Denied: School board opposes TIF for downtown Hershey project

It’s back to the drawing board for a Cumberland County developer after a school board voted against a tax incentive that would have supported construction of a public parking garage as part of a redevelopment project in downtown Hershey.

School directors in Derry Township voted 6-3 to reject the tax-increment financing package proposed by Wormleysburg-based RVG Management & Development Co. There were board concerns that the district lacked a policy related to TIF proposals and that the developer had set a deadline to act.

RVG is hoping to build a $28 million, 130,000-square-foot mixed-use complex on West Chocolate Avenue, a project that would include a three-story parking garage.

The developer was seeking $2.3 million from the TIF, or about 38 percent of the parking garage’s cost. The garage was added to the plan to provide parking to accommodate on-site users, plus give the community more downtown parking.

The developer said the cost of the garage would drive up commercial lease rates, so the TIF was proposed to offset some of the costs.

It’s unclear what RVG may do following rejection of the TIF. Ed Fetter, senior vice president, said the company will take a look at everything and regroup.

The company promised to bring about a dozen new retailers and restaurants, as well as dozens of apartments and office spaces to the former post office property.

Township Supervisor Justin Engle, who works across the street from the proposed project, said he expects RVG will bring another project forward that does not include structured parking, mixed uses, density and other “smart-growth” principles.

“This site is the keystone of downtown Hershey development,” he said. “We’ve missed the opportunity to make it great and benefit from the economic development that it would have spawned.”

Lauren Zumbrun, the township’s economic development manager, called the vote “unfortunate” because the project in its current form could have helped grow the local tax base while potentially driving other economic development in the township.

“It appeared that the TIF was the best fit and most appropriate,” she said.

Under the TIF, the taxing entities — the school district, the township and the county — would forward a portion of future tax revenue to make payments on any debt incurred to improve the condition of the property.

The property is currently assessed at about $2.3 million with current taxes to the school district of $40,745 per year. The proposed project would increase the assessed value to about $15.5 million, which would generate $274,485 in school real estate taxes. The difference between the current taxes and the proposed increase is $233,740, or the tax increment.

RVG’s TIF proposal, prepared by PFM Financial Advisors, calls for diverting 89 percent of the tax increment for at least 16 years, and up to 20 years. For the school district, that means forgoing $208,028 per year of the increment. The district would retain the other $25,711 as well as the base taxes currently paid on the property.

The redevelopment project itself was expected to result in more than 500 jobs, which would generate more local income and sales tax revenue on top of the long-term property tax bump.

RVG was hoping to get all local approvals and start construction this summer. If that happened, buildings could have been delivered by the beginning of 2018 and tenant fit-out work would have followed.

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