LOWER MACUNGIE TWP., Pa. - The opening of the Hamilton Crossings shopping center is still at least two years away in Lower Macungie Township.
If approved, the project will bring the much-anticipated first Costco Wholesale Club store to the Lehigh Valley. Target will be the other anchor store in Hamilton Crossings, which will have a total of 25-30 stores.
The project reaches a milestone in the long approval process at 7 p.m. Tuesday, when its developers seek numerous variances from the Lower Macungie Zoning Hearing Board.
More than just another shopping center, Hamilton Crossings is being promoted as a town center, a community gathering place and a gateway to Lower Macungie Township.
Lower Macungie has been looking to have the property developed for a long time, said Jeremy Fogel, spokesman for the development team. While it is not centrally located in the township, he said it is in the middle of Lower Macungie's commercial corridor.
Hamilton Crossings developers promise upgraded aesthetic appeal and amenities similar to those at the Promenade Shops at Saucon Valley in Upper Saucon Township.
The project is unusual because the developers are asking Lower Macungie Township, East Penn School District and Lehigh County to pick up part of the tab, which totals more than $115 million, by agreeing to take less property tax revenue from the shopping center for up to 20 years.
The developers maintain they won't be able to build the shopping center without that help and warn no one else will be able to build on that site, largely because a major man-made environmental problem is beneath the surface of the property.
The shopping center is proposed on 63 acres of meadows along both sides of Krocks Road, between Hamilton Boulevard and the Route 222 bypass. Krocks Road will become the main entrance for Hamilton Crossings.
The developers said the total property, including about 10 acres north of Route 222 that will be used for storm water drainage, now only generates about $10,000 a year in total property tax revenues for the township, school district and county. If the shopping center is built, they say that total will increase to up to $1.4 million a year.
While Fogel could not provide a breakdown, most of that $10,000 goes to the school district, which has the highest property taxes, and none goes to the township, which hasn't collected property taxes from its homes and business for many years and won't do so in 2013.
The Hamilton Crossings development team -- Tim Harrison of Staten Island, N.Y., and The Goldenberg Group of Blue Bell, Montgomery County – has agreements of sale to buy the entire 73 acres.
All but seven acres of the land is owned by the Allentown Catholic Diocese, which planned to have it become part of a cemetery before it was sliced up by construction of the bypass and the relocated Krocks Road.
The development faces a major complication. In the late 19th Century, iron ore was mined on the site. Left behind were hundreds of thousands of tons of waste material, called mine wash.
That non-toxic mine wash has been described as mud, slurry and quicksand, with the consistency of toothpaste or pancake batter. The soupy material was dumped into open mining pits after iron ore had been removed. Those pits eventually were covered with soil and some of the property has been farmed.
The problem is that buildings cannot be erected over the unstable mine wash deposits, which extend as deep as 26 feet beneath the surface. Fogel said any building constructed over them would settle significantly.
"Mine wash is prevalent across the site," said Fogel. "We found it all over the place."
The southern portion of the property is especially wet, according to the developers.
They estimate 50,000 dump truck loads of mine wash will have to be dug up, dried and stabilized by being blended with limestone and soil cement. Even after that mix is put back into the ground and compacted, buildings will not be erected on it
Sara Pandl, the township's director of planning and community development, said the location of proposed buildings had to be changed when site borings were done and the mine wash deposits were discovered. She added even mine wash deposits beneath parking areas must be dug out, to make sure those areas are stable.
If that mine wash is not remediated, said Fogel, "nothing can go on this site."
Power lines also cross the property. Pandl said only parking lots can be constructed beneath those power lines, not buildings.
The Hamilton Crossings project was first proposed to the township in 2009 with just two big stores – a Target and a Lowes. But Lowes later decided it was not building any new stores, said Pandl. She said later BJs and ShopRite became interested, adding ShopRite still is interested, and Costco replaced BJs.
The closest Costco stores to the Lehigh Valley are near Montgomeryville and Pottstown. "Costco!" declared a resident at a recent township meeting. "Make the whole thing Costco!"
Fogel said Costco and Target will own their stores and parking areas and the development team will own the rest of the property.
Hamilton Crossings will have up to 570,000 square feet of retail space. In public meetings, the developers have mentioned its tenants will include restaurants and at least one bank.
"We're negotiating with a number of tenants, but are not prepared to disclose their names," said Fogel. "If we receive the variances we've requested, we will start to finalize deals with the rest of those tenants."
Fogel said the project will generate more than 400 construction jobs and more than 1,000 permanent jobs.
He said a consistent architectural design theme will be evident throughout Hamilton Crossings, adding Target and Costco have modified and upgraded their prototypical "anytown USA type of designs" to have Lower Macungie specific stores, not just block stores that could be plopped down anywhere else in the country.
The developers don't want visitors to be confronted by a big wall of industrial-looking buildings, said Fogel. He said Hamilton Crossings will have landscaping and colorful flowers, and outdoor seating areas and several gathering places.
The developers also propose to have 2.5 miles of walkways through the shopping center.
Zoning Hearing Board
Lower Macungie's Zoning Hearing Board will consider granting Hamilton Crossings numerous variances when it meets Tuesday night.
Some variances being requested already were approved by the zoning hearing board when it ruled on an earlier version of the project. Fogel said they must be requested again because Hamilton Crossings had to be completely redesigned after the mine wash material was identified.
Pandl said both Lower Macungie's planning commission and township commissioners are recommending zoning hearing board approval for all variances being sought, but the zoning board is an independent body.
Getting that approval from the zoning hearing board is "critical," said Fogel, because those variances are needed to proceed with the design.
"If we don't get some of the variances, it would impact our design and potentially the viability of the project," said Fogel.
"If one or more of the variances are not granted, we would have to make changes to the design to comply with the underlying zoning ordinance and we would likely not be able to provide the design that the township has supported."
Variances are needed for two gas stations that will be part of the complex, including a gas station/convenience store on the northwest corner of Hamilton Boulevard and Krocks Road and gas pumps for Costco customers, between the Costco store and Route 222.
Assuming the zoning hearing board grants the variances, Fogel said detailed land development planning will be the next phase of the project. Those plans ultimately must be approved by township commissioners. But most of the review work will be done by the planning commission, which makes recommendations to commissioners. Because of the size and complexity of the project, Pandl expects that will involve several meetings.
"We will provide a very air-tight set of plans so the township's process to review them is easier," said Fogel,
Hamilton Crossings also will need a conditional use permit from Lower Macungie, said Pandl.
She predicted the township's final approval of the project should take no more than a year. The developers hope to begin construction in 2013 and open Hamilton Crossings by late 2014 or early 2015.
The project also will need approval from the Pennsylvania Department of Transportation and the state Department of Environmental Resources. Pandl said the township can give its final approval subject to PennDOT and DEP approvals if the township's review of the project finishes first.
Total property taxes collected on the property will increase from $10,000 a year to as much as $1.4 million a year if Hamilton Crossings is built. But the county, township and school district will give up a portion of that increased tax revenue for up to 20 years if they agree Hamilton Crossings is worthy of tax increment financing-- TIF.
If they do not agree, said Fogel, they will receive no additional tax revenue because the property probably never will be developed.
TIF is used for projects that have fairly widespread community support but significant financing gaps, according to John Kingsley of the Lehigh County Industrial Development Authority, which would administer the proposed Hamilton Crossings TIF district.
In addition to mine wash remediation, the Hamilton Crossings development team plans to use TIF funds for infrastructure improvements that will benefit the public, such as upgrading storm water systems to reduce flooding in the area and upgrading roads so Hamilton Crossings does not create traffic problems.
Fogel said those traffic improvements will include a "collector/distributor road-- a major through lane that we'll be building along the bypass." He said other significant improvements will be made to Krocks Road and Hamilton Boulevard.
Stormwater controls will include adding a basin on the 10 acres north of Route 222, where a water-filled quarry is the only visible remains of the iron mining operations.
Fogel said any developer will find it impossible to build on the property without re mediating the mine wash and making the other major infrastructure improvements.
To qualify for financing under the state's TIF program, projects must pass a "but for" test, explained Fogel: "But for this financing the project cannot move forward."
He said "extraordinary" infrastructure and mine wash remediation costs will total $18 million. Other funding sources are being pursued to pay some of those costs. He declined to say how much of that $18 million the development team hopes to get through TIF or how much it would like to get from each of the three taxing bodies.
The township, school board and county have appointed members to an exploratory committee that eventually will make a recommendation to each taxing body.
Each of those three taxing bodies then will decide if it wants to participate in TIF and, if so, what percent of the property tax revenue it would get from the shopping center should be diverted for up to 20 years to help pay for the project.
The taxing bodies will not have to contribute the same percentages. And it's not an all-or-nothing deal. Two could decide to participate, for example, and one could decide not to participate.
TIF will be "an economic generator" for the township, school district and county, argued Fogel because, even if they do allocate a portion of Hamilton Crossings' property tax revenue to TIF, they still will be getting much more property tax revenue from the property than they do now.
After TIF loans used for those project improvements are repaid, the three taxing bodies will collect the full amount of increased property taxes from Hamilton Crossings.
Allentown, PA 18102