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Board chairman made millions on new Starbucks center
The new Starbucks distribution center in East Manchester Township could bring more than $490 million in local economic impact in the near future, but the township's board of supervisors chairman and his family have already made $12 million selling the land to the developer of the warehouse.
That sale was spurred on rezoning approved by the township board — rezoning that the York County Planning Commission advised against.
Texas-based Hillwood Investment Properties, operating as North York Development LLC, purchased the property at 465 Zions View Road, which has since changed to 1605 Bartlett Drive, on Oct. 24, 2014, for $12 million from Steven H. Gross Jr. and five of his family members, according to records filed with the York County Recorder of Deeds.
Records with the York County Assessment and Tax Claim Office show that the 97-acre property had been zoned agricultural before the purchase date and assessed at a value of $307,670.
The property was reassessed at $1.5 million after it was rezoned to industrial use and is now assessed at nearly $31.8 million following the construction of the 1.2 million-square-foot warehouse.
An October 2005 letter shows that the York County Planning Commission had advised against a request to rezone the area, including this property. The township supervisors voted in 2006 to rezone the land, against the advice of the county planners.
According to the assessment office, the property’s assessment wouldn’t reflect the change from agricultural to industrial until it was developed for industrial use, which occurred in 2015, even though the land was in an industrial zone before that time.
Gross, who has served on the East Manchester Township Board of Supervisors since at least 2001, according to York Dispatch archives, and as its chairman since at least 2008, could not be reached for comment.
The township's manager, Dave Gentzler, said Gross, who is a farmer and does not use email, was on vacation and could not be reached. Multiple messages were left on Gross' home phone answering machine, and no one responded to a doorbell at his residence, listed in county records as 190 Manchester St.
The board's vice chairman, David Naylor, reiterated that Gross was unreachable and declined to comment on the story, except to recommend that a York Dispatch reporter show up to the board's next meeting, on Sept.13, to ask questions.
The township's other supervisor, Barry Rudisill, and its solicitor, Andrew Miller, did not immediately return requests for comment.
The property: The property had been in Gross' family as far back as records have been kept by the county recorder of deeds, and Steven H. Gross Jr. was first added to the deed on Dec. 17, 2010.
Recorded minutes dating back to 2008 on East Manchester Township's website show that Gross had recused himself from the board whenever the Hillwood project was being discussed. Gentzler said that entailed him leaving the room until the discussion was complete.
Minutes were not immediately available from rezoning discussions in 2005, and Gentzler suggested that The York Dispatch submit a Right to Know request, which has since been filed.
The York County Planning Commission had advised against the rezoning request in 2005 because the area contained "a large percentage of 'Prime Agricultural Soils'" and the township already had other vacant industrial lands available, according to the commission's letter to the township.
The property also had been included under the county's Clean and Green Act, which provides in-use agricultural land owners a property tax reduction, before it was sold for development, according to assessment records.
Assessment records also show that Gross and his family currently own at least 13 other agricultural properties totaling more than 907 acres, though some of the properties are listed as vacant.
Gary Frederick, senior vice president of development for Hillwood, said his company had been in discussions with Gross about the property for several years before the purchase date, but he did not know an exact timeline.
LERTA: Once Hillwood had developed the new warehouse, it advertised in a company brochure that the center was approved under the Local Economic Revitalization Tax Act, or LERTA, by East Manchester Township and Northeastern School District.
The LERTA tax abatement provides a property tax exemption schedule for up to 10 years, with savings realized on a sliding scale beginning with 100 percent in year one and decreasing 10 percent annually, according to the York County Economic Alliance.
The YCEA website states that "LERTA was established to allow local taxing authorities to exempt improvements to a business property, if such property is located in a deteriorated area."
Hillwood's brochure states that over the course of a 10-year lease, the approximate value of abated taxes will be $5.8 million, a savings that will now be passed on to Starbucks, which reported a net revenue of $19.2 billion in its 2015 fiscal year earnings report.
Minutes from the township's board of supervisors meeting on Feb. 11, 2014, show a brief discussion of Hillwood's interest in entering LERTA, but no minutes from subsequent board or planning commission meetings show any vote on approving the company's application. Miller had advised the board more than four years earlier that supervisors do not need a motion for LERTA approval when a property is located within an industrial zone.
During the Feb. 11, 2014, meeting, Miller advised the supervisors to adopt an official LERTA ordinance consistent with the county's LERTA ordinance.
A Right to Know request has been filed to see the township's current LERTA ordinance, but according to the township's code book, which is posted on its website, all properties within an industrial zone are eligible for LERTA. That ordinance was adopted on April 8, 2014.
The county's LERTA ordinance, meanwhile, states that the tax exemption is for "new construction in deteriorated areas of economically depressed communities and for improvements to certain deteriorated industrial, commercial and other business properties."
Hillwood had applied for a LERTA exemption with the county, presenting its case at a recent county commissioners meeting, but it withdrew the application before a vote, according to county spokesman Carl Lindquist.
Frederick, Hillwood's representative at the commissioners meeting, declined to comment on the company's reason for withdrawing its application.
Lindquist said the county had conducted a staff review and determined Hillwood’s application did not meet the requirements of its ordinance because of the timing of the submission and because the property had been farmland, not a deteriorating property.
“We strongly support economic development,” Lindquist said. “This just didn’t meet the requirements.”
East Manchester Township is one of six municipalities in the county with an adopted LERTA ordinance, according to a study published in February 2013 by the county planning commission. All six school districts associated with each municipality also offer LERTA tax abatements.
According to a recent directory of business and industrial parks published by YCEA, Northeastern School District has a 26.09 mill tax rate, compared to East Manchester Township’s rate of 1.04 mills.
The directory also shows that five of six other business or industrial parks located in East Manchester Township are benefiting from LERTA.
Brian Geller, director of operations for the school district, said he doesn’t know if the district has ever denied a LERTA request that was approved by the township, but he added that the district tries to work with the township on these requests.
Hillwood’s LERTA requests were approved by the township and school district on a speculative basis, meaning before a tenant was known.
Economic impact: The tenant for the next 10 years is now known to be Starbucks, which operates a nearby roasting plant and plans to hire approximately 300 full-time workers during the next three to five years as part of the expansion.
An economic impact report referenced by Starbucks in its news release about the expansion, which will make York County the company’s largest distribution center in the world, stated that new center could lead to approximately $491 million in economic impact for the area.
Katie Lentz, executive vice president of the YCEA, said the report came from her inputting figures into a software that was developed by the U.S. Bureau of Economic Analysis.
The figure provides a snapshot, Lentz said, that would account for temporary construction jobs and is working from 2009 Census Bureau data. The software does not account for costs associated with the project, such as infrastructure improvements that might be passed on to the county or township, she added.