Lehigh Valley

Hotel Bethlehem owner says he pulling expansion plans

Bruce Haines argues city doesn't support project

BETHLEHEM, Pa. - Bemoaning that he wasn't "feeling the love" from the city, the managing owner of the Hotel Bethlehem said he's pulling plans to build a new parking deck and dramatically expand the historic Downtown hotel.

But the authority that oversees the tax-incentive zone tabled the plan, and the mayor said after the sometimes contentious meeting that he hopes everyone can take a deep breath and re-group.

"It's good for Bethlehem," Mayor Robert Donchez said. "We can't lose focus of that."

The Bethlehem Revitalization and Improvement Authority met Tuesday afternoon to consider an application from Hotel Bethlehem managing owner Bruce Haines for inclusion in the City Revitalization and Improvement Zone Program or CRIZ.

Under the CRIZ designation, certain state and local taxes collected within the nearly 130-acre zone will be used to pay off construction loans within the district, provided the projects bring in new business to the state or expand existing businesses. The authority issues the bonds that are then paid off with the tax revenues generated within the zone.

In October, Haines unveiled plans to replace the hotel's 100-spot parking deck with a 460-space garage topped with four stories of guest rooms and event space. He said the addition would connect to the existing nine-story hotel and be designed in the same style.

The proposed expansion would increase the hotel's event space from 110,000 square feet to nearly 214,000 square feet that will allow the hotel to double its capacity for event guests to 80,000 people.

Haines proposes adding 73 rooms and suites, pushing the total number of rooms to 201 that would accommodate 80,000 guests annually up from 50,000. The hotel also projects adding 100 additional employees, pushing the total to 340 employees with an annual payroll of about $8.7 million.

At the beginning of the meeting, members of the business community, the current mayor and a former mayor all praised the hotel's expansion plans as a positive and a tremendous draw for the Bethlehem's Main Street area. And authority board members each voiced their support for the project, despite having their questions and individual concerns.

Haines told the board that he was looking for a simple "up or down vote" as to whether the hotel would be added to the CRIZ, allowing him to seek out investors to partner in the roughly $40 million project. During his brief presentation, he said the process and that search has been delayed for months, in part, over questions about whether the Bethlehem Parking Authority would somehow be involved in the hotel's new parking deck.

Haines noted that the hotel would maintain a lease agreement with Historic Bethlehem Museums and Sites for off-site parking even after the expansion.

One of the major stumbling blocks during the meeting was a claim from Haines that he learned only last week that he'd need an approved land development plan before the board would consider CRIZ designation. He argued that he wasn't going to make the significant investment in the land development process and search for a partner without knowing whether the project would be included in the CRIZ.

Alicia Karner, the authority's executive director, said after the meeting that all other CRIZ applicants came before the board with finalized land development plans in hand. Board Chairman Jim Broughal said after the meeting that an applicant could go through the process without a land development plan in place, but then the board would be considering a project that was not set in stone.

Board member Joe Kelly said he had some concerns about parking and asked Haines to participate in a larger look at Downtown parking. He said he also suggested to Haines during a summer meeting that he look at how to get more hotel visitors to explore Main Street.

But Kelly said he felt Haines dismissed his issues as unimportant.

The board also noted that tentative plans call for an access road to be built on land that Haines does not yet control.

During the course of the meeting, Haines accused of Broughal of having a conflict of interest by serving as the parking authority solicitor and chairman of the authority board. Broughal said after their meeting no conflict exists as he is not a voting member of the parking authority, a conclusion backed by the revitalization authority's solicitor.

Broughal said he supports the project, but had questions because he didn't see a great deal of public benefit in the face of a long-term investment of a lot of public money. The CRIZ debt would have been about $20 million.

As the meeting deteriorated, Haines again blamed the city parking authority for delays in a decision, said he sensed a lack of support from the city that didn't give him the confidence to seek outside investors and argued his opposition to plans for Martin Tower were having an affect on the board's deliberations.

Outside the meeting, Haines said the project didn't work without the CRIZ and that it was clear to him the city's support wasn't strong enough to move ahead. He said he already spent about $100,000 on the project and wasn't ready to invest more without a clear sign that the board supported his application.

"I withdrew the application. I'm done," Haines said. "We're not going to do the project. We'll back off and take a deep breath and operate the hotel as we have been."

Broughal vehemently discounted Haines' contention that the parking authority held up the project in any way. The parking authority simply offered him options such as operating a garage that he would build, said Broughal, who had little more to add after Haines' abrupt departure from the meeting.

What happens next is a mystery. The authority took no action Tuesday, opting only to table the application. The mayor said he hopes Haines reconsiders his decision after everyone takes a step back for a few days.

"I hope we can find some middle ground," Donchez said.

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