With a $10 million loan repaid in full by the owner of a massive business park on former Bethlehem Steel land, state officials made the case for the importance of investing in vacant brownfield sites to build economic development opportunities.
On Tuesday afternoon, state and local officials joined economic development professionals to celebrate the success of Lehigh Valley Industrial Park VII in Bethlehem at the headquarters of the park’s owner, Lehigh Valley Industrial Park Inc.
While it may be hard to believe the property sat unused a decade ago, it now houses more than 20 businesses and employs thousands of employees, with companies that include Spillman Farmer Architects, Curtiss-Wright, Wal-Mart, Crayola and Primark occupying warehouses, manufacturing facilities, office spaces and distribution centers on hundreds of acres of land.
The mix of tenants is becoming even more diverse, with a hotel opening later this year and a dialysis treatment center that recently opened.
The state’s Department of Community & Economic Development issued a $10 million loan and $5 million grant in 2006 to jump-start the project, which included expansive construction of water, sewer and stormwater systems, along with roads, utilities and sidewalks, to activate the park. With extensive environmental remediation required, the project took several years before tenants started moving into the industrial park.
Today, the park is 70 percent built out and represents a $375 million private investment, said Kerry Wrobel, president of LVIP. Besides the $5 million from the state, Northampton County also financially supported the project.
“It’s a challenge for small companies, but that’s where our niche is,” he said.
As an example, Vastex, the industrial park’s newest investor, occupies a new building that opened last year at 7 Emery St. in the park. The company is a small manufacturer that makes the equipment that produces screen-printed products and has about 35 employees, Wrobel said. Meanwhile, Alpla Inc., a global manufacturer of packaging products, will open its first facility in the region in July. J.G. Petrucci Co. Inc. of Hanover Township, Northampton County, is the owner and builder of the site, one of many projects the company has built for LVIP. J.G. Petrucci also was general contractor for the Vastex site.
MODEL OF SUCCESS
The Business in Our Sites program funds speculative projects to create ready sites with grants and loans and supported LVIP VII’s redevelopment, said Scott Dunkelberger, deputy secretary for the state DCED.
The project is a poster child for the program’s success, he said.
Overall, Dunkelberger said he was not surprised that the project turned out to be a big success but noted the potential difficulty in the timing of the investment, which was the economic recession of 2008.
“LVIP has a great deal of experience in industrial real estate development, so I’m not surprised it’s successful,” Dunkelberger said. “To be able to do it in the throes of the worst recession we had speaks volumes.”
FIRST FOR THE PROGRAM
The private and public leadership in Pennsylvania’s economy is uncommonly great, he added.
Dennis Davin, secretary of the state DCED, said the LVIP VII project was the state’s first one funded by the Business in Our Sites program.
“Without a program like this, these things just don’t happen,” Davin said. “There are many more brownfields around Pennsylvania, and we need more funding. These are the types of things the governor wants to invest in.”
In 2003, LVIP knew it needed dollars to invest in the project, Wrobel said. He described it as an amazing opportunity at the time for a small nonprofit such as LVIP to take over a large amount of land.
“The Business in Our Sites program gave us the confidence to move forward,” Wrobel said. “It gave us the patience to say, ‘no.’ ”
He noted how some companies initially wanted to establish truck terminals or places to store equipment at the park, but he wanted to create a place for excellent manufacturers and large industrial properties. The program also allowed LVIP to provide competitive pricing for tenants, he added.
Alicia Miller Karner, director of the Bethlehem’s Community & Economic Development, spoke about how the city’s government officials at the time had the forethought to diversify the economy long before it became popular.
The Local Economic Revitalization Tax Assistance program long has long been a part of LVIP VII, she said. The LERTA takes real estate taxes and abates them at a pro-rated amount the next 10 years.
Last year, the state recapitalized the Business in Our Sites program, Davin said. The state put $75 million into the program from underused state programs into the fund.
“We are going to go back to the legislature for additional funding,” Davin said. “Business in Our Sites is such a critical program; we need to prepare sites for development.”