Okay, we're recording.

Do this first.

I will call to order a community development committee meeting.

I'm Hilary Quiet, Chair of the Community Development Committee.

The other committee member present is Justin Amon.

And no other council members are present this evening.

The clerk will please call the roll.

This Quiatec here.

Mr.

Raymond.

Here.

And Ms.

Daniels.

There is one item on tonight's agenda, the annual financial accountability incentive reporting or FAIR hearing.

This matter is for informational purposes only.

We do have a public comment period.

I will now recognize the public for comment.

Is there anyone who would like to make a public comment with a five-minute time limit?

Then we'll move on to agenda item one, and I'll recognize the representative of the administration.

Good evening.

Thank you.

I'm Sean Ziller.

I'm the deputy director of economic development for the city.

And as last year, here to present uh this year's FAIR report.

Once again, thank you, Chairwoman Quyatech for holding the meeting of the community development committee.

As a stated, um, I'm here to present the 2025 FAIR report.

I'll be the sole presenter for that report, but I did want to introduce, and she's in the back row, um, our newest addition to CED in the Economic Development Bureau, Chastity Haxton, who assumed the role of our economic development coordinator this past May.

Uh, Chastity brings experience with the Missouri Department of Social Services, the Missouri Department of Economic Development, the U.S.

Department of Agriculture, and has spent time in the nonprofit fundraising sector.

Across these roles, she has focused on business recruitment, grant funding initiatives, and program implementation specific to small business development.

Chastity holds a Bachelor of Arts from Ohio University and a Master of Public Arts in Public and Master of Arts in Public Affairs from the University of Missouri.

Um, and because she's like all of us, she's currently completing a second Master of Arts and Public Interest Communications, which she expects expects to finish next month.

Uh we're unbelievably excited to have her join the department, and I'm sure Chastity uh would be happy to speak with members of council regarding her background, her previous experience and kind of what she brings to this role.

She's been here for two months and I think has already been doing a really great job thinking about how she can bring her skill set to advance the great work we're we're doing in the department.

Uh in addition to myself and Ms.

Haxton, we're also joined this evening by Ms.

Collins, Director of Community and Economic Development.

As in years prior, we're here for the annual Financial Accountability Incentive Reporting hearing.

The FAIR program was established for ordinance in 2018 to help City Council better understand and have transparency into the economic development tools we utilize here in the city.

Uh to that end, you received and should have in front of you the annual FAIR report, which is what we'll be reviewing at this hearing.

The report is looked back at the year 2025, examining how economic development incentives, both tax and non-tax incentives, have worked and had an impact during the last year on continuing Bethlehem development.

You can see from the table of contents in the FAIR packet that the report includes an incentive inventory, incentive program summaries, evaluation reports for each incentive program, incentive program impact statements from recipients, um, and tax expenditure spreadsheets and reports.

The incentive inventories on on the numbered pages one and two.

So it's actually a few pages uh further into the packet, uh, list the tax and non-taxent incentives included in this report.

Uh they include the local economic revitalization tax assistance or alerta, the city revitalization improvement zone or CRIS, the Enterprise Zone Loan Program, the Bethlehem Small Business Loan or Small Business Loan Fund uh program, the business infrastructure development or bid loan loan fund.

Uh the program summaries are on numbered pages three and 10.

These have not materially changed from years prior.

Importantly, the program evaluation portion is on page 11 to 28.

As has been done in prior years, we'll go right to the evaluation reports and provide brief refreshers on the incentive programs.

As a reminder to brief prepare these evaluations, program beneficiaries receive uh a request annually from our office seeking information such as where they are with respective projects, how many employees are hired and retained, and how the program has impacted their project.

Information that we gather is aggregated and presented presented for each incentive program.

We do not report and re represent to program recipients that we will not report on specific financial or employment data of individual projects on a project by project basis.

As we go through the incentives, uh and I think we've we've discussed prior to this, we can stop after each section and then a loan fund section, uh loan fund sections uh to take questions you may have before moving on uh to the next.

Um we'll start by turning to LERTA on page 11.

Pennsylvania enacted the local economic revitalization tax assistance act uh in 1977, and for deck several decades following, the city of Bethlehem has implemented multiple LERDA designations across different areas of the city.

As you know, these programs helped incentivize the redevelopment of much of the former Bethlehem steel property into productive job generating and tax producing in the tax producing district it is today.

Um the two LERTA zones currently in effect uh are summarized, therefore, in the next section.

Bethlehem's existing LERDA ordinances reflect the distinct policy objectives that they were uh designed to achieve at the time of their adoption.

Earlier alerta designations responded to a struggling local economy and the need to simulate investment in key areas, much of which comprise was once the largest brown field in the nation.

Given the limited level of private investment at that time, those incentive structures were appropriately tailored to encourage redevelopment.

However, the city's needs and the policy tools required to address them have evolved significantly over the past 30 years and even over the last five to 10 years.

2021, City Council amended Article 342 to establish the South Side Affordable Housing LERTA, which became effective on uh September 7th, 2021 and is scheduled to expire at the end of 2026.

South side LERTA 2 subsequently took effect on January 1st, 2023 and will expire on December 31st, 2027.

As those expiration dates approach, the city has begun evaluating the potential establishment of a new LERDA designation or designations, which would require, among other steps, review and approval by city council, as you know.

Internal evaluation discussion and discussion are ongoing.

A staff assess what a future iteration should include.

Now it can most effectively support, for instance, increased affordable housing over the next designation period while complementing existing and planned housing initiatives.

As with any review of an incentive program, the central questions are what are what public policy objectives are we seeking to achieve, and how should the incentive be structured to most effectively advance those goals?

In developing a potential new LERDA designation, it is imperative that the program reflects Bethlehem's current priorities, will certainly position the city to address its recognized future housing and economic development needs.

As shown in section 2B on page 12, in 2025, the city relinquished uh a little over 1.046 million in real estate taxes under LERTA abatements.

As a refresher, both active LERTA zones offer graduated abatements based on building reassessments after improvement over a period of 10 years.

Per the existing ordinances guiding these zones after reassessment, building values used to calculate accessible taxes begin at 10% of their total value.

Then increase uh by 10% per year until the abatement expires.

In the first year after reassessment, uh one adds the full land assessment to 10% of the building assessment, and the next year the building portion jumps to 20% of the new value and so on.

For the affordable housing alerted district for projects with 10 plus residential units, either at 10% of the unit, either at least 10% of the units must remain affordable during the Lord LERTA schedule or a payment of 25,000 is required uh by the property owner developer per unit.

For the Southside LERTA 2 district, uh, for projects with 10 uh more than 10 residential units, either at least 10% of the units must remain affordable during the Lord schedule or payment of 52,320 is required per unit.

Since the Affordable Housing Funds establishment in the Affordable Housing Lorda ordinance, the city has a collected uh 907, a little over 907,000 of in lieu payments across these two districts.

Uh additional abatement city and county, I'm sorry, additional abatement city and county only is available available for projects that are LEED certified silver, gold, or platinum.

And I'm happy, we're happy to take any questions relative to the LERTA zones.

Thank you, Mr.

Ziller.

Um, I want to recognize the um arrival of councilwoman uh Daniels, who's also a member of this committee and uh solicitor steward before we start questions.

Um Mr.

Ayman, I'll start with you since you'll hear me.

Not for me, thank you.

Okay.

Ms.

Daniels, did you have any questions?

No.

Okay.

Um, great.

My turn.

I have a question.

Sure.

I just have a couple.

Um one of the things I was interested in.

Um you you did address uh the fact that um one of the alertas is expiring at the end of December.

And so you'll um you'll keep us apprised of of what the plans are and what your thinking is in terms of um the potential for a new LERD going forward.

Certainly.

Yeah.

Um one thing that is for me was a little difficult um in this report.

And I know I've looked at this report a few for a few years, but it just jumped out this year, is that we don't kind of tease out which LERTA is um resulting in which amount of the payment in lieu of for the two affordable housing ones.

I was I was just kind of curious if maybe those figures would be available or some there's some way to um determine which one maybe was it.

I mean, it could be that neither is really having more of an impact.

I'm just curious about that.

Sure.

And we can we could certainly uh provide that.

Good.

Um yeah, because I was wondering out of the 33 projects, how many actually involved um by number also um creation of of housing units?

So um and I know that um this figure um in terms of the the gross of of what's been being abated could include um expired LERTAs where there are some projects where they're still reaping the benefit of the abatement.

So it's it's a little bit confusing.

I understand that, but uh I uh so I'll say of the 33 uh that we list as as kind of abatement active, you know, a large majority of those are that the original Southside, not Southside Literature, but the original South Side LERTA.

Um, and then you know those that have paid into the fund um more recently, or especially the past I'd say year or two years, four or five projects that have paid into um into that fund.

Uh within the last year, I think we've only had three projects that have paid into the fund, um, one of which was a new project uh in 2025.

Great.

Well, that's helpful to know that I mean there's there's still some activity in that.

Okay.

Um those were my only questions for now.

So we can move on to Chris if you're ready.

Okay.

Uh next, the evaluation report for the city revitalization and improvement zones or CRIZ is on page uh pages 15 to 17, numbered pages 15 to 17.

Uh the CRIS was authorized for Bethlehem by the Commonwealth in 2013.

It's a program managed locally by the Bethlehem Revitalization and Improvement Zone Authority, um, or BRIA.

The authority has its own members appointed by the mayor and DCED and city administration play a role in managing the program.

The focus of the program is to provide opportunities to spur new growth, helping to revive downtowns and create jobs for the residents in the regions uh in the region.

Uh vacant, desolate, underutilized or abandoned space will be developed, thereby creating jobs, or that's certainly the hope.

Uh increasing personal incomes, growing state and local tax revenues, reviving local economies, and improving the lives of city residents and visitors.

Um as a reminder, the CRIS valuation report uh here actually covers the taxes paid to the city in the Commonwealth in 2024, uh, which are then returned to the authority as increment in 2020.

So taxes generated in 24 are reflected in the evaluation, meaning it actually lags a year behind the rest of the report in that respect.

Uh in 2024, we have six uh projects in the CRIS, uh project at Greenway Third and New, uh, five 10 flats, 610 flats, Wilbur Mansion, Wind Creeks expansion, and then the two uh medical office buildings, the Lee High uh through Lehigh Valley Health Network, the Tower Place uh uh properties.

The total dollar value of tax incentive received by beneficiaries in 2024 was a little over 1.78 million.

And this reflects the eligible state and local taxes generated that have come back to the authority to distribute to property owners to pay down debt.

A smaller portion, approximately 107,000, goes toward the administration of the authority, as well as public projects associated with the CRIS, and that equates to about 250 uh thousand dollars.

The private investment in these projects supported a total of approximately 40 million in CRIS debt.

Uh turning the pay turning the page in the report.

You also know that the property tax assessments prior to CRIS were 1.63 million, and now we're and we are now at an approximately uh four 45.6 million.

No property taxes, no property taxes are abated or lost through this program.

So this is additional delta uh goes to the city.

Uh finally, you also know that also note that there are 839 employees in the CRIS zone uh attached to CRIZON projects in 2024, seven 708 of whom are full full-time.

These figures do not include the construction jobs that are certainly associated with those projects.

Um with that, I'll take any questions relative to Chris.

Thank you.

Mr.

Eamon.

None for me at this time.

Thank you.

Ms.

Daniels.

Uh, the only question I have, is there any reason why we're not able to list the actual project names?

The reporting that we're required to do by the Commonwealth requires that we identify them by um parcel ID and by address.

Um, but I mean, we can list the names of the projects as well.

Mr.

Ziller did list them.

So again, it's the Greenway Third and New Um 510 Flats, which also includes social still, 610 flats, uh, the Win Creek Hotel Expansion, Wilbur Mansion, and the two Martin Tower Medical Office buildings.

Thank you.

Um, so at this point, in terms of activity on um CRIS designated sites, um, is Martin Tower the only location that still has active uh development going on, or are there still other parcels outside of that particular site?

Yeah, there's certainly uh activity um outside of that site.

You know, we have as you know, 130 uh acres um are designated through the Commonwealth and through a kind of process that runs through BREA.

Um, those pro those parcels that acreage that has the CRIS acreage, you know, those developers, property owners can come and present their project to the BRIA board, which then approves it, and that's not the end, it then goes to the Commonwealth for approval.

Um, and then if they want financing tied to CRIS relative to their project, uh they have to come back to Brea as well.

So, you know, as it stands right now, that you know, of that uh 130 acres, a majority is is kind of it's already designated, whether they're active projects or kind of you know, just continuing um available acreage for growth.

Uh that's it's kind of a mix.

And so, but all of the parcels are in private hands, and the people who own it, they know that they are within that opportunity.

They have that opportunity.

So correct.

Okay.

Mostly all there are there are a few acres banked.

Um had previously um had uh parcels that were owned by the parking authority were designated, and all of those were decertified.

Many of the decertified acres have since been redistributed to other parcels, but there are a few um acres of uh undesignated.

So new projects can come in to the BREA authority and ask for um designation, which again would have to be approved by the authority and then by the commonwealth, right?

And so just so we are all understanding it.

The the there's so there's no property taxes that are abated in this.

It's the business privilege tax, and it's the it's it's a it's a couple of like the amusement tax.

The vast majority of uh abated taxes are are state taxes, right?

So it's really the commonwealth who is giving up the most in terms of um uh tax revenue at the on the city side, it is it's the local services tax, it's the business privilege tax, and then our city amusement tax.

Right.

Yeah, okay.

Um those are the only questions that I had.

They were just for my own understanding of the situation.

I appreciate it.

Okay.

Uh the enterprise zone uh loan program, the enterprise zone section begins on numbered pages 19 to 21.

Uh, the city's enterprise zone loan program is a legacy program designed to support the rehabilitation, expansion, and improvement of blighted buildings and properties through qualified investments by private businesses and nonprofit organizations that advance economic development.

Funded through legacy dollars in the city uh, I'm sorry, funded through legacy dollars, the city received many years ago.

The program remains at this time underutilized.

The the funds were issued as loans with the potential to resolve revolve as payments were received, and the remaining legacy loans are tied to projects funded under previous program cycles.

With our enterprise zone designation in the city, we have to renew periodically.

Our enterprise zone expired on September 30th of 2024.

However, many of the benefits still apply for another two years beyond that exit date, uh, including the opportunity for qualified businesses to apply for enterprise zone tax credits, which in our experience is arguably the kind of most attractive um benefit of this program.

The only way to obtain another designation is to apply with a new application, which would include the creation of a new five-year strategy and business plan for us to demonstrate a renewed need.

To that end, we recently re recently released an RFP seeking support in the preparation submission of an application to the to the PA Department of Community and Economic Development for Renewal.

City's application will evaluate outcomes achieved during the expiring enterprise zone designation period and propose modifications for subsequent term to better align with Bethlehem's evolving uh conditions, needs, and emerging challenges.

The application will identify new targeted investment and development needs as well as implementation strategies to address those needs.

As part of the enterprise zone renewal process, we'll also evaluate how the loan resource can be more strategically deployed to maximize impact and better support future investment within the zone.

As noted, the enterprise zone designations provide provides access to several benefits.

Applications for tax enterprise zone tax credits, typically available through an annual application cycle, are submitted directly to the Commonwealth by eligible private entities.

Because these applications are neither submitted through nor reviewed by the city, they are not reported as part of FAIR.

That said, the city does support applicants through the submission process in coordination with uh our regional PADCD office.

Um I think we're gonna move on to the other loan programs as well and take the questions as a bundle, if any.

Uh the Bethelem Small Business Loan Fund, what we called the BSBLF, uh, is on pages numbered pages 22 to 25.

This incentive is administered by rising tide community loan fund, and small business owners located in the city can access loans uh for acquisition of property, new construction, expansion, and equipment.

Multiple funding sources comprise this loan fund in 2025.

The quote unquote return to the city is through job creation, economic development benefits, and direct dollar investment resulting from the supportive projects.

In 2025, there was one small business that received the incentive.

Total value of that incentive of the incentive received by taxpayers was estimated at uh 24,412 of the number of BSBLF funded projects, apart from the aforementioned, that was a newly funded.

Uh six remain active uh in 2025, meaning their their loans continue.

Following recent staff changes at rising tide, we're working closely uh with the fund to ensure the continued success and continuity of this program moving forward.

Details regarding the business infrastructure development or bid program are on numbered pages 26 to 28.

The goal of the bid program is to provide loans to private companies or developers for the construction, rehabilitation, or repair of infrastructure improvements on privately owned property, uh, which improvements are necessary to complement industrial investment by private companies, which increases Pennsylvania's share of domestic and international commerce and creates or hopes to create uh new net jobs or net new jobs.

The bid revolving loan fund is funded by grant to loans from the Commonwealth.

The city loans out this money and the loan repayment goes back into the fund.

The recycled loan funds are then made available to eligible applicants.

As we've noted previously, the dollars in question are legacy dollars that go back to the late uh 1990s, uh, and no loans out of the bid fund were approved in in 2025.

And with that, I'm happy to take any questions regarding the loan funds.

Thank you.

Ms.

Daniels, did you have any questions?

Mr.

Amen.

Just one question.

Um, you mentioned whether your feeling or the department's feeling that the enterprise zone loan program seems to be underutilized or heavily underutilized.

What would be your your reason or your opinion that that is the case?

Sure.

So the dollars, the legacy dollars that are kind of still attached to that loan fund, um, you know, had previously funded projects.

Uh one that I think I hope you would all know is the the Pi Incubator Facility in the South Side.

Um, and so that you know, that that project, which I think was constructed in 2013, 2013.

Um, those loan funds are still attached to that project that was an agreement between the city and the Bethlehem Economic Development Corporation.

Um, and then prior to that, it funded two projects, which have since closed out.

So uh it's just a matter of again, closing out this this project from Pi and you know, hopefully returning those funds into what they should be revolving.

Understood.

Yep.

Thank you.

Sure.

So just to clarify, that means that um there really isn't there really aren't funds if somebody wanted to borrow right now from that particular program because they're still awaiting repayment.

Correct.

Okay.

Um that's helpful to understand.

Um, and then is that the same reason why um the BID is also that there've been there's been no loaning?

And then is that the same reason why the BID is also that there've been there's been no loaning?

It's still Yeah.

To my understanding, um, and and I'll have to check with our business administrator.

I wasn't able to prior to this meeting.

I think there's you know not a significant amount of bid dollars left.

I mean, I think if we had certainly um available funds to continue the program, it it is the fact that it's those legacy dollars that you know were given to us.

Um I think this one was by the Commonwealth.

So and then that I did notice that um uh for in the the rising tide, um, that there was not a C D BG um now.

I'm losing my losing my spot in here.

Uh um I'm sorry.

I think the the short answer if I am predicting your question is that there are no new C D BG dollars that have gone into that program.

Right, yeah.

And last year there was there was not correct.

Yeah, no new C D VG dollars.

And is that is that sort of the plan for the future, just in terms of prior shifting priorities and limited C D BG funds and um as Sean mentioned, we're kind of sort of actively evaluating how the program is operating and especially with their new um staff over there at Rising Tide.

Yeah.

But I I will say rising tide, they do incredible work and their small business loan program is funded from a number of other funding sources.

So the city component is is one piece of it, but it's um you know, it's an active program, even you know, outside of the city dollars, which is important to note.

Well, thank you very much for bringing this information to us.

Were there any closing questions from either members?

Okay, great.

Thank you very much.

This meeting is adjourned.

Thank you.