A tax increment financing plan for the proposed Hamilton Crossings shopping center in Lower Macungie Township was approved late Tuesday afternoon by the Lehigh County Industrial Development Authority.

The TIF financing plan still must be approved by Lehigh County, East Penn School District and Lower Macungie – an approval process that will begin with Lehigh County commissioners getting their first look at the plan later this month.

All three local government entities must opt into the plan for it to be financially successful. The project won’t go forward if there isn’t approval by all three, said Atty. John Lushis, the authority’s solicitor.

The authority’s board voted to allow 50 percent of the increased property taxes that will be generated by the shopping center to be used to help pay the cost of infrastructure improvements – upgrading roads, storm water facilities and utilities -- for up to 20 years.

That means the school district and the county will give up half of the property taxes coming from the shopping center for up to two decades.

Lower Macungie currently does not collect property taxes from its residents and businesses. If the township does implement a property tax during the 20-year lifetime of the TIF, it also will collect only 50 percent of property taxes from Hamilton Crossings.

The developers maintain they won’t be able to build the shopping center without tax increment financing.

“We look at this as an income generator,” said Cindy Feinberg, authority chairwoman. “Without this development, we don’t have any new taxes coming in.”
Over the 20-year life of the TIF, East Penn will get $11,244,000, said Lushis, and the county will get $2,646,000.

“We are pleased that the LCIDA board supports the TIF plan and look forward to moving to the public meetings to discuss the plan with the governing authorities,” said Jeremy Fogel, spokesman for the developers. “The project is moving forward positively and we get more and more excited as we get closer to bringing it to fruition.”

The $140 million Hamilton Crossings project will include a Costco and Target –its two anchor stores – plus an unidentified “major high-end food store” and other “local, regional and national retailers and restaurants” in a total of 590,000 square feet of commercial space.

The shopping center will be built 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.

Construction is projected to begin by September, with an anticipated opening date in autumn 2014.

It is expected to create 495 new construction jobs and 920 new permanent jobs.

TIF money only for public improvements

The authority rejected using TIF money to remediate hundreds of thousands of tons of non-toxic waste material, called mine wash, on the site, because it wants that money used only for public improvements.

Feinberg said that has been the authority’s position on the last three TIF projects it has worked on -- to help with public infrastructure improvements that can’t get funded in other ways.

Said Fogel of the developers: “We made it clear that we intend to use any TIF proceeds on infrastructure improvements only, but asked to have the flexibility to apply funds to mine wash only if necessary. Obviously we will not have that flexibility, but the infrastructure costs are so significant that it should not be an issue for the project.”

Transportation improvements, including widening the Route 222 bypass and Krocks Road and upgrades to Hamilton Boulevard, will total about $11 million, according to Jason Brockman, senior managing consultant at PFM, the authority’s consultant for the project. He said storm water improvements will total more than $4 million and utility upgrades will total nearly $1 million.

Without TIF money helping to defray those “extraordinary costs,” commercial development of the site “cannot and will not occur,” said Brockman, who reviewed the project plan before the authority board’s vote.

“Basically, the developer has asked the TIF committee for $7 million toward the project to help cover these public improvements,” said Brockman. He said the committee agreed to a 50/50 split up to $7 million, with the developers paying all costs beyond that.

The authority board decided against including TIF funds for mine wash remediation at its March 26 meeting reported Lushis. Developers have said they cannot build over mine wash deposits, which are described as having the consistency of pancake batter, on the property. Those deposits were created by iron ore mining that began in the 19th century on the site.

The developers did not attend the authority’s meeting, which began at 4 p.m. Tuesday in the offices of the Lehigh Valley Economic Development Corporation in Bethlehem.

The TIF committee also was not at the meeting. That committee, which includes two representatives of each of the three local taxing bodies, met regularly for several months to help the authority develop the plan.

Approval process

The 20-plus-page TIF plan, as well as the resolution approving it, are not yet being made public, but will be by the time they are presented to county commissioners, when they meet in public as a committee on April 24, before their regular meeting at 7:30 p.m.