Lehigh Valley

Bethlehem wants more critical look at tax-incentivized programs

Economic development targeted

BETHLEHEM, Pa. - How do Bethlehem taxpayers know they're getting a bang for their buck when it comes to the alphabet soup of economic development incentive programs?

The short answer is most do not. That's why Tuesday night Bethlehem City Council's Community Development Committee forwarded an ordinance they said will be a "proactive storytelling" tool in showcasing the efficiency and effectiveness of tax-incentive programs throughout the city.

The vote was 3-0.

"Citizens have a right to know where their tax dollars are going," said Councilman Shawn Martell.

The ordinance, which took up to 300 hours to compose, would establish Article 349, known as Economic Development Incentive Reporting and Evaluation. It would also create the Financial Accountability Incentive Reporting (FAIR) program. The legislation includes provisions to support more efficient city resource allocation by creating a system for periodic, evidence-based performance evaluations of incentive-based programs, such as the Local Economic Revitalization Tax Assistance (LERTA) and City Revitalization and Improvement Zone (CRIZ).

For example, Section 349.04 will require an annual public hearing to evaluate how the programs are working.

Martell said the hearings will serve three purposes.

  • They will require the review of documentation on the programs.
  • They will increase accountability.
  • A public comment session will be included in each hearing.

The hearings will also asses whether existing economic development incentives should be modified, continued, amended or repealed. Should the ordinance become law, the first hearing would be required to be held by Oct. 31.

Another interesting facet of the bill is that it requires standardized reporting on the programs. Councilman Michael Colon noted that "each program has a different intent," but the tax expenditure report in Section 349.05 (B) (2) requires the administration submit an evaluation report with the following information:

  • The name and description of the incentive.
  • When it was enacted, its term and any sunset or critical dates.
  • Eligibility requirements.
  • The number of taxpayers who receive the incentive, and the total dollar value of such incentives received by taxpayers, including amounts eligible to be carried into future tax years.
  • A "return on investment calculation," which analyzes the costs of providing the incentive and the benefits realized by the city.
  • The total value of investment resulting from the incentive.
  • The number of projects planned, started and completed.
  • Number of jobs and other direct economic benefits resulting directly from the incentive.
  • Indirect economic activity stimulated by the incentive.
  • A discussion on quantifiable and non-quantifiable community impact.
  • An assessment of whether adequate protections are in place to ensure the fiscal impact of the incentive doesn't increase substantially beyond the city's expectations in the future.
  • Recommendations by the administration for potential legislative action.

Gathering the information and then composing the reports "is going to challenge" the administration, according to David Brong, the city's business administrator. Nevertheless, Brong added that the administration welcomes the transparency.

The legislation requires the administration to submit the first report by May 1.

Councilman William Reynolds said Tuesday night the bill was not attempting to stop development, but to show exactly if and how the programs are producing results. Reynolds is confident that factual information will paint a picture of the success the tax-incentive programs are having throughout the city.

"We need to tell the story better," Reynolds said. 

Economic development incentive programs essentially sweeten the pot for investors to develop locations that otherwise would not garner interest. The investment usually spurs economic growth. Once considered controversial, today developers practically expect them.

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