County commissioners approved Thursday by a split vote a five-year tax abatement request totaling over $518,500 for DHL Express, a transportation company that plans to invest $88 million in blighted property in South Lebanon Township.
DHL, an Ohio-based logistics company, requested a partial Local Economic Revitalization Tax Assistance (LERTA) abatement for the vacant and contaminated Alcoa site, located in the 3000 block of State Drive. Without the $518,568.75 reduction, the company’s tax bill would be over $1.23 million for that five-year period.
LERTAs are designed to allow taxing authorities to provide tax abatement to businesses to encourage economic development within local communities.
Kelli Saunders, a DHL company representative, said her employer wants to invest in Lebanon County because it is in a key location.
“We have a specific life sciences and pharmaceutical customer that we would like to develop a 970,000 square foot distribution center in Lebanon County at the former Alcoa Aluminium site,” Saunders said. “Being a transportation company, we have a large emphasis on decreasing our carbon footprint, our carbon emissions, (and) not using greenfield or raw land to develop.”
Saunders said the soil is contaminated, and added that DHL would be remediating the land as well as the property, which has been blighted since January 2010 after Alcoa ceased operations there.
“With our focus on sustainability and redeveloping of sites, this location is perfect for DHL to potentially develop on,” Saunders said.
Saunders said the company has worked with the state Department of Environmental Protection to create a remediation plan and is looking to move forward with purchasing the site, contingent on the LERTA approval.
Saunders noted DHL is prepared to invest $75 million for the building construction and remediation of the soil and another $13 million for fixtures, racking and other equipment to be housed within the facility.
“The warehouse will create over 200 jobs with a total payroll at a minimum of $7.7 million, probably increase over that as market rates for payrolls and wages trend upward,” said Saunders. “Over the five-year period, the county would see a positive net tax in the amount of $716,000.”
Commissioner William Ames said he has struggled with the decision to approve LERTAs over the past 10 years, adding that he’s voted to approve some while disapproving others. He then cited several reasons for his opposition to this LERTA request.
“More and more of our available land is being used, which is a good thing, but it has to come to a close sometime,’ Ames said. “In a sense, these taxes that are being abated are passed off to other property holders, both homeowners and other businesses in our county.”
Manpower is also an issue, according to Ames.
“All you have to do is drive around the county (to see) hundreds and hundreds of help wanted signs, it’s almost impossible. This will put an additional burden on our labor force,” he added.
Ames told the other commissioners it’s time for them to examine whether LERTAs actually benefit the community.
“We need to take a close look at what are the benefits to the residents of Lebanon and businesses of Lebanon County, existing, by granting these LERTAs,” said Ames. “I believe we’ll very quickly decide that it really does not give us a benefit. For that reason, I am going to vote against the LERTA.”
Commissioner Jo Ellen Litz disagreed with Ames, saying that DHL’s plan to remediate a blighted property that has been abandoned for many years is a good thing for Lebanon County.
“One of our major priorities is preserving farmland and we’ve put a lot of money into farmland preservation,” LItz said. “Here, it is a little bit of a reverse psychology, we’re allowing a partial tax exemption over five years. We are truly recycling a brownfield, one with contamination. We are not destroying brand new farmland. There is truly a need for an incentive to make this land productive.”
Litz said she was leery of approving any LERTA in the current work environment because of the damage to it caused by COVID-19, but added that many restrictions are being lifted at the end of the month and that by the time the company finally opens (groundbreaking is slated for 2022), the county’s workforce needs will have returned to pre-pandemic levels.
“This is a win-win for everyone and I will be approving this proposal,” Litz said.
Chairman Robert Phillips agreed with Litz, saying he views this as new tax revenue that will add to the county’s coffers.
“I really feel that five years of us investing that gives a tool that helps make this happen is something I am comfortable in doing,” Phillips. Ten years would have been a tough request, but five years, I feel, is a good compromise, and for those reasons I am supporting this effort.”
It was noted by Litz that DHL is partnering with Hershey Company, which is building a new warehouse in the Annville area. Saunders said there is a partnership, saying DHL is supplying the labor at the warehouse near Annville.
In other county business, the commissioners voted to enter into a lease with the Lebanon YMCA on the Camp Shand property the county purchased last October from the Lancaster YMCA at a cost of $725,000.
The agreement is a 99-year lease for a payment of $1 from the YMCA to the county, according to Jamie Wolgemuth, county administrator. Wolgemuth said the agreement includes a provision to dissolve the partnership if “things go sideways” for one of the parties, and he noted that liability will be assumed by the YMCA.
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