Bethlehem Pitches New LERTA to NorCo Council

Though Bethlehem officials are unsure why the quality of housing stock is beginning to deteriorate in some north Bethlehem neighborhoods, they are hopeful that a real estate tax incentive will lead to a revitalization. Housing and Community Planner Allyson Lehr pitched this program, called a LERTA, to NorCo Council on August 3.

LERTA is an acronym for Local Economic Revitalization Tax Assistance. Property owners inside a LERTA zone may apply for a tax break for improvements that increase assessment, upon which all real estate taxes are based. They will continue paying full taxes on the land assessment, but the increase in assessment resulting from improvements like a new roof or front porch can be phased in gradually over a period of ten years.

What is this area? It's the northern neighborhood near Moravian College. Its boundaries are Maple Street on the east, Main Street and Mauch Chunk Road on the west, Broad Street on the south and East Laurel on the north. "It's not the most depressed in Bethlehem, but it's not the most affluent, either," said Lehr. She said the area could go "either way." She believes a LERTA will help this area from becoming a "problem neighborhood."

Why a LERTA?

• There are 8,156 properties in this area, and 59% of them are rentals. A LERTA gives a landlord an incentive to make improvements.
• A majority of properties inside this district are rated C or D by county assessors.
• Three schools - William Penn Elementary, Liberty High School and Thomas Jefferson - are either inside or immediately outside this district. They have all shown an alarming increase in the percentage of students who receive free or reduced lunches. At Liberty High School, that percentage has increased from 34% in 2005 to 55% in 2015. At William Penn Elementary, 77% of the children are getting free or reduced lunches. It's 72% at Thomas Jefferson. "There's an indicator that there's some kind of economic distress in that area," observed Lehr.
• 208 homes in the proposed LERTA district are vacant in what should be a desirable area just a stone's throw from the downtown.

"We think it could really appeal to people just starting out or people with families if it was uplifted a little bit, said Lehr. "It would be a great neighborhood for families."

Bethlehem approved a LERTA ordinance for this district, which has also been approved by the school district. Northampton County is expected to vote on this matter in October.

Hayden Phillips questioned whether the entire City of Bethlehem will soon be under a LERTA. "I have my doubts," he said. He and John Cusick both stated they prefer to see this tax tool used in a brownfield than in a residential area.

Ken Kraft sharply disagreed with them both. He stated Council approved a LERTA in Easton "the size of the whole darn town."  He added that "Bethlehem doesn't come back and ask for things all the time even though we do provide most of the taxes for the County. This is a blighted area. I lived in that area."

Kraft speculated that this area became blighted because of Allentown's NIZ, which has drawn residents. He also blamed the proliferation of apartments. "Now I wouldn't live there," he said. "If Moravian decides to turn it into student housing, and those people get a hold of it, I'd rather get it back to what it was."

He also noted that Bethlehem pulled its LERTA ordinance three times in an effort to make sure it was not too big, not tooo small, but just right.

"They pulled it to add to it," countered Phillips, who expressed some concern about the government "picking winners and losers."