amounts to about three months’ of electricity costs for Spencer’s business, would hurt. He’d have to consider relocating, and he’s already been exploring opening a second location in Maryland where such a tax isn’t implemented.

The leader of the borough council isn’t exactly sympathetic.

Council President John Gerken said Spencer should pay the amusement tax and that the borough’s solicitor believes Hanover has a good case to enforce the ordinance. Whether the arcade can afford the tax is “not our problem,” Gerken said.

“It’s not government’s job to ensure that people stay in business, you know what I’m saying?” he said. “The laws have to be enforced, whether you like it or not.”

But there’s no doubt it’d be good for the borough if the arcade succeeded.

For years, Hanover’s downtown hasn’t offered much in the way of dining or entertainment, with an old movie theater sitting vacant and a longtime pizza shop closing about two years ago. Even the Famous Hot Weiner, the town’s iconic hot dog shop, stops serving its gut-busters at 8 p.m.

There have been signs, though, that a livelier downtown awaits.

A couple months before TimeLine Arcade moved to its current home on Carlisle Street, an artsy sandwich and coffee joint opened not far away. Since Spencer relocated, a couple of local breweries have announced plans to move downtown, while a specialty olive oil and spice shop has opened across the street.

The area has also received the state’s Main Street designation, said Scott Roland, another downtown advocate and CEO of the real estate company that owns the building Spencer’s arcade occupies.

“At some level, you could say he was the catalyst for the last 12 months’ worth of downtown resurgence,” said Roland, who thinks it would be difficult to see the arcade leave because of a “regressive” amusement tax.

Borough Councilman Henry McLin called it a “nuisance tax,” and because it nets only about $4,600 a year, he wants to repeal it instead of jeopardizing a business that’s helped jumpstart the downtown.

“That would just be stupid, and it would be against the public interest to drive him out,” McLin said.

Spencer doesn’t know what prompted the borough to send him the bill. It’s especially baffling since he said he didn’t pay such a hefty amusement tax during the two years his arcade was in the North Hanover Mall, also within borough limits.

While there, Spencer paid the fee on a few coin-operated machines he had, but not on the dozens of machines that didn’t require coins or tokens to play. The borough didn’t seem to have an issue with that, he said.

Spencer has no coin-operated machines at his current location. That fueled his belief the tax doesn’t apply.

While Roland believes Hanover has already set a precedent from the arcade’s time at the mall, that hasn’t stopped the borough from trying to apply the antiquated ordinance to Spencer’s modern-day pricing structure.

“Times have changed,” said Barb Krebs, the borough manager. “(Customers are) still paying. They’re just paying in a different way.”

Spencer agrees times have changed. But, in his opinion, the ordinance was needed for a long-ago era when arcade games were popping up all over and bringing in hundreds of dollars a week. That’s no longer the case, he said.

Beyond that, Spencer worries that even just dropping the words “coin-operated” from the ordinance could open a Pandora’s box in which everything from iPad games available at some restaurants to console demos at gaming stores could be subject to the amusement tax.

For now, Gerken and Krebs stressed the borough is just considering its options and hasn’t taken any formal steps toward changing the ordinance.

While Spencer isn’t exactly sure what will come of the tax bill, he doesn’t hold any ill will. His business might harken to the past, but he wants it to be part of the borough’s future.

Given the number of downtown spaces that are yet to be filled, Spencer hopes the borough doesn’t make the incorrect choice.

“Then guess what?” Spencer said. “You’re back to square one, and you have no downtown again.”

Staub can be reached at Andrew@PAIndependent.com. Follow @PAIndependent on Twitter for more.