East Cocalico paves way for UGI tax abatement

By on May 10, 2017

Concluding a two-hour packed, public hearing, the East Cocalico Township supervisors passed a resolution declaring a 32.7-acre tract of land adjacent to Colonel Howard Boulevard a deteriorated property.

This designation triggers the possibility of well over $5 million in tax relief over 10 years using the Local Economic Revitalization Tax Assistance Act (LERTA).

Earlier presentations by UGI outlining the many costly challenges the site poses for development brought positive initial responses concerning tax abatement for 10 years from the Cocalico School Board, the East Cocalico supervisors and the Lancaster County Commissioners.

School board members will finalize their decision on granting tax abatement for up to 10 years at their May 15 meeting at 7 p.m. at the district office, 800 S. Fourth St., Denver.

The supervisors will hold a hearing to decide whether to grant the 10-year tax abatement at their on May 18 meeting. The meeting location and time is listed on the township Web site at eastcocalicotownship.com.

Some residents at the hearing contended that the conditions for LERTA were not fully met. LERTA legislation provides for tax exemption for new construction in deteriorated areas of economically depressed communities and for improvements to certain deteriorated, industrial, commercial, and other business properties.

While UGI officials made the case that the light industrial-zoned land qualifies as deteriorated with all the infrastructure challenges and lack of nearby gas, sewer, and water lines, the tract is not located in an economically depressed community as defined by the law.

UGI attorney Paula Leicht and Tom Goodman, East Cocalico solicitor, explained both items don’t need to apply, and the case made for improvements to deteriorated land was enough to secure LERTA status. The international consulting firm of Young is secured as co-retainer to help UGI understand LERTA as applied to undeveloped property and business/industrial property.

With LERTA nothing is assessed on the improved property in year one, in year two 10 percent is assessed, year three 20 percent and so on up to year 11 when 100 percent of improved value is assessed. The land tax would still be collected annually.

The improved value is pegged at $23.8 million with the proposed 100,000-square-foot headquarters. With LERTA factored in, the township will receive approximately $249,000 over 10 years compared to $5,000 today; the school district over 10 years will receive $2.7 million compared to $60,800, and the county $454,000 over 10 years compared to $811 annually, according to UGI officials.

UGI will enlarge its current workforce of 200 up to “a full complement” of 300. The utility will be assessed the township’s one percent earned income tax. If employees live elsewhere and have a similar tax, the higher of the two will be assessed and paid. Upon opening, most employees will be commuters from UGI’s Berks County’s Morgantown Road operation as well as the operation near Albright College just north of the Reading city line. The UGI lease on these sites expires in March 2019.

During public comments at the hearing, residents, volunteer firefighters, the police chief, school and school board officials welcomed UGI’s plans and praised the positive community involvement for which UGI is known. Public comments reflected interest in employment opportunities and increased economic stimulation with UGI employees purchasing food, gas, and other items locally.


UGI officials field citizen questions

After a one-hour presentation concerning unusual expensive site challenges UGI will face with the 32-acre tract of land proposed for a new corporate headquarters, many East Cocalico residents took the opportunity to ask questions and provide comment.

Following public comment, supervisors voted unanimously that the distressed conditions of the site meets LERTA (Local Economic Revitalization Tax Assistance Act) conditions and allows, if approved at another township hearing, a tax break for up to 10 years.

UGI is proposing no tax increase the first year after the building is constructed. In year two, the new building would be taxed at 10 percent, in year three 20 percent, and on until a full tax assessment would kick in at year 11. The tax on the land would be collected every year.

Prior to opening the hearing, Supervisor Chairman Doug Mackley announced that in the interest of time and allowing everyone in the crowded meeting room an opportunity, each person would have five minutes to speak.

Resident Jeff Mitchell commented on the UGI figure of $217,000 as the assessed land value.

“We’ve all been reassessed,” said Mitchell. “What’s the new number for 2018?”

Attorney Paula Leicht said UGI would not have access to that information and there should not be an assumption that the assessment went up.

The new assessment for the land, as posted online, is $291,000. A telephone call to the county assessment office confirmed that this figure is accurate. The increase is in line with the area average of 32 percent.

Adamstown Area Library Board of Trustees member Jane Weber briefly explained the importance of the new area library project. She said that UGI’s community involvement in this project would be “greatly appreciated,” ending with: “I’ll give you my card.”

Both Dave Stahovich, UGI senior operations manager, and Joe Swope, UGI media relations, appeared interested in more information regarding the library project. The project is the multimillion-dollar rehabilitation of a former VFW building, for the library which serves five local municipalities: Adamstown and Denver boroughs, and East Cocalico, West Cocalico, and Brecknock townships.

Also addressing educational issues was Dr. Ella Musser, superintendent of Cocalico Area School District.

Musser asked about UGI’s involvement in community technical schools, student internships, shadowing programs and other company interactions with high school students. After Stahovich answered her inquiries, she said: “Excellent.”

Resident Ken McCrea asked what dollar amount UGI considers being above the development cost anticipated for a project of this magnitude. The project includes a 100,000-square-foot building and parking for approximately 350 vehicles.

“We’ve had other large projects in the township which have also encountered significant costly site development challenges,” said McCrea. The area is known for its limestone rock. UGI officials said it could cost up to $700,000 more just to run utilities across the road.

McCrea said if additional development costs would go as high as $2.5 million, the ten-year tax abatement UGI is requesting from the township, school district and county would amount to about $5.5 million over 10 years, and that’s with no tax increase calculated.

Calculating a tax increase like that of the last decade, total tax abatement amounts to about $5.8 million.

Zoning Officer Tony Luongo verified that other major projects, such as Pet Value, have encountered expensive land development issues. Luongo didn’t have specific numbers with him.

Although UGI is seeking the 10-year tax abatement, the township, school district, and county could consider tax abatement for a lesser number of years.

The Rev. Sandy Gideon commented about the frugality needed by all school districts in balancing budgets.

“If we don’t approve the LERTA will you still come?” she asked.

Several UGI officials, without providing a “yes” or “no” answer, shared the usefulness of the LERTA when dealing with auditors and other officials.

Site development cost increases for this project, the largest one Stahovich has dealt with in his 30 years with UGI, are far above what’s typical. The LERTA shows cooperation and helps to defray, not cover, the high development costs, he said. All of this reflects favorably when the project is evaluated by state auditors.


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