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Lower Macungie commissioners hear mixed comments on TIF for Hamilton Crossings

By Randy Kraft, WFMZ.com Reporter, RKraft@wfmz.com
Published On: May 02 2014 05:52:09 AM CDT
Lower Macungie residents offer TIF opinions 5-1-14
LOWER MACUNGIE TWP., Pa. -

If Lower Macungie Township commissioners were hoping for a clear mandate from residents before they decide the fate of a tax increment financing plan for the long-debated Hamilton Crossings shopping center, they did not get it at Thursday night’s public hearing on the TIF.

The purpose of the hearing was so residents could express their views on the township opting into a TIF for the shopping center. That decision won’t be made until June.

“There are two questions we have to resolve as the board of commissioners,” said Ryan Conrad, president of the five commissioners.

“One is should we create the TIF district? Secondly, should Lower Macungie participate in the TIF district?”

Last year, that participation seemed a sure thing, when all five township commissioners went on the record supporting the Hamilton Crossings TIF plan. But two of those five commissioners have been voted out of office.

At the hearing, former commissioner Ron Eichenberg, one of the two who were not re-elected, made it clear his support for the TIF has not diminished.

“Hamilton Crossings will be the catalyst for the renaissance of Hamilton Boulevard,” said Eichenberg. “A favorable vote for the TIF will certainly result in a renaissance of Hamilton Boulevard. Lower Macungie will see a world-class boulevard.”

Township manager Bruce Fosselman estimated about 110 people attended the hearing.

Thirty people spoke – two of them twice.

If nothing else, the public hearing -- which is required by the state’s TIF act -- raised anticipation for June 5, when the commissioners are expected to finally vote on whether or not they want to opt into the TIF.

Township insiders predict that June vote will be 3-2, although it’s not yet clear if the TIF will be approved or rejected.

If the majority of commissioners vote yes, Lower Macungie will agree to give up 50 percent of property tax revenue from the shopping center for up to 20 years. That money will be used to help pay debt on road and other public infrastructure improvements.

“But for TIF financing, this project cannot be realized,” Hamilton Crossings developer Tim Harrison told the audience at the start of the hearing.

A few residents made it clear they will remember how commissioners vote on the TIF at election time.

“This is supposed to be a representative form of government, so we’d like you to represent us,” resident Arlene Dabrow told commissioners.

“We have a lot to consider until June 5,” said Conrad at the end of the hearing. “It’s not easy being up here, hearing both sides of the argument, with that sort of weight on our shoulders. But that’s what our job is. That’s what you elected us to do and that’s what we’re going to do.”

The township commissioners have not yet voted on approving development plans for the $140 million shopping center, which now is scheduled for completion in the spring of 2016. That vote won’t happen until after they decide the TIF issue.

Although the hearing was called for the public to offer opinions on the merits of the Hamilton Crossings TIF plan, several people stood to express their opposition to the entire project.

Others who spoke said they support the Hamilton Crossings project, but oppose the township opting into a TIF to support that project.

Resident Donald Richards, for example, said he is 100 percent in favor of the project, but 110 percent against creating a TIF district for it.

Richards said if the success of $140 million shopping center project depends on less than $7 million in TIF financing, “it’s like the tail is wagging the dog.”

Keeping score

It might be argued that people are more likely to show up for a meeting if they oppose something than if they support it.

In this case, 10 of the 30 people clearly supported the TIF and/or the shopping center, 15 were opposed and five did not make their positions clear.

Commissioner Ron Beitler, who is the only one of the five commissioners who has gone on record against the TIF, said 16 people spoke against it.

Hamilton Crossings developer Jeremy Fogel said his own tally showed the input received seemed balanced between positive and negative comments. Fogel counted 11 people supporting the TIF, 11 opposing it and eight opposing the project, mostly because of traffic issues.

Fosselman said he counted 12 for the TIF, six against and eight neutral.

Ground rules

Conrad laid out the ground rules at the beginning. People were given three minutes to speak. He discouraged “cheering, applauding and outbursts.”

“This is your opportunity to share your comments and your opinions,” he told the audience. “We want to hear what you have to say.”

He said the hearing was not a debate or a Q&A session and that the commissioners were under no obligation to respond to comments.

Some issues raised during the hearing have been addressed in previous public meetings –such as other projects the developers have done -- but no one seated on the dais responded to them Thursday.

Other issues were explained in presentations at the start of the hearing – such as what is a TIF, why Hamilton Crossings is eligible for a TIF and why TIF money will not be used for iron ore mine wash remediation on the site – but some apparently did not hear them.

“The promise of future tax revenues is a little like Judas Iscariot taking 30 piece of silver,” maintained Charles Rhoads, the first resident to speak. “It will come with future costs to the township and the township’s citizens.”

Rhoads predicted one of those costs will be more crime. “Fifty percent of our crime apparently occurs at the Wal-Mart, which is the other big store in our area.”

Hamilton Crossings will include a Costco, Target and Whole Foods as its anchor stores.

Others spoke in support of the shopping center, especially because it will produce jobs.

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They included Jim Reilly, president of Lehigh Valley Buildings Trades.

Harrison said building the shopping center will require 425 construction jobs and generate 923 permanent jobs when completed.

“I’m here tonight in support of the TIF,” said resident Kevin Lewis, a carpenter who hopes to land one of those construction jobs. “We have nothing to lose and everything to gain.”

Some residents were skeptical that local people will be hired to build the shopping center, saying major retailers bring in their own crews.

Increased traffic was a major concern expressed by numerous residents.

Two warned Hamilton Boulevard will become like MacArthur Road in Whitehall Township north of Allentown.

At the end of the hearing, Conrad complimented the well-mannered audience for the level of respect they showed to commissioners and each other.

After the public spoke, Commissioner Douglas Brown indicated he isn’t giving up on the idea of the Hamilton Crossings developers paying a traffic impact fee, which could be used to improve roads not immediately adjacent to the shopping center.

In April, Atty. Richard Somach, the township solicitor, told commissioners a traffic impact fee of at least $2.5 million cannot be collected from the Hamilton Crossings developers because initial plans for the project were submitted to the township before an ordinance creating that fee was even advertised, back in 2009.

But at the end of Thursday’s hearing, Beitler maintained the traffic impact fee is an outstanding issue he hopes the commissioners will address. He said those fees would address many of the traffic concerns that had been raised by residents.

Lawyers clash

The most dramatic moment of the evening did not directly involve the TIF or the development.

Atty. Jonathan Hugg, who represents two nearby shopping centers whose owners oppose a Hamilton Crossings TIF, stood to say Somach, the township’s solicitor, works for the same law firm as the solicitor for the Lehigh County Industrial Development Authority –LCIDA -- which developed and would administer the TIF.

Hugg told commissioners: “You have the same lawyer advising you that’s advising the industrial authority that’s advising the county and the county executive. You need independent counsel. Everything is so incestuous.”

Hugg argued that created a fundamental legal problem: “Nobody has their own advocate; nobody can look at this objectively. And there’s a veil of secrecy over this whole process. The public is excluded.”

Atty. John Lushis, who is solicitor to the LCIDA and – like Somach -- a member of the Norris, McLaughlin & Marcus law firm in Allentown, stood to say any attacks on his law firm “are just flat-out wrong.”

Addressing Hugg directly, Lushis said: “Mr. Hugg, you are way off base. You are factually wrong and your attacks on the ethics of our firm are just scurrilous.”

Developer’s presentation

When the hearing began, residents still had to wait more than 40 minutes to speak – after presentations about Hamilton Crossings were made by Harrison, officials from LCIDA and Scott Shearer of Public Financial Management, financial adviser for the TIF.

Harrison stressed the benefits of the project and addressed several misconceptions about it. He also warned it will fail without the TIF.

“We’ve heard we’ll never walk away, even if there’s no TIF, because we’ve got so much invested that we’ll see it through anyway,” said Harrison.

“The truth is we don’t want to walk away. We have invested millions of dollars and five-and-a-half years of our time.”

He said the developers don’t want to disappoint their tenants, stakeholders or residents who have been looking forward to seeing the project come to fruition.

“But it’s really not our choice,” said Harrison. “Without this TIF, without this essential piece of our capital stack, this project will fail for lack of financing.”

Harrison told commissioners “this project needs your help. We respectfully request that it warrants your help. If you are willing to help, the project will provide very substantial and lasting benefits to Lower Macungie Township and its residents.”

Emmaus resident John Donches argued the reputations of the developers are on the line.

Donches said if they don’t go through with the project – “TIF or no TIF” -- their reputations will take a big hit in their efforts to find major retailers to come in on any other projects that they plan.

The 63-acre shopping center site is split by Krocks Road between Hamilton Boulevard and Route 222.

Harrison said the 63 acres generated a total of $57,000 in property tax in 2013.

He said the shopping center will generate more than $1.4 million in new property tax revenue –including $571,540 a year to East Penn School District and $322,000 a year to Lower Macungie.

The developer noted that totals more than $16 million in additional tax revenue to the school district over the 20-year life of the TIF.

Harrison said $63 million in infrastructure improvements are required “to make this site developable” – not including millions more for mine wash remediation.

He said that $63 million includes $11 million for transportation improvements, $4 million for storm water and flood control and $1 million for utility improvements.

He said 63 percent of the transportation improvements, 85 percent of storm water improvements and 20 percent of utility improvements have to be made because of existing conditions “whether Hamilton Crossings comes to fruition or not.”

Harrison said the theoretical maximum the development can get from a TIF is $7 million toward such public infrastructure improvements, $3.6 million less than the cost of addressing existing infrastructure problems.

Beitler gets last word

At the end of the hearing, Beitler said the developers originally required “three for three” – meaning East Penn School District, Lehigh County commissioners and Lower Macungie had to opt into the TIF for it to succeed.

The school district opted in last year, and reaffirmed that position this week, but the county commissioners decided not to participate in the TIF.

“Now, at best, we have two for three,” said Beitler. “I still want to understand what changed, that now we’re able to move forward two for three. And why we wouldn’t be able to move forward with one for three?”

Beitler told the developers: “I’m outlining to you the arguments I need to hear for me to support this."