Luzerne County Courthouse
                                 File Photo

Luzerne County Courthouse

File Photo

Payments in lieu of taxes may be the new norm for developers seeking real estate tax breaks in Luzerne County.

County Councilman Chris Perry made this point during a recent work session discussion about the latest tax break request — this one from NorthPoint Development for a 15-building data center near Interstate 81 in Hazle Township.

Kansas City, Missouri-based NorthPoint is offering to provide an estimated $1.18 million in lieu of taxes to partially offset the impact of tax forgiveness.

Set at $2,500 for each acre housing a structure, these payments were modeled after the tax break for another developer — Hillwood Properties — that council approved in August for a project along Route 309 in Hazle Township.

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Perry had described Hillwood’s tax break as a “unique plan” because the developer will make payments totaling $945,000 to the county in lieu of taxes as the phased project advances.

During the work session earlier this month, Perry credited NorthPoint for offering a payment similar to Hillwood’s and said he believes council will now be looking for such contributions going forward.

Half would be paid when each building permit is issued, with the remainder forwarded to the county when the temporary certificate of occupancy is issued.

“I very much appreciate that,” Perry said of the payments.

Councilman Kevin Lescavage also thanked the NorthPoint representatives — Tom Williams and Attorney Brian Stahl — for “sharpening their pencil” with the proposal.

Councilwoman Brittany Stephenson also noted NorthPoint’s compromise.

The break for blighted property is under the Local Economic Revitalization Tax Assistance (LERTA) program that provides up to a decade of real estate tax discounts on new construction — but not the underlying land.

Originally NorthPoint sought full county real estate tax forgiveness on new construction the first seven years, 90% in the eighth year, 80% in the ninth and 70% in the tenth and final year. This mirrored the schedule that had been provided to Hillwood.

Pressed to seek less by council’s Infrastructure Committee, NorthPoint revised its tax forgiveness request to 90% the first seven years, followed by 80%, 70% and then 60% the final three years.

Council is expected to vote on the request at its next meeting March 25.

Data centers are increasingly in demand to house computing and networking equipment that stores and churns out information for businesses.

Councilman Harry Haas inquired about the 900 data center jobs projected to be created, which are separate from an estimated 900 construction-related workers. Haas said he wants more than entry-level wages, saying many residents must work multiple jobs to cover expenses.

NorthPoint representatives have said the 900 jobs will include electrical engineering and information technology positions that should provide family-sustaining wages. In response to Haas, examples were provided, based on similar facilities and industry standards, of a data center operations manager paying $99,000 to $145,000 and a technician at $60,000 to $85,000 annually.

Haas said NorthPoint has made a “good faith effort” in its proposal, but he is still unsure if the county is receiving the “best deal” because data centers are “picking up steam” and “very lucrative now” in other parts of the country.

Based on points raised by Perry and others, Councilman Jimmy Sabatino said he wants to start working on a set of standard expectations for tax breaks down the road. Council could set the percentage discounts, payments in lieu of taxes and other conditions it deems acceptable for projects by category, including warehousing, manufacturing and technology development, he said.

These standards could then be publicized so developers understand the minimum requirements they must offer to advance to further consideration, Sabatino said, offering to take the lead in drafting a proposed plan.

“Then we might attract developers to come to us instead of wait for them to come to us,” Sabatino said.

Among other matters raised in questioning, Stephenson asked if NorthPoint has considered adding affordable housing projects in the 26 states where it operates. Council members have increasingly raised concerns about the impact of rising development on the lack of affordable housing in the county.

Williams said he and Stahl have been discussing the topic with representatives at NorthPoint, which has a multi-housing division that has not yet expanded to this market.

Council Chairman John Lombardo said affordable housing comes up during every LERTA discussion, and he encouraged developers to consider such projects.

Lescavage said affordable housing is a “real problem” nationwide, but he believes subsidies will be necessary for projects to come to fruition due to the price of building materials.

Following up on recent council discussions about the building trades, Lombardo asked if NorthPoint will be using local labor.

Williams said the company tries to engage local contractors and labor as much as possible.

NorthPoint has constructed buildings totaling 8.5 million square feet in the county to date that are now occupied by 15 companies, with $1 billion in private investment in these projects, he said.

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.