EASTON, Pa. — A plan to allow tax relief to the developers of the long-vacant Dixie Cup plant found support during a hearing by Northampton County Council on Thursday night.
Despite that, tensions were high as council fielded commentary from Wilson Borough and Palmer Township government officials, Wilson Area School District administrators — and even a county commissioner who walked out in the midst of the meeting.
Council held the public hearing on so-called Tax Increment Financing — a financing mechanism that phases in property taxes and allows builders to pump money that would have gone to taxes back into the project to spur redevelopment.
Under the TIF, increased property tax revenue generated by construction improvements can be used to pay off developers' loans.
Wilson Borough, the school district and the county all have to sign off on the TIF, which amounts to about $26 million. Northampton County is the only entity yet to approve the arrangement.
County Council will vote to consider the TIF at its Nov. 6 meeting.
Attorney Jonathan Cox, representing developer Skyline Development Group, explained the need for the TIF in order to make the $185 million project a reality.
Developers want to transform the old factory — mostly vacant for decades — into a 405-unit apartment building.
“The net proceeds to be used for the project are a little shy of $20 million. They're going to be two series of bonds," Cox said. "The Series A bonds would be roughly $5 million; they will be secured only by the TIF revenues. The Series B bonds, roughly $15 million, will be also secured by the TIF revenues, which are the incremental real estate taxes generated once the project is completed.”
A few concerns
Wilson Borough resident Armando Moritz-Chapelliquen urged county council to re-evaluate the terms of the affordable housing buyout – which allows the developer to pay a fee per unit on 10% of their units in lieu of pricing them at what is considered fair-market rate.
That money is then used to fund affordable housing initiatives in the county.
"If the goal of policy is to make good things happen, then I strongly encourage you to consider this amendment, make a motion and secure the passage of this TIF to reinvigorate my neighborhood.”Armando Moritz-Chapelliquen, resident
Moritz- Chapelliquen said the rate used for the Dixie Cup project came out to around $1 million, with about 40 units bought out of the deal at $27,000 apiece, adding that figure should be much higher.
“I empathize with my neighbors who wish to see this project done, and I empathize with the neighbors who think we are getting a bad deal," Moritz- Chapelliquen said. "If the goal of policy is to make good things happen, then I strongly encourage you to consider this amendment, make a motion and secure the passage of this TIF to reinvigorate my neighborhood.”
One individual who spoke at the meeting later argued against the TIF, saying the tax abatement was unfair for homeowners in the area who never received such a benefit.
A slew of support
Palmer Township Director of Community and Economic Development Kent Baird said his township “is curious as ever to see the redevelopment of this site and the economic development benefits that it might bring to our community.”
Northampton County Director of Community and Economic Development Tina Smith read a letter in support of the TIF from Easton Mayor Sal Panto Jr.
“While this property is not located in the city I represent, I recognize its critical importance to the greater Easton area, and I know that the positive economic impact it will have will extend to all areas of my city,” Smith read.
“The fact is, the renaissance of our region is in full swing, and we know that the residents and visitors to this new development will be visitors to our downtown, consumers of Easton goods and services, patrons of our restaurants, and participants in our events and festivals.”
Wilson Borough Council President John Burke IV spoke on the broad support for the project and, in turn, the TIF to make it happen, making a point that the property has sat in its current state for over four decades.
“I was born June 1983. Dixie closed June 1983. So I've never seen anything in that building besides what it is today and the fact that we're here, I couldn't be happier,” Burke said.
“And I just kind of hope that council can see that this will be a huge boost for not only just for the borough, but for the entire county.”
The landmark building at 12 S. 24th Street, with a Dixie Cup on its roof, is visible from Route 22 near the 25th Street exit.
Richard Groff, who founded Groff Real Estate Investments, said Northampton County is only an 11% stakeholder in the TIF question.
“The impact is greater to the two [entities] who really want you to approve it,” he said.
Wilson Area School District Superintendent Harrison Bailey III said the district sees the project and the TIF as more than a question of taxes, but opportunities for the community.
“I look at this as an opportunity for the children, specifically, in this case, the high school students of this community, to not just work in this facility, but to have opportunities to have experiences in this … career-ready experiences within this place,” Bailey said, adding students could visit the facility and learn from developers as the project commences.
“So there's a much bigger objective for me as the superintendent than tax base. So for anyone who assumes that that's the only reason that we want this to happen, they're sadly mistaken.”
'We're getting hosed'
Skyline Investment Group Managing Partner Brian Bartee took to the podium, urging approval of the TIF.
“The taxpayers aren't losing any money. The base tax stays intact," he said. "So we when we're having these conversations, we have to, because the way it's coming out is that the taxing bodies are losing all their revenue, and that's not the truth.
“So we can disagree about the TIF, that's fine. But let's just make it to where the taxpayers need to know they're not paying any additional funds and there was no burden on them.”
“So we can disagree about the TIF, that's fine. But let's just make it to where the taxpayers need to know they're not paying any additional funds and there was no burden on them.”Brian Bartee, Skyline Investment Group
When Councilman John Goffredo asked Bartee if he would be open to a stipulation in the TIF that would ensure he would maintain control of the property until the 20-year period ends, Bartee seemed open to discussion on the matter, but not firm on such a timeline. (Later he said he would be fine with 10 to 12 years).
Discussion devolved in the ensuing talks with council and Bartee, with Goffredo characterizing the funds the developer would give to low-income housing as “a payoff” to secure the TIF, and raising concerns that granting TIFs and LERTAs amounts to choosing winning businesses unfairly.
“I just have to I wish you all the best luck in the world. I hope it passes for you. I think we're getting hosed in the county,” Goffredo said before leaving the hearing.
Wilson Mayor Donald Barrett Jr. spoke about his goal of getting the Dixie facility revamped during his time in office, explaining to council that his district needed the building “to work for us” in order to keep the borough going.
Barrett also pointed out that base tax on the property would still be paid.
“Even though we're splitting hairs over money that's going into this building, [Bartee’s] still going to be paying taxes. He's just not paying the increments," Barrett said.
"The people who are living in those buildings are going to be paying taxes. So their tax revenue is coming. They're just not paying the incremental. He said he was going to sign a contract. So I seriously was hoping that we could get this done.”
