As I mentioned earlier this week, I am philosophically opposed to incentivizing economic development with tax breaks. To me, the most offensive of these giveaways is the KOZ, under which the beneficiary is exempt from virtually all taxes, excepting federal income tax. But the tax break proposed for Chrin's industrial park in Palmer Township is a less offensive TIF, which uses tax money generated by the project to fund future development.
My thinking about this TIF changed during a public meeting in which Northampton County's Alicia Karner made a power point presentation, which was followed by comments from numerous individuals who support this project. Most persuasive, at least to me, was Palmer Township Supervisor Dace Colver.
Before getting into what Colver said, I want to share Karner's power point presentation, which lays out the nuts and bolts concerning this proposed TIF.
Chrin TIF Power Point
13 comments:
While I wish Palmer the best, reading through the power point, the following points raised question marks:
1. basing it on projections that in 12 years the estimated market value will jump from a mere $2.2 million to $414.4 million, and creating over 3,682 jobs.
I suppose economic timing is everything. I specifically think to when PennDOT finished Route 33 to 78 with interchanges on Wm. Penn and Freemansburg Ave it did indeed spur economic development, and an increased tax base, during a unique time period of overall growth for the Lehigh Valley.
Then the economy slowed. When Bethlehem Township redid its Comprehensive Plan in response to the growth in 2004, Forest City/Bayer Properties were building a huge lifestyle center/mixed use development; Wagner was building a mixed use/residential development; St. Luke's was building a huge campus; and shortly thereafter Pektor was proposing a huge development a little down the road on a tract of PPL property. Seven years later? Forest City tract is farmland now landbanked by St. Lukes; Wagner's tract is still farmland to be developed at some uncertain point by a new developer; St. Lukes built a smaller phase of their campus; PPL tract is still farmland with nothing on the radar (not a bad thing for that specific tract, in my opinion).
My point is, after 7 years despite the interchange, the anticipated windfall of increased taxable property values never materialized because of the economy. Will it someday, of course. But an interchange alone will not bring Palmers dreams of going from $2.2 to $414.4 million dollars according to the bondholders' payment timeline...and the bondholders need to be paid, whether the anticipated development occurs or not.
2. This comment: "If the district does not develop at the rate sufficient to repay the bonds, the property owners within the NID will make up any shortfall in the TIF bond debt repayments." Hopefully the economy rebounds quickly---again, I am pessimistic, so what happens if the NID property owners are not in a financial position to be able to pay the debt repayments? What is Plan C?
Lighthouse, that is the risk assumed by those who buy the bonds. Interest rates will be close to 7% on tax exempt bonds.
There is no risk to the taxpayer, and therefore, no need for a Plan C.
Well, I can only wish them the best then, and probably should hold off on further comments until Part three on Colver's comments.
Lighthouse, On your first point concerning the projections, you question whether it will come to pass. So many times, it does not so I know exactly what you mean. But I got the sense that, believe it or not, these were conservative projections. There are numerous businesses just waiting for that interchange so they can move in. That is a reality, and it has been confirmed by several people in other economic development areas. This is the real deal. And as Alicia noted, there will also be jobs for construction, followed by spin off jobs in nearby neighborhoods to service the people working there.
I'll explain this is in more detail on Monday. This is one of those instances were I think a TIF can work.
This stuff is "shady" period. Never does it work out like its projected. It assumes that there is a market for the development and that the development will continue. In the meantime, the taxpayer loses. Now is not the time to be giving any tax breaks UNTIL the national economy stabilizes and is on an upward growth. Then, and only then should this type of "shady" financing be considered. Why do I sense the Northampton County, Easton Area School District and Palmer is about to be duped? Fuzzy math and projections are always a recipe for disaster.
Bernie, my man. Would you be so generous with your support if LVEDC had proposed this TIF?
First, I am not generous with my support. It is basically a grudging support. Second, this was proposed by Chrin, not any economic development body. But LVEDC made it very clear that it supports this very much, and attended the same meeting I did.
karner smart
Bernie
Know you primarily focus on Bethlehem issues but we really need your input on this arena. Now we learn the state has lent $22M to the project. Did taxpayers have any say in that loan? Those same taxpayers that will thrown out of their businesses and homes. Please investigate. Allentown residents are at a loss. No one seems to care.
We must support the job creators.
You know who else gives great power point presentations, Ed Pawlowski. Think about it!
I understand. But instead of looking at the fact that it is a power point, look at what it says.
If Karner take this job, Karner not smart!
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