Luzerne County Council asked to alter tax diversion for Pittston area residential project

A Pittston area townhouse developer is asking Luzerne County Council to alter a real estate tax diversion program that had been approved more than a decade ago.

Prior county commissioners and other taxing bodies had granted the Tax Incremental Financing diversion, or TIF, for the Stauffer Pointe development in 2008.

Buyers of new properties constructed in a TIF zone pay real estate taxes as usual. But instead of keeping that revenue, taxing bodies agree to temporarily use the money to repay an infrastructure loan needed to create the development.

The premise is that taxing bodies will reap the benefits of development in former blighted areas once the loan is repaid.

In this case, taxing bodies agreed to give up the revenue until a $4 million infrastructure loan is satisfied.

Representing Stauffer Pointe Development Group, LLC, local Attorney Angelo C. Terrana, Jr. said the change his group is requesting — an expansion of the TIF zone — will help taxing bodies by accelerating repayment of the loan and ending the diversion sooner.

According to Terrana:

The project involves 184 units — 144 in Pittston Township and 40 in Pittston city.

Only the Pittston Township portion was included in the TIF because the developers believed that was sufficient to meet needs at that time.

However, the construction is proceeding in both municipalities, and the pace of development slowed overall with the housing recession and, more recently, the coronavirus.

If Pittston is added to the TIF — the request now before county council — Stauffer Point Development projects the $4 million loan will be repaid by 2031 instead of 2036. A TIF remains in effect until the loan is repaid.

Pittston and the Pittston Area School District have both approved the TIF expansion. County council members are set to discuss the matter at Tuesday’s work session but would not vote until a future meeting.

Shaving five years off the loan would allow the county to keep $549,500, which is the estimated total real estate taxes the county would receive from the Stauffer Pointe development from 2032 through 2036.

Overall, the development is expected to yield $619,791 in annual school, county and municipal tax revenue by 2032, with the county’s portion estimated at $109,900.

About 40 Stauffer Pointe units have been built and sold so far in both municipalities, leaving 144 more to construct and sell.

“This year started out fabulous, but then COVID-19 hit,” Terrana said.

A TIF was warranted because an abandoned Lehigh Valley Railroad line cut through the development site, separating the two sections and leaving a 20-foot drop-off, he said, noting a “tremendous amount” of fill and other work was required to make the tract level.

This work and roads and utilities to prepare the site for development will cost more than $6 million, which means the developer must spend over $2 million on infrastructure not covered by the TIF, Terrana said. He stressed that doesn’t include costs to build the residential units.

Terrana argues the project is worthy of support because it is reusing blighted land to grow the future tax base. The project is on high ground, providing scenic views of the Wyoming Valley.

TIFs rare

County council has not approved a TIF since the county’s home rule government structure took effect in 2012, officials said.

The developer of the former Valley Crest nursing home site in Plains Township has discussed but not yet formally asked council to vote on a TIF to help fund highway traffic improvements needed for a $94 million project. Officials had said that proposed TIF loan would be about $4.4 million.

The state won’t issue a highway occupancy permit for the Valley Crest project unless congestion is addressed along the stretch of Route 315 and Business Route 309 (Kidder Street) between Mundy Street and the Cross Valley Expressway, officials have said.

The 62-acre Valley Crest site is accessible from a road off Route 315 that also services the adjacent VA Medical Center.

The traffic improvements would cost about $13 million and will be partially funded by the state, officials have said.

Valley Crest Real Estate LP purchased the former nursing home from the county for $2.075 million in 2015 and plans to tear down the asbestos-filled structures to construct a retail, hotel and apartment complex called Valley Crest Commons.