Bethlehem says incentive could aid $350 million in new private development

By - Last modified: November 1, 2013 at 10:34 AM

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Bethlehem Mayor John Callahan announces the formation of the Bethlehem City Reinvestment and Improvement Zone Authority.
Bethlehem Mayor John Callahan announces the formation of the Bethlehem City Reinvestment and Improvement Zone Authority. - (Photo By Brian Pedersen)

Not to be outdone by Downtown Allentown's recent revitalization, the City of Bethlehem is moving forward on establishing a funding zone that could result in about $350 million in new development in the city in the next three years.

At a press conference Thursday afternoon at City Hall, officials announced the formation of the Bethlehem City Reinvestment and Improvement Zone Authority, a group that would create an application to submit to the state for approval of the zone. The application is due by the end of November, and there is expected to be competition for the CRIZ.

"Essentially, [the CRIZ] is an incentive that rewards entrepreneurs who are here to grow companies," said Mayor John Callahan. "The incentive is limited to 130 acres in the city. We still have over 1,000 acres of Bethlehem Steel land remaining."

A CRIZ allows designated state and local taxes generated by businesses in the zone to be used to finance construction and development of a variety of buildings, including commercial, sports, exhibition, hospitality, retail and recreation projects.

The five-member authority consists of these Bethlehem residents: Jim Broughal, solicitor for Hanover and Bethlehem Township, Northampton County; John Filipos, a shareholder in the accounting firm Buckno Lisicky & Co.; Joseph Kelly, director of the Department of Community and Economic Development for the City of Bethlehem; Gretchen Longenbach, director of Community and Economic Development for the City of Easton; and Ann McHale, professional insurance agent and manager of T.J. McHale & Co. Inc., an independent insurance agency.

The city is looking to perform adaptive reuse of the Bethlehem Steel buildings, which could be part of the CRIZ, Callahan said.

The authority will define the zone and determine what sites can be included. The city is looking for "shovel ready sites," Callahan said, and could include Martin Tower, which could be a $250 million project on Eighth Avenue, and a proposed convention center in South Side Bethlehem.

State Sen. Lisa Boscola, who lobbied for Bethlehem to be included in the CRIZ legislation, said if a convention center is built in Bethlehem, it would be built with private dollars. Public projects are allowed in the CRIZ, such as infrastructure projects, but the majority would be private investments.

Many developers already have come forward with the goal of having their projects become part of the CRIZ, Callahan said. The zone can include land in different parts of the city.

As part of the 2013-2014 budget process, Pennsylvania allowed two cities with at least 30,000 residents to establish these zones. Bethlehem's population is 75,000.

While the legislation was introduced a year ago, this is just the start of the journey, Boscola said.

"We're far from the finish line," she said.

When she saw the success of Downtown Allentown, she said, she knew she had to get Bethlehem involved. Now, the city has to put forward its best possible application, she added. There are seven other cities vying for one of the two CRIZ designations.

"That's what we're aiming for, a rock-solid application that can't be denied by the administration," Boscola said.

The governor's office published the guidelines for the CRIZ program Oct. 30, which means applications will be accepted between Nov. 1-30, giving Bethlehem a month to finalize and submit an application.

Callahan said the authority will meet shortly and submit an application in the next few weeks.

"The new authority will have a tremendous amount of work to do in a little less than a month," he said.

The legislation permits up to two CRIZ designations and one pilot zone approval before 2016, then up to two CRIZ designations each year beginning in 2016. The applications will be reviewed by the state Department of Community and Economic Development, the state Department of Revenue and the Governor's Office of the Budget.

"This is a powerful economic development tool that can transform a downtown," said state Rep. Steve Samuelson.

The CRIZ term is 30 years, and the benefits would go on for decades, Samuelson said.

"Bethlehem has been proactive; we've taken a lot of steps already and we stand a good chance of being accepted," Samuelson said.

The city will find out if the application was approved after 90 days from the date of submission, Callahan said. Only two third-class cities will earn the initial designation.

"If we are not successful this time, the next available opportunity for application is 2016, so time is of the essence," he said.

Brian Pedersen

Brian Pedersen

Reporter Brian Pedersen covers construction, development, warehousing and real estate and keeps you up to date on the changing landscape of our community. He can be reached at brianp@lvb.com or 610-807-9619, ext. 108. Follow him on Twitter @BrianLehigh and read his blog, “Can You Dig It,” at http://www.lvb.com/section/can-you-dig-it.

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