Stage set for ‘Luxor’ tax break approval
Phase-in reduction gives borough and school district revenue boost
LANSDALE » A pair of votes on back-to-back nights this week could provide the final step needed for a new apartment building in Lansdale.
Both the North Penn school board and Lansdale’s borough council have resumed talks on a plan to phase in taxes on “Lansdale Luxor,” a five-story, 205-apartment building that’s been on the drawing board for Board Street for nearly two years.
“So much has changed and become even more difficult since then. Your vote is critical to this project’s ability to happen or not,” said developer John Westrum.
Since fall 2018, Westrum has developed and refined plans for “Lansdale Luxor,” a building to be built on the spot of a vacant warehouse east of Broad and Vine Streets and south of the town’s freight station. Those plans were approved by Lansdale’s planning commission in November 2019, council’s Code Committee in early December, and full council later that month, which led the developer to begin talks on a LERTA, or Local Economic Revitalization Tax Assistance Act incentive, to phase in the increase in property taxes over the next ten years.
After hearing the proposal last fall, North Penn’s board asked Westrum to revise the phasein period from ten years to five, and the developer showed the updated phase-in plans to Lansdale’s council in February. A public hearing on that five-year phase-in was slated for late March 2020, but the arrival of COVID-19 and cancellation of public meetings put those talks on hold until recently.
Lansdale’s council resumed talks on the LERTA request, and Westrum gave an update to the school board’s finance committee last week. The environmental contamination below, and plans to relocate a stream on the corner of the site, have not changed since the arrival of COVID-19, according to the developer, but the project timeline has.
“We have all of the approvals and permits, subject to financing, at this point, which we really need the LERTA in order to make the financing happen,” he said.
“Our projected start is in October 2020, and the project timetable is to take approximately 18 months, and completion in April 2022, with stabilized occupancy in 2023,” he said.
Current plans call for roughly 88 percent of the units inside the building to be studio and onebedroom units, with only 12.5 percent as two-bedrooms, a mix similar to other Luxor buildings by Westrum elsewhere in Montgomery County. Since the last talks in March, Westrum said, the current owner of the property has experienced multiple break-ins into the vacant former warehouse on the site, with fires set inside and piles of debris and graffiti scattered throughout the vacant building.
“The current owner has sealed the property off, but if it’s not developed, it’s going to sit the way it is. We hope that’s not the situation, but this is what it looks like today,” he said, showing photos of the current conditions.
As a vacant building, the site currently generates roughly $29,508 in real estate tax revenue to Lansdale Borough, the North Penn School District, and Montgomery County combined, with the district’s share just shy of $22,000 and Lansdale’s roughly $4,600. Those numbers would grow to an estimated $527,000 overall, with $388,000 to the district and $84,000 to the borough annually once the project is done, Westrum told the board, and that difference is what would be phased in over time under the LERTA.
“What we were proposing was, from the school district, that over a tenyear period would have been an increase of about $2.28 million over that ten-year period,” he said, under the proposal from last year.
By shortening the phase-in window from ten to five years, the total tax revenue to the district would grow from $1.18 million in new revenue over 10 years, to $2.8 million over five years, an increase of roughly $916,000. For the borough, the increase is similar: from a projected $51,000 over ten years with no improvements, revenues would grow to just over $405,000 over the 10-year phase-in period, and are estimated at just over $602,000 in the five-year period, a hike of $196,000.
“We think that’s sizable. Again, we would love to have a ten-year LERTA, we’ve done a ten-year LERTA elsewhere, but it was advised to us that five was the only option that’d be acceptable” by the board, Westrum said.
Due to the timing of their respective meetings, Lansdale could hold a public hearing and act on Wednesday followed by the full school board on Thursday.
“After a consensus by the (school board) finance committee, we should be able to make a decision, boroughwide,” said John Ramey, Lansdale’s Finance Director.
Westrum told the school board that, if both bodies grant approvals this week, the developer’s next steps would be to secure similar approvals from Montgomery County in September, start construction in fall, and the increased tax revenue could begin as early as 2022.