Bethlehem has been chosen as one of two cities to get a coveted tax incentive zone that will help the city advance $350 million worth of economic development projects, including the reuse of the massive No. 2 Machine Shop and Martin Tower.
Gov. Tom Corbett on Monday announced that Bethlehem was chosen by the state to get a 130-acre City Revitalization and Improvement Zone that is based on a similar tax incentive zone being used to rejuvenate Allentown.
Lancaster won the second CRIZ. The two cities beat out Chester, Altoona, York, Lancaster, Erie, Wilkes-Barre and Reading.
“This is like a late Merry Crizzmas present for the Christmas City,” outgoing mayor John Callahan said. “This will foster $350- to 400-million in new development in the city. This is a game-changer.”
The projects proposed would yield 4,120 permanent jobs and 3,140 construction jobs, according to the application that the Bethlehem Revitalization and Improvement Authority submitted to the state for the CRIZ designation.
The projects range from mixed-use developments, like the one at the vacant 21-story Martin Tower, to retail destinations like the Bass Pro Shops pitched for No. 2 Machine Shop at the former Bethlehem Steel plant.
The CRIZ is similar to, but not as generous as Allentown’s Neighborhood Improvement Zone, which allows developers to redirect tenants’ state and local taxes, including employees’ withholding taxes, to finance construction and redevelopment.
Both zones can cover up to 130 acres, but where Allentown’s NIZ allows developers to keep all their tenants’ state and city taxes and use them to cover construction costs, the new legislation limits that benefit to companies that are lured into the CRIZ from outside the state.
If a developer brings a Pennsylvania company into a CRIZ, it can only use the additional taxes the business generates after the move above what it was paying the state at its old location.
The legislation includes other safeguards designed to prevent the new zones from cutting into state revenues, tightens auditing and planning procedures and requires private developers to put in $1 for every $5 they get in redirected tax dollars.
In its first year-and-a-half, Allentown’s Neighborhood Improvement Zone produced half a billion dollars’ worth of proposed development, including the city’s $177 million arena, and more than $300 million for several office buildings, an apartment complex and a hotel.
The projects proposed in the Bethlehem application include:
- A $175 million redevelopment of Martin Tower, the former world headquarters of Bethlehem Steel that has been vacant since 2007. Asbestos abatement, sprinkler installation and its odd cruciform shape design have made it difficult for development. The tower, owned by developers Lewis Ronca and Norton Herrick, sits on 53 acres off Route 378, making it attractive should those challenges be met.
- No. 2 Machine Shop, the storied 1890 building where naval ammunition was once made, would be part of a larger retail development next to Sands Casino Resort Bethlehem anchored by Bass Pro Shops, a destination sporting goods store, and a hospitality facility, such as a second hotel. The second phase would include more retail businesses and residences.
- Parts of Lehigh Valley Industrial Park VII, a 1,000-acre business park off Route 412 in the former Steel plant, would accommodate pharmaceutical firms, technology companies, food processors or light manufacturing.
- A portion of Majestic Bethlehem, a 500-acre business park in the most remote parts of the old Steel plant, would target a data storage facility.
- On an empty lot where Third Street Chicken and Ribs once stood, developer Dennis Benner is proposing a $12 million office and retail building at Third and New streets and a $33 million apartment high-rise with ground level retail on West Fourth Street. There would also be an $11 million parking garage in partnership with the city’s parking authority.
- In the 500 block of East Third Street, BethWorks Renovations LLC proposes a four-story building that would bring new retail on the first floor, office space on the second and residential to the third and fourth floors.
- A small property at the south end of the Hill-to-Hill Bridge would include a building for professional and commercial uses.
- Another urban in-fill project would be included on the North Side on Long Street and the city’s oldest parking deck, the Walnut Street garage. The Walnut Street garage would be expanded and the city would solicit proposals for developers for a mixed-use development for the Long Street lot.
- Northside Plaza, proposed by Benner, would be a mixed-use office project on Eighth Avenue not far from Martin Tower. The first floor would include retail and medical offices, with services on the upper floors.