Deal struck on Hamilton Crossings shopping center
Updated On: Apr 17 2013 09:23:27 AM CDT
A tax increment financing plan for the proposed Hamilton Crossings shopping center in Lower Macungie Township was approved late Tuesday afternoon by the Lehigh County Industrial Development Authority.
The TIF financing plan still must be approved by Lehigh County, East Penn School District and Lower Macungie – an approval process that will begin with Lehigh County commissioners getting their first look at the plan later this month.
All three local government entities must opt into the plan for it to be financially successful. The project won’t go forward if there isn’t approval by all three, said Atty. John Lushis, the authority’s solicitor.
The authority’s board voted to allow 50 percent of the increased property taxes that will be generated by the shopping center to be used to help pay the cost of infrastructure improvements – upgrading roads, storm water facilities and utilities -- for up to 20 years.
That means the school district and the county will give up half of the property taxes coming from the shopping center for up to two decades.
Lower Macungie currently does not collect property taxes from its residents and businesses. If the township does implement a property tax during the 20-year lifetime of the TIF, it also will collect only 50 percent of property taxes from Hamilton Crossings.
The developers maintain they won’t be able to build the shopping center without tax increment financing.
“We look at this as an income generator,” said Cindy Feinberg, authority chairwoman. “Without this development, we don’t have any new taxes coming in.”
Over the 20-year life of the TIF, East Penn will get $11,244,000, said Lushis, and the county will get $2,646,000.
“We are pleased that the LCIDA board supports the TIF plan and look forward to moving to the public meetings to discuss the plan with the governing authorities,” said Jeremy Fogel, spokesman for the developers. “The project is moving forward positively and we get more and more excited as we get closer to bringing it to fruition.”
The $140 million Hamilton Crossings project will include a Costco and Target –its two anchor stores – plus an unidentified “major high-end food store” and other “local, regional and national retailers and restaurants” in a total of 590,000 square feet of commercial space.
The shopping center will be built on 63 acres of meadows along both sides of Krocks Road, between Hamilton Boulevard and the Route 222 bypass. Krocks Road will become the main entrance for Hamilton Crossings.
Construction is projected to begin by September, with an anticipated opening date in autumn 2014.
It is expected to create 495 new construction jobs and 920 new permanent jobs.
TIF money only for public improvements
The authority rejected using TIF money to remediate hundreds of thousands of tons of non-toxic waste material, called mine wash, on the site, because it wants that money used only for public improvements.
Feinberg said that has been the authority’s position on the last three TIF projects it has worked on -- to help with public infrastructure improvements that can’t get funded in other ways.
Said Fogel of the developers: “We made it clear that we intend to use any TIF proceeds on infrastructure improvements only, but asked to have the flexibility to apply funds to mine wash only if necessary. Obviously we will not have that flexibility, but the infrastructure costs are so significant that it should not be an issue for the project.”
Transportation improvements, including widening the Route 222 bypass and Krocks Road and upgrades to Hamilton Boulevard, will total about $11 million, according to Jason Brockman, senior managing consultant at PFM, the authority’s consultant for the project. He said storm water improvements will total more than $4 million and utility upgrades will total nearly $1 million.
Without TIF money helping to defray those “extraordinary costs,” commercial development of the site “cannot and will not occur,” said Brockman, who reviewed the project plan before the authority board’s vote.
“Basically, the developer has asked the TIF committee for $7 million toward the project to help cover these public improvements,” said Brockman. He said the committee agreed to a 50/50 split up to $7 million, with the developers paying all costs beyond that.
The authority board decided against including TIF funds for mine wash remediation at its March 26 meeting reported Lushis. Developers have said they cannot build over mine wash deposits, which are described as having the consistency of pancake batter, on the property. Those deposits were created by iron ore mining that began in the 19th century on the site.
The developers did not attend the authority’s meeting, which began at 4 p.m. Tuesday in the offices of the Lehigh Valley Economic Development Corporation in Bethlehem.
The TIF committee also was not at the meeting. That committee, which includes two representatives of each of the three local taxing bodies, met regularly for several months to help the authority develop the plan.
The 20-plus-page TIF plan, as well as the resolution approving it, are not yet being made public, but will be by the time they are presented to county commissioners, when they meet in public as a committee on April 24, before their regular meeting at 7:30 p.m.
After some “minor tweaks” are made to the wording, including removing all references to any TIF money being used for mine wash remediation --the plan will be distributed to the six members of the TIF committee, at which time it will become a public document.
It will be posted on the county, township and school district websites.
Feinberg said it is anticipated that East Penn School Board will be the first taxing body to vote on the TIF plan, as a resolution during its May 13 meeting.
The county commissioners will only review the plan on April 24, predicted Feinberg. She said it will be up for first reading as an ordinance at the commissioners’ May 8 meeting, with final approval expected at their May 22 meeting.
Lower Macungie is expected to act on the TIF plan in late May or early June.
Fogel is optimistic the school district, township and county will approve the TIF plan “because the TIF committee worked very hard to understand the project in great detail, and ultimately agreed to support the plan when we present it to their respective boards.
“The project is a one of a very few of its kind moving forward in the entire country, and we think the folks involved understand the tremendous positive impact it will have in the region.”
After all three taxing bodies have voted on the TIF plan, a public hearing will be scheduled, said Brockman. He added a Hamilton Crossings TIF district will be created about three weeks after that hearing.
No 60/40 split
The developers had proposed a 60/40 split, with the taxing bodies collecting only 40 percent of property taxes for up to 20 years, but the authority and its TIF committee wanted a 50/50 split, according to Brockman.
Fogel said: “We will have to work to secure funding from other programs and combine them with the TIF in order to secure the funding we need to allow the project to move forward.”
Brockman said 50 percent of the tax increment is projected to total about $703,000 a year once the shopping center is fully operational. That will double in the 21st year, when the local governing bodies keep 100 percent of the tax.
Brockman said the school district now collects $45,000 a year in property taxes on the site and the county collects $10,000. He said the school district will be getting $569,000 and the county will get $134,000. The school district and township also will collect much more in other annual taxes.
The Hamilton Crossings development team -- Tim Harrison of Staten Island, N.Y., and The Goldenberg Group of Blue Bell, Montgomery County – has agreements of sale to buy the property, most of which is owned by the Allentown Catholic Diocese.
Brockman said Costco and Target will own their buildings, parking lots and portions of entryways – totaling about 49 percent of the entire project. The developers will own the other 51 percent.
Brockman said the authority will issue and repay the TIF debt.
He said the property owners cannot appeal their assessed value over the 20 years of the TIF, or for as long as the TIF debt is outstanding.
The five authority board members at the meeting unanimously approved the TIF plan. Joining Feinberg in voting for it were Mark Bartholomew, Howard Lieberman, Bill Clements and Joanne Kuchera.
Copyright 2013 WFMZ. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
State police seen rushing back to Frein's neighborhood
Police: 4 children killed in crash were not in seatbelts or booster seats
State police say they are hot on Eric Frein's Trail
Officials narrow search for accused cop killer Eric Frein
Police: Alleged cop killer Frein 'planned extensively'
Black bear kills hiker in northern New Jersey
Bridge replacement project set to begin in Lehigh County
Couple squashes competition with pumpkins at Oley fair
Gen Xers are poorer than their parents
Bomb squad called in for old metal lunchbox