East Cocalico, CSD mull UGI tax break

By , on March 8, 2017

Local officials are weighing a 10-year tax break for UGI, which is facing several obstacles in its quest to build a new, corporate headquarters on a 32-acre parcel adjacent to Col. Howard Boulevard and Route 222.

At an East Cocalico Supervisors meeting March 2, UGI Chief Financial Officer Dan Platt explained that estimated site costs are now expected to exceed an original range drawn up by the company’s auditor.

Causes include wetlands that could be a potential home to bog turtles-triggering environmental monitoring and protections-a complex traffic design and a costly extension of sewer and natural gas lines from near Route 272.

UGI is asking the township, the school district, and the county to grant it $3.9 million in relief through the Local Economic Revitalization Tax Assistance Act, or LERTA. The state abatement program waives new taxes on development for the first year, then phases them in at 10 percent a year for 10 years. In the 11th year and beyond, UGI would pay full taxes on the entire assessed property value.

UGI would still have to pay full taxes on the value of the land from day one.

Cocalico School District Superintendent Dr. Ella Musser attended the meeting along with the district’s business manager, and they reported on UGI’s request at a school board work session Monday night.

The school board signaled its willingness to provide the credit, given the long-term potential for tax growth that the $35 million headquarters and adjacent developments, including the proposed Cocalico Commons, could provide.

“We didn’t find any reason not to do this,” school board President Allen Dissinger said after Musser’s presentation. “We’re going to make money in the long run. There’s everything for us to gain.”

According to handouts supplied by the district, the land is zoned agricultural and generates $217,200 in annual property tax revenue. Cocalico estimates UGI’s project could bring in $1.5 million in municipal tax payments and $5.9 million in school district payments over 10 years, without factoring in tax relief.

Even if the company gets the LERTA designation, UGI would still pay about $3.4 million over the 10 years. In the next 20 years, the property could bring some $9.1 million into local coffers.

That’s money local municipalities aren’t getting now, and the abatement offsets UGI’s extra investment up front.

The company says its costs were driven up because of the possibility of bog turtle habitat protections, which effectively removes seven to eight acres from development because of much tougher set-back regulations.

“A significant amount of a money will be needed for underground holding of water run-off because we can’t let the water run into the wetlands,” said UGI Project Manager Dave Stahovich.

Getting into and out of the new site required numerous meetings with PennDOT because the original access drive plans brought traffic too close to a new light that would be associated with the already-approved Commons development across Col. Howard Boulevard.

Instead, Stahovich and Platt explained, UGI would connect to Pepperidge Drive but it would have to build up the land by about 30 feet and create a land bridge.

Despite the added costs, UGI remains interested in moving its headquarters from Reading. The proposed site provides easy access for employees and others traveling to what could be a 90,000-square-foot building.

It would shift about 250 management-level employees to the area, though most would not move their families, creating little impact on the school system. But as jobs or added or retirees or replaces, new residents could add to the tax rolls.

A UGI representative from Ernest and Young told East Cocalico leaders that money the township would collect on new wage earners “could” exceed the property tax abatement.

And school Business Manager Sherri Stull said if UGI pulls out, the township is unlikely to find any other takers because of the expense associated with the challenges there.

“I think, except for the traffic issues, the community wants something out there,” school board member Barry Harting said. “They want to see that area developed.”

LERTA was designed in 1977 to assist economically disadvantaged areas with developing deteriorating properties but has been used in non-blighted areas.

UGI officials mentioned Nordstrom’s move into a vacant West Donegal industrial site in 2014, a move supported by a LERTA credit.

A resident who attended the supervisors’ meeting said LERTA allowed municipalities to grant tax abatement for any number of years, up to and including 10. UGI officials said that was correct, but they were requesting 10.

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