Hyman To NorCo Council re Dixie- "Put Simply, Folks, You Are Being Scammed"

God Threatens NorCo Council
with curses of Leviticus

Last night's meeting of Northampton County Council was before a packed house. Numerous previous County Council members, from Democrat Jerry Seyfried to Republican Peg Ferraro, were on hand to congratulate Linda Zembo on her retirement as Council's Clerk. In addition, numerous county SEIU union workers, mostly clad in purple T-shirts and signs, came to demand a better contract for Human Services than the one offered by Exec. Lamont McClure. There was a large contingent of pro-lifers to oppose a resolution concerning abortion being offered by Council member Kelly Keegan as well as a few pro-choice advocates. Finally, there were several people speaking in support of or against a tax break for the proposed Dixie Cup apartment development in Wilson Borough. The net result of all of this was a four-hour meeting. I intend to fill you in on everything that happened, but because I was actually at this meeting and am attending a hearing for the Northampton Four early tomorrow morning, my writing time is limited. Fortunately, I was able to obtain a copy of the speech that local apartment developer Nat Hyman gave to County Council and will share that with you. 

Before I do, I should warn you that County Council was threatened by Republican kook Beverly Hernandez last night with the curses of Leviticus. "I will terrorize you with disease and fever. You will suffer from eye problems and depression. You will plant your crops and get nothing because your enemies will eat them. I will condemn you so that you will go down in defeat in front of your enemies. Those who hate you will be your rulers. You will run away even when no one is chasing you." So, there's that. Now I know why I have cataracts. "I hope you look good with millstones," she said in a parting shot.

I did not see any millstones but noticed than Council members Ken Kraft and John Goffredo started walking into walls after the meeting even though Kelly Keagan's pro-choice resolution went down the drain. They might be in deep shit with the Big Guy. Not that Big Guy, but the real Big Guy. But I digress.

Nat Hyman is a lousy Hearts player, but he knows real estate better than most. In addition to completing projects in Allentown, he has been developing old factories into apartments in Northampton, Palmer Tp, Nazareth, Stroudsburg and Williamsport. He has a master's degree in architecture, so he knows how to repurpose these vacant buildings and bring them to life. He also is pretty good at spotting a red flag, as he did with the initial developer proposed for Allentown State Hospital. The state was forced to back away from this person, and the project fortunately went to a far more responsible developer. 

Here's what Nat told County Council about the proposed tax break for Dixie. 

Hyman learning how to play Hearts

As the person who has likely done more adaptive reuse projects than anyone else in the Lehigh Valley, many of which are almost identical to the Dixie Factory, I am here simply to share my opinions on this subject. 

First, one disclaimer, I did attempt to buy the Dixie factory. Contrary to the conspiracy theorists out there, I am not here tonight to sabotage this project so that I can buy it.  Joseph Reibman has made it abundantly clear that he will never sell me the building, and, after my comments tonight, I’m sure that is a fait accompli. 

And, as I made clear in my email to Mr. O’Hare, I very much want to see this property returned to productivity.  As I recently purchased a 102,000 square-foot building, less than one mile away from Dixie, I am now invested in this specific area and want to see the whole area improve. But it must be developed successfully and expeditiously to benefit this neighborhood. 

I believe your evaluation of this matter should be binary in nature…..that is you need only ask 2 questions:

1. Is it necessary to grant a TIF to have this property developed and what message would that TIF send to other potential developers? and 

2. Is this developer the best option to whom you entrust $29 million dollars of TIF money and potentially $10 million in RCap money to successfully develop this property? 

Let’s take the first question….is the TIF necessary. The short answer is absolutely not!

I know Mr. McClure has been zealously screaming from the rooftops and posting on every known social media site about how great this project is and how important it is to approve the TIF. I can’t speak to what his motives are but the immutable evidence that a TIF is absolutely not needed here is that I made an offer to buy the building for $7m and was not going to ask for a TIF or any other assistance. To be clear, I am the expert on these projects, not Mr. McClure, and I am telling you that a TIF is categorically not needed here. It is not up for debate. Put even more succinctly, if Mr. Reibman would agree to accept $7m from me, I would write him a check today and sign a contract not to ask for a TIF, RCap or any other assistance. 

Instead, according to the TIF plan, they are paying $12m (which, by the way, is odd given that it has been advertised for the last several years at $10m and if you went on Loopnet right now you would see it advertised for $10m. I have brought a copy of that listing for you at $10m). So, the taxpayers are paying $29 million in TIF and $10 Million in RCap to pay Mr. Reibman $5m more for the property. It is that simple. 

I have previously developed many of these buildings, including some almost identical to the Dixie Factory like the 325,000 square foot Adelaide building in Allentown. In Northampton County alone, I have completed the 130,000 square foot Lincoln Commons project in Nazareth, and will be undertaking 2 other substantial developments….all affordable housing, all with NO TIF. 

So, the question is why am I able to do affordable housing adaptive reuse projects with no TIF and these people need $29m for luxury housing? Is it because the Dixie presents some unique challenges. The answer is again absolutely not!

I will shortly begin work converting the Northampton Brewery to 70 affordable apartments. I have brought with me tonight a package of pictures to leave with each of you which will make very clear the significant challenges I will face with this project: 
1. Enormous 20 foot wide holes in the floors where brewing vats existed.
2. Entire concrete floors that are only 7 feet high which must be removed. 
3. Six story stairwells and elevators which must be created. 
4. All new window openings need to be cut through the stone and then structurally reinforced. 
5. Entire concrete floors which are slanted with troughs for the beer run off. 
6. Concrete platforms must be jack hammered out 

7. And all new underground stormwater sewers and catch basins need to be installed, as well as all new parking lots. 

NONE of this work is necessary at Dixie. Compared to this Brewery project, the Dixie redevelopment is a walk in the park!

In Dixie, all of the window openings exist! They simply need the existing windows replaced with new windows and mullions. 

Inside, it is an empty shell. After removing some lead paint and asbestos, which we all contend with in buildings of this age, it is ready to run new systems and build the apartments. 

There is minimal demolition, minimal structural work, and the parking lots already exist.

We all can agree that the building is a mess and an eyesore and in desperate need of redevelopment. But ask yourself if that should be rewarded with a TIF. 

The building is in this disrepair because it was left to atrophy and was never maintained. Are we as taxpayers now going to reward that negligence with a tax benefit?!

Also ask yourselves, Is granting a TIF here fair to all of us who are doing identical work without the benefit of government largesse? As I said, I am doing a 102,000 sf building less than a mile away. May I please have $29m? Granting a TIF to this project will create an uneven and unfair playing field. It is bad precedent. The government will be picking winners and losers and I can’t imagine that you want to be in that position. 

And as far as Mr. McClure touting how great it is that the developer will be contributing $1m to some affordable housing fund, well if you’ll give me $29m I will happily contribute a million dollars to whatever you want! That’s a brilliant business play! I Would proffer that thinking like that is the difference between using your own money vs. taxpayer money!

So, we are left with the enduring question as to how do you get the Dixie factory developed without a TIF. My friends, the answer is simple. Enforce the building codes on this building now! It is unsafe, unsightly and unfair to all of the good neighbors who maintain their properties. Building codes should have been enforced years ago. 

Directing the owner to promptly bring the building up to code will force him to sell the building to a responsible developer at a reasonable price. No TIF will be necessary. Then you can sit back and watch the building go through an exciting metamorphosis and watch your tax rolls swell……immediately …….not in 20 years!

On to the second question… 

To be clear, I do not know Mr. Bartee or Skyline Investment Group, never met the man or even heard of him. What I do know is that which Mr. O’Hare uncovered and subsequently confirmed with him in a telephone conversation. That is:

1.He has never developed anything….not one building. 

I was recently approached by Catasauqua and asked to respond to their RFP to purchase and develop the Iron Works land. The first criteria for their approval is the experience of the developer. If they are doing due diligence as to the experience of the developer for the opportunity to BUY a property, shouldn’t you be questioning the developer’s experience before giving $29 million dollars?

2. On his website, He claims to have developed one project, The Louix. That is a lie, it does not exist. 

3. He claims to have 5 offices. That is a lie. They do not exist. 

4. He told The Morning Call that he would not be applying for any other government assistance beyond this TIF. That is a lie, he is in the application process for $10 million in RCap money. 

5. The phone number for all 5 offices is his cell phone number

6. He has said that he will be spending $155,000,000 to build 400 apartments and will rent them between $1,800 and $2,900 a month. That is a mathematical impossibility! Just do the basic math….one or both of those numbers must not be true. At market rates the interest alone is $2,300 per unit per month and with the amortization it is over $3,000 per month. So not even accounting for all of the other expenses, how can he possibly rent the units for less than his debt service? They may tell you that some of that is equity, but that requires a return on investment as well.  Before you give someone millions of dollars, I would want to be 100 % certain that they will be successful with it.

My time limit does not allow me to go through the myriad other inconsistencies and red flags with this developer, but the bottom line is if walks like a duck and quacks like a duck, chances are it’s a duck. Put simply folks, you are being scammed. Don’t be swayed by pretty renderings and promises of roof top pools. 

After Hyman left, he was subjected to attacks by Council member Jeff Warren and Skyline advocate Claudia Robinson. I'm sure he'd be happy to return and respond to their accusations. He did have one powerful backer. Ron Angle was at the meeting and was fascinated by and agreed with what Hyman had to say. As Angle spoke, Council member Kelly Keagan kept looking at her watch to make sure he did not go beyond five minutes of saying things she did not want to hear.  

I will bring you the rest of this story, pro and con, on Monday. I will also tell you about the 10-week old model fetus that a pro-life sympathizer brought to the meeting as well as the SEIU union workers who just rejected a fairly generous contract offer. 

By the way, if anyone is offended by my irreverence towards the Almighty, I don't give a shite. I called God last night and he approved this message.