Bethlehem tax break a bad idea
Back in the 1980s, Bethlehem decided that its neighborhood near Liberty HS and Moravian College needed some TLC. The city itself made public improvements that included street reconstruction, utility upgrades, new sidewalks and street trees. In addition, city workers went went door to door to promoting a rehab program for homeowners using CDBG grant money. Fast forward to 2017, and this same neighborhood is declining again. Without analyzing the reason for this blight, Bethlehem plans to remedy it with a special tax incentive called a LERTA. At best, this feel good measure will do no harm. But at its worst, this special tax incentive could actually accelerate this deteriorating neighborhood.
When she appeared before Northampton County Council recently to provide an excellent presentation for a program that encompasses over 8,100 properties in northeast Bethlehem, Housing and Community Planner Allyson Lehr said city officials are unsure why this area is declining. But that’s no secret.
The preferred residential unit is no longer the single family home with the white picket fence. According to Lehigh Valley Planning Commission Executive Director Becky Bradley, there’s been a tectonic shift away from the home to apartment life. She said this trend is across all age groups and all income strata.
An uncertain economy, lack of job security and the 20 percent down payment required for a mortgage have all combined to make apartment life more attractive.
What does this mean in a neighborhood where, as Lehr stated, 59 percent of the homes are owned by absentee landlords?
Under these circumstances, all that a LERTA does is make these properties more attractive to investors and speculators hoping to cash in on student or transient housing.
Under a LERTA tax incentive, property owners can gradually phase in an assessment increase that results from improvements to a home.
But a struggling homeowner who fixes his roof or spends money to bring his property up to code will see no assessment increase. Those who benefit will be absentee landlords who buy up homes they hope to rent.
So in a well-meaning attempt to make this neighborhood better, city officials may actually be making it worse.
Take a look at Easton’s experience with a similar LERTA that it adopted in 2012. According to county records through a Right-to-Know request, it is known that the Easton LERTA district comprises 859 properties of all kinds, from residential to commercial and industrial. While this is quite large, it is only about 1/10th the size of the 8,156 properties for which a LERTA is being sought in Bethlehem.
Easton’s program ends this year. In the five years that Easton’s LERTA has been in effect, only 72 properties have enrolled in the program, with 56 in progress and 16 under construction. This is a fairly low number, around 8.4 percent. Only 46 residential properties, or 5.4 percent, have taken advantage of the LERTA.
To address the underlying cause of blight in this neighborhood, Bethlehem officials should do what they can to make residents aware of existing CDBG programs to make the area attractive to homeowners, not absentee landlords. This includes housing rehabilitation loans of up to $20,000, exterior building improvement loans of up to $60,000, deconversion funds to help transform multi-unit buildings into single family homes and those ubiquitous facade grants of up to $5,000.