Amazon investment in Lehigh Valley nets 3,000 jobs since 2010

Amazon has invested more than $17 billion in Pennsylvania, $3 million of which was invested in the Lehigh Valley since 2010, according to its own economic report.

The findings from its 2021 U.S. Economic Impact Report, also show that Amazon created more than 25,000 full and part-time jobs starting at $15 per hour in the state, more than 3,000 of those in the Lehigh Valley and 2,500 in the Susquehanna Valley.

Estimates from the report, produced by Keystone Strategies, show that Amazon’s investments in the commonwealth led to the contribution of more than $16 billion to the Pennsylvania economy over the last decade. Of that $16 billion, $3 billion was invested in Lehigh County, said Steve Kelley, regional public relations for Amazon.

The total investment and contribution to the economy in the Susquehanna Valley were not available, Kelly said. There are two fulfillment centers in Lehigh County, one in Easton, three in the Carlisle area and one in York, he said.

“Recovering from this pandemic, positioning our state’s economy for continued economic growth, and improving opportunity for all require a strong private sector that invests in innovation, its workers, and the community,” said Gene Barr, president and CEO of the Pennsylvania Chamber of Business and Industry. “Amazon has made substantial commitments to Pennsylvania, and we look forward to working with them, our members, and leading policymakers to continue to build upon these significant investments in our local communities.”

“From Philadelphia to Harrisburg to Pittsburgh and everywhere in between, Amazon is proud to provide good jobs to thousands of Pennsylvanians while boosting the overall state economy,” said Maura Kennedy, economic development manager for Pennsylvania at Amazon. “Amazon’s success and ongoing expansion efforts in the Keystone State is a tribute to the diverse and skilled workers that call Pennsylvania home and I look forward to seeing our continued growth for years to come.”

The report analyzed Amazon’s 2020 U.S. investments in areas including infrastructure and compensation. On top the company’s investments and direct employment, Amazon’s investments have supported the creation of more than 39,000 indirect jobs across the state. These are jobs in supported industries including construction, transportation, retail, healthcare, food services and more.

Business owners, take time to plan the future

It is fairly obvious that successful business owners must be good at what they do, or they would probably not be successful. But can a small business owner really expect to learn and know how to do all things related to running their company?

In most cases, the business owner is very good at running the business in a fashion that provides significant profits but there may be opportunities to be even better or more effective. Challenges that business owners may face include finding new employees and training them, obtaining financing, offering a retirement plan for their employees and succession planning to name a few.

Unfortunately, many business owners are so busy with the day-to-day business they forget to take time to work on the business and look ahead to plan for six months or two to three 2 -3  years down the road. If they are not working on the business, they may miss potential opportunities or get in such a routine that they become less efficient and lose their competitive advantage.

Many of the areas mentioned above are complicated and ever-changing as federal and state administrations attempt to enact new proposed changes.

Business owners should do what they do best and “Team Up” with experienced partners for the rest.

If an owner is spending too much time trying to hire new associates and train them (and this takes time way from growing the business), they might consider teaming up with an employment agency and let them focus on finding and interviewing applicants to get a qualified group of solid candidates. This way the business owner is not spending time outside of the business and not planning for the future.

Determining if and how to finance an expansion, a new program or an acquisition can be complicated as there could be multiple financing options available. The business owner needs to have a great relationship with two or more financial sources so they get to evaluate various options and aren’t limited to just one solution which may not be the best solution for their current situation.

Incorporating a retirement plan for the associates is a great benefit to offer and can help reduce turnover while also potentially offering the business owner some significant tax advantages. Implementing a retirement plan can be complicated and time-consuming. Teaming up with an experienced retirement plan adviseor who can handle the bulk of the details and make sure all the regulatory requirements are met allows for the business owner to be involved in the process and make the ultimate decisions while they remain focused on running their business to the best of their ability.

As successful business owners near the end of their careers, they need to plan for their exit from the business, either through a sale or some sort ofa succession plan. This process is not a weekend decision. It can take several years to develop the successor or make changes in the company to make it

more valuable. Finding advisors advisers who specialize in these activities can make a big difference in the success of the transition and a major difference in the selling price of the company.

Certainly, there is a cost to “Teaming Up,”, but what might be the cost or benefits lost if you don’t?

Just like most great organizations have a team of associates working together and utilizing the strengths of each member, teaming up with experienced advisors in their field can provide a business owner with solid advice and options to consider. Doing so will allow the owner the ability to remain involved in the decision process without having to learn every intricate detail of the process. By doing this the owner can remain focused on running their business to keep the business successful.

Brian Fields  is a vice president,  Financial financial Advisor advisewith Merrill Lynch in Camp Hill. He has with nearly 20 years of experience in financial services!.

Ben Franklin makes $1.8M in Return to Health investments

Ben Franklin Technology Partners of Northeastern Pennsylvania (BTFP/NEP) said it is taking $1 million it received from the Pennsylvania Department of Community and Economic Development for COVID-19 relief efforts and putting it towards $1.4 million in emergency investments it is making in 18 regional startups.

It is also investing $404,000 in 17 established manufacturers as part of its Return to Health investment program for a total of more than $1.8 million in investments supporting a total of 35 companies.

The program includes different types of company investments including Portfolio Protection Investments, which will help secure its existing investments in pre-COVID-19 viable and growing early-stage clients.

BFTP/NEP said these are clients that were performing strongly in job and revenue growth and loan performance or were developing promising product or patent portfolios.

The loans made in its 21-county service territory were all zero interest loans.

Some of the investments were made to companies directly working to help in the fight against COVID-19.

Among the recipients were LifeAire Systems LLC of Allentown, which is receiving $100,000 to help it commercialize its Aire-PPE Decontamination Unit that is currently pending FDA approval. The unit kills COVID-19 and other bacteria, viruses and fungi on the surface of N-95 masks allowing them to be quickly and safely reused.

$75,000 is going to U.S. Specialty Formulations LLC of Bethlehem to support the logistics and purchase of equipment to expand an analytical lab to meet the demand for pre-clinical materials for use in a COVID-19 vaccine.

Most other investments were to support the continued growth of the companies that were impacted by the pandemic.

Demand for affordable housing is strong, so where are the new housing projects?

This graph shows the rising gap between higher median home sale prices and lower median household incomes across the U.S. SOURCE: U.S. CENSUS BUREAU –

The topic of housing affordability is dominating the industry, yet some question whether affordable housing is still a worthwhile investment.

Experts point to a phenomenon that’s happening today where the cost of housing, particularly in the rental market, is continuing to push past levels of affordability for many. The rise in construction costs and drop in government subsidies, coupled with stagnant wages and low inventory are combining to create an affordable housing crisis where there’s not enough new product becoming available.

Construction of market-rate apartments is surging across the nation in both urban and suburban areas, while construction of units for low to moderate-income renters has declined dramatically.

Affordable housing is typically housing for low and moderate-income renters who do not spend more than 30% of their monthly income on rent.

“It’s a pretty robust market today,” said Jeff Arrowsmith, senior director of affordable housing for CBRE, a global real estate firm, with a local office in Upper Macungie Township. “Originally, there was a lot of activity by the private sector and they made their money through the development fees. As properties aged, there’s a robust market that’s emerged.”

Arrowsmith said there is a booming opportunity that investors see in affordable housing although there has not been a lot of new affordable housing construction since 2008. That’s part of what’s driving the conversation about the lack of affordable housing across the nation.

Nationally, the CBRE team sells about 25,000 affordable housing units per year, Arrowsmith said.

Over the last 10 years, the affordable housing market has been steady, with about 63,000 units built. Prior to that, the figure was 80,000 to 100,000 units under the low-income housing tax program. Under the federal Housing and Urban Development program, there is no increase in supply, he said.

“There’s no new program emerging federally that’s going to solve the problem,” Arrowsmith said. “A lot of the initiatives are taking place at the local and state level.”

One examples is be inclusionary zoning, which would compel developers to include affordable housing in their developments.

“There are efforts to provide housing authority loans for construction of affordable housing,” Arrowsmith said.

 Possible solutions

Sometimes, the private sector contributes to the loans to support the work.

The jury is still out on whether the federal Opportunity Zone program, a tax incentive, will enhance the ability to provide affordable housing. So far, Arrowsmith has not seen investors using the program to develop a significant amount of affordable housing.

“One solution is to increase the pool of available tax credits …so there’s more equity to facilitate development,” he said.

Another issue affecting development of affordable housing is how to bring down building costs. Doing so would enhance developers’ abilities to put together successful projects, Arrowsmith added. In some cases, it may be more effective to redevelop, rather than build new affordable housing.

The other challenge is how to prevent older units from being transformed out of affordable housing once the 30-year cap on rents expires and they become eligible for market-rate conversion.

About 850,000 units across the country that could be at risk for market conversion over the next 10 years.

“There needs to be efforts made that create an incentive for the owners of those assets to protect their properties into the future,” Arrowsmith said. “There’s a vast under supply of affordable housing and there aren’t really programs in place to create affordable housing.”

For property owners, it could be better to upgrade their rental properties rather than build new affordable housing, according to one official.

“Less landlords today want to deal with HUD housing,” said Jeff Barber, president of Lehigh Financial Group, a mortgage lender in Allentown. “They can get better rates today just by doing basic upgrades. I’m finding today that more landlords are fixing up their properties and making them better quality.”

Rents have risen tremendously in the Lehigh Valley and today, it’s all about market rate housing.

Investors buy a property to get a return on investment and have to charge more for rent, he added.

“The days of affordable housing are gone,” Barber said.

Blight occurs when the money those property owners get from a low-income housing unit is so low that they can’t afford to take care of the property, he added.

“There’s more people that want affordable housing but these are the same people who want $15 per hour, which is fine, but the cost of living is going up,” Barber said. “You can’t have cheap housing in a booming housing market.”

 Many challenges

There’s a housing shortage today because people aren’t moving around as much in search of jobs. It’s the opposite, now: the jobs are moving to where the workers are, resulting in fewer homes coming onto the market.

Add to that the high cost of construction and the rising level of student college debt, and the problem gets worse.

Construction costs have risen about 6% to 8% per year, across the nation, said Claude Hicks, director of real estate development for HDC Mid-Atlantic in Lancaster, a nonprofit that specializes in building and managing affordable housing communities

“There’s all these economic things going on,” Barber said. “There’s no economic programs that make it worth anyone’s while to look at affordable housing as a real estate investor.”

Furthermore, interest rates have fed into the housing shortage and it’s helping the economy grow by keeping interest rates low.

One way that Allentown could see more affordable housing is through a partnership with City Center Investment Corp. and Lafayette College’s Dyer Center for Innovation and Entrepreneurship. They’ve launched The Real Estate Lab, a program designed to teach at-risk youth how to invest and manage properties. One of its goals is to create financially attainable housing in downtown Allentown, with rents within the affordability standards set by HUD for households at the 70-percent area median income level.

However, time will tell whether the program works as intended.

Alan Jennings, executive director of Community Action Committee of the Lehigh Valley, a nonprofit in Bethlehem, is one of the members of The Real Estate Lab’s advisory board.

“You can’t make any money on affordable housing,” Jennings said. “That’s why there’s so many subsidies to make it work.”

Jennings said his organization tried to develop two vacant lots in South Bethlehem, cul-de-sacs left over from a private developer who bailed on a $6 million project that called for building 36 units of affordable housing. Jennings said his organization raised $1 million in grant money and tried to buy it. After working on it for three years, his organization gave up on it, Jennings said.

“That’s why we have government subsidies,” Jennings said. “But we don’t have much government subsidies anymore. If you can’t afford a mortgage and you are in the private market for a rental, you aren’t going to find anything.”

The fair market rent in the valley requires a person to earn at least a $19 per hour wage to afford a two-bedroom unit, where monthly rents typically go for nearly $1,200, he added.

The federal government does offer a low-income housing tax credit.

“This is typically the only subsidy the federal government provides for private developers to provide affordable housing,” Jennings said.

However, for a developer to take advantage of it, there needs to be a state financing agency that can administer it, and that process takes a minimum of two years, he said.

“It is a problem that has no solution until we recognize that the public sector has some responsibility for making housing affordable for low to moderate-income people,” Jennings said. “There’s no other way to do it. It’s most challenging in the most robust market.”

In a robust market, the demand for housing outstrips supply, which is what drives up pricing.

“Allentown is not exempt from the challenge because the NIZ [Neighborhood Improvement Zone] is causing developers to speculate and raise rents,” Jennings said. “People aren’t being displaced yet but that could happen eventually.”

HDC Mid-Atlantic built South Side Lofts, an affordable housing community that opened in South Bethlehem in 2014. PHOTO/SUBMITTED –

 High demand

Meanwhile, one affordable housing developer is at work in Easton. In 2019, PIRHL Developers LLC of Cleveland, received tax credits from the Pennsylvania Housing Finance Agency totaling more than $2.3 million to help pay for an affordable-housing project on Easton’s south side.

The developer is turning the blighted Stewart Silk Mill property on Coal Street, also known as the Black Diamond factory, into a 55-unit, two-building apartment complex called The Mill at Easton.

Though there are signs of progress, the need is increasing.

“Our waiting list is equal, typically, to the number of apartments we have,” said Dana Hanchin, president and CEO of HDC.

“Right now, what we are facing is an affordable housing crisis where you have increasing construction costs. In addition, you have stagnant wages and lower incomes. It’s placing an increasing amount on us to provide.”

Overall, affordable housing projects need subsidies to make them work, Hanchin said, adding the private market would figure out a way to supply it if the subsidy wasn’t needed.

While there are some for-profit companies in the affordable housing industry, the nonprofit HDC has a made it its mission. It owns or manages 3,742 properties across three states, including the Lehigh Valley and Berks County.

The Lehigh Valley is a primary affordable housing market for the organization. HDC completed South Side Lofts in South Bethlehem in 2014, and River Run Meadows Apartments in Birdsboro in 2018. It also has some potential new projects in the works.

In downtown Allentown, HDC has a project in the pre-development stage that will offer affordable housing for seniors with a set-aside for people with Down syndrome, said Claude Hicks, director of real estate development for HDC.

In addition, not far from its South Side Lofts project in Bethlehem, HDC has a project it expects to finalize a deal for within the next 90 days, he said.

Lawmakers in the state Senate are considering legislation that would increase the subsidy to each state. While such legislation could help, it won’t fix the problem, Hicks said. “…For every one unit we build, there are three to four families waiting,” he said.

Hicks said the low-income housing tax credit is a great, stable investment that has been around for a long time.

Hanchin said HDC has many banking partners that provide them with some financing for affordable housing. HDC competes for the tax credits and, if awarded them, sells them to investors, she said. However, relying solely government to solve the affordable housing crisis is not the answer, according to Hanchin.

Low household income contributes to the issue.

“If we are having incomes where they are, and incomes are stagnant, we will still be challenged,” she said. “We have to begin to move the needle on that side as well.”