Steel Grit – How a City Overcame the Death of an Industry

City of Bethlehem
Written by Claire Suttles

In 2001, Bethlehem Steel shut its doors after nearly a century of dominating the industry. The closure could have spelled disaster for Bethlehem, Pennsylvania, a community that has been at the heart of America’s steel production since the industrial revolution…
But Bethlehem turned its lemons into lemonade so successfully that the city is now a bustling center for a diverse range of business sectors – and has even been ranked one of the top 100 best places to live in America.

“The city has a strong spirit of innovation and entrepreneurism,” says Alicia Miller Karner, Bethlehem’s Director of Community and Economic Development. The community had the foresight to begin diversifying before it was too late, a fact that helped salvage Bethlehem’s economy when times got tough.

“Obviously, when the steel company closed that was a dramatic hit to the city,” Mayor Robert Donchez shares. “We were very fortunate that we began to diversify way back in the 60s and 70s. That has really paid off.” Today, the city of 75,000 is home to a handful of major industrial parks and boasts a wide range of businesses, from high tech companies and manufacturing facilities to medical institutions and entertainment venues. “And we are still continuing to diversify,” Mayor Donchez adds.

The community has several advantages going for it, all of which helped it to overcome the loss of Bethlehem’s steel industry. “Bethlehem is a very progressive city,” Mayor Donchez points out. “We are business friendly. We also have a very good workforce and a very good work ethic. And, we had very good political leadership and corporate leadership. The public private partnership has worked very well here in Bethlehem.” This spirit of cooperation has been key to the city’s renaissance. “We are very bipartisan,” the Mayor continues. “I think the fact that we all work together, that we try to put politics aside for the betterment of the city, has led to our success and has led businesses to locate here.”

Bethlehem Steel controlled 1800 acres before it went under – 25 percent of the city’s real estate and the largest brownfield in the nation. The community has done a remarkable job of transforming this acreage into a bustling destination for commerce and industry. “With the loss of Bethlehem Steel, there was such an opportunity for development on the land that they held,” Ms. Karner remarks. “If Bethlehem steel hadn’t gone out of business there might have been underutilized tracts within the city for a much longer period of time.”

With the addition of Bethlehem Steel’s land, Lehigh Valley Industrial Park (LVIP) has been able to add park number seven to its list of successful industrial parks, which have been a stabilizing and diversifying force for Bethlehem since 1959. “We have had a great amount of interest, from manufacturing to warehousing, to office space,” Mayor Donchez says of the new development. Parks I – VI already generate approximately $12 million in annual property and payroll taxes for the city and, when LVIP VII is completed this year, more than 25,000 people will be employed at companies located within the massive park system.

In a very different sort of project, the city has used former Bethlehem Steel land to create a 130 acre arts and entertainment district in Bethlehem’s Southside. Sands Casino Resort Bethlehem is the district’s anchor property. The $1 billion recreation Mecca is a fully integrated resort with 3,000 slot machines, over 300 hotel rooms, nine restaurants, 200,000 square feet of retail outlet shopping, and 46,000 square feet of flexible multi-purpose space. The complex employs 25,000 people and welcomes an average of 10,000 visitors every week. “It was the catalyst to develop that site [into an arts and entertainment district],” says Ms. Karner. And it has more than lived up to expectations. “Sands has been very involved in the community,” the Mayor agrees. “They have been a very good corporate citizen.”

Moreover, the private $1 billion investment behind Sands has ignited a string of other new developments in the district, including a PBS broadcasting facility, a community college, and ArtsQuest Center. The latter provides cultural and educational experiences for Lehigh Valley residents and promotes individual and community creativity, enlightenment and fulfillment. “ArtsQuest has something going on 365 days a year,” Mayor Donchez remarks. One of the district’s first developments was the Banana Factory, which reclaimed an old banana distribution warehouse. The six building complex has three galleries and multiple classrooms, as well as 30 rent subsidized art studios, creating a space for everything from glassblowing and painting to photography and sculpting. “That was a really interesting way to start revitalizing the Southside into an arts district,” Ms. Karner points out.

The city’s emphasis on arts should come as no surprise. “Bethlehem has a long tradition of investing in the arts,” Ms. Karner explains. For instance, ArtsQuest’s history stretches back more than 30 years, to when the organization launched Musikfest in 1984. The 10 day festival has grown to become the largest free festival in the United States, with over 500 shows on 14 stages and nearly 1 million visitors each year. The city is also home to the oldest Bach Choir in the nation. Founded way back in 1898, the internationally renowned Bach Choir of Bethlehem gave the first American performance of Bach’s Mass in B Minor and the Christmas Oratorio – and continues to wow audiences both at home and abroad today. “We really are a city that is known for its arts and music; and even more so now with the development of Musikfest and ArtsQuest. It is really a city of year-round festival.”

Bethlehem recently received a CRIZ (City Revitalization and Improvement Zone) designation, which will fuel even more growth and development. CRIZ is designed to help jumpstart investment in hard to develop properties – and the plan is already bearing fruit. A distillery named Social Still, which launched right after Christmas 2014, was the first local business to take advantage of CRIZ’s tax incentives, which help offset construction costs. Only one of two cities in Pennsylvania to earn a CRIZ designation, Bethlehem is eager to continue using the status to the best advantage. “We have approved another project for about 115 market rate apartment units located in one of our two downtowns,” Ms. Karner explains. Another 40 apartment units, which are not receiving CRIZ tax incentives, are also expected to break ground soon. “You can tell the vibrancy of the city by the amount of apartments that are under construction,” she says. “People want to move back into our downtown.”

Young professionals enjoy the convenience of walking to work, but retirees are also pouring into new, downtown properties. “They might head south for a few months in the winter, but they still want to live in an urban setting when they are in Bethlehem,” says Ms. Karner. “They want to walk to the entertainment district. They want to walk to dinner. So we’ve got both the 20-somethings and the 50 or 60-somethings in our community.”

Indeed, Bethlehem makes an ideal home for people from all walks of life. The community boasts a high level of diversity, an excellent school system, several universities, two medical institutions, a range of quality housing, and is “one of the safest cities in the commonwealth of Pennsylvania,” Mayor Donchez explains. “We have a very high quality of life. When you look at all the amenities that we offer, it is really a great place to live and to raise a family. And we have the industrial parks that surround us providing jobs for people. We are very blessed.”

With so much to offer, Bethlehem is well placed to continue its remarkable growth. “I think the future is very bright,” Mayor Donchez shares. “We are looking at more CRIZ projects within the city. We are continuing to move forward with economic development.” Private developers are also eagerly eyeing the city. “While we as a city have used every incentive we could get our hands on, we also have a solid group of developers who want to continue to invest in the city,” Ms. Karner reports. “When you have private developers champing at the bit, you know the future is going to be a good one. We are going to do a lot of high quality projects. We are going to do a lot of development.”



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