Blairsville KOEZ site eyed to attract grocer
By Jeff Himler
Published: Monday, Sept. 23, 2013, 12:12 p.m.
Blairsville Borough Council and Blairsville-Saltsburg School Board have agreed on an effort to attract a grocery store to downtown Blairsville through designation of a proposed Keystone Opportunity Expansion Zone in the borough.
At their respective meetings on Tuesday and Wednesday, the council and school board adopted similar resolutions targeting the location of the former Bi-Lo supermarket at West Market and North Morrow streets and related properties for KOEZ status.
If approved by the state Department of Community and Economic Development, the site of slightly more than 3 acres would be eligible for an exemption from local real estate taxes and state corporate income taxes for a period of 10 years, extending from Jan. 1 of next year to Dec. 31, 2023. Under a companion agreement the borough and district are pursuing with the property's developer, only partial exemption would be granted for local taxes.
Byron Stauffer, executive director of the Indiana County Office of Planning and Development, addressed both local taxing bodies at their meetings. He said the decision to forgo tax payments from KOEZ properties for a decade can be seen as an investment in future increased revenue that development of the parcels will generate.
“The (KOEZ) program works,” Stauffer said. “It does pay dividends if it's done correctly.”
He cited the Corporate Campus industrial park in neighboring Burrell Township as a site where a KOEZ zone has added to the economy. He said designation of KOEZ acreage at the park in 2001 was an important factor in attracting such tenants as Penn Machine and the WyoTech automotive school. In 2011, he noted, when those KOEZ exemptions expired, the Penn Machine plant and three buildings on the WyoTech campus were added to the local tax rolls.
There has been an additional benefit of spinoff development, Stauffer said, referring to the construction in the township of the Indy Park housing complex for WyoTech students.
Officials are hoping the borough will see a similar benefit from the proposed borough KOEZ site.
Since the Bi-Lo store closure in March 2010, borough surveys have repeatedly identified recruitment of a new downtown grocery outlet as a top priority for residents.
Blairsville council member Mary Ugoletti noted attracting such a store could be a key factor in the borough's plan to develop new housing on the west end of town.
“It's going to be much easier to market those homes if we have a grocery store in town,” she said. “Without a grocery store, those are going to be a pretty tough sell.”
Ugoletti said the Corporate Campus KOEZ is “without a doubt what attracted WyoTech and 150 jobs.”
Stauffer said he has been involved with borough officials in working with the current developers of the former Bi-Lo site — Earl Hewitt and D. Craig Josephson of Indiana County-based Strategic Real Estate Properties, LLC. While noting that decisions can change in the private sector, Stauffer said the developers, who acquired the property about a year ago, currently are focusing their efforts on attracting a grocer to occupy at least a portion of the vacant Bi-Lo store.
School board President Ed Smith, among school officials who also have met with the developers, indicated three prospective tenants have been looking at the site.
But, Stauffer said, there are challenges to reoccupying the building that a KOEZ tax exemption could help offset.
While noting that grocers typically operate on a tight profit margin, Stauffer said, “It will take a substantial investment to get that building up and running.”
He said the vacant building has been substantially gutted of furnishings. A new grocer would have to install such essential items as coolers, shelving and checkout lines.
In contrast, related buildings along Market owned by the same developer have remained occupied and currently house a state liquor store and an office of the Hewitt Real Estate agency.
According to Smith, the fact that the smaller buildings are in use prompted the school board's buildings and grounds committee to propose an additional agreement for payment in lieu of taxes (PILOT) with Strategic Real Estate Properties. He said the committee met Monday with the developers, whom he said seemed satisfied with the terms of the additional agreement.
Borough council on Tuesday and the full school board on Wednesday each signed on to the PILOT agreement, which scales back the full 100-percent real estate tax exemption that is permitted under the state KOEZ Act of 1998.
Under the agreement, the two currently occupied parcels will continue to be billed annually at the existing local 2013 tax rates for the 10-year life of the Blairsville KOEZ site. Those amounts — including $1,821.82 paid to the school district — would not be affected by a countywide property reassessment program that is just getting under way.
The remainder of the former Bi-Lo site would be fully exempt from taxes for the first seven years of KOEZ eligibility. Then payments would gradually be phased in — at 25 percent of the full amount due in the eighth year, at 50 percent in the ninth year and at 75 percent in the 10th year.
In the 11th year, the entire site would return fully to the tax rolls.
At Tuesday's meeting, Ugoletti and Jeff Marshall proposed enacting the full 100-percent KOEZ exemption for the borough's share of taxes from the site, but they were overruled by fellow council members.
Council member Carolyn Smith supported the KOEZ and PILOT proposals but expressed reservations about forgiving taxes for a developer after increasing taxes levied on borough residents. “It just doesn't sit well on my burner,” she said.
In December, the borough approved a 1.9-mill hike in the real estate tax rate.
With the borough and school board both approving an identical geographic boundary for the KOEZ site, it next will be considered for approval Wednesday by the Indiana County commissioners. The county board also is expected to vote on proposed KOEZ sites at the former Gorell window manufacturing plant in White Township and at the former PolyVision plant (Dixonville Commons) in Green Township.
Indiana County has been allotted up to nearly 50 acres out of 350 acres that state officials will consider for KOEZ designation in the 41st Senatorial District.
Stauffer said the proposed Blairsville KOEZ would be the first such site in the county to include a PILOT agreement, and he acknowledged that state officials aren't keen on such agreements. “It starts to erode the effectiveness when you start nickel-and-diming (tax exemptions),” he said.
He indicated the state DCED also wants to see local participation in shouldering a share of the tax exemptions provided at a KOEZ site.
Applications for the county's proposed KOEZ sites are due on Oct. 1, Stauffer said.
Jeff Himler is an editor for Trib Total Media. He can be reached at 724-459-6100, ext. 2910 or firstname.lastname@example.org.
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