Costco Could Net East Penn $1.5 Million Annually

After a lengthy discussion and two failed attempts to table the decision, the East Penn Board of School Directors Monday night approved a financing plan that could bring the Lehigh Valley its first Costco as soon as fall of 2014 and ultimately put an estimated $1.5 million per year into the school district's bank account.

The plan approved by the board to help fund the proposed $140 million Hamilton Crossings shopping mall in Lower Macungie Township is what is known as Tax Increment Financing or TIF. Basically, a TIF is an economic tool to help develop a site that requires a large amount of money to pay up-front costs.

In this case, the land – 63 acres off of Krocks Road between Hamilton Boulevard and the Route 222 bypass – needs significant remediation to remove waste from iron mining and address storm water issues before it can be developed.

In a nutshell, here’s how the TIF would work: The government bodies that will ultimately benefit from the tax revenue generated by Hamilton Crossings – East Penn School District and Lehigh County – agree to forgo a portion of those tax dollars for a set time period to help the developer pay for whatever bonds or loans are needed to bankroll the project to get it off the ground.

The plan approved by the board Monday night sets up a 50-50 split on tax revenues for a 20-year period. In terms of dollar amounts, under the agreement East Penn is expected to earn about $765,000 per year in tax revenue from Hamilton Crossings during those 20 years and Lehigh County, about $135,000.

Once the 20-year period is over, the amount of tax dollars generated for the district and the county would double, according to the TIF plan. That would make East Penn's annual cut about $1.5 million.

Lehigh County and Lower Macungie Township need to approve the plan before the project can move forward. Lower Macungie Township does not levy a property tax. 

Ultimately, the board approved the plan by a 6-2 vote, with Directors Julian Stolz and Lynn Donches voting against the proposal. Director Michael Policano abstained from the vote. Stolz, Donches and Policano tried twice during the meeting to get the rest of the board to agree to postponing the vote to a later meeting.