ALLENTOWN, Pa. - The huge old factory lies silent, dark and empty along Little Lehigh Creek at the bottom of the S. 10th Street hill in Allentown.
An effort is being made to bring the 15-acre industrial site back to life, by putting it into a state Keystone Opportunity Zone – KOZ.
Owners of properties in state-approved KOZs are exempt from paying taxes for 10 years, giving them a big financial incentive to redevelop those properties.
The goal is to have a new company or companies operating on a rehabilitated site, producing jobs and, eventually, generating much more tax revenue – not only for Lehigh County, but the city and Allentown School District as well.
Whether that KOZ is approved for the 600 S. 10th St. site will be determined by Lehigh County's nine commissioners at their Sept. 26 meeting. Based on the discussion Wednesday night, it may be a close vote.
Scott Unger, executive director of the Allentown Economic Development Corporation, told commissioners KOZ "gives us the best opportunity to put this property back into productive use for the benefit of the county and the city."
Unger said the existing factory probably will have to be torn down and replaced with one or more new structures. He said that property is zoned heavy industrial.
"This is a chance to take a non-productive site and get jobs there," said Commissioner Percy Dougherty. "Fifteen acres can support a lot of jobs in the future."
Dougherty noted a rail line serving the site adds to its potential value but said the old industrial facility is dilapidated and "virtually unmarketable. Without a KOZ, the possibilities here are dismal."
However, Commissioner Vic Mazziotti said several offers have been made to purchase the property in the last several months. "I wouldn't say it's unmarketable if they're receiving offers," said Mazziotti, adding that getting offers in this economic climate proves it has value.
Unger didn't mention figures, but said the seller will take a significant loss on any sale, adding: "Even at basically a fire sale amount, he's having a hard time closing a deal."
Dougherty said several potential buyers who looked at the site turned away because of unspecified environmental problems that will have to be addressed as part of its redevelopment.
The property is owned by a New York City company called 600 South Tenth Street Holding Company.
"We don't know the property owner," said Commissioner Michael Schware. "He's not here asking us to do this. We don't know the potential buyer and what they are going to do with the property. We don't have all the information we should have to make a decision on this property. We need to have more facts before we do something like this."
The county faces an Oct. 1 deadline to apply to the state Department of Community and Economic Development to put the property into a KOZ. "If this was a priority, it should not be brought to us at the last minute," said Schware.
But Dougherty said if commissioners don't take advantage of the window of opportunity before them, "that window is going to be slammed shut."
Commissioner Scott Ott said the property's owners are "delinquent in their tax obligations." He said either they will sell it or it will be sold at sheriff's sale if they don't pay back taxes. Said Ott: "I'm inclined to say let's let commerce take its course."
Schware said many people have lost their homes and businesses in the last few years because they could not pay property taxes, but the county is considering giving owners of the South 10th Street property a KOZ designation that will increase its value.
"That's a slap in the face to everyone who pays their taxes," said Schware. "It's a slap in the face to everyone who lost their homes or business properties for not paying their taxes."
Said Dougherty: "If we're worried about giving the owners of that property an advantage, I am willing to do that, so they sell it."
If the property is put into the KOZ, Schware is concerned the current owners will pay back taxes, bring the building back up to code and then just mothball the site and "enjoy a 10-year tax holiday until the market improves."
Said Schware: "I don't see the benefit of taking this property off the tax rolls. One way or another we're going to get the taxes on this property, whether it's at a sheriff sale or through a new owner who buys it."
Schware said other industrial sites in Allentown are being marketed without a KOZ designation. "Why are we making this property more valuable?"
Commissioner Daniel McCarthy said putting the property into a KOZ means it eventually will come back on the tax rolls with a more productive use "than it presently is enjoying, which is absolutely nothing. It's a vacant building, nobody's there, nobody's doing anything."
McCarthy said the KOZ program was authorized by the state Legislature and in operation for 10-12 years. McCarthy said PPL's new office building at Ninth and Hamilton streets was the result of a KOZ incentive, as was the Brewworks brew pub and Bridgeworks by the Creek on South 10th Street. He said Olympus Camera's headquarters in Center Valley also is in a KOZ. Dougherty stressed the KOZ successes in center-city Allentown and at Olympus.
But Schware said being in a KOZ does not necessarily mean a property will be improved. He said another property adjacent to 600 S. 10th already is in a KOZ but has not been improved. "The KOZ doesn't always work."
Allentown, PA 18102