Latest post in a series about Wind Creek Casino

Dana Grubb is a lifelong resident of the City of Bethlehem who worked 27 years for the City of Bethlehem in the department of community and economic development, as sealer of weights and measures, housing rehabilitation finance specialist, grants administrator, acting director of community and economic development, and deputy director of community development.

Gadfly,

Having administered many economic development grants in my time with the City, I absolutely agree that performance measurements would be extremely important to determine whether there is actually a benefit to the expenditure of public dollars on economic development projects. Philosophically, I have always taken issue how over time public dollars have evolved from paying for public infrastructure in support of development to actually funding the development itself, which I believe banks should be doing.

Grant applications for state and federal funds generally require that public benefit be measured. How many jobs and what kinds of jobs (salaries?) will be created, how many construction jobs were created, what is the projected increase in taxes, is there any spin-off benefit to other local businesses, etc. are the kinds of projections that can make or break an application for funding assistance.

However, once the public dollars are spent, gathering data for monitoring benefit can be like pulling teeth from a crocodile. Cooperation by businesses isn’t stellar. I also used to wonder whether anybody, particularly elected officials, even cared if that data was gathered. After all, the positive press and political benefit of having delivered a grant is all about re-election and public image of “bringing home the bacon” for politicians. As the City’s grants administrator, my leverage to get data dropped drastically once the money was spent to help a business be constructed. Perhaps that has improved over time, but my cynical side tells me that this kind of business development assistance was more about politics than anything else. It’s kind of like your grocer collecting for a charitable cause at check-out and then touting that they contributed $1 million to some cause. They didn’t, you and I and many others did!. Public dollars belong to us and politicians like to act like Santa Claus with everyone else’s money!

So, Peter’s thought is sound, but I’m not so sure whether the cooperation and/or political will exist to pursue data driven results when public dollars go into business development. At least in days past when public infrastructure was built to support that development, the public had a tangible asset in place such as roads, traffic signals, public utilities, landscaping, and information technology infrastructure.

Dana

Latest post in a series about Wind Creek Casino

Gadfly:

I think you’re maybe confusing TIF and CRIZ.

The taxes that were captured under the TIF were used on public improvements throughout the TIF area. They were not returned to the casino in any fashion.

The end of the TIF is not a loss to Wind Creek, who pay their real estate taxes no matter if there is a TIF or not. When the TIF expires, those taxes will now go to the BASD, COB, and NC.

There was no direct benefit to the casino unless one considers public infrastructure that was built using TIF funding having a spin-off effect.

For example, completion of the Hoover Mason Trestle or SteelStacks using TIF created an attraction that might draw hotel business, restaurant business or gambling clientele to the casino complex.

The end of the TIF simply means that there will no longer be that public funding component to complete projects like those I mentioned earlier.

Dana Grubb

Thanks, Dana!

Latest post in a series about Wind Creek Casino

Dana Grubb is a lifelong resident of the City of Bethlehem who worked 27 years for the City of Bethlehem in the department of community and economic development, as sealer of weights and measures, housing rehabilitation finance specialist, grants administrator, acting director of community and economic development, and deputy director of community development.

“And the additional real estate taxes the new construction will generate will immediately help the city’s bottom line. In past years, county, city and school district tax revenue generated from improvements there went into a special taxing fund — the Tax Increment Financing — to pay for infrastructure improvements at the former Bethlehem Steel land. The TIF expires next year.”
                                                            Morning Call, December 4

Gadfly,

Along with then City Solicitor Joseph ‘Jay’ Leeson and Bethlehem Redevelopment Authority Executive Director John Rohal, I was the 3rd member of the City’s negotiating team to deal with Bethlehem Steel representatives to bring about Tax Increment Financing (TIF) at the site that comprised what was then known as Beth Works. It roughly encompassed the area from the Fahy Bridge to the property that is now Lehigh Heavy Forge just east of the casino. It was looked at to be a financing mechanism for providing public funding to support the construction of public infrastructure for new development on a portion of what at that time was the largest brownfield site in the United States.

What is TIF? It is the set aside of real estate taxes collected on new development within a defined area. The taxes being collected on the unimproved property continue to be paid to the taxing entities, in this case the Bethlehem Area School District, City of Bethlehem, and County of Northampton. Once development takes place the property is reassessed to include those improvements. So, if an acre building site is assessed before any improvements at $500,000 and reassessed after improvements at $2.5 million, the real estate taxes on the $2 million increase would be diverted into a TIF account and not be paid to the taxing entities.

Public meetings were held, and all three taxing entities bought into the idea of diverting tax proceeds into a fund reserved for making public improvements to support new for-profit development.

As those funds accumulate they can then be used to pay off bonds that are floated to fund public improvements such as streets, public utilities, parking lots/garages, etc. The TIF in Bethlehem was structured for a 20-year term, which if my memory serves me was the term limit in 1999 when we negotiated this deal with Bethlehem Steel. The aforementioned public improvements were the kinds of public improvements envisioned back then to be built and funded with TIF. Of course, Bethlehem Steel went bankrupt and development concepts evolved, so different kinds of “public improvements” were made.

The singular project that made TIF viable was the casino development and the roughly $4 million in annual real estate tax increases that were then going into the TIF account. This allowed the Redevelopment Authority to float bonds for a variety of initiatives that include the Hoover Mason Trestle, Stock House, parking lots, public areas of SteelStacks, and the South Bethlehem Greenway. TIF money also went into other questionable uses as well, such as the private 510 Flats project ($800,000) across from the NCC Fowler Center and funding the South Side Ambassadors Program, and reimbursing ArtsQuest for staff time to unlock/lock the Hoover Mason Trestle access gates.

As with many government initiatives good intentions can often lead to unintended consequences, and TIF ended up being used in ways that some would question, including me as an original negotiator. Politics and the desire to feed at the public trough tended to trump intentions.

Although I’ve been informed that it is possible to extend the TIF term so that additional improvements could be made, I do not believe that the political will exists with any of the three taxing entities to do that. Increasing needs in individual budgets do not make it attractive to forgo tax revenue beyond the original 20-year term.

I hope this makes it more understandable.

Dana

So Professor Dana or others: let me see if I understand. Let’s see if I can put this in my own words.

Under the TIF, the property owner (the Sands) paid taxes as usual on their now developed and more valuable property, but the amount of the tax increase solely attributed to development went not to the taxing agencies but into a fund solely directed at improving their property. The taxing agencies’ revenues from the property stayed the same (in that sense, they didn’t “lose” money), but they agreed to take a hit on increased taxes from the increased value of the redeveloped property, and, in effect, the property owner saved some money on improvements. The taxes on the increased value of the property flowed back in to the property owner enabling it to do more improvement.

So is it true to say that the end of the TIF is a loss to Wind Creek? That they are the ones to lose the benefit? So is it true to say that the end of the TIF is a gain for the City (and the other taxing agencies)? If so, that sounds ok to me. But it sounds to me that you see “us” losing a benefit when the TIF ends and that you would like to see the TIF continue — can you explain that further? Does Wind Creek need the “help” of the TIF? Are there things on that property that won’t get done without the TIF? I think I’m still missing something here.

Gadfly still needs your help.

Latest post in a series about Wind Creek Casino

ref: “Wind Creek will be focused on becoming good neighbors in Bethlehem”

Gadfly,

Please move over, I’m on the same limb, and I am sure there will be others. What difference it will make is a guess, but you’ve articulated my emotional and rational thoughts on point.

Deni Thurman-Eyer

Gadfly is reminded of the Emily Dickinson lines:

I’m Nobody! Who are you?
Are you—Nobody—Too?
Then there’s a pair of us!
Don’t tell! they’d advertise—you know!

Latest post in a series about Wind Creek Casino

Jon Harris, “At grand opening, Wind Creek pledges to reinvest in Bethlehem property. In fact, hotel construction could start in early 2020.” Morning Call, October 10, 2019.

Keeping an eye on Wind Creek. Holding my breath a bit.

Especially this week with the Touchstone Festival, Gadfly has been thinking a lot about Bethlehem’s nature, culture, history, heritage, personality, identity, character — and future.

He doesn’t see a third-of-a-mile-long adventure and water park — once described by Wind Creek something like the “premier destination in the Northeast” — in that future.

Or should he say he doesn’t want to see it in Bethlehem’s future, because it looks like a sure thing.

Wind Creek seems determined.

Looks like it will be here.

Gadfly’s resistance to that reality is visceral not intellectual, not logical.

A waterpark in the No. 2 Machine Shop? Feels like dancing on a grave.

In a way his repulsion is beneath explanation, his own explanation.

And he hears no one else expressing anxiety.

It’s lonely on this limb.

For sure, we don’t want barren brownfields. Given the alternative, we should be glad for the Sands, for Wind Creek. Huge tax money. Lots of Union construction jobs (you are in Gadfly’s head, Councilman Callahan). Visitors pouring dollars into the local economy. 2,360 employees and growing. And Wind Creek throwing money at non-profits. That’s a “good neighbor,” right?

He knows all this.

Why can’t Gadfly be happy? Why so conflicted, so cranky?

Makes no sense.

Gadfly wasn’t Gadfly when we were going through the Sands pregnancy.

He was bothered, but only out of the corner of his eye. He didn’t feel involved.

Now as a toddler-Gadfly he feels involved.

Granted, he’s come to accommodation with the casino. In fact, it’s virtually invisible to him. He’s barely aware of it. It’s not in his world. We don’t bother each other. We co-exist. We live in separate spheres. Alternate realities.

Perhaps the same thing will happen with the hotels and water park.

But it feels like on a mega-scale what he sees too often in front of our City committees on building-scale — an “outside” developer plunking in something for his gain that does not fit our grain.

When Gadfly came to Bethlehem 50 years ago, he was proud that it was known as the home of moral might and technological might.

Strange combination but serious stuff.

And now we might be advertised to the world for a waterpark that is the premier destination in the Northeast.

A playground.

Doesn’t compute.

Gadfly waits for the slap upside the head.

Help him.

Talk him down.

Stage an intervention.

It’s lonely on this limb.

—–

Jon Harris, “At grand opening, Wind Creek pledges to reinvest in Bethlehem property. In fact, hotel construction could start in early 2020.” Morning Call, October 10, 2019.

• [Wind Creek’s] to-do list . . . includes a proposal to transform the No. 2 Machine Shop via a $250 million infusion and a $90 million plan to build another hotel, with potential for a groundbreaking on the hotel early next year.
• Those plans have Wind Creek and local officials excited about the 10-year-old property’s future — and they said as much during a grand-opening ceremony on Thursday just outside the casino’s main entrance.
• “Bethlehem is the jewel of the Lehigh Valley and as Wind Creek thrives, we’ll continue to shine,” state Sen. Lisa Boscola said, adding that she believes the crucial property, built upon what was once the country’s largest brownfield, is in good hands with Wind Creek.
• Boscola, State Sen. Pat Browne and Bethlehem Mayor Robert Donchez also reflected on the past, back 15 years ago when it was far from a sure thing that Bethlehem would even allow casino development. Donchez was then a councilman, actually casting the deciding vote to allow the project in the city.
• “There’s no question in my mind that was the right vote,” Donchez said.
• But Thursday was more about the future, something ushered in with a tribal dance and song, fireworks, appearances by Emeril Lagasse and Buddy Valastro and a charity-giving contest. In the contest, in which 10 area nonprofits were pre-selected and then the public voted to decide the winner, Wind Creek Executive Vice President and General Manager Brian Carr announced Via of the Lehigh Valley as the winner of $25,000. He then announced Wind Creek had decided to give the remaining nine nonprofits a prize of $10,000 each.
• Tribal Chair Stephanie Bryan said the tribe and Wind Creek will be focused on becoming good neighbors in Bethlehem, planning to build on the legacy Las Vegas Sands Corp. left in the city and to create additional job opportunities beyond the property’s current employment of about 2,360.
• Arthur Mothershed, Wind Creek’s vice president of business development, said plans are moving along for a 276-room hotel and another 42,000 square feet of meeting space near the existing 282-room hotel. He said Wind Creek believes it can break ground on the hotel shortly after Jan. 1, a project that will take about 14 months to complete.
• More fluid is the plan to turn the No. 2 Machine Shop, which is a third of a mile long, into a 300,000-square-foot adventure and water park that also would include a roughly 400-room hotel. Mothershed said that, conservatively, Wind Creek is probably eight months away from getting the design to the point where it can think about a groundbreaking.

(10th in a series of posts on Wind Creek Bethlehem)

John Marquette is a retired librarian/archivist, author, historian, and a resident of Bethlehem. His current project is focused on the restoration of the interior of the Archibald Johnston Mansion in Housenick Park. 

What plans does Wind Creek/Poarch Band have in place to really revitalize the Steel property before we lose the NY gamers to a brand name they know and love?

If we didn’t like the amount from the sale of the Sands to Wind Creek, we are not going to be happy with having to depend on visitors from the Lehigh Valley and west Jersey.

John

(9th in a series of posts on Wind Creek Bethlehem)

Steve Melnick has had a career in economic development for over 35 years in several states, with the last 20 years here in Bethlehem and the Lehigh Valley.

Gadfly:

It seems to me that Mr Callahan is trying to set an very acrimonious tone with Wind Creek. Politically, it would appear that the mayoral race is already underway, and Mr. Callahan is trying to present himself as the advocate for the common man rather than the big corporate donors that have funded his campaigns in the past. It is beyond comprehension to expect Wind Creek to willingly overpay their taxes just to make life easier for city council during their budget negotiations. In an attempt to position himself as the financial watchdog for the city, and in the interest of transparency, I would presume that he chastised the Benner building owners when they did the same thing and asked the city to backstop a $17 million dollar garage for their primary use. I presume that Mr Callahan has also had this discussion with the owners of the Martin Tower site as well as with Jeff Parks and his group over their project. Fair play across the board.

Steve

(8th in a series of posts on Wind Creek Bethlehem)

Dana Grubb is a lifelong resident of the City of Bethlehem who worked 27 years for the City of Bethlehem in the department of community and economic development, as sealer of weights and measures, housing rehabilitation finance specialist, grants administrator, acting director of community and economic development, and deputy director of community development.

Gadfly:

Some elected officials really need to put on their big boy pants and stop whining about how little deed transfer tax Bethlehem will receive. Yes, it was even less than I expected after consultation with a few in the business world who have been involved in similar kinds of business transactions, and the Mayor is taking the right approach. It’s a bigger picture issue. After all, the Sands and now Wind Creek Casinos are in business to make money, not lose it. The proposed development by Wind Creek will bring a nice boost to Bethlehem’s tax coffers over time. The TIF will be expired so the benefit will be immediate when construction is completed. Yes, the Mayor definitely has the right approach.

Dana

(7th in a series of posts on Wind Creek Bethlehem)

“The role of a developer is to make money. Harsh but true. They don’t care about anything except the goal of making money.”
Kate McVey

Well, those items on the “wish list” from the Casino Transfer Tax on the City 2019 budget p. 278 — some very dear to the heart of Gadfly followers — ain’t gonna happen. As foretold by follower Dana Grubb a few posts back, the windfall for the City was nowhere near what the City was hoping for and tentatively planning for. Nowhere near. Noooowhere near.

CM Callahan previewed the official bad news at Council on Tuesday. Listen to his tight-lipped tone:

“Tell Wind Creek I’m very disappointed in their start in the City of Bethlehem. It’s their legal right to use loopholes to lower the tax . . . [but] you can tell the representatives from Wind Creek that that’s not a neighborly thing to do. . . . [They said] they wanted to come in here as good community partners . . . I’m very disappointed in what I’m hearing.”

The good thing is the proceeds from the CTT were not built into the City budget. They are “extra.” They are a “windfall.” So in that sense at least, no harm has been done. Just that no extra good is being done either.

Mayor Donchez looks on the good side. The very major development that is the next step in Wind Creek’s plan. That’s what mayors have to do.

Jon Harris and Nicole Radzievich, “A bad beat for Bethlehem: Tax on Sands casino sale far less than dreamed of.” Morning Call, June 5, 2019.

Seeing a price tag of $1.3 billion when the Sands Casino Resort Bethlehem sale was announced in March 2018, Bethlehem’s eyes lit up like a Christmas tree with what it thought could be a realty transfer tax jackpot of up to $13 million — as much as $6.5 million to the city and $6.5 million to Bethlehem Area School District. But it turns out, it appears to have been dealt a bad hand.

They indicate the city and school district are each in line for about $246,580, while the state is slated to collect about $493,160 in transfer tax, according to a review of public documents by The Morning Call. Mayor Robert Donchez said he has not received official word as to what the amount will be but is aware it could fall far short of the $6.5 million his administration once discussed.

While the casino transfer tax wasn’t budgeted, the city planned to spend the money on a list of deferred projects, such as street maintenance and City Hall improvements, that have been on its wish list for a decade.

The difference between the city’s initial projections and the expected transfer tax boils down to how the deal was structured, which allowed for only the value of the underlying land to be computed in the transfer tax calculation. To enable Las Vegas Sands Corp. to sell 100% of Sands Bethlehem’s operations to Wind Creek, the minority owners, Bethworks Now LLC, had their stake in the facility transferred into a ground lease. Wind Creek, which owns the structures and improvements on the site, entered into a lease with the ground landlords, said Arthur Mothershed, Wind Creek’s vice president of business development.

Bethlehem City Councilman Bryan Callahan conveyed his disappointment in the tax total at Tuesday’s City Council meeting. From what he was hearing, Callahan said at the meeting, the city could expect in the ballpark of $150,000 in transfer tax, which he took as a disappointing start to Wind Creek’s tenure in Bethlehem. “To use loopholes in the law, to say you’re leasing property versus owning it, that’s one thing,” he said, looking at the mayor. “But they want to come in here as good community partners. I was hearing great things. I hope the No. 2 Machine Shop goes through, but I’m very disappointed in what I’m hearing, and I hope you could relay that to the officials at Wind Creek.”

“It’s more important to develop that [property] as a destination site, which will bring more jobs and [property] taxes to the city. We can’t lose sight of that.” It’s that type of investment, Donchez said, that will have a longer lasting impact on Bethlehem than the one-time revenue that comes from a transfer tax.