Thursday, September 22, 2011

Do We Really Need To Give Chrin a Tax Break? - Part One

Charles Chrin is definitely the smelliest person in Northampton County. He's worse than me! Driving by his landfill is always a treat, especially on a hot Summer day. It's just agreed to pay a $114,000 fine to the state DEP because, basically, it stinks.

In addition to being smelly, Chrin is definitely the largest landowner in Northampton County and he's probably the richest, too. So naturally, people hate his guts. He could probably get away with stinking up the place, but none of us like people who have more money than the rest of us. You could say we're all socialists at heart, but I think we're just jealous. Chrin can donate land for Williams Township football fields and community centers bearing his name, but nobody really likes the guy.

He might be a gazillion years old, but he's still going gangbusters on getting as much money as he can before he dies. His latest venture? Ripping apart over 600 acres of greenfields in northern Palmer Township with a humongous industrial park. And because that park will result in lots of heavy truck traffic, he wants on Interchange off of Route 33, right around Tatamy.

Now Chrin originally promised to foot the bill the $25 million plus bill himself, but he now wants to finance it using tax money, with a TIF. Sounds outrageous doesn't it?  That has to be approved by the host municipality, school district and County. It passed unanimously in Palmer Township, had only one dissenting vote on the Easton School Board and looks like a winner in Northampton County.

This is exactly the kind of project I love to rip apart. Corporate welfare, I scream. Good ol' boys taking care of each other, I complain. Nobody listens.

I went to a Finance Committee meeting last week, expecting to have my usual opinion confirmed. Instead, I was persuaded that this proposal is actually a very good idea. I was impressed by the presentation made by Northampton County's Alicia Karner, as well as the comments of former State Rep. Rich Grucela (he must be getting paid by Chrin) and Palmer Township Supervisor Dave Colver.

I'll explain why, despite my natural hatred of anyone who has more money than me, this is a good idea. But before I do that, I'll note the excellent argument against this idea by Frank Castrovinci, the sole Easton School Director to say No.


My name is Frank Castrovinci.  I am a Controller at a local company, and was recently appointed as a director on the Easton Area School Board. I apologize for contacting you at your personal e-mail address, but I have an important message as a resident of Northampton County that I hope to draw attention to.
The Easton School Board was presented with the TIF proposal for the Rt. 33 Interchange at Main Street in Palmer Township on August 18.  The proposal was approved 6-1, and I was the dissenting vote.  I am writing to you because there are a number of issues that I believe many are not considering with this proposal, and I wanted to contact the county council to highlight these concerns.
1.       TIF financing should not be used for projects that would go forward without the incentive.  On this project, the developer was intending to pay for the cost of the interchange prior to the cost increasing given the need to replace a bridge.  Porsche chose to be located in the same industrial park as the land that will be within the TIF disctrict after screening greater than 50 sites, and Majestic has a large facility in this general area, all without the interchange.  I understand that at full development an interchange at Main Street would be beneficial, but given the developer’s original plans and apparent attractiveness of this location, I do not believe a TIF is warranted for the full funding of this project.  I questioned this during the presentation to the school board.  The reply was that the cost of the interchange increased, and without this financing the developer would need to front the cost of the project.  This was their plan prior to the bridge replacement requirement.  A reasonable (and logical) request would be for the cost of the bridge to be covered by the TIF plan.
 
2.       The two existing TIF districts in Northampton County are excellent examples of the use of TIF financing.  Both are at locations that would likely have not been developed without the financing.  I am not sold on the fact that this is the case for the Rt. 33 Interchange proposal.
 
3.       The presenters of the proposal draw attention to the Dietrich Group study and the potential payout to the taxing authorities if they agree to the plan.  They also state there is no financial risk to the taxing authorities.  In my view, the issue is how much the taxing authorities should be willing to give up to pay for the interchange.  If the economics of this industrial park at full build out as projected by the Dietrich Group are sufficient for the Chrin Company to finance the interchange, an incentive of the magnitude they are requesting should not be provided. The bridge is deficient and should not be the cost of the developer, and something we should consider assisting with.
 
4.       The developer has some exposure to cover cost of the interchange through the Neighborhood Improvement District that will be in place for this location.  My understanding of this concept is that there would be an additional assessment made on property owners within the TIF district if the development has not been sufficient to cover the cost of the loan.  As the developer would be one of the property owners, they would be liable to kick in some funding to cover the shortfall.  In my view, if the developer is willing to do this, they should be willing to pay some portion of the interchange cost up front, allowing the taxing authorities to receive a higher amount of the taxes to be collected from this industrial park, and alleviating some of the burden placed on our existing taxpayers.  I am not aware of any effort to negotiate a more equitable proposal.
 
5.       The Chrin Company will be pricing this land at the market, and will seek to undercut the competition by just enough to attract prospects to their industrial park.  They in effect will control how much of this incentive is passed through to companies considering property in this area.  This gives me a high degree of discomfort, and translates into a huge potential windfall for the developer rather than an incentive to attract high quality jobs to our area.
 
6.       The magnitude of this incentive is excessive given the lack of definition around the companies and jobs that will be located in this industrial park in the future.  Palmer Township’s claim is they will not allow large distribution centers to cover this land, though as we see the Lehigh Valley is popular for these types of facilities.  Though this area appears to be promising, I am concerned about offering an incentive of this magnitude for jobs that are not defined.  If the next Olympus was moving into the Lehigh Valley, I would likely be agreeable to including an amount above the cost of the bridge in the TIF financing plan, if that is what it would take to close the deal.  This is not the case for this proposal.
 
7.       I have read that some counties have ceased allowing TIF financing for greenfield sites, as this financing was intended to cover blighted areas as defined by the Urban Redevelopment Law.  Allowing TIF financing for greenfield sites has the opposite effect of what I believe the true intent is of this legislation.  The definition of blight is so broad that it appears almost anything can be considered blighted property. We must limit offering this type of financing on projects such as this, and reserve it for properties that are truly blighted, as the county has in the past.
I respectfully request that you consider these points as the TIF financing plan is presented to yourself and the rest of the Northampton County Council.

25 comments:

Anonymous said...

Yes, it is the right thing to do. It will stimulate the economy. we must help the job creators!

Anonymous said...

NO!!!
NO!!!
AND....NO!!!
Mr Ohare,
You can basically call the building of the exit a tax increase for the people who live in the area. They said as much in the coverage of the issue. Plus the TIF portion could turn into the next swaption. I am really suprised Ron is behind it.

And speaking of tax increases, if Marty Zawarski wins in the Twsp in Novemeber, you might as well inform those residents that they too are voting for a tax increase.

I know him for 30 + years, let me just say , he is a bad choice.

Anonymous said...

Do we really want to use taxpayer money to destroy more fertile farmland along the margins of the LV? Especially at a time when we are using taxpayer money to preserve open space.

Use taxpayer money to revitalize our Brownfields property, remove blight and create jobs. Do not use taxpayer money to promote more farmland destruction.

Anonymous said...

Bernie had the following story first!

By Devon Lash, Of The Morning Call

10:51 p.m. EDT, September 21, 2011

Neighbors opposing the expansion of a strip club in east Allentown thought they found a savior when attorney William Malkames volunteered to take on their case for free.

The neighbors wanted the courts to block a city ruling that would allow Erv's Ladies and Gentlemen's Club to triple in size and stay open until 2 a.m.

Last week, they learned Malkames is being paid by a local Realtor tied to another strip club soon to open in Allentown, Savannah's on Hanna.

Anonymous said...

It might be interesting to look at campaign finance reports over the last several years regarding contributions to the Common Pleas Judges, local elected officials and the District Attorney to see how much money, if any, has been "donated" to these various people from Chrin.

Jon Geeting said...

Frank Castrovinci is making sense, but the biggest reason not to do this is that the market for industrial park office space and retail is dying of natural causes. Businesses increasingly don't want it, and these things are sitting empty all over the country.

Firms want centrally-located downtown office space. Wal-Mart is moving toward smaller Wal-Mart Express stores in urban areas. Obviously this would be terrible for the environment and traffic congestion, but the most important point is that it's a bad investment decision on Chrin's part, and it would be even dumber for Northampton County to enable it.

Anonymous said...

NO!

Let the old bastard do whatever he wants with his land.

But no help.

Anonymous said...

Geeting is right on this on every point. I never agree with him, and wish he could connect this dot with the over use of regulations and taxes. This type of move is usually made because it's cheaper and easier than using existing space.

Anonymous said...

You liberals don't get it. We must help the job creators. We must not give money to the lazy and give it to the creators.

Bernie O'Hare said...

"Firms want centrally-located downtown office space."

Yeah, that must be why Allentown is doing so well. You just don't know what you are talking about, as usual.

Larry Kisslinger said...

Anon 3:38 AM
And speaking of tax increases, if Marty Zawarski wins in the Twsp in Novemeber, you might as well inform those residents that they too are voting for a tax increase.

I know him for 30 + years, let me just say, he is a bad choice.

Some info about this Chrin, EASD,
"Palmer" Township and NorCo post:

1./ I know entire Zawarski family for over 40 years and have done much honorable business with all of them, especially Marty.

2./ I don't know how, why and when Marty entered the Palmer Township race for Commissioner! I think he is very busy with his business and seeking a seat for Bethlehem Township Commissioner at Large.

3./ What in God's name does Marty have to do with this post in the first place? I suppose is just one of his detractors with no clue and a personal axe to grind, trying in vain to get a political smear in, edgewise. Go figure.

Bernie O'Hare said...

"It might be interesting to look at campaign finance reports over the last several years regarding contributions to the Common Pleas Judges, local elected officials and the District Attorney to see how much money, if any, has been "donated" to these various people from Chrin."

I have detailed these in previous posts.

Anonymous said...

If I had an axe to grind I would have listed the multitude of reasons I feel he is a poor choice. Let the people beware.
Obviously you don't know him as well as you think you do.
And the "just one of his detractors" statement speaks volumes!
I know exactly what he is running for and why.
I stand behind my comments that a vote for him is a vote for a tax increase. Specifically a school tax increase.

Anonymous said...

Bernie @ 10:12am,

Your comments may be true in the current and recent past but it appears that this is changing as a result of the hockey arena that will be located in the downtown area. I know people who are relocating businesses into, or back into, the downtown area because of the incentives. The use of a tax zone in that case is smart and will pay big dividends when all is said and done.

Allentown is similar to what happened in Asbury Park, NJ in the mid-1990s, albeit without an arena being built. The proper incentives were given to businesses and individuals to move back into the area. As a result, a dilapidated area returned to what it had been in the past.

And Geeting is dead on regarding the office space in the area and the business park model in general. It simply does not make sense to subsidize this kind of development on prime real estate.

I would be willing to subsidize this development, if and only if, there were strict restrictions where all development would be industrial manufacturing. This would bring good paying, blue collar jobs into Northampton County while actually producing something again. That would be a win-win for sure.

Publius

Anonymous said...

Palmer Township is in a way, sealing it's fate.

The only thing that will be built on this land will be retail, service and warehousing jobs that will largely be offered to and taken by your entry level and low income folks. The Lehigh Valley economy supports precious else that isn't ready to be absorbed by existing places like the hospitals.

LANTA is pretty lousy at getting people out to these sorts of places, so you'll see a demand for cheaper housing as close as possible to this area. They aren't going to be coming from the Slate Belt, but the cities.

Palmer will be overrun by developers wanting apartments and townhouses. Not bad at all, as it'd serve a need, but just as Whitehall and Upper Macungie Townships learned or continue to learn, you don't get to just provide the retail and warehousing and naively think those workers are going to live elsewhere.

Get ready for a dramatic change in Palmer Township.

Anonymous said...

I remember the during the inception of these various LVIP's they were touted to be competition for "Silicon Valley"
with high paying tech employment.....now we get sweat shops like Amazon, and robotic 200 acre 50 employee warehouses. Truck traffic to tear up our roads that are already in disrepair, and destined to stay that way if some factions have their short sighted visions inacted.

Anonymous said...

This is a really BAD idea, the T.I.F. is designed for brownfield areas, Bethlehem has the LARGEST Brownfield area in the USA and NORCO thinks it a great idea to use it on pristine farms and open space. I say NO NO NO, stop the madness and stop the Pork to the rich. You won't create any jobs here you will just ruin the area for ever...

Oh and I forgot the most important thing, the whole area is full of sinkholes due to all the limestone underneath it...

Lighthouse said...

If you were posting a story about the government proposing tax breaks to help those facing foreclosures, your site would be filled with comments from Tea Party members and fellow-travelers bemoaning a redistribution of wealth downwards.

Yet they are usually silent when the redistribution goes upward to bail out companies, or in this case, increase the profits to ultimately be made by Mr. Chrin. The so-called "job creators."

While part of me can see Mr. Castrovinci's comment, "A reasonable (and logical) request would be for the cost of the bridge to be covered by the TIF plan", I must point out that in Bethlehem Township all the traffic improvements along the Freemansburg Ave corridor, including the expensive widening of the bridge over Route 33, was always going to fall on the shoulders of the developers who would be causing the increased traffic. Originally it was going to be split among the large stakeholders (Forest City, St. Lukes, Wagner,...). When Forest City pulled out, and Wagner's eyes may have been bigger than he was able to pull off (?)(new developer now for his property), St. Lukes has taken the lead (since they bought the Forest City tract thus now controllng both sides of the interchanges) and is spearheading what will be roughly $25 million dollars of traffic improvements when all is said and done in several years. Bethlehem Township taxpayer (and hence BASD, too) cost has always been $0.00. Repeat: major development, major traffic improvements, and no TIFs.

Chrin has his hand out for corporate welfare. Tea Party, where is your rage? Or does "corporate" ring so loud that you don't hear the word "welfare"?

Anonymous said...

Lighthouse -

I am anon 8:48 a.m. I am a tea party supporter. Read what I said and you will now know one who doesn't fit your sterotype. If you made the effort, you'd know others as well.

You have the talking points down. But, you are wrong. Corporate welfare, welfare for those who can but won't work, all the same.

And, contrary to your talking points, it is not a scorched earth policy we believe in. If we don't piss money away on every "want", we will be able to provide for every "need".

-Clem

Anonymous said...

Interesting comments about St. Luke's and Bethlehem Twsp...the state has given them at least $10 million. Five million for infrastructure improvements. Not exactly footing the bill themselves. So basically, we are paying for it one way or another.

Lighthouse said...

7:18.
Your point is partially taken. I know that Forest City and subsequently St. Luke's were trying for Federal and State grants the past several years. A key difference is that federal and state grant money will be spent whether it comes to our congressional and state districts, or not--thus, as you say, "So basically, we are paying for it one way or another." But we'd be paying for it even if Northampton County or Bethlehem Township got none of it and it all went to other communities.

That is different than a TIF, where the local taxing entities are making a purposeful decision to create tax breaks in the hopes it pays off in the long run (and if it doesn't, then the taxpayers lose out).

Bernie O'Hare said...

Lighthouse,

To your last point, a TIF allows a developer to use the increase in taxes as security for indebtedness to pay for improvements. Look at Alicia Karner's explanation.

If the development fails, it is the developer who is stuck with the bill, not the taxpayer.

The taxpayer loses out only in the sense that taxes are deferred for a number of years.

Lighthouse said...

I was reading and posting on Part two regarding the powerpoint, I did question what happens if development fails. I guess I'll look for your response there.

Anonymous said...

Mr. Ohare

And when the developer goes bankrupt (huge possibility these days) , who is on the hook for the TIF monies when due?

Bernie O'Hare said...

The persons buting th binds to fund the infrastructure will be on the hook. Nobody else.