State of City Address

Year 2010

Mayor John Callahan
State of the City Address
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February 18, 2010

I want to thank the Greater Lehigh Valley Chamber of Commerce and the Bethlehem Business Council for hosting and organizing my seventh “state-of-the-city” address. I want to take a few moments to introduce the members of my staff who help me get things done in the City who are here—many of whom you know…

Last but not least, I want to thank you, the private sector and business leaders in the City. You are the ones that have leveraged your houses and invested your life savings to chase the American dream here in Bethlehem. Your investment has been a critical component of ensuring that the quality of life remained steady, even through the toughest times. So on behalf of a grateful City, I thank you. You are in large measure why I am able to deliver optimistic reports on the state of our City.

When we met to discuss the state of the City last year, I think it is safe to say many of us were pre-occupied with the state of the national economy. At this time last year the global economy was in full recession. The unemployment rate in the Lehigh Valley was 7.1%, the highest since 1993, with the expectation that the number would go up, not down.

And although the economy steadied, unfortunately the expectation about unemployment became reality as today it hovers around 10% in the Lehigh Valley and the prospects for growth in the immediate future are modest at best.

Even with the economic recession throughout 2009, Bethlehem had a pretty remarkable year, jobs went up, crime went down and taxes remained steady.

In May, the Sands opened the doors to its casino. The opening generated about 1,000 direct jobs needed to operate the property and produced the opportunity for hundreds of indirect jobs to provide ancillary support for the property, at time when the people of the Lehigh Valley desperately needed them. The over 750 million dollar investment the Sands made in the old ore pit portion of the steel site is truly remarkable. It is a first class casino. The building honors Bethlehem’s tremendous industrial heritage and the quality of the construction certainly equaled the pledge of the Sands to deliver a casino for the Commonwealth by which all casinos should be judged. It blends in flawlessly with the buildings on the site, relating both in scale and style so much so that some visiting the site for the first time wonder whether the building is in fact a remnant of an old machine shop rehabilitated as part of the project.

Since opening, the casino has been a steady performer as the Commonwealth’s third busiest casino. And, the benefits of the project for the entire Lehigh Valley cannot be overstated. The host fee from the slots portion alone is helping to stabilize the budgets for Allentown and Bethlehem along with the two counties. The Northampton County Gaming Authority is in place and preparing to dispense a portion of the County funds in the form of grants to contiguous municipalities for specific projects. And, once table games are up and running the city of Easton will also share in the host fees. The local revenue sharing agreement is one of the finest examples of regional cooperation in the state and will be seen in the future as a watershed moment for governmental cooperation here in the Lehigh Valley.

The revenue sharing agreement is really something to be celebrated. Too often we forget just how interconnected we all really are here in the Lehigh Valley. To think for a moment that the loss of Bethlehem Steel was felt only in Bethlehem is to ignore the reality of life here in the Lehigh Valley. We here in local government cannot become short sited thinking parochially and making decisions just for the now. We must always have one on eye the future, looking for ways to guarantee stability for years to come.

In the coming years, local governments here in the Lehigh Valley can and must be leaders in working together to collectively solve problems in a regional manner. It will not be easy, but the Lehigh Valley will be stronger if we do. A couple of areas where I see the potential and need for Valley solutions are: crime, transportation and health.

We need to be proactive, offering plans to solve the congestion problem on Route 22. We need to work to ensure that our regional planning has as one of its goals the return of passenger rail from Philadelphia and New York to the Lehigh Valley. Fostering better communication and sharing of information through a regional crime center will only serve to make our police forces more effective. Finally, we should continue to study the benefits of implementing a bi-county health department and decide whether the level of service can be sustained or improved all the while being more cost effective.

We welcomed Synchronoss Technologies, Inc, which moved into the 62,000 sq. ft. Global Research and Development Center in LVIP VII with 400 new technology jobs and the projection for an additional 200.

A 17 million dollar, 124 room, Hyatt Place Hotel opened in downtown Bethlehem just outside the City’s historic district becoming the first downtown hotel built in the Lehigh Valley in over 30 years. In the north side historic district, Moravian College welcomed students to a new dorm located on its south campus. Each of these projects served to increase the vibrancy of our already flourishing downtown historic district.

Several small businesses opened their doors in 2009 such as, The Firehouse which completed a remarkable transformation of an old firehouse building into a new restaurant, Cutter’s Bike Shop which opened on Third Street, The Melting Pot and Chickadees just to name a few. We wish them the best.

Bethlehem is moving in the right direction when people continue to be willing to make investments to chase their version of the American Dream here. And the City will do all we can to ensure we celebrate more small business openings throughout 2010.
We recognize the important role small businesses have played and will continue to play in our success. That is why the City is doing all it can to help these businesses succeed. Currently, the City has FRED and FAÇADE loans and BEAR loans along with other additional gap financing that help Bethlehem small businesses gain access to the capital they need to start or expand their businesses. Right now we are studying these programs, which have been in place for sometime, looking for new and innovative ways to re-tool these programs to better meet the current needs of small businesses that are already open, as well as those budding entrepreneurs looking to chase their dream. We are hoping to develop programs that will create incentives for job training, energy efficiency and business growth.

On South Mountain, Ben Franklin Partnership is completing an addition. More importantly, it received a 6 million dollar grant as part of the Recovery Act to increase its ability to deliver early stage technology companies hands-on support, guidance and key resources during the economic recovery. There can be little doubt about the benefits to Bethlehem and the Lehigh Valley when our small businesses have access to funds to finance their ingenuity and entrepreneurial spirit - just look at companies like Orasure, Cigars International and IQE.

In addition to all that opened, we also celebrated several significant groundbreakings. Steelstacks will be a dynamic arts, culture and education campus on the western end of the steel site and is set to open in 2011. When completed, the project will bring us one step closer to fulfilling our longstanding community vision of remaking the steel mill into a multi-use entertainment destination.
Surrounded by 100s of eager skaters on a cold winter day, the City broke ground on its skate park. A tremendous investment in the youth of the community funded primarily by state grant dollars that when completed will attract skateboarders from throughout the Lehigh Valley and beyond.

Last year, we announced the creation of a downtown shuttle bus, which enables visitors to travel between the Southside Shopping District, the Historic Shopping District, and the Sands Casino Resort Bethlehem. I am happy to report today that the first half-year of the LOOP shuttle has been a success. It actually takes about three years to measure the effectiveness ad efficiency of a newly implemented transit service, as of today, ridership sits at 87% of target, which is on par with the national standards.

Last year the City implemented employee performance appraisals. These appraisals will provide both employee and supervisor an opportunity to document and discuss organizational priorities and set and meet performance goals for the employee.

I also want to take a moment and report on another initiative we undertook last year - the Citizens’ Academy. The Citizens’ Academy, the first of its kind in Pennsylvania, offers individuals interested in getting involved in local government and its activities, the opportunity to be directly exposed to city operations, learning more about what city government does, and direct exposure to the various city operations. The ten-week course sought to in increase transparency in the way the City operates while at the same time expanding the city’s volunteer capacity and building a new generation of leaders in Bethlehem. I am pleased to report that the initiative was an overwhelming success. Today, many of the Citizens’ Academy class members have expressed as strong interest in staying involved, and one member now sits a city committee.

Here are just some comments from last year’s inaugural class: …

I am happy to announce that due to success of the program we are going to do it again. The eleven-week program is slated to start Wednesday March 31, 2010. Applications are available on-line on the City website beginning on Monday, February 22.

The new businesses that opened in Bethlehem in 2009 continued to further diversify our local economy. Diversification of our economy was a critical reason why the City was able to weather the recent recession better than most. Since 2004, over 5,000 jobs have been created or retained here. During 2009 1800 jobs were created in the City. And these numbers do not take into account projected employment opportunities from projects that are in the pipeline at LVIP VII, (29) the St. Luke’s facility on 8th and Eaton or the Majestic parcel.

Because of these new jobs the City was able to net 500 jobs as of the third quarter in 2009, during the worst economy in this country since the Great Depression.

Since 2004, Bethlehem has had more than 2 billion dollars of investment resulting in a 155 million dollars increase to our tax base.

Already in 2010 we have celebrated the opening of Cigars International’s new headquarters and warehouse facility at LVIP VII. This project preserved 175 jobs and is projected to create 50 brand new jobs. Construction of the facility created 150 jobs.

Pending state approval, later this year, the Sands will offer table games to its visitors. And, the introduction of table games not only brings increased host fees for the region, it brings another 350 quality jobs to the Lehigh Valley. These jobs are good paying, family sustaining jobs that will further grow economy.

The Majestic Corporation continues to make progress at its 441-acre development project. It is anticipated that this project will bring 3 to 4,000 jobs and 500 million dollars in economic development when it is completely built out.

Also this year we anticipate the completion of the STEPS Building at Lehigh University and are eager to celebrate the groundbreaking for the new PBS 39 studio on the former steel mill property.

The City is positioned to beat the odds again and enjoy another good year of job growth and economic growth.

I am fond of saying that there is no more important indicator for a city’s livability and ability to attract more economic growth, than safety. We can’t attract millions of visitors to Bethlehem if they don’t feel safe. We can’t expect someone to raise a family here if they don’t feel safe. We can’t expect someone to grow or relocate a business here if they don’t feel safe. We can’t be the setting for the American dream if our City isn’t safe.

It is the most important priority of any City to keep its residents safe. If the old adage is true that “don’t tell me what your priorities are. Show me where you invest your money and I will tell you what they are” than I am confident that someone looking at the City’s use of tax dollars since I became Mayor will know that my priority is public safety. Since I became Mayor we have invested millions of dollars in public safety.

We have increased our manpower. As this chart shows, we have added more officers in the last six years, than we have in the twenty years prior. FBI statistics rank Bethlehem the safest city in Pennsylvania with a population over 30,000. Through November 2009, we actually went 24 months without a homicide.

Today, I am pleased to report that violent crime dropped again last year. This marks the third year in a row. Since 2006, violent crime in the city has fallen a whooping 27%. In fact, in 2009 all part one offenses in the City fell about 18% and overall crime dropped 9%.

These drops in crime are not an accident. First of all they are a testament to the hardworking members of the City’s police force. Everyday they put themselves in harms way to protect us, and our quality of life. We owe them a debt of gratitude.

The drops are also the result of the investment of tax dollars in our public safety. Today, we have the largest, best trained and best equipped police force in our City’s history and we are all benefiting from it.

And its not just about boots on the street, we are also trying to help our police officers do their jobs more efficiently. Throughout the City we have installed cameras as force multipliers in various areas as another method of criminal deterrence or to catch people in the act. Today I am pleased to announce that in the coming months the City will be installing new cameras in other sections of the City. These cameras are just another way of keeping our commitment to you to protect our neighborhoods.

The 2010 budget shows our continued commitment to do our part to create an environment where businesses large and small cannot just survive, but thrive. The 2010 budget continues our fiscally responsible approach of paying off more debt than we take on. Unlike so many other cities, Bethlehem has not mortgaged our future. Since I became Mayor, we have decreased the city’s total debt by $60 million, and we are on track to aggressively pay down debt by fifty percent in the next seven years, and sixty percent in the next ten years—a claim that very few governments can make.

And I’m happy to add that we have accomplished all this without a tax increase in the last four years.

By being responsible stewards of tax dollars, we will be able to grow our cash reserves, establish a taxpayer stabilization fund, and ensure the financial stability of the city for decades to come. Growing our cash reserves will certainly improve our bond rating, which I am happy to report - in case you missed it - remained steady again this year.

My most recent five-year financial model showed that if we continue to aggressively pay-down of city debt, while growing cash reserves there will be no tax increases for the foreseeable future. In fact, if things go as projected, there is a very real possibility for a future tax decrease.

This year we will continue to make the necessary investments in our infrastructure. The longer we delay work on our infrastructure, the more expensive it becomes to fix it.

Upgrades to the signalization and intersections as part of the Route 412 project will be completed this spring. The bridgework on the Minsi-Trail Bridge recently restarted. In the spring, we will overlay the downtown portion of Route 412 from Pierce Street all the way to Northampton Street. We will continue to push for the construction of the new ramp on the Hill-to-Hill Bridge to begin this spring. And, it is anticipated that the widening of 412 will start in the spring of 2011.

Also, thanks to the American Recovery and Reinvestment Act, Pennsylvania Ave and Broad Street will get much-needed overlays as well. These overlays are an additional 2 million dollar investment in critical roadways in Bethlehem, which may have had to be deferred for another year.

The City will also be doing streetscape improvements to a portion of Broad Street as part of the Elm Street project. This spring in historic district we will be undertaking adding some additional on-street parking spaces on the south end of Main Street. The Parking Authority is also in the process of upgrading its parking deck behind Broad and Main Street. This is the initial phase of a larger parking deck project that along with the additional 14 parking spaces on the Broad Street Bridge, adds much needed parking to our bustling downtown.

Bethlehem’s reputation of being a well-managed city is important to me. It was not earned by accident. We at City Hall take pride in delivering more with less. The Continuous Improvement initiative has helped us do just that. CI in the City is the innovative public-private partnership with Air Products that eliminates waste, increases efficiency, and empowers employees to do their jobs better.

Government must always be reforming to stave off bureaucracy. Helping government workers more effectively serve citizens is one way of maintaining a responsive government. To date we have cut millions of dollars in government waste.

For example, cutting energy costs has produced real savings for the City taxpayers.

Today, like any small business or city resident, the City is not immune from the recent electrical rate increase. Last year, the City paid on average 7.3 cents per kilowatt-hour. In an effort to use your tax dollars wisely the City entered into a joint agreement with multiple municipalities sponsored by the Pennsylvania League of Cities to purchase energy in bulk. Today, the City is paying Constellation energy 7.9 cents per kilowatt hour, up from last year, but significantly less than 10.9 cents per kilowatt, which is what PPL is charging municipalities today. By acting quickly, the City did the best it could under the circumstances to pass as little of the rate increase on to you as it could. In total our actions saved taxpayers about $330,000 this year.

The energy increases also effects the cost of operating our streetlights. In 2004 we repurchased our streetlights from PPL, which created a tremendous costs savings to the City of $8.3 million dollars over the life of the project. The savings were generated because we no longer pay PPL to own, operate, and maintain them, all we do is pay for is the energy. We have actually realized more savings than that because there has been an increase of over 40% in the energy costs associated with street lighting by PPL. Had we not purchased the lights back from PPL, our street lighting costs would have increased by over $400,000. Now, because we own and operate our lights if we remain with PPL for energy our increase would be just over $150,000 due to the rate increases. However, by shopping for energy, we currently anticipate to limit that increase to closer to $100,000, essentially saving City taxpayers over $300,000 in 2010.

Switching out LED lights has also resulted in a tremendous savings for City taxpayers. We used to pay over $100,000 annually in energy costs for our streetlights. Now with the switch our bills are down to around $25,000 annually and we use that savings to not only to pay for the original loan used to purchase the LEDS but also to escrow money for the next round of re-lamping all the traffic signals.

At the wastewater treatment plant we have saved over $200,000 that would otherwise normally be spent on fuel oil by recapturing and reusing our methane gas.

And, we continue to search for other ways to cut costs. Right now, we are studying implementation of the recently completed energy audit. When fully implemented these projects could result in savings of $3.4 million dollars over time. Initially, the audit projects that the guaranteed savings could be about 285,000 the first year.

I am equally proud of Bethlehem’s reputation as a very livable city. Livability is one of those intangible, “you know it when you see it” elements. But it is something that cannot be taken for granted and must be protected. I am pleased to announce today that in the coming months we will be forwarding to City Council a comprehensive update to our zoning ordinance. While we have made tremendous strides in the area of zoning in planning since I took office, the City has not had a comprehensive zoning update since the 1970’s, so it is long over due. More important, an updated zoning ordinance is the best tool local government has to protect its neighborhoods and ensure that growth in the City makes sense.

I am also pleased to announce that this spring the City will be breaking ground on its portion of the Greenway. Last year we had a ribbon cutting marking the opening of a potion of the Greenway completed by Sands as part of their project. And for those of you who haven’t seen it, once the snow melts and the weather warms you really should take a walk along it. You can even check out the progress on the skate park. It is really worth the time.

Once completed the Greenway will truly transform the quality of life in South Bethlehem, imagine the day you can get on the Greenway at the intersection of Hayes Street and Third Street and walk all the way to Saucon Park without crossing a single street.

In closing, our city has become a shining star among Pennsylvania cities. Those of us who live here know that. But it is a testament to just how far we have come when we are receiving national and international accolades—making three different top ten best places lists in just three years.

We have shown how fiscal discipline, decisive leadership, and smart investment can set the table for the private sector to do what it does best, grow an economy and create jobs.

Bethlehem’s success is a joint venture of all of us in this room government, business leaders and residents each willing to do their part to make Bethlehem great.

Together we can continue to be a model for mid-sized urban America, a model of hope for other communities that they too can reverse their decline and remake themselves. Together I know we will continue to accomplish great things here in Bethlehem. We can overcome any obstacle and beat the odds, so long as we continue to work in common purpose, to make the City of Bethlehem and the Lehigh Valley a great place to live, raise a family or launch a business.

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