The new owner of a prominent 172-acre tract in the Hanover Industrial Estates is seeking a second property tax break for its vacant site — a request up for Luzerne County Council discussion Tuesday.
A county council majority had reluctantly agreed in 2014 to extend a Keystone Opportunity Zone (KOZ) break for the Hanover Township property through 2024, providing real estate tax forgiveness to the owner and exemption from most state taxes to the business tenants it planned to attract.
NP Wilkes Barre LLC, which purchased the New Commerce Boulevard property for $15 million earlier this month, has requested another break ensuring a decade of tax forgiveness on new construction. This break is reserved for blighted property under the Local Economic Revitalization Tax Assistance Act, or LERTA.
The clock for the second break would start when a new building is occupied and assessed by the county. While the LERTA tax forgiveness already would be covered by the KOZ through 2024, it would provide a supplemental break after the KOZ expires.
For example, a new building picked up by the assessor’s office at the start of 2018 would receive tax forgiveness from KOZ through 2024 and from LERTA through 2027.
The development company behind the purchase — NorthPoint Development, of Kansas City, Mo. — bought the property with aggressive plans to construct structures totaling more than 200 million square feet for new development, said Brian Stahl, an attorney at Kingston-based Hourigan, Kluger & Quinn who is representing the developer.
NorthPoint has developed properties in several states, including the former Harley-Davidson West Campus in York County and an industrial property in neighboring Schuylkill County.
Stahl said he can’t speak for prior owners but stressed NorthPoint made a significant investment and is driven to complete all new construction by the end of 2018.
Local officials consider the Hanover Township tract a gateway property because it is visible from Interstate 81 and conveniently located off Route 29.
Earth Conservancy, a nonprofit and tax-exempt reclamation organization, spent millions filling deep mine pits and contouring the eyesore property to eliminate ponds and prevent runoff before selling the tract to a subsidiary of Texas-based Trammell Crow Co. for $11 million in 2014.
It’s unclear why past buyers did not follow through on promises to take full advantage of the KOZ and construct a new distribution center employing an estimated 800 with jobs paying more than $30,000 a year on average. In a pitch to county officials requesting the KOZ, a Trammell Crow representative said the company had “breathed some life into a park that’s really seen better days.”
The Trammell Crow subsidiary turned around the same day it purchased the land and sold it to KTR NE PA LLC, a property trust company, for $18.2 million, records show. Prologis Inc., a warehouse and distribution center owner, later absorbed the land as part of its purchase of KTR, records show.
As a concession for the tax break, Trammell Crow had agreed to pay around $10,000 annually for a decade in lieu of property taxes on the land — a requirement inherited by subsequent owners, including NorthPoint.
Tax break requests must be approved by all three taxing bodies, officials say.
The Hanover Area School Board recently approved the LERTA for the Hanover Township site, pending township approval. Township commissioners approved the request Monday night.
Critics say tax-break programs unfairly give select properties a government-funded competitive advantage, while supporters say much of the development here wouldn’t exist without tools to attract employers and developers who are offered incentives in other states.
Tamburro R.E. Development and Management LLC, which purchased the former Valley Crest Nursing Home property in Plains Township from the county for $2.075 million last year, agreed to remove a LERTA tax break from its purchase conditions after several council members said they would not approve one.
The Pittston Area School Board rejected a LERTA pitched for the former Techneglas property in Jenkins Township in 2015, killing the proposal before it came before the county council.
Around 30 properties in the county now receive LERTA breaks approved by prior administrations, many located in the CenterPoint Commerce and Trade Park in Jenkins Township, county records show.
Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.