The Saucon Valley School Board Tuesday approved the extension of a tax abatement program that is already credited with generating nearly $466,000 in tax revenue for the district and has the potential to bring in 66 times that amount.
The board’s 5-2 vote gave the South Side Local Economic Revitalization Tax Assistance (LERTA) program, designed to stimulate the redevelopment of former Bethlehem Steel Corp. land, which includes 1,400 acres of brownfields, another five years.
The way the LERTA development incentive works is pretty simple: property owners receive a decade-long tax abatement on improvements or new development, but still pay the base taxes. The new taxes are phased in through 10 percent increments starting in year two.
The board heard a presentation by Alicia Miller Karner, director of community and economic development for the City of Bethlehem, about what has been accomplished through the LERTA over the past five years, including its current and potential future impact on the Saucon Valley School District.
Right now, that impact comes in the form of tax dollars generated by the Walmart E-Commerce Distribution Center, opened in the Majestic Bethlehem Center in July 2015.
Using the Walmart project to help crunch the numbers, Karner projected that when all is said and done the district could see $31 million in tax revenue from the properties within the LERTA, provided that the remainder of the site is built out in a manner similar to what Majestic has proposed. Once the abatement period expires, those tax dollars would be expected to increase, she added.
When pressed by several board members about what would happen if the board voted against continuing the LERTA, Karner said that development would slow down drastically, listing levels of competition among Lehigh Valley municipalities to attract developers and Bethlehem’s high millage rate as prime causes.
“I suspect that my kids will be back here talking to you about trying to get something built at this location if this is not implemented,” Karner said. “I see this as an opportunity to assure the future of the district.”
“It is a little bit of guess work. We do not have a crystal ball,” she added. “We look at LERTA as an acceleration tool. It is a question of what is the pace of development and how long will it take to get to full build-out without the LERTA. We believe that LERTA is a fiscally responsible tool because it doesn’t take away from what you are already getting.”
The former Bethlehem Steel brownfield now includes Lehigh Valley Industrial Park VII and Majestic Bethlehem Center, which are home to Primark, Crayola and Walmart distribution centers, defense contractor Curtiss-Wright, Cigars International and Reeb Millwork. Collectively, LERTA development projects employ more than 4,000 full-time workers, according to Karner.
In addition to Saucon Valley School District, the tax beneficiaries of the South Side LERTA include the City of Bethlehem, Lower Saucon Township, Northampton County and Bethlehem Area School District. With Tuesday’s affirmative vote by the Saucon Valley School Board, four of the five entities have now approved the five-year extension, with Northampton County being the last to vote on the matter.
The current LERTA expires at the end of 2017 and Karner said she will go before county officials sometime between now and then.
Board members Edward Inghrim and Bryan Eichfeld voted against the resolution.
It is my opinion that the board got sold a bill of goods on this LERTA, I approved the LERTA 5 years ago when the Real Estate Market was in the dumps and tax incentives were needed to get investment in this area. Now we are in the hottest real estate market in the Northeast! As an example of how much this LERTA costs the district, there is a building that is in construction on SVSD section of the property that should be completed next year. That property would bring about $800,000 in taxes next year! Now it will bring in zero, and it will not be for 11 years that the School District will get the full revenue. How many senior citizens will have to pay increased taxes before that revenue cuts in!!! But the Multi-billion dollar Corporation Majestic Properties will save $4,400,000.00 over the 11 years, no wonder the Majestic exec had a big smile on his face. That lose of revenue to the school district is just for 1 building, they plan to build 6 more on that property.