East Penn School District will become the first of three local government bodies to vote on approving tax increment financing for the proposed Hamilton Crossings shopping center in Lower Macungie Township.

The school board is expected to vote on the TIF plan when it meets Monday night.

Lehigh County commissioners had a first reading Wednesday night on a proposed TIF ordinance, but will not vote on it until its next meeting on May 22.

If both East Penn and the county commissioners approve the TIF plan, Lower Macungie commissioners will vote on June 6.

While only a couple of Lehigh County commissioners seem openly opposed to the plan, how the nine county commissioners vote will make or break the deal.

The outcome of that vote is far less certain than votes for approval expected by the school board and township.

All three local governing bodies must approve the TIF. Without that approval, Hamilton Crossings developers maintain, the upscale shopping center won’t be built. And they stress if the land is not developed, the three governing bodies will continue to derive much less tax revenue from it.

If the three local governments agree, for up to 20 years they will give up 50 percent of increased property tax revenue coming from the $140-million shopping center – which will include a Costco and a Target.

The money they give up will be used to pay debt on infrastructure improvements intended to benefit the public around the shopping center. That includes $11 million in road improvements, $4 million in storm water improvements and $1 million in utility upgrades. The three governing bodies’ TIF contributions to help cover those costs will total no more than $7 million.

Hamilton Crossings developer Tim Harrison told commissioners about 76 percent of those improvements are designed to address “problems that will be there whether we develop or not.”

Last year, the 63-acre property along Krocks Road between Route 222 and Hamilton Boulevard generated a total of about $7,000 in property tax for the county and school district. Lower Macungie does not have a property tax.

It is projected the school district will gain about $590,872 a year in new tax revenue from Hamilton Crossings for the first 20 years and $1,289,084 beginning in the 21st year. The county will gain about $132,305 a year annually and $294,120 beginning in the 21st year.

Despite that, county commissioner Scott Ott called the TIF plan “a loan that never gets paid back. Why not pay the taxpayers back?”

Ott also said county commissioners are “law makers, not deal makers” and suggested it looks like they are making a deal with just one developer.

Harrison explained the state’s TIF law requires there has to be an economically feasible project, “not a hypothetical project.”

Atty. John Lushis, solicitor of the Lehigh County Industrial Development Authority that developed the TIF plan, also explained such plans must follow the state’s TIF law, which requires that a TIF district can be created only on land owned by a developer.

Ott maintained the school district and county are helping to accomplish something Lower Macungie wants to see done but might have trouble doing alone because it doesn’t have any real estate tax.

Township manager Bruce Fosselman responded by saying the township has budgeted $250,000 this year for traffic improvements to coincide with Hamilton Crossings.

“I think it’s a great project – I like it,” said Commissioner Michael Schware. “My wife likes it more than I do. She can’t wait to go to Costco.”

But Schware said he also has a problem giving “favorable treatment” to one development – as well as a problem with the county giving up real estate taxes from the shopping center.

“I don’t think we should be at the same percentage as the school district or the township,” said Schware. “Personally, I think our percentage should be zero. I don’t think we should be giving up one dollar of tax revenue for this project.”

Ken Bacher, who serves on East Penn School Board, urged commissioners to support the TIF plan, saying it will help the school district keep its property tax rate down.

Ott asked how East Penn taxpayers will know extra money coming to East Penn will be used to keep taxes down. Bacher said East Penn’s superintendent has announced taxes will not go up in the 2013-14 school year, partly because of Hamilton Crossings. Beyond that, said Bacher, school taxes “will go up less than they would if we did not have this money coming in.”

Bacher, who served on the TIF advisory committee, objected to any suggestion the TIF plan was created in some backroom deal. “I put a lot of hours into this, I took this very seriously.”

Commissioner Vic Mazziotti, who also served on that TIF committee, commended Bacher for asking tough and insightful questions as the plan was developed. “I appreciate his hard work and his dedication.”