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Legal concerns stop Wilson School Board from approving tax abatement for former Dixie Cup site

Published On: Nov 19 2012 11:24:08 PM EST

The owner of the former Dixie Cup Plant in Wilson is hoping to redevelop the site with a mix of residential and commercial uses.


Citing too many legal uncertainties, the Wilson Area School Board on Monday night decided the time wasn’t right to authorize a 10-year property tax abatement being sought by the owner of the former Dixie Cup plant in hopes of reigniting efforts to redevelop the vacant site with a mix of residential and commercial uses.

The board had drafted a resolution to approve the tax abatement authorized through the state’s Keystone Opportunity Zone (KOZ) legislation, but never took a vote on the measure due to no members making a motion for consideration. The school district collects about $68,000 per year in taxes from the former 630,000-square-foot Dixie Cup property, owned by Reibman and Reibman of Allentown.

For the property owner to receive an abatement of up to 10 years, it must be approved by the school board, Wilson Borough Council and Northampton County Council. Borough Council recently authorized the abatement.

While no motion was made Monday night to vote on the school board resolution, members said they anticipate the proposal will likely be reconsidered in the near future.

Board member William Wallace said he could not support the resolution at this time due to concerns over when improvements at the site would no longer be eligible for the tax abatement.

Since the redevelopment is being proposed in stages, Wallace said improvements done within the 10-year abatement should be required to pay full taxes on new assessments as they are phased in, instead of receiving the full abatement over all 10 years. Wallace said the board’s legal counsel needs to research the taxing requirements for the phased improvements, since the KOZ law’s language “seems vague.”

Wallace also took issue with language in the KOZ law allowing for an exemption on the local earned income tax for residents of planned apartments within the redevelopment site. He said the board needs more information on the extent of earned income tax exemptions and how they would impact school district revenues.

“We need to make sure this is done in a balanced way,” Wallace said.

Board President David Seiple said he would have voted in favor of the abatement Monday night if a board member had made a motion to consider the resolution.

The property owner has said the Keystone Opportunity Zone program would help reignite previous redevelopment efforts that stalled several years ago when the economy soured. The former Dixie Cup plant -- built in four stages between the 1920s and 1950s -- was originally set to be redeveloped with a mix of condominiums and apartments totaling 302 units, but that effort grinded to a halt in recent years when the real estate market “disintegrated before our eyes,” the owner recently said.

The latest proposal, estimated to cost between $50 million - $60 million, calls for 50-75 percent of the facility being redeveloped with one- and two-bedroom market-rate apartments. The remainder of the facility would be redeveloped with office space, according to Reibman and Reibman.

While the municipality, school district and county would lose out on property taxes for up to 10 years, there would be much more to gain over the long-term future by allowing the abatement, Borough Council President Leonard Feinberg said during a previous board meeting.

“After 10 years, the value of a redeveloped building will be worth a lot more than it is now,” he said.