Tax Break Will Line Pockets of Dixie Developer, Consultant and Architect With a Cool $15 Million

Last week, I published Allentown developer Nat Hyman's warnings to Northampton County Council at their June 6 meeting concerning a $29 million tax break known as a TIF proposed for the long vacant Dixie Cup factory in Wilson Borough. "Put simply, folks, you are being scammed," he cautioned. His remarks drew 65 comments from my readers, many of whom agreed with him. But he was also subjected to several attacks, which began almost immediately after he left the building. Many of them come from people who have a major financial interest in this project, thanks to taxpayer largesse. Developer Bill Bartee has put himself down for a $4 million "developer's fee." Consultant Claudia Robinson, who specializes in getting tax credits and public subsidies, is slated to pull down even more, $4.25 million. And Bartee's "exclusive" architect, CHASM, will collect a $6.75 million fee.  So, $15 million of the $29 million in increased assessment will be lining the pockets of a developer, a consultant who specializes in public cash grabs and an inflated architectural fee. The Borough, County and School District will just have to wait 20 years. 

Where did I get this outlandish information? Did I just make it up? Unfortunately, no. It is part of the TIF application attached to the Ordinance introduced on May 6. (Page 5).

The Hyman criticism began with Stan Margle, Solicitor to Wilson Boro. His borough has not formally acted on the TIF request. "I would preliminarily support it," he told Council, seeming to forget that his role is to provide legal advice, not opine on public policy. "This is a real developer," he added, although Skyline has never developed anything other than the Louix, a building that does not even exist. 

"I can tell you Nat Hyman is wrong," proclaimed Margle. "The developer is not getting $29 million out of that [TIF] if you pass it." Margle was unable, however, to tell Council member John Goffredo how much the tax benefit actually is. 

Despite Margle's claim, Hyman happens to be correct. He told County Council that they would be awarding a $29 million tax break, and that's precisely what it is. He did not guess at this figure. It is on page 9 of the TIF application    

Margle also claimed that Hyman was wrong when he asserted that Wilson Borough has been far too lax at enforcing code violations. He told Council member Ron Heckman that Wilson has cited Dixie 10 times for code violations and has fined the maximum $300 each time. I checked. It's true that Dixie was cited 10 times in 2018 and 2019, but not since then. Of these 10 citations, Dixie was fined only three times. They were $100 fines for snow and ice removal (once) and broken windows (twice). If Wilson was really interested in code enforcement, it could cite Dixie for every broken window, and on a daily basis. That would encourage a sale. Instead, it has allowed the property to languish for the past 40 years. 

Margle added that Hyman's $7 million offer to buy the property was rejected "because the product he proposed was substandard." Margle later conceded that Hyman "does good things, but it would not be appropriate for this building in this place." This was all news to Hyman, who told me he had prepared no plans for the property.

Rather than stick around through all the speeches about abortion and a SEIU union contract, Hyman left when he had finished his speech. Council member Jeff Warren waited until then to attack him. "Is Mr. Hyman still here?" asked the increasingly sanctimonious Warren. "I'd like to ask him a question. He came in here pretty bombastic about his project seeming as though he somehow wanted to destroy this project." He later added, "I was going to ask him about labor, but he's gone." 

That explains why Warren and Executive Lamont McClure are so gung ho over an out-of-state developer with zero experience. You see, this project is expected to create about 150 temporary construction jobs. Warren and McClure are so intent on seeing them go to their campaign contributors in the trade unions that they are willing to hand out $29 million of your hard-earned money to someone they do not know for apartments that most of us could never afford. This is no way to govern. 

Another black mark against Hyman, at least to Warren, is that he is from Allentown and not a Northampton County resident. Well, that's a helluva' lot better than a developer who uses a virtual address in NYC as his office. 

Hyman was slammed by Warren for leaving after he made his points, but developer Bill Bartee was completely MIA. Consultant Claudia Robinson, a specialist in corporate welfare, was physically absent and participated via a phone held up to the mike by the "Project Manager." Instead of outlining the advantages of this project, she of course attacked Hyman for a "very unfair" speech. She never stated how Hyman was wrong, but then launched this ad hominem. "Mr. Hyman has his own skeletons and it's really not appropriate for me to start discussing them now ..." Really? Then why mention that there are skeletons?    

Council President Lori Vargo-Heffner eventually stepped in and admonished Robinson. "With all due respect to Mr. Hyman, he came, he left a note, he's not the point of reference here. We are. So it's our turn to ask questions and get the answers. He had an opinion, but that's not what we're basing our questions on." Robinson then apologized.

Council member John Goffredo also defended Hyman. He pointed out that they were conducting a public hearing.  Hyman, unlike Robinson, was actually there, even if he did leave.  

Goffredo asked Robinson of the TIF was really needed. "Without this TIF, this project will not happen," she declared for the first time. Up until now, she had been saying it would be harder to attract private equity investors. Now it's impossible. 

Hyman was also defended by former Council President Ron Angle, who had come to the meeting to say good-bye to outgoing clerk Linda Zembo. "I don't know Nat Hyman, but I do know his reputation is very good," said His Eminence. "Whatever he builds is done right ... . Do you know who Skyline is? One guy. He'll give you all kinds of locations around the country ... That guy should be here. Nat Hyman did come here. He left, maybe he had another appointment, but he did come. ... "

Several people ridiculed the $1 million bribe for affordable housing as a drop in the bucket. Chuck Weiss, the Associate Exec Director of Housing for CACLV, noted that $1 million gets you maybe four apartments. "It would be nice to see a little more money coming out of this for affordable housing." Alyssa Baratta, Exec Director of Third Street Alliance, said that 2,203 LV households are homeless "A million dollars means nothing to housing these people." Armando Moritz-Chapelliquen, a Wilson Borough activist, looked at the gap between the $1,800 in rent to be charged for a 1 BR apartment and the fair market rent of $1,137. He concluded that a much fairer contribution to affordable housing would be $6.3 million. 

The final speaker was Wilson Borough Mayor Donald R. Barrett Jr. Unfortunately, he wasted a lot of his five minutes by needlessly criticizing Wilson Borough activist Armando Moritz-Chapelliquen. "It just needs to get done." he said.  

Warren, who never is at a loss for words, made this final pitch. "Sometimes, you take what you can get."

That's a ridiculous excuse for throwing away $29 million in taxpayer money. 

UMBT Approves "9th Largest Bldg" in US

David Friedman, an Upper Mount Bethel Tp (UMBT) Supervisor, advised Northampton County Council last night that UMBT has just conditionally approved the 9th largest building in the country. It will be over 1.5 million sq ft when complete. Friedman said he has no idea what is intended, but possible uses do include a warehouse. 

In April, County Council voted 6-3 for a tax break for the developer at that site

UPDATED: I am unsure how this proposed building actually ranks among the country's largest buildings.

Did NorCo Council Incentivize Part of the 13 Million Sq Ft in Proposed Warehouse Development?

In April, Northampton County Council voted 6-3 to approve a tax break known as a LERTA for industrial property owned by developer Lou Pektor. Those in favor were Council members Tom Giovanni, John Goffredo, John Brown, Ron Heckman, Lori Vargo-Heffner and Kerry Myers. Voting No were Council members Tara Zrinski, John Cusick and Kevin Lott. 

This vote followed a lengthy hearing in which over 20 people spoke, some of them twice, either to support or oppose the tax break. Most of those who opposed were concerned that Pektor would develop warehouses instead of manufacturing facilities. 

This tax break was quickly vetoed by Executive Lamont McClure because "we should not be incentivizing warehouse construction with tax breaks." But the same six Council members who voted for the Pektor tax break overrode McClure. 

Last week, Lehigh Valley Planning Commission's Matt Assad advised County Council that 13 million sq ft in warehouse development has been proposed in Northampton County. Council was provided with a list of "land uses of regional significance," meaning their impact will be felt in multiple municipalities. They include nine separate development plans submitted by Pektor's RPL Logistics in Upper Mount Bethel Tp.  

Assad was careful to avoid embarrassing Council by telling them they approved a tax break for warehouse development, but it certainly appears that is exactly what they did.

How About Some Corporate Welfare?

With limited exceptions, one of the biggest mistakes a local government makes is it presumes it is in any position to judge what business ideas will succeed and which will fail. Last time I checked, they can't even manage their own budgets, but think they are experts at stimulating the economy. For decades, i have watched as they create a KOZ here, a TIF there, a LERTA everywhere. The only reason there has been any success with the NIZ is because the government has practically given everything away, and even there, most of the businesses have been poached. The CRIZ, ugly step-sister to the NIZ, is a spectacular failure. One frickin' project has been developed. Just one. Martin Tower is dead as a doornail. But Bethlehem City officials, in their infinite wisdom, want to spread the poison to a small parcel.

I'll give them this much. They're being transparent, instead of colluding with some developer behind closed doors. But whatever they decide, it will suck. The business of government should be government, not business. Alicia Karner, you might like to golf, but that does not make you part of Corporate AmeriKa. you sold me on the Chrin TIF, which has produced about three jobs! And Bob Donchez, you're a retired teacher, for Christ's sake! You go to bed at 7:45 pm.

What the hell do either of you know about business?

Listen, if you want to give away the store, give it to me. Angle and I are starting a "medical" marijuana growing operation, and this is a great way to avoid the taxes. We could use a few grants, too.

I feel better now.

Below is the city's statement:

Bethlehem, PA. – (November 1, 2016) – Mayor Robert J. Donchez announced the City of Bethlehem is seeking one or more projects from private developers and/or non-profit developers to certify as City Revitalization and Improvement Zone projects. These projects must be constructed on sites within the City on less than 2 acres. The City considers the allocation of CRIZ to new projects as critical importance to the revitalization of underdeveloped properties in the City.

“With the recent release of CRIZ designation from several Bethlehem Parking Authority parcels, the City is in the unique position to look around and see what other projects might benefit from this incentive,” said Mayor Donchez. “Now that there have been improvements to the CRIZ law, I would like to see projects that are in the final stages of development but need this incentive to push the projects over the goal line.”

The City of Bethlehem was awarded a City Revitalization and Improvement Zone (CRIZ) designation in December of 2013. The CRIZ is expected to provide economic development and job creation within the City of Bethlehem. State and local taxes collected within the CRIZ will be used to repay debt serve to stimulate economic development projects within the zone. The focus of the program is to provide opportunity to spur new growth in Bethlehem, helping to revive downtowns and create jobs for the residents in the region. Vacant, desolate, underutilized or abandoned space will be developed, thereby creating jobs, increasing personal incomes, growing state and local tax revenues, reviving local economies and improving the lives of city residents and visitors.

The RFP can be found at https://www.bethlehem-pa.gov/econdev/index.html.

State Tosses $152 Million Around

The Commonwealth Financing Authority (CFA) met on July 1, waved its magic wand and forked over $152.4 million for projects that Governor Wolf calls "critical to the economic vitality of the state.” He goes on to claim they will "support significant community and economic improvements and spark revitalization in Pennsylvania’s communities.”

There are hundreds of loans to small businesses throughout the state. Surprisingly, only one small business from Northampton or Lehigh County is among them. The absence of these small loans from either county is an indication that each county's Department of Community and Economic Development has dropped the ball. The sole small business development loan I see locally is a $130,500 loan for Starter's Golf. This business is located in Bethlehem, but apparently hasn't started.

Included is $48,000 for a facelift at Nazareth's American Legion, a private club with a restricted membership, and one that has repeatedly been busted for illegal gambling. I suppose you could call that business development, if you include monkey business. It was voted on by a Borough Council. Larry Stoudt who works there for tips, never recused himself. .

In Allentown, the grants include $200,000 for a "waste to energy project" that I thought was dead. You never know.

Another $90,000 is being thrown at the Wildlands as it continues to restore Jordan Creek, something it has been doing for the last gazillion years.

Efforts to restore Allentown Metal Works include a $953,000 loan, as well as two grans totaling $2,953,000 grant at the South 10th St KOZ site.

Lots of alternative energy projects have been approved. There's $2 million to renovate the K-5th grade Paxinosa Elementary School into a high performance building, complete with LED lighting, lighting occupancy sensor, low-flow water fixtures and high efficiency water heaters, air handlers, chiller and condensing boilers. After this renovation, an estimated $20 million project, the school should have an energy savings of 2,000 mmBtu and have a LEED gold rating. These funds came from the High Performance Building Program, which helps underwrite the cost associated with the design and construction or renovation of high performance buildings in the state.

Bethlehem Area School District snagged $1.496 million for solar energy projects at Farmersville Elementary, East Hills Middle School, Buchanan Elementary, Spring Garden Elementary and Freedom High Schools. It picked up another $2 million for LEED certified middle school.

Maybe George Wacker, a bottom-feeding blogger who has been hired to do the school district's social media at $2,000 a month, can pull himself out of a bar and tweet about it.

Nazareth Area School District (about $2 million), Career Institute of Technology ($0.496 million) and Moravian Academy ($1.3 million) got green to go green , too.

So did businesses like Ben Franklin Tech Ventures ($750,000), Lehigh Valley Hospital ($96,120), Freshpet ($694,928), Air Products ($1 million), Crayola ($508,000) and the Flat Iron Building ($55,440).

Local governments like Williams Tp ($58,590 for solar energy) and Lower Saucon ($87,748 loan for energy efficiency upgrade) also were approved

As we all know, solar is hardly the most efficient energy producer in the Mid-Atlantic, so the state is now backing all kinds of loans to anyone who wants geothermal at their home. Locally that includes Kevin and Jennifer Hiestand, who were approved for an $11,134 loan to purchase and install a residential geothermal system in Lehigh County. Vynecrest LLC was approved for a $30,000 loan.

Yes, there are infrastructure grants, too. Bethlehem's Broad Street ($200,000) and Allentown's American Parkway ($232,000), and Easton is getting $128,000 for pedestrian improvements on 13th Street.

A sore subject in Bethlehem Township is the pedestrian crossing to Northampton Community College, which is unlit. It is nearly impossible to see students crossing at night. The college will get $283,000 for traffic calming measures.

Lafayette College in Easton will receive $1.1 million for its travelways improvement plan. This is money it does not need, considering its endowment and its exemption from most taxes.

Even locally, there's simply too many projects to cover in one post. The one that bothers me most, even more than Nazareth,  is a $1 million grant for The Waterfront Development Co., a NIZ developer . I'll discuss that below,.

Bethlehem City Council's Communication Problem

"What we've got here is a failure to communicate" is a refrain we all remember from Cool Hand Luke. It could easily describe what is happening as Bethlehem City Council considers controversial zoning changes at the 53-acre Martin Tower Development. Though City Council President Willie Reynolds claims he is really listening to concerns raised by Historic downtown and South side merchants, he and other Council members have certainly given them every reason to believe they are being ignored. Store owners have openly suggested that Reynolds and others on Council are getting their marching orders from Martin Tower owners and developers Lewis Ronca and Norton Herrick, who have yet to appear at a meeting. Reynolds and Bryan Callahan have even attempted to embarrass merchants into silence. They've responded with over 100 write-in votes for "Martin Tower" in last week's election.

Last week, City Council was supposed to have its final vote on zoning changes that would permit as much as 1.3 million sq ft of retail and a third downtown at Martin Tower. Reynolds vowed that Council would later change the law, but had to adopt it first do that the developers would be free to demolish a historic landmark. They had to pass the ordinance so they could change it.

This final vote never happened. Bethlehem Planning Chair Jim Fiorentino, zoning attorney Marc Kaplin and The Bethlehem Press were all quick to recognize the folly of this move. If that occurred, Martin Tower developers would be free to present a plan creating not one, but several publicly subsidized Promenades that would be the death knell for Bethlehem businesses already struggling to compete against restaurants and retail inside Allentown's publicly subsidized Neighborhood Improvement Zone (NIZ).

Martin Tower Part of CRIZ

You see, the Martin Tower development is part of Bethlehem's Community Revitalization Investment Zone (CRIZ), modeled after Allentown's NIZ. This gives a closed club of five developers, including Martin Tower, the right to use state sales and income taxes to subsidize new development, including hotels, destination retail and restaurants. They were anointed behind closed doors, free of public input or scrutiny, in a glaring demonstration that "what we've got here is a failure to communicate."

A developer outside this closed club has little reason to invest in Bethlehem.

According to the Keystone Research Center, a left of center think tank, this creates an uneven playing field in which state tax revenues are diverted to the few at the expense of the many. When those few are campaign contributors who fund large portions of the campaign warchests of City Council members and the Mayor, as is the case here, questions of crony capitalism and pay-to-play arise. This and other media sources have raised these questions, as well as members of the public. They have gone unanswered.

The Keystone Research Center also questions whether tax incentives like the NIZ and the CRIZ help create a state budget deficit. Hotel Bethlehem Managing Partner Bruce Haines has stated that, even if retail at Martin Tower is scaled back to 400,000 sq ft from the original 1.3 million, that will still cost the state $6 million per year in lost sales, income and payroll taxes.

This CRIZ designation makes little sense at Martin Tower, which is more of a sprawling suburb than a struggling downtown, Yet in the CRIZ application submitted to the state, the former Bethlehem Steel HQs was touted as "ideally situated" and "readily marketable" under its existing zoning for office and residential use, with a very limited neighborhood retail component. The iconic 23-story building is identified as the "cornerstone" of the Bethlehem CRIZ, "another example of Bethlehem's efforts to create its future from the vestiges of Bethlehem Steel's past."

Now the City wants to demolish the tower. This is in stark contrast to the approach it has taken to redeveloping the South side, where the old blast furnaces are lit up by multi-colored spotlights and the former steel company stock house has been converted into a Visitor Center.

Lehigh University Political Science professor Al Wurth questions whether Bethlehem has become "a 'steel' city that denies its steel heritage, and the work and dreams of its forbears, in favor of 'incentives' - sweet deals for the new owners who control our future and our past, though they never did or will live here."

Why not just take the CRIZ designation away from Martin Tower, and open the card game up to another developer who might actually bring a new business into Bethlehem?  Can't do it, says Department of Community and Economic Development (DCED) Director Alicia Karner. Under the state's interpretation of the CRIZ legislation, an interpretation that was surely fueled by the lobbyist hired by the closed club of CRIZ developers, any transfer of the CRIZ requires the agreement of the affected developer. The City would have to pay Ronca and Herrick to move the tax incentive to an area in the City where it might actually make sense.

Failure to communicate at "public" hearing 

Against this backdrop, where all the hallmarks of political favoritism are present, and merchants are concerned about their very survival, transparency and open communication between government officials and the public are extremely important. But the City has dropped the ball there, too.

This was evident at the very first "public" hearing conducted on this zoning proposal on October 6. Before a single member of the public could say a word, Planning Director Darlene Heller gave a power point presentation that lasted for two hours and 15 minutes. This was about twice the length of her presentation concerning a completely new zoning ordinance, adopted in 2012. She went on at great length discussing rear and side yard setbacks in what appeared to be an effort to lull over 100 people to sleep.

When she finally had finished, and before the public could say a word, Council members who has already publicly announced their support for these zoning changes used Heller and DCED Director Karner as props to justify the zoning changes. Bryan Callahan actually stated that "no one will be happy with this" so he therefore supports it.

When it was finally time for the public to speak, four who had signed on had already left. But 28 of them remained, and except for Bethlehem Democratic Committee Treasurer Clyde Thomas, all were opposed to the zoning changes.

Failure to Communicate Continues in Subsequent Meetings

This failure to communicate continued during City Council meetings on October 20 and again on November 4, where Council refused to engage in any dialogue with 48 speakers who addressed them during a portion of the meeting called "courtesy of the floor." This is no courtesy. It is a right under Pennsylvania's Sunshine Act. Speakers are limited to five minutes, and are answered with stony silence, even when mild attempts at humor are made. Council members have explained that they are silent because they have no desire to interfere with the public's statutory right to speak. But this lack of dialogue, which is rare in local meetings elsewhere in the Lehigh Valley, contributes to a growing perception that the public is nothing more than a third wheel on the government bicycle heading over a cliff. In an effort to be more inclusive, City Council is unwittingly closing the door on real discussion.

This lack of dialogue frustrated Marc Kaplin, a zoning attorney hired by the merchants to protect their interests. When Council refused to answer his questions, he reminded them that "it is also your duty to justify or respond or tell me I'm wrong."

Council Intimidation

Instead of meaningful dialogue, two Council members have used their positions to intimidate members of the public.Council President Willie Reynolds  has threatened to stop anyone who raises the question of political favoritism as a result of campaign contributions made to him or others by Martin Tower developers. The Appollo Grill's Rod Holt and Bethlehem Brew Works Jeff Fegley have ignored this threat.

But that pales in comparison to what Bryan Callahan has done. After various merchants have spoken and are unable to rebut him, Callahan has ticked off concessions that have been made to them, often erroneously.

At the end of the November 4 meeting, Callahan actually accused one critical merchant who won't be named here of paying all of his Bethlehem employees from an Allentown-based business to be able to take advantage of Allentown tax incentives.

In addition to being untrue, how employees are paid and taxed is confidential information protected by the Local Taxpayer Bill of Rights. Disclosure of that information is unlawful. According to Callahan, he obtained this information from the City's taxing authority, The Keystone Collections Group.He then used this confidential information at a public meeting to intimidate one of the merchants who has been critical of the Martin Tower rezoning..  

What's next?

This lack of communication continues as Council member Eric Evans has introduced a series of five amendments, introduced just prior to the November 4 meeting, designed to reduce the amount of destination retail and prevent a third downtown. Evans was the only Council member to oppose the rezoning of Martin Tower. He is concerned about merchants as well as West Bethlehem residents who have no desire to see a large residential community.

No copies of these zoning amendments were available for pubic inspection. Evans' own explanation of them was tortured and disjointed, prompting Hotel Bethlehem's Bruce Haines to suggest that the whole proposal be scrapped. "It is one thing to be blind-sided by Allentown, but to be  blind-sided by our own administration is beyond my wildest imagination," he argued.

Because these amendments must be reviewed by both the City and Lehigh Valley Planning Commission, Council is unable to vote on the ordinance as amended. Reynolds stated the matter would  be reviewed by the Planning Commission and return to Council for a final vote on December 15.

But the City Planning Commission has already canceled its November meeting, so it's unclear whether the final vote will occur this year.

(Blogger's Note: This story also appears in the November 11 2015 print edition of The Bethlehem Press.)

Rumor Mill: Wolf Building Granted KOZ

At the end of a very lengthy budget hearing yesterday, Northampton County Council members began hounding executive John Stoffa to update them on the progress of the Wolf Building sale. Bob Werner, the sole Council member to vote against it, said he's been hearing and reading a number of things, and asked Stoffa if the County has agreed to accept less than developer Mark "I'm an opera singer" Mulligan had agreed to pay for the property in June. That agreement was contingent upon a KOZ classification, which basically would exempt the property and all its tenants from all but federal income taxes.

Stoffa started to answer, but then changed his mind. "I'll have a report tomorrow," he told Werner.

Although no one is willing to go on record, I've heard from several persons that there's no reason to give Mulligan any breaks at all. That's because, against all odds, state officials have designated the Wolf building as a KOZ property. I'm guessing this is what Stoffa intends to report.

If this is so, Mulligan has no basis for holding Northampton County hostage to a reduced sales price.

What this also means is that the mad rush to reduce the assessment on this property, which was being pushed by Mulligan and Easton officials, was totally unnecessary.

The Revenue Appeals Board broke the law for nothing. The members of a quasi judicial board stained their credibility and integrity by not just disregarding the law, but by permitting one person to vote by proxy in a matter in which he had heard none of the testimony.

No Just Cause For Easton KOZ

When will city leaders learn? Allentown Mayor Ed Pawlowski has tried for years to lure Allentown businesses with a form of corporate welfare known as placement in the Keystone Opportunity Zone. Businesses, and even residences located in those zones are exempt from virtually every tax, save federal taxes, for periods of up to ten years. After years of failure, Pawlowski and State Senator Pat Browne are now trying something new - a Gee Whiz NIZ.

These programs never work. A good business idea will succeed, whether it's subsidized or not. A bad business idea will fail, no matter how much public money is poured into it. Good Jobs First, a non-partisan think tank, rates the Pennsylvania KOZ program as an amazing 0. In fact, the state's entire economic subsidy program gets a D. The promised jobs just never appear.

Instead of cutting funds for higher education, governor Corbett should consider scrapping these ineffective corporate welfare programs.

Easton, like Allentown and the rest of the state, should know better. It granted a KOZ for the Cinema Paradiso many years ago, based on Abe Atiyeh promises that the aging movie complex would be converted into an office center. Instead, it became another movie theater. It went broke, even with the tax breaks.

Now comes word that  Mayor Sal Panto wants to try a KOZ again, despite the clear evidence that these tax breaks never produce the jobs or developments promised.

Unlike Easton or Allentown, Bethlehem has never had a KOZ. And guess what? Bethlehem does a better job drawing businesses.

Allentown NIZ Will Deprive State of Needed Revenue

The Morning Call reports that Pennsylvania's revenue projections are off by 3.6% this year, in spite of a state budget that balances the books by reducing public education funding by $1.1 billion. The state has imposed "draconian" cuts in funding to Ben Franklin Technology Partners', located in Bethlehem, too. According to State Senator Pat Browne, dwindling state revenues make these cuts necessary. "We have been in a trough, a serious trough," he laments to a reporter. What the good Senator fails to point out, however, is that he dug the hole about which he now so sadly complains. He helped draft legislation that gives major tax breaks to well-heeled entrepreneurs, so that those on the brink, can continue to suffer.

All in the name of hockey.

Back in 2009, Browne and State Rep. Jennifer Mann, in a bi-partisan thumb of the nose to those of us who struggle making ends meet, slipped a little piece of language into a Fiscal Code update, which was supposed to clarifying the definitions of "little cigars" and "cigarettes." $28 million - that's a lot of cigarillos - is buried in an infrastructure line item for something brand new - the "Neighborhood Improvement Zone." To be fair, that program is available for any local government with a population between 106,000 and 107,000 in the 2000 census. It's certainly nobody's fault that the only local government fitting this bill just happens to be Allentown.

Aside from the outright grant, what's really repulsive about this is that taxes that should go to the state, to pay for things like schoolbooks and Medical Assistance, will instead be funding a J.B. Reilly development, helping him get richer.

Senator Browne, incidentally, was a tenant in J. B. Reilly's building at 8th and Hamilton. He's now a tenant in J. B. Reilly's building at 7th and Hamilton. Just a coincidence, I'm sure.

Lehigh Gas has already abandoned Bethlehem to move into this brand new neighborhood zone, depriving the state of whatever tax money is generated by the 70 people it employs.

There go a few more schoolbooks.

How much state tax revenue will be lost every year? That's hard to say. It depends on how many businesses move in. Some say $10 million per year, but I suspect the final figure will be much higher. Helpful as ever, the state has set up a web page to make it easier for businesses in that district to help J.B. Reilly. Who knows how long this NIZ will last.

To be frank, the NIZ is NUTZ.

I'd like to tell you about Reilly's campaign contributions, but the state site seems to be inoperable since it was "improved."

Noon Update: While the NIZ does provide for dollars that could be used to offset new development costs in the zone, the rules for their use - as Michael Molovinsky has aptly pointed out - were only revealed after the "yellow peril" retailers were displaced. Besides, if you really read the rules and guidelines, the ACIDA - or perhaps the new "super" authority being created - can be quite arbitrary in their dispensing of NIZ dollars. ACIDA, for example, is the same authority that approved the lease with the Brooks Group for the Arena without even seeing it.

Do We Really Need to Give Chrin a Tax Break - Part Three

Who the Hell would endorse a tax break for a rich dude? Easton School District, Palmer Township and very soon, Northampton County Council. And they are right. Let me explain why.

Before Charles Chrin, Howard Seiple was the largest landowner in Northampton County. A farmer, his tracts extended into four different townships.

After he died, much of this property was sold to developers, who built McMansion after McMansion on what was once verdant farmland. That puts tremendous pressure on school districts, who must educate the children without getting enough money in taxes. It's also a drain on municipal government, which must maintain the infrastructure and provide emergency services to what was once quiet farmland.

Charles Chrin purchased 689 acres from the Seiple Estate. Unlike other developers, he's avoided the residential development temptation. I doubt this is altruism. Chrin knows he can make more money with an industrial park.

But it's still infinitely preferable to another housing development, or a 420-unit apartment complexe. It will increase the tax base, reducing the burden of everyone else. The Chrin TIF will allow him to defer the increase in taxes so he can use that money to finance a Route 33 interchange that will draw business.

As I've told you many times, I'm no fan of corporate welfare or Chrin. But this is no handout. It benefits everyone. No risk is assumed. In the middle of a recession, it could produce thousands of jobs.

Dave Colver, Chairman of the Board of Supervisors in Palmer Township, is the person who persuaded me that this TIF is necessary. Here's what he told Northampton County Council's Finance Committee last week.

I'm Chairman of the Board of Supervisors in Palmer, but I'm here representing all five board members. This was a unanimous decision to opt in. There was no dissension. We have been in favor of this project in general, and the TIF project all along. So all five board members are completely backing this project.


We're all in the same boat - the Township, School District and the County. We need money to operate. We can only deal with tax increases so much. In Palmer, we have looked at the north end of the Township as the way to offset some of that future tax base down the road in the future.


Let's face it, this is not a quick thing. This is not gonna' fix it in three to five years. There's no money coming off of this in the first five years. Everybody gets what they've been getting for farmland. We get about $15,000 on all that land up there. That's it. We can continue to get that $15,000, you folks can continue to get your $25,000, we can all go home and forget about it and Charlie can plant corn. Game over.


Our concerns. Zoning. Our comprehensive plan for every ten years - we're doing a new one now - past twenty years has looked at the north end development and an interchange to handle the infrastructure. We cannot develop the north end of that Township without an interchange, period. There's just no way to do it with the traffic, everything, that's needed in that area. So we have ... my successors [he means predecessors] ... I've only been there 1 or 14 years ... but my successors looked at that as the way to develop the north end. This is a way to make it happen.


The need for the interchange is imminent. The Township will not let, and the developer has pledged, no residential development, period. The Township will not allow it. We're controlling the zoning. No Bog Boxes. We're not gonna' see the million, two million square feet under roof, with twenty or thirty people operating forklifts so that the trucks can run around the clock and get on an interchange. Not gonna' happen. We control it.


We've got a developer who is willing to work with the Township and who is not looking for residential or the Big Box development.


We looked at the exposure. What exposure is Palmer Township, the County and the school district have with this? If it all fails, if it falls flat, is there any tax dollars that Palmer, the school district could be resonsible [for]? As you've heard, in the whole discussion prior to me, it's all being funded - the TIF is being funded - through the increase in the buildings. The taxes? It falls back on the Neighborhood Improvement District, which at this time is the property owner and anyone who would purchase in the future. And if that fails, it's the bondholders. There is zero risk. None. Find it, tell us what the risk is? There is none.


This is a way for all three of us to work together. It's not too often the County, the school district and the local municipality cross paths on a project that comes together to do something with zero risk for the betterment that could create two to three to four thousand jobs over the next eight - ten - twelve years.


My Board voted unanimously for it. he School District, as you heard, voted 6-1 in favor of it. I hope you folks at this Committee level, and when we get to County Council, at the County level, will see the merits of this project and support it unanimously. It's a good project. It's good for the County as a whole, and it brings jobs, it brings construction, all these ancillary things.


We're talking about 689 acres. There's another couple hundred acres outside of this district right there in Tatamy, Stockertown, Lower Nazareth, Forks. Everybody gets the benefit of this interchange.

$3.89 Million For 60 New Lehigh County Jobs?

One of my first jobs was at Baker Chemical Company, where I managed to blow up the lab on three separate occasions. The bosses were very happy to see me go to law school.

It's called Avantor these days, and, according to a news release, corporate headquarters are moving to Upper Saucon's Stabler Center, in Lehigh County, safely away from the occasional ka-boom. Its new location will be twice the size of its old facility.

Existing HQ staffers, and there's about 140 of them, will work from this new location. Over the next three years, Avantor will hire an additional 60 people.

"Anytime a large corporation like Avantor decides to relocate to our county we would welcome them. In light of the economic climate of the last three years it's extra special to have Avantor relocate its corporate headquarters here and support a workforce of 200 full-time employees in Upper Saucon Township,” said Lehigh County Executive Don Cunningham. “The Stabler Center is emerging as a magnet for corporate relocations and job growth for our region. We are grateful to Governor Corbett and the state for realizing the importance of this and supporting job creation in Lehigh County and Pennsylvania."

Avantor manufactures and markets high-performance chemistries and materials around the world under the brand names J.T.Baker® and MacronTM (formerly Mallinckrodt® Chemicals). The products are used in biotechnology and pharmaceutical production; in the manufacturing of semiconductors, flat panel displays and photovoltaic cells; and in research, academic and quality control laboratories.

Lehigh County and the Lehigh Valley Economic Development Corporation helped the company obtain a $3.89 million funding offer for the project from DCED, including a $200,000 opportunity grant, a $3 million grant from the Redevelopment Assistance Capital Program, $90,000 in job training assistance, and $600,000 in job creation tax credits.

“A corporate relocation project of this size and importance comes along once or twice a decade,” said Philip B. Mitman, LVEDC president and CEO. “In this challenging economic climate, the commonwealth, the Lehigh Valley and the Lehigh County leadership team continue to work together to bring jobs to our region. This cooperative leadership embodies the spirit of free enterprise.”

Oh, I don't know. That's $64,833 in state subsidies for every new job, attracting from far away Phillipsburg N.J. Nothing about that seems like "free enterprise" to me.

"Stop Corporate Welfare" Dietrich All For State Grant to Chrin

I've disabled comments on this post. There's a pretty good discussion at Easton Patch, and you can let me have it there.

Didn't Chrin Say He'd Fund Tatamy Interchange Himself?

It's bad enough that what little is left of the LV's rural charm is being destroyed by someone who already owns half of Northampton County and whose sole motivation is greed. Now comes word that we could end up paying for it, too. That Interchange, incidentally, was originally part of Glenn Reibman's megabond.

Northampton County Council Considers More Corporate Welfare

On Wednesday, Northampton County Council was told its pension fund is currently running a deficit of $60 million. The cost of developing just 50 acres at Weaversville Wayne Grube Memorial Park will be another $6.5 million. Real estate tax revenues are flat. Now is not a good time to be handing out tax breaks.

Yet that's precisely what's before Northampton County Council right now. Proposed Keystone Opportunity Zone (KOZ) expansions in Northampton, Portland and Bangor will remove $13,000 in real estate tax revenue.

The Bangor proposal, which includes The Trust Building, drives Angle nuts. "We're giving a tax break to a guy from out of the county to buy The Trust Building, rent it out and not pay taxes for ten years. . . . The chance of me voting for this is zero."

Council member Mike Dowd disagrees, noting that KOZ classifications spur development.

Council will vote on this proposal in two weeks.

Over the last two years, Pennsylvanians have handed out more than $567 million in corporate welfare grants from the state general fund budget to politically connected businesses. Between 2003 and 2007, Pennsylvania ranked 38th in job growth, 40th in personal income growth, and 42d in population growth among the fifty states. Keystone Opportunity Zones have only helped the make the rich a little richer.

Corporate Welfare for Lehigh Valley Business

Having trouble making payments on your country club membership?

Considering selling that beachfront condo?

I've got good news for you.

Just relocate to a Keystone Opportunity Zone, and all your troubles will be over, bippy. Property owners, residents and businesses located in a KOZ pay virtually no local or state taxes. So who makes up the difference? Why, that's the rest of us, silly. We exist to serve the rich. And guess what? Governor Rendell actually wants to expand this program.

Unfortunately, some naysayers and obstructionists have blasted KOZ programs as "nothing more than corporate welfare for companies that would have built new local facilities and hired more people without tax breaks."

Don't worry. The boys at Blackwater have shot them.

But you may ask yourself, where can I find a KOZ? That's where the Lehigh Valley Economic Development Corporation can help. It actually has a site selector to help you find a place that's just right for you. Just remember to click the KOZ box.

In Northampton County, only two sites are available, Easton's rapidly sinking Riverwalk and the proposed Bangor Business Park, which has been in planning for the last gazillion years.

Boo!

But Lehigh County is another story, with fourteen different sites. Every single one is in Allentown, which is moving forward and in the midst of a renaissance and really, really safe, too. Really!

Yipee!

You can join other corporate welfare recipients at The Butz Corporate Center, The Plaza @ PPL Center and City Line to sneer at people who are forced to ride buses.

Over the last two years, Pennsylvanians have handed out more than $567 million in corporate welfare grants from the state general fund budget to politically connected businesses. Between 2003 and 2007, Pennsylvania ranked 38th in job growth, 40th in personal income growth, and 42d in population growth among the fifty states. Keystone Opportunity Zones have only helped the make the rich a little richer.