City officials have determined what Milosev proposes is the highest and best use for that property, said Collins.

Even if Adelaide gets a KOZ, the project’s plans must be approved by the city before it can be developed. The developers also will have to request rezoning. Officials said it currently is zoned for light industrial uses.

Commissioner Percy Dougherty said he has great difficulty with an industrial building being transformed into a residential building, especially if it will mean more children bringing more financial stress to the school district. “Not that I’m against kids,” he added.

Milosev said more than half the apartments will have only one bedroom. Collins argued that even with two-bedroom units in the complex, Adelaide Mills will not be a natural draw for families with school-age children.

Dougherty said he supports KOZs that will spur job-creating industrial activity.

But Commissioner Daniel McCarthy said the 19th-century building is not suitable for 21st -century manufacturing.

Adelaide Mills was built in 1881, according to a date on a peak of the four-story brick building.

Weighing the KOZ

Collecting the current property tax plus 10 percent for the next 10 years is far less than the county and school district would collect in increased taxes if the property could be redeveloped without a KOZ in less than 10 years.

“We do lose the potential gain on the value of the property,” said Commissioner Michael Schware.

But Jones countered it’s a gain that will never happen without KOZ.

Said Dougherty: “Some people have expressed to me that, with everything that’s going on in downtown Allentown, this site probably will be developed anyway without the KOZ.”

Collins said Adelaide is much larger than any other former mills that have been redeveloped in the city and is deteriorating more every year. “We’ve had other developers look at this site and walk away because of the hurdles that need to be addressed,” he said.

KOZ is “an inducement, an incentive” to potential buyers interested in redeveloping a property, said McCarthy.

Collins said the PILOT agreements with the county and school district will remain in effect even if Milosev and Himmelrich would sell the property to another developer after it wins the state’s KOZ designation.

Pennsylvania’s KOZ program is designed to improve long-neglected properties, create jobs and ultimately increase tax revenues, improving the financial health of the community.

Michael Hefele, Allentown’s planning director, said a KOZ designation ultimately results in a significant increase in taxes to the city, county and school district.

Collins estimated taxes could increase by 850 percent after Adelaide Mills would be redeveloped.

A second proposed KOZ

The former Allentown Metal Works, a second proposed Allentown KOZ at 606 S. 10th St., already has been approved by the school board and city council. The county commissioners also will vote on its KOZ status at their Aug. 14 meeting.

That site includes a number of empty factory buildings on more than 17 acres just above Little Lehigh Creek.

That property has been owned by the Allentown Commercial & Industrial Development Authority since April, which means it currently is generating no taxes. Unlike Adelaide Mills, the property will be marketed for another industrial use rather than residential.

ACIDA’s intent is to sell the property to a developer and get it back on the tax rolls, said Scott Unger, its executive director. He told commissioners no purchaser has been identified yet.

Unger said it’s too early to know if it will be a multi-lot or single-lot industrial development. But he stressed it will be used for manufacturing or some other industry, which could generate up to 300 jobs for city residents.

Unger said 15 environmental conditions, most typical of an old industrial site, must be “characterized and remediated.” He told commissioners that includes more than 300 drums of various chemicals, most of them related to painting.