NorCo Council Adopts Bethlehem LERTA

Allyson Lehr

Last night, by a 5-3 vote, Northampton County Council approved a LERTA program in North Bethlehem. Ken Kraft, Seth Vaughn, Mat Benol and Bob Werner voted Yes. Hayden Phillips, Matt Dietz and President John Cusick cast No votes. Peg Ferraro, who did support the LERTA, was apparently kidnapped by the forces of darkness and missed the meeting. This left everything in the hands of Glenn Geissinger, the sole Council member who said nothing.

He voted Yes.

For those of who who just aren't up tp date on all the tax gimmicks out there, LERTA is an acronym for Local Economic Revitalization Tax Assistance.

Property owners inside a LERTA zone may apply for a tax break for improvements that increase assessment, upon which all real estate taxes are based. They will continue paying full taxes on the land assessment, but the increase in assessment resulting from improvements like a new roof or front porch can be phased in gradually over a period of ten years.

To me, these are the least offensive of the tax breaks. Generally, NorCo Council will approve a LERTA if it has been approved by the City and school district, as is the case here. But the sheer size of the area, combined with LERTA failures in Easton and philosophical concerns about picking winners and losers, made county officials hesitate.

What is this area? It's the northern neighborhood near Moravian College. Its boundaries are Maple Street on the east, Main Street and Mauch Chunk Road on the west, Broad Street on the south and East Laurel on the north. "It's not the most depressed in Bethlehem, but it's not the most affluent, either," said Bethlehem Housing and Community Planner Allyson Lehr back in August. She said the area could go "either way." She believes a LERTA will help this area from becoming a "problem neighborhood."

Why a LERTA? here's what Lehr told Council in August.

• There are 8,156 properties in this area, and 59% of them are rentals. A LERTA gives a landlord an incentive to make improvements.
• A majority of properties inside this district are rated C or D by county assessors.
• Three schools - William Penn Elementary, Liberty High School and Thomas Jefferson - are either inside or immediately outside this district. They have all shown an alarming increase in the percentage of students who receive free or reduced lunches. At Liberty High School, that percentage has increased from 34% in 2005 to 55% in 2015. At William Penn Elementary, 77% of the children are getting free or reduced lunches. It's 72% at Thomas Jefferson. "There's an indicator that there's some kind of economic distress in that area," observed Lehr.
• 208 homes in the proposed LERTA district are vacant in what should be a desirable area just a stone's throw from the downtown.

After Lehr's excellent presentation, I decided to see how successful Easton has been with its smaller LERTA, which also includes residential properties. It has been a failure:

1. The Easton LERTA district comprises 859 properties of all kinds, from residential to commercial and industrial. While this is quite large, it is only about 1/10th the size of the 8,156 properties for which a LERTA is being sought in Bethlehem.

2. In the five years that Easton's LERTA has been in effect, only 72 properties have enrolled in the program, with 56 in progress and 16 under construction. This is a fairly low number.

3. Only 46 residential properties have taken advantage of the LERTA. Even fewer, just 26, are commercial.

4. Twenty-one of these properties are completely exempt from all real estate taxes because they are in the Keystone Opportunity Zone, another tax incentive program in which virtually all taxes, except federal income taxes, are exempt. This includes the Simon Mill (19 parcels), old City Hall (1 parcel) and Governor Wolf Building (1 parcel).

But Bethlehem, unlike Easton, recently adopted a Financial Accountability Incentive Reporting (FAIR) program, thanks to Bethlehem Council president Willie Reynolds. This will enable Bethlehem to keep an eye on its LERTA.

Willie, who is used to being in a room full of Democrats, had an eye-opening experience when he visited NorCo Council two weeks ago and again last night. But he was quite conciliatory when he addressed County Council and thanked them  "Now is not an easy time to be in government," he said.

I had considered bribing John Cusick to tell Reynolds his time was up as soon as he got to the podium.

Though I think the LERTA will accomplish nothing in Bethlehem, I expected to see it pass last night.

But that was before an amendment to the LERTA ordinance was introduced last night.It was about 7,000 pages long and was itself completely full of errors.

It took Council nearly an hour of meeting time to sort through the mess and correct it.

When it was time to discuss the ordinance on its merits, Hayden Phillips and Matt Dietz repeated their argument that the government was"picking winners and losers."

John Cusick's opposition was a bit more nuanced. First, he complained about the the 10-5-0-50split among the three taxing entities. Second, he thinks the area issimply toolarge. Third, he'd like to see the City use all the other tools available.

"This whole body is amazing to me," said Ken Kraft, who would love to be in a room full of Democrats. "We're not picking winners and losers. We're taking an area out of blight."

 Kraft also said that Bethlehem is more proactive than Easton and won't be the LERTA failure that Easton is.
Bob Werner, who represents Easton, was outraged and challenged Kraft to a duel. Today at dawn, they rowed across the Delaware so that Morganell is unable to prosecute them. I will report the details when they come.