According to the proposal, the borough would give two parcels of land along the Falling Spring to the development corporation in exchange for the site of the former Madden Hotel on Main Street, which will be demolished and turned into a parking lot.
The borough and the development corporation have agreed to share the cost to demolish the old hotel, said David G. Sciamanna, president of the Greater Chambersburg Chamber of Commerce and executive director of the development corporation.
"It's one of those deals where we need them and they need us, but we both have the same goal in mind," he said.
A bar that operated out of the now-vacant and boarded-up hotel was closed and the development corporation bought it in 1995 "to prevent it from being a continued problem for downtown," Sciamanna said.
That same year, the development corporation bought four properties along the Falling Spring for $300,000, with the intent of generating interest and development in Chambersburg's downtown, he said.
Noelker and Hull, the architectural and interior design firm founded in Chambersburg in 1957, was the first to inquire about the site with the idea of renovating a two-story brick furniture warehouse known as the former Culp's warehouse.
"I found this site a long time ago. I think it's one of the best sites in Chambersburg as far as its potential for a park-like setting," said Michael Hull, son of the firm's co-founder, John.
The firm's newly renovated 8,000-square-foot building has offices on three floors for 30 employees, and the business is still growing, Hull said.
Once the property exchange is complete, the development corporation eventually plans to construct two office buildings on the parcels on the bank of the Falling Spring, where Chambersburg's founder - Benjamin Chambers - built a grist mill and sawmill, said Paul E. Cullinane Jr., executive director of Downtown Chambersburg.
Discussions have taken place among potential tenants or buyers, but no agreements have been reached, he said.
Occupants will likely be commercial businesses and possibly some small retail or specialty shops, Cullinane said.
The Village on the Falling Spring, a 2-acre parcel in the borough's north end between an alley and the confluence of Falling Spring and Conococheague Creek, came out of a master plan contrived two years ago to improve the downtown.
The area will resemble a park-like atmosphere where people can eat lunch and relax, Cullinane said.
The project also includes cleanup of the stream, and a 12-foot high, 3,000-pound reproduction overshot water wheel has already been repaired through volunteer efforts.
The master plan also includes the renovation of the Capitol Theatre on South Main Street, expansion of Ludwig's Parking Lot across from the theater, a rails-to-trails path through the borough and renovation and reuse of the old Franklin County Jail building on the corner of King and Second streets.