The cost of parking in downtown State College may be driving out local businesses, some local officials say.

Any time the borough makes it more difficult for people to come downtown, businesses suffer, said Ed Friedman, owner of Friedman Real Estate Group, which rents to 160 tenants in the downtown area.

Friedman said a 4,000-square-foot retail store in the downtown area is scheduled to close in late 2003 or early 2004 due to lack of sales volume, but he said he could not disclose the store's name.

The lack of sales are due to the increased price of parking in the downtown area, he said.

"I really believe by raising parking rates, you really drive people out," Friedman said at a borough work session Friday.

During the meeting, Friedman passed out a report to the council examining business trends in the downtown area from the past five years.

"I think this clearly shows people aren't patronizing downtown," he said.

Not all think the largest issue facing businesses downtown is the cost of parking.

"The downtown's biggest problem is not the parking rates; it's the perception that there is no parking downtown," said council member Jim Meyer.

Despite the belief that there is no available downtown parking, spots are always available, Meyer said. Sometimes it just isn't out in front of the store, he added.

"If people think there aren't any spaces, they're not going to attempt to go downtown," he said.

Although Meyer agreed that increasing parking rates might hurt downtown businesses, other factors are also involved.

Meyer cited the recent national economic slowdown and the possibility that retailers are not selling the right things.

"Obviously parking rates are always a factor," he said. "There's other elements at play here."

One solution to the problem may be cheaper parking -- and more of it.

"I'd like to see the borough proceed with a new parking garage. I'd like to see the borough be more proactive," Friedman said.

In somewhat of a catch-22, to pay for the new parking garage, rates must continue at their current level, or taxes could be increased.

"If we want to build parking, we have to finance it," Borough Manager Peter Marshall said.

A potential tax increase to pay for the new garage was not well-received by the council.

"We avoid adding taxes for services that serve some and not others," said Borough Council member Tom Daubert. "One of the reasons we do this is so people who use the facilities pay for the facilities."

Unless the parking issue is resolved in the near future, Friedman said all retail businesses will vacate, leaving State College a ghost town filled with nothing but pizza shops. "I don't think that's what we want, but that's what we're going to get," he said.