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LVIP to buy abandoned Steel land
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Lehigh Valley Industrial Park Inc. will take control of 1,550 acres of former Bethlehem Steel brownfields under a deal that is expected to close Tuesday, according to the seller of the land and a confidential memorandum that details the agreement.
In the memo, Drew R. Lewis, Northampton County community and economic development director, told County Council members that LVIP will keep 600 acres to redevelop itself and sell more than 500 acres to one of California's largest developers, Majestic Realty Co.
The deal would flip all of Bethlehem Steel's brownfields in south Bethlehem into the hands of proven developers to bring about one- eighth of the land in the city back to the tax rolls, paving the way for its commercial, retail, residential and industrial redevelopment.
The rest of the land will be carved up and sold to other developers, according to the memo, which describes the April 25 meeting of the LVIP executive committee as "highly confidential."
"Due to the secrecy of the meeting all handouts were collected when the meeting adjourned," says the memo. No sale price was disclosed.
The LVIP deal does not involve the remaining 120 acres of Bethlehem Steel land west of the Minsi Trail Bridge, which will be sold by the International Steel Group of Cleveland to the Delaware Valley Real Estate Investment Fund to develop the Bethlehem Works shopping, entertainment and residential district.
ISG bought the land as part of its buyout of bankrupt Bethlehem Steel. ISG Chief Financial Officer Mitchell Hecht said all the parties are in a "rolling close" on the properties that began Wednesday and he expects all the land -- 1,550 acres to LVIP and 120 acres to Delaware Valley -- to change hands Tuesday.
"This is precisely the kind of development that LVIP should do," said Northampton County Executive Glenn Reibman, who sits on the LVIP board of directors. "It's a new direction for LVIP but the right direction at this time."
The 600 acres LVIP would keep is larger than its largest industrial park, LVIP-IV, which is 430 acres.
Majestic probably won't take over its land until 2004, according to the memo, and company officials have estimated a full build-out to take 10 years.
Reibman said LVIP, a nonprofit organization, is the right developer for the redevelopment of the largest brownfields site in the country because of its track record developing six successful industrial parks in the Lehigh Valley that are at capacity.
"With LVIP stepping up we know the product we're going to get," Reibman said.
The linchpin of the LVIP project is a $13 million access road that will be built with money from a controversial $111 Northampton County economic development bond issue. Without the road, Majestic has said it would not be interested in the South Side land.
"The heart and soul of the bond issue is this development," Reibman said.
In addition to the county money, the memo says funding will come from bank financing and state and federal grants.
According to projections, a fully redeveloped brownfields property would be a $1.5 billion business park with 10,000 employees that would generate $70 million in taxes a year.
Several projects are already in operation or under development on some of the former Steel land:
Conectiv Energy has built a significant portion of its $600 million generating station and is pumping electricity from its gas- powered turbines.
Work has begun on the $7.5 million Flyers Skate Zone ice hockey center that's planned to open in the fall.
The BethIntermodal truck-to-rail terminal has been operating for two years.
OraSure Technologies has built Technology Center III on 4 acres it bought from Steel in 2001.
The city has done $12 million in road and streetscape improvements for Bethlehem Works.
Kerry Wrobel, executive director of LVIP, declined to comment Friday.
But LVIP's largest developer, J.G. Petrucci, said the redevelopment project -- with its proximity to Interstate 78 and the planned $58 million of improvements to Route 412 -- is a home run that will likely see him bringing developers to the table.
"I size it up as a fantastic situation," said Petrucci, who entered into negotiations himself for the land until LVIP came into the picture. "I don't think there is any question that that location off [Interstate 78] will work. I would be disappointed if we didn't have some significant projects in there."
The site is all the more attractive because of the intermodal facility, Petrucci said.
"None of the other [LVIP] parks have rail service," Petrucci said. "You could see it encouraging companies that use bulk transport. Plastics companies, for example, could bring in bulk resin."
Lehigh Valley Industrial Parks I to VI house 370 companies and 17,000 employees on 1,498 acres and generate more than $9.6 million in annual payroll and property taxes, according to LVIP's Web site. LVIP expects there to be 20,000 employees throughout the park system upon full development of Parks I through VI, which is projected for the year 2010.
Majestic, of California, operates 50 million square feet of business communities, distribution facilities, retail centers, industrial and office parks, hotels, sports arenas and resorts that include the Staples Center in Los Angeles where the NBA's Lakers play.