Luxor project receives its tax discount
A planned 200-unit apartment building on Broad Street in Lansdale has gotten the tax discount needed to proceed.
Both Lansdale’s borough council and North Penn’s school board voted on back-to-back nights to phase in those taxes over five years.
“We are hoping that the project would start in earnest right around the end of this year, November, if we’re successful in getting these various approvals,” said Michael Maier, a vice president with developer Westrum.
Starting in fall 2018, Westrum has shown
plans for “Lansdale Luxor,” a five-story, 205-unit apartment building that would replace a vacant warehouse east of Broad and Vine Streets and south of the town’s freight station. Lansdale’s planning commission approved the plans in November 2019, council’s Code Committee then did so in early December, and full council later that month, which spurred talks on a LERTA, or Local Economic Revitalization Tax Assistance Act incentive, to gradually phase in the increased property taxes.
Last fall, North Penn’s board asked Westrum to revise the phase-in period from their proposed ten years down to five, and the shortened LERTA phase-in plans were shown to Lansdale’s council in February. A public hearing on that fiveyear phase-in was slated for late March 2020, and the school board and borough council both resumed talks in early August ahead of formal votes in their August action meetings.
Before borough council on Aug. 19, Maier and attorney Joe Clement argued their case in a two-part hearing, seeking permission to classify the vacant warehouse building as deteriorated and then to adopt the LERTA ordinance itself.
“If you know this property, it’s right across the street from borough hall. There’s about a 50,000-square-foot abandoned warehouse that has been a public nuisance for quite some time in the borough,” Clement said.
“The borough has changed quite a bit around that property. It is a more residential look and feel around that property, particularly with the development across the (rail) tracks at Andale Green being right around the corner. Now, that use as an industrial site is just no longer desirable on that property,” he said.
During the hearing, Clement detailed how the property as-is currently generates roughly $4,500 per year in tax revenue to the borough, and the estimated $34 million apartment building would raise that number considerably. Under the LERTA, once the building is done and the property formally revalued, the taxes to the borough would increase in the first year to $19,400; to $39,800 in year two; to $58,200 in year three; to $77,500 in year four; and to $97,000 in year five and thereafter.
“In short, the borough would get about $259,000 in taxes over the next, call it six years — really five, if we look at years one through five — as opposed to $27,000 in taxes it would get under today’s land use value,” Clement said.
According to Westrum’s presentation to the school board earlier in August, assuming current millage rates, the project would create roughly $550,000 in new tax revenue to the borough over the next ten years, and $2.5 million in new revenue to the school district. Changing the phase-in period from ten years to five “cost” the developer just shy of $197,000 in added tax revenue that would go to the borough over that time, and roughly $916,000 more to the district.
During the first phase of the hearing, councilman Leon Angelichio asked several questions about whether the consolidation of two adjacent parcels into one would have any impact on the LERTA; Clement said the consolidation is not yet finalized and therefore requires two parcel numbers be recorded, but otherwise has no change.
“It does not impact the taxes associated on those two (properties) now. The land value is what it is, it will continue to be what it is. When the project is completed, the land value, or the improvement value that’s associated with the land, will greatly increase, and that’s where we get the abatement,” Clement said.
Angelichio asked if the two parcels would impact the cost or processes of remediation of chemicals below the site from prior industrial uses, and/or cleanup of a stream running through a corner of the site; Clement said it would have no impact. Angelichio then asked if the tax discount was critical for the project, and Clement said it was, particularly in light of roughly $1 million in unanticipated costs from redirecting the stream.
“Absolutely. In this instance, for sure. Not only because of the environmental condition of the property, but also with the designation of the drainage feature on the property now being a stream — that added tremendous costs,” Clement said.
“It was not designated as a stream at the time the property was acquired, and as a result, you have approximately $1 million of costs added to the project. And for anybody to make any reasonable use out of this property, they’re going to have to address that stream,” he said.
After discussing the status of the property, council then held the second phase of the hearing, to draft the ordinance allowing the tax abatement. Resident Carole Farrell, who lives on Blaine Street just south of the site, asked for an updated project timeline, to which Maier said he hoped work can begin this fall.
“It’s about an 18-month construction period, so we’re talking about starting in November 2020, and hopefully, if all goes well, we’ll be opening for residents in April 2022,” he said.
Councilman Rich DiGregorio asked if the project would use any public grant funding. Clement said none would be used “for this part of the project,” and that some county grant funding will be used for demolition of the warehouse building, “but that went to the original property owner and not the applicant.”
Council then voted unanimously to approve the LERTA ordinance, and North Penn’s school board also did so unanimously but with no discussion on Aug. 20.
Lansdale’s borough council next meets at 8:45 p.m. on Sept. 2, with various committees starting at 6:15 p.m.; for more information visit www.Lansdale.org.