Bethlehem, a destination city — but not in the Wind Creek sense

https://www.peacewalk.org/

Lepoco 3

This is how we should think of Bethlehem as a destination city.

Not in a Wind Creek sense.

Time for the annual peace walk.

It’s a busy time of year, you say.

Join or leave the walk at three spots along the way.

You don’t have to be “religious.”

Would you join Gadfly again?

Peace matters.

Next Saturday

This is a good time of year to think of donating to LEPOCO, an unsung Bethlehem treasure.

“Once the public dollars are spent, gathering data for monitoring benefit can be like pulling teeth from a crocodile”

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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

TIF revisited

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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!

Pausing on Peter’s posts

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Peter Crownfield made two comments on posts recently that are easily missed because of the WordPress format for comments — and I’d like to foreground them here.

Peter: Is this [the newly proposed Wind Creek hotel and etcetera] to be a climate-neutral (net zero) building? Is it to be fossil-fuel free? If it doesn’t meet these basics, they should not be allowed to go forward.

We don’t have a real Climate Action Plan in place yet.

But Gadfly thinks we should be thinking that we have a figurative one in place and acting as if it were real.

That is, that every new building now should be held to the rigorous standards of the plan that we will have.

For instance, I’m afraid that the Polk Street Garage will get through without the kind of thinking about solar power that the Environmental Advisory Council folk prompted the Parking Authority about.

The BPA response to the EAC was, to me, far too vague.

For instance, Gadfly is not sure at Planning Commission meetings etc that he hears questions about energy saving design and so forth.

We should be thinking that way even though rules aren’t in place, shouldn’t we?

If Wind Creek doesn’t pass the kind of scrutiny Peter suggests, they should be stopped. No reason why, with their resources, they are not a model of energy efficiency, even without being forced to be.

Gadfly might feel good about Wind Creek’s plans to make Bethlehem the no. 1 destination in the Northeast for a water park if at least their campus was a model in this respect.

Peter: I have not analyzed the TIFs in question, nor have I seen any comprehensive analysis by the city. I have seen quite a few comprehensive studies of TIFs (and similar tax incentive programs) in other areas, and most of them indicate a net loss to the municipalities, even after the TIF ends. I thought Bethlehem was going to start analyzing all these incentive programs in terms of financial results, jobs added, and other predicted benefits.

Yeah.

I would very much like to see a comprehensive analysis of the first 10 years of the Sands, for instance.

These incentive programs come with a lot of promises, a lot of hype — have those things been delivered? I almost feel that such an analysis has to be done by an independent body.

So we’re seeing hype surrounding the recent announcement of Wind Creek’s first major phase.

But what’s our experience with such forecasts?  Can we trust?

A TIF Tutorial

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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.

Wind Creek is winding up

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Cranky ol’ Gadfly must admit that turning the property into the “No. 1 resort destination in the Northeast” still freezes his bowels.

The financial ramifications for the City in general are always a mystery to a guy like the Gadfly. Does anyone want to comment on that? Can anyone explain in layman terms what the TIF is and what significance it is that it is ending?

Wind creek 3

Nicole Radzievich and Jon Harris, “Wind Creek Bethlehem promises spa, bar and ballroom in future hotel.” Morning Call, December 5, 2019.

Following through on its promise, Wind Creek Hospitality is pitching a 12-story hotel that would include a spa, bar, ballroom and more meeting space at the south Bethlehem casino it bought this year, under plans filed with the city.

The $90 million hotel would be built near the existing 282-room one and wrap around the Wind Creek Event Center. It would include 270 guest rooms on the upper floors. The ground floor would include the ballroom, meeting space, business center, banquet kitchen and bar. Renderings of the second floor show a pool and patio tables that spill out onto a deck.

“We will work closely with Wind Creek to move this project forward,” Mayor Robert Donchez said. Donchez lauded the investment in the property and people it will bring to the city. He said the amount of meeting space — an additional 36,000 square feet — will provide flexibility for the city to land larger conferences. 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.

The hotel is part of Wind Creek’s plan to turn the property — in the words of Wind Creek President and CEO Jay Dorris — into the “No. 1 resort destination in the Northeast.”

Wind Creek immediately undertook a $15 million facility rebrand and held a grand opening in October. The hotel and meeting space expansion was to be the next part of the plan. The expansion of the hotel has been described as a no-brainer, because the existing 282-room hotel boasts a 93% occupancy rate that forces Wind Creek Bethlehem to turn away visitors up to four nights a week. Demand for meeting space exceeds the facility’s current capacity.

More fluid, and more of a head-scratcher regarding how it will be pulled off, is a $250 million plan to turn the crumbling No. 2 Machine Shop into a 300,000-square-foot adventure and water park that also would include a roughly 400-room hotel. At the grand opening, Arthur Mothershed, Wind Creek’s vice president of business development, said the company was at least eight months away from getting the design of that project to the point where a groundbreaking could be scheduled.

The hotel expansion, and especially the Machine Shop project, is meant to strengthen the Bethlehem resort, which already gets 9 million visits a year as the closest casino to New York City with table games. But more competition looms on the horizon, most notably if New York officials in the years ahead move forward with Las Vegas-style casino gambling in its population-rich downstate. That could take a significant chunk of Wind Creek Bethlehem’s robust busing program from New York City and northern New Jersey, meaning Wind Creek must diversify its offerings to stick out in the crowd.

Along those lines, the hotel expansion is expected to unlock revenue and earnings potential by growing lodging, meeting space and food-and-beverage offerings. The Machine Shop redevelopment, meanwhile, could boost the resort’s offerings, with rock climbing, rope courses and ziplines, and bring an estimated 1.4 million new site visits a year.

“I’m on the same limb”

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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!