Dixie Cup TIF - Developer Nat Hyman Sez Dixie Can Be Developed With NO Government Assistance

I've told you why NorCo Exec Tara Zrinski supports a tax break to convert Wilson Borough's vacant Dixie Cup factory into 405 luxury apartments. I've shared arguments of three Council members who voted for the tax break (called a TIF) when it failed last year. Now I'll share the views of someone who actually knows what he's talking about.  Allentown developer Nat Hyman has done 40 projects similar to Dixie, and here's what he shared with NorCo Council.

I write you regarding the TIF you are considering giving to the developer of the Dixie Building in Wilson Township. Please keep in mind that a TIF is the MOST generous form of tax incentive, far more so than a LERTA ! There are a few fundamental facts I believe you should consider before giving this money to Skyline Investment Group:

1. This will do absolutely NOTHING to address the affordable housing crisis. This developer has repeatedly said that they will be spending $185,000,000 for 400 apartments. That is a staggering $462,500 per apartment !!!! Basic math tells you that the interest costs alone will be $2,500 per apartment / per month (without including any amortization and all of the other operating expenses). These numbers will require rents north of $6,000 per month just to break even…..hardly affordable ! And the fee in lieu of $1.2 million that they propose paying toward affordable housing is nothing. This would build 8 affordable apartments and, more importantly, they are paying you out of the $29 million you are giving to them ! They are paying you with your money !!

2. Some have tried to claim that this project will create many jobs.  The reality is that Dixie will create some construction jobs on a very short term basis. It seems to me that some people are pushing this TIF to curry favor with those construction unions. After that, there will be virtually no jobs created. Two or three full time people will be needed to run this apartment complex once it is built. This is not a project like Eli Lily which will create 1,000 good paying and long term jobs.

3. This “developer” has actually NEVER DEVELOPED ONE BUILDING. While they did list one project on their website called “The Louis” that they said they had developed, that was a lie.  When confronted with this lie, they removed the project from their website. In addition, they had listed 5 offices around the country all with the same phone number which is the principal’s cell phone number. Those offices have likewise now been removed from the website. Finally, their supposed office in NYC is simply a shared executive office where they use a community receptionist. Do you really want to give $29,000,000 in taxpayer dollars to someone who has never built anything and is clearly a scam?

4. Skyline is presently in DEFAULT of its purchase agreement of the Dixie property with Wilsonpark. To date, they have paid ZERO principal or interest on the $11.5 million purchase price. So you are considering giving money to a borrower who has shown their inability and/or unwillingness to honor its obligations. There is not a lender in the world who would loan money to a borrower with a history of not paying its debts.

5. As I said, Skyline has said that this Dixie project will cost $185,000,000. ANY lender loaning or granting money to a borrower would want to be 100% assured that the project will be fully funded. There is NO WAY you should consider giving Skyline the $29,000,000 unless and until they can prove they have a firm commitment for the other $156,000,000 to complete this project.

6. Having done 40 developments similar to the Dixie building, I can tell you , unequivocally, that this project can be done beautifully with absolutely no government assistance. It would seem to me that the $29,000,000 is better spent on Gracedale, budget deficits or a reduction in your constituents’ taxes.

Finally, a disclaimer …..despite what some have said, I have ABSOLUTELY NO vested interest in this project and nothing to gain or lose by your choosing to give or not give them this money. This building has been sold and the title transferred to Skyline Investment Group and nothing you do will change that. I will not own this building regardless of your decision. I am simply a taxpayer upset by seeing my tax dollars wasted and I do have a philosophical disagreement with the concept of giving taxpayers’ money to a private developer to build luxury apartments. That said, I come at this from a unique perspective as the Lehigh Valley’s largest developer of adaptive reuse projects ….I have done 40 projects virtually identical to Dixie and have never taken one dime of government money or any incentive. As an example, I am converting the former Crayola headquarters in Palmer Township (only 3 miles from Dixie) into 94 affordable apartments with absolutely no taxpayer money. This developer could do the same with Dixie and he has told Council that he can indeed build Dixie without this TIF!!! So why would you give it to him??!  

Ask yourselves, if I am correct and you give this untested “developer” $29,000,000 in tax payer dollars and, as I predict, the project is never completed, what legacy you will have created for this Council?