Bethlehem is set to expand a tax incentive program aimed at developing run-down properties on the south side of the city.
City Council last week unanimously granted the first of two approvals needed to extend the Local Economic Revitalization Tax Abatement, or LERTA, which is set to expire Dec. 31, 2022.
First established in 1991, this LERTA zone encompasses approximately 1,629 acres, including the former land of Bethlehem Steel Corp. which enjoyed a renaissance as LVIP VII and Majestic Bethlehem Center industrial parks; Casino Wind Creek Bethlehem with concert hall, hotel and shopping center; and the SteelStacks performing arts center with studio PBS39.
Bethlehem has an additional LERTA zone north of the Lehigh River that extends through 2023 and a LERTA aimed at encouraging the creation of affordable housing created last year through 2026.
LERTA reduces 100% of taxes on the new assessment of a property that results from the development of the property for one year, with the new tax revenue being phased in at 10% per year until the property and all its improvements are fully taxed after a decade.
The proposal before council, awaiting final approval on August 2, would create a LERTA Southside II district – extending LERTA incentives to around 250 acres, or 15% of the current 1,629 acres. If the city council gives its approval, the proposal would be forwarded to the Bethlehem Area School Board and then to Northampton County Council for further approval.
That’s a tight deadline to avoid a program hiatus once Southside’s current LERTA expires at the end of the year, said Alicia Miller Karner, Bethlehem’s deputy director of economic development.
One of the issues facing city officials is how much to charge developers of residential properties within LERTA if they choose not to offer affordable housing. The LERTA order before council would require developers of 10 or more homes to set aside 10% of homes as affordable housing, meaning tenants pay 30% of their income for rent and utilities. As an alternative, the ordinance proposes to charge housing developers a one-time fee of $26,350 for each home to be designated as affordable housing.
Councilor Grace Crampsie Smith before last Tuesday night’s initial vote meeting shared calculations based on average rents in Lehigh Valley to show that fees in lieu of affordable housing should be about double that figure. She said she plans to introduce changes to the fees beyond the current proposal from Mayor J. William Reynolds’ administration.
Karner said the fees are proposed at a level to impact affordable housing in the city, but moderate enough for investors to pay, noting the money can leverage additional funds.
Only 17 of the 250 acres of Southside’s new LERTA are available for residential use, Councilor Kiera Wilhelm sought to clarify.
Councilwoman Hillary Kwiatek also said she plans to introduce additional amendments related to the consequences of failing to meet LERTA program requirements.
More information about LERTA is available in City Council papers from its July 5 meeting, when it held a public hearing on the proposal, at bethlehem-pa.gov.
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Kurt Bresswein can be reached at [email protected].