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CASE STUDY >> PENNSYLVANIA
Developing the Nation’s Largest Brownfield
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LVIP
president Kerry Wrobel displays plans for the site. |
One of the largest private brownfield sites in the nation is the former Bethlehem Steel plant that winds along the Lehigh River in eastern Pennsylvania. The entire site represents 20 percent of the City of Bethlehem’s land mass.
In late May of 2004, Lehigh Valley Industrial Park, Inc. (LVIP), a private nonprofit economic development corporation, acquired 960 acres, about half of the site, from the International Steel Group (ISG). Another company, Majestic Realty of California, will develop about a third of the former plant site.
The remainder, called Bethlehem Works, is aimed at public attractions — an industrial museum, skating rink, high-end retail and restoration of some of the blast furnaces. Bethlehem Steel created the master plan for developing the entire site prior to going bankrupt.
For its half, LVIP intends to create a diversified industrial park consisting of small parcels devoted to manufacturing, high-tech operations, warehouse, distribution and office space. Initially, according to LVIP president Kerry Wrobel, the company will develop a 265-acre area called the Saucon tract within the site. Zoning for this area will be changed to industrial redevelopment, allowing everything from retail and commercial to heavy industrial.
First Tenant Signs Up
United States Cold Storage, a leading frozen foods company headquartered in Cherry Hill, NJ, has already purchased a 32-acre parcel in the Saucon tract for a refrigerated warehouse operation. The first phase, a 175,000 sq. ft. facility, is scheduled to open in April of 2005. Ultimately, this operation will expand to 600,000 sq. ft.
“United States Cold Storage sees this site as an ideal location from which to penetrate Northeast markets,” says Wrobel. “It’s within a 90-minute drive of 27 million people.”
LVIP is building a road from the Route 412 entrance that will lead to a cul
de sac terminating near the United States Cold Storage property. Utilities and
a detention pond are being added to support the first phase.
Another road, called Commerce Center Boulevard, will provide access to the adjacent
550 acres of Majestic Realty, the heart of the former plant site.
As part of its development effort, LVIP will move and reconstruct an intermodal truck/rail transfer facility, currently in the Majestic area, to a more suitable area in the former coke plant site of Bethlehem Steel. The Lehigh Valley Rail Management LLC will eventually own the new intermodal facility under a lease purchase arrangement with LVIP.
Keystone Innovation Zones
Wrobel notes that the Saucon tract is the most challenging area of the entire site. “The Saucon tract was the home of the large Grey rolling mills that built the skyline of New York City and the Golden Gate Bridge. It housed the structural shipping yard where the steel I-beams were straightened and stored. We’re dealing with four different elevations and a high concentration of steel structures undergoing demolition,” he says.
The lots in the Saucon tract that front Route 412 qualify for a brand-new Pennsylvania initiative called Keystone Innovation Zones (KIZs). The state created these zones to enhance regions near colleges and universities (the site is near Lehigh University).
The intention is to promote partnerships among universities, young high-tech companies and the community to foster innovation and incubate new businesses. Companies that qualify are eligible for substantial tax credits. Colleges can apply for grants from an annual $10 million pool to implement or enhance technology transfer programs.
Expanded Responsibilities
Wrobel adds that before ISG entered the picture, when LVIP was dealing directly with Bethlehem Steel, the company was slated to develop only the 265-acre Saucon tract. At the 11th hour of the sale of Bethlehem Steel assets to ISG, the Bethlehem Steel Board decided that ISG should take over all surplus properties, including the Bethlehem plant.
In April of 2003, LVIP made the case that they had the capability to develop the entire site, not just Saucon. As a result of the presentation to ISG, LVIP came away with the right to develop nearly 1,000 acres.
“Obviously, total development will require a significant public-private partnership,” says Wrobel. “But as a nonprofit, we’re well positioned to secure the necessary funding.”
Pennsylvania has already contributed about $2.5 million. Northampton County will provide $13 million for 4,200 linear feet of road and a rail bridge to support the new intermodal facilities. These projects will also provide access to 1,300 acres that are currently land locked.
Environmental Considerations
LVIP will assume environmental liability on the site, working with the Pennsylvania
Department of Environmental Protection and the Environmental Protection Agency
to assess and perform remediation where required.
“Primarily,” Wrobel says, “portions of the site have material
from heavy metals that exceed health-based standards established by the Commonwealth
of Pennsylvania. This is something you’d expect for a plant manufacturing
steel for 100 years.”
Bethlehem Steel characterized most of the impacted areas and developed an overall remedial strategy for the property. LVIP will continue that process and address the remaining conditions as part of site development.
“Pennsylvania’s environmental cleanup program was designed specifically for sites like this, providing great remedial flexibility so that a variety of alternatives can be explored during cleanup and development,” says Wrobel.
He adds that this has allowed LVIP the opportunity to work directly with the development community in identifying reasonable site development strategies that can be used to satisfy regulatory requirements. These strategies include engineering and institutional controls.
Future development will cap the residual materials in place. “Effectively, most of our tenants will develop their parcels as if they were on a greenfield site,” says Wrobel. “Our tenants’ only responsibility will be to build the final caps, which will be nothing more than the construction of their buildings and parking lots.”
Making It Happen
A wide range of companies — manufacturing, technology, distribution, logistics, retail and office — has expressed strong interest in the project. “We have two or three parties looking at each lot in our first phases,” Wrobel says. “For example, several companies from the Lehigh Valley and Northern New Jersey want to expand or relocate. We’re located just a few minutes from the New Jersey border.”“We’ve made a commitment to the city of Bethlehem that we are going to create a dynamic gateway into South Bethlehem,” says Wrobel.
“Additionally, this project stands a good chance of improving the prosperity of the whole Lehigh Valley region. We intend to make it happen.”
Megan Longenderfer is vice president of marketing & public relations for the Lehigh Valley Economic Development Corporation in Bethlehem, Penn.