Elm Terrace discount moves ahead
Final vote for discount could come July 17
A hefty discount for one of the largest recent projects in Lansdale is now just one vote away.
LANSDALE >> A hefty discount for one of the largest recent projects in Lansdale is now just one vote away.
The borough’s Economic Development Committee voted unanimously on Monday night to recommend council consider awarding roughly $511,000 in discounts to Elm Terrace Gardens under the town’s economic development ordinance.
“The fact that we are moving it along is, in and of itself, the recommendation,” said EDC Vice Chairman Richard Strahm.
Earlier this month council’s administration and finance committee discussed the possible discounts for Elm Terrace Gardens, a senior living community located on Broad Street. Elm Terrace qualifies for the borough incentive via a roughly $14 million expansion project that began in 2015 and was largely completed in 2017, adding two stories and roughly 44 new units to the complex.
A local ordinance has been on the books since 2010 creating an “Economic Development Incentive” that lets council grant discounts on the electricity that businesses buy from the town, if a business qualifies by spending certain amounts and keeping certain numbers of jobs in town.
Discounts increase if an applicant spends more, and council voted in early 2018 to add several additional tiers; the smallest is 25 percent off of permit fees and five percent off of electric bills for two years for those that invest $50,000 and keep or hire at least five employees.
Borough Manager John Ernst summarized for the Economic Development Committee on Monday night the same discussion held by the administration and finance committee two weeks earlier: that Elm Terrace is now seeking the largest possible discount, ten percent off of their electric bills for ten years, and an additional 50 percent off of permit fees. Applied to their current monthly electric bill of $38,000 per month, the incentive would discount $3,800 per month or roughly $46,000 per year, adding up to roughly $461,000 over ten years, plus an additional $50,000 in permit fees, leading to a total discount of roughly $511,000, Ernst said.
“This application is in front of the EDC. Your job is to recommend approval to full borough council,” Ernst said.
EDC Chairwoman Carrie Hawkins Charlton asked if the discounts would apply retroactively to bills before the incentive is passed. Ernst said the current code is written to begin that period once the land development project is formally finished, once escrows are released and review letters finalized, and said Elm Terrace had done so within the past six months.
“We started this as soon as they made us aware that everything was cleaned up,” he said.
Committee member Denton Burnell asked how far back a project could be completed and still apply for the discounts. Ernst said his recollection was that the limit was five years, and said he and borough staff “feel we’ve got a pretty good handle now” on upcoming projects that may qualify.
“My guess is, as they move forward with Knapp Elementary, that that project may or may not qualify, depending on the final numbers,” Ernst said.
North Penn School District staff and the school board have held lengthy talks in recent months about renovations to that school, with early estimates that the project would cost at least $20 million, well above the borough’s highest threshold.
“I say that knowing that Knapp Elementary is not even an electric customer. They have PECO electric, but they are working behind the scenes to possibly change that,” Ernst said.
Committee member BJ Breish asked if a discount could transfer if the business changed hands, and Ernst said he would have to research further.
“If another company comes in and runs this facility as the same type of business, just a different owner, I guess there would be a question as to whether or not we would allow that (discount) to continue,” he said.
Strahm asked if the company could apply for a second discount if another expansion project is planned, and said he had seen Elm Terrace “on a real estate buying spree” nearby.
“What would happen if they did do another similar sized expansion? Would they be eligible again for another electric discount? Could you stack them, so to speak?” he said.
Ernst said staff and the borough’s solicitor would likely have to look into how that would be handled, and joked he would be glad to have that problem.
“That would be a...terrible...problem to have: that a company invests that much money, in that short a period of time, in the borough? Wow, good for us, and good for them,” he said.
EDC member Bruce Schwartz asked if the discount, for Elm Terrace and others already awarded, would impact the borough’s budget. Ernst and Burnell said all that have already been awarded are already included in the 2019 budget, so only the $46,000 annual discount for Elm Terrace, if granted, would have to be factored into for the 2020 budget.
Member Rege McKenzie asked if the committee had any grounds to vote against recommending the incentive, and Ernst said to his knowledge, “there’s no question as to whether or not they qualify.”
“So if we’re interested in encouraging development, which they certainly did, we probably should approve it,” McKenzie said.
The committee then voted unanimously to pass on the incentive to full council, and Ernst and Burnell said council could vote to approve it as soon as their next meeting on July 17.
That meeting will be held at 7 p.m. at the borough municipal building, 1 Vine St.