ALLENTOWN, Pa. - A couple of them came very close, but the Lehigh County commissioners stopped just short of asking developers of the proposed Hamilton Crossings shopping center the $7-million question Wednesday night.
That question is why those developers maintain they can't build the upscale shopping center unless the county, East Penn School District and Lower Macungie Township buy into the tax increment financing – TIF – program proposed for the project.
The developers must convince all three local taxing bodies that they can't do the project without TIF. That state program will allow developers to use 50 percent of increased property taxes from the shopping center to pay for infrastructure improvements for up to 20 years -- rather than the county, township and school district immediately collecting 100 percent of dramatically increased property taxes.
The commissioners began their review of the TIF financing plan Wednesday. The discussion will continue when they have their first reading of a proposed TIF ordinance on May 8, with a vote on final approval expected May 22.
"We are being led to believe that if we don't do this TIF approval, this project can't happen," said county Commissioner Scott Ott. "But this project's total expense may swing by more than the amount of the TIF that we are told is absolutely essential. That's what I'm trying to figure out."
And Commissioner Michael Schware asked: "If we vote this down, does that mean the TIF is dead? Or could it be revised and resubmitted under different criteria than exists now?"
The project legally could move forward without the county's involvement, responded attorney John Lushis Jr., solicitor for the Lehigh County Industrial Development Authority, which created the Hamilton Crossings TIF plan.
But Lushis said the East Penn School District would not go forward as the sole participant because politically it would not work. He explained East Penn would be the sole participant because Lower Macungie currently collects no property taxes from its residents and businesses.
Noting the developers have said "if the TIF doesn't happen, the project doesn't happen," Ott asked Hamilton Crossings developer Tim Harrison if the budget for the $140-plus-million project "includes a cushion for unforeseen circumstances."
Harrison, who fielded most of the questions asked by commissioners, said it does. He explaining that "cushion" is about 10 percent of the total cost.
"If something bad didn't happen that I didn't expect, it would be the first time in my whole career," said Harrison.
But if everything goes smoothly, noted Ott, the developers might save more than the $7 million they want in TIF money.
"Government has to get out of this game," Allentown resident Joe Hilliard told the commissioners. "You're in the game of picking winners and losers. Why do all the other businesses not get this deal? It's fundamentally unfair using government money you don't have to pick winners and losers."
Hilliard also said: "I don't think Costco and Target are going to throw up a store just because they get a tax break." And he maintained other projects went ahead when TIF financing was rejected by local governing bodies.
The 63 acres where the shopping center will be built now brings the county a little over $10,000 in annual property tax revenue, said Jason Brockman of PFM, financial consultant for the TIF project.
When the shopping center is completed, that is anticipated to increase to more than $134,000 a year. And that number will double after 20 years, when the county starts collecting 100 percent of Hamilton Crossings property taxes.
Lower Macungie votes last
The East Penn School Board will vote on Hamilton Crossings TIF funding first, at its May 13 meeting.
Lower Macungie will vote last, in late May or early June.
"The support of Lower Macungie's board of commissioners is 100 percent," said Bruce Fosselman, Lower Macungie's manager. "We feel this is a great project not just for the township, but for the school [district] and the county. My wife, my friends [and] the residents of the township want this project. It's a great deal for everybody."
Fosselman, who served on the TIF committee, said he's been working with Harrison on Hamilton Crossings for about three years. He's seen other projects Harrison has done and said: "They're first class."
If Lower Macungie implements a property tax in the next 20 years, it also will contribute 50 percent of property taxes from Hamilton Crossings to TIF financing. If that happens, said Commissioner Percy Dougherty, the TIF debt will be paid off sooner than 20 years, which means all three local taxing bodies will start collecting full property taxes sooner from Hamilton Crossings.
"As a resident of Lower Macungie Township, I can tell you we are starved out there for good shopping," said Dougherty. "Many locations out there are not of the quality of which we are speaking now."
Attorney Blake Marles, a Lower Macungie resident who represents the developers, got the biggest laugh of the night when he stood up to declare: "I won't shop at Costco……because I don't shop anywhere."
TIF for public improvements
The TIF program will give the developers up to $7 million, nearly five percent of the estimated total project cost.
TIF money will be used only to help pay $11 million in transportation improvements, $4 million in storm water improvements and nearly $1 million in utility upgrades.
Harrison estimated only 24 percent of those improvements will benefit Hamilton Crossings, while 76 percent will benefit everyone.
For example, he said storm water improvements will help a residential neighborhood south of the Route 222 bypass that now experiences "severe" flooding problems.
And he said road improvements will benefit everyone who drives on Route 222, Hamilton Boulevard and Krocks Road.
Marles explained most of the improvements will be made "for the public, apart from the development, because what was put there previously wasn't adequate." He said government in the past failed, because it didn't plan properly for everything that would happen around the infrastructure it originally put in place.
As an example, Marles said the state's design for the Route 222 bypass was inadequate because "it wasn't going to address the needs of the public for very long. What this TIF is really doing is picking up a piece of the public cost that wasn't picked up."
New Hamilton Crossings details
New details about Hamilton Crossings emerged at Wednesday's meeting.
Harrison said the anchor Costco and Target stores will be the magnets that will attract other tenants. "Without them, we wouldn't have a project."
He said he is not allowed to name the unidentified high-end food store also coming to Hamilton Crossings, "but when we do, I think you'll see it's maybe the most powerful magnet of all." He added: "We can't talk about some of the other retailers, but you would recognize them."
"This shopping center has elements that make it a true asset to the township and I would hope to the county," said Harrison.
He said Costco has been looking for a location in the Lehigh Valley for five or six years. "They have determined this is the only location they would be interested in occupying in the Lehigh Valley," he said. "And they intend this location to serve the entire Lehigh Valley."
He said attributes that attracted Costco are the proximity to Route 222 and Lower Macungie's demographics. He said it was important to Costco that 21 percent of the township's adult population has just not college degrees, but master's degrees or PhDs.
Harrison said the Target along Cedar Crest Boulevard in South Whitehall will not be replaced by the Hamilton Crossings Target. He said that existing Target is very successful and Target management thinks having both stores will give the company a more successful presence in the Lehigh Valley.
Developers promise their project will create 495 construction jobs when work begins later this summer and 920 permanent jobs when Hamilton Crossings is completed in the autumn of 2014.
The Hamilton Crossings TIF was created by the Industrial Development Authority with some input from a TIF committee consisted of two representatives from the township, school board and county.
Both Commissioners Vic Mazziotti and Dougherty, the county's representatives, have said those TIF meetings should have been held in public.
"These were not our meetings," said Mazziotti. "They were the IDA's meetings. While we were willing to open this up to the public, the IDA determined they were not willing to do that." He said committee members could attempt to influence the plan, but it was the IDA's plan.
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