21st Century Smokestacks

By Darl Rastorfer

One million high-spirited residents from the Lehigh Valley and beyond swarmed the SteelStacks Arts and Cultural Campus during ArtsQuest's annual 10-day music festival in August. The festival, like other entertainment and cultural activities on the campus, unfolds in a startling setting that combines new facilities with colossal remnants of Bethlehem's industrial past.

Five 20-story blast furnaces (steel stacks) provide a backdrop; a new municipal park perched atop the 36-foot-tall Hoover-Mason Trestle offers views across the campus. The trestle and steel stacks are among 33 significant landmark structures that have been — or will be — adapted for new use within a special 126-acre historic district named Bethlehem Works. The district, in turn, is part of the redevelopment of the entire former Bethlehem Steel Corporation plant in Bethlehem, Pennsylvania.

Steel executives mothballed the facility in the mid-1990s.

By then it had grown to occupy 1,800 acres, 20 percent of the municipality. It was the largest privately owned brownfield in the U.S. — an enormous rusting corpse at the heart of an otherwise picturesque city of 75,000 residents. It was also a lost resource that for generations had contributed to the economic prosperity of the city and the entire Lehigh Valley region.

Redevelopment efforts began before the plant closed. Today, the historic district's anchor developments and edges are alive with people of all ages drawn to its parks and plazas and the recreation, entertainment, and cultural offerings of the Sands Casino Resort Bethlehem and the SteelStacks Arts and Cultural Campus. The district attracted 10 million visitors in 2014.

The former plant's remaining 1,600 acres are now an industrial park and intermodal transit terminal, the Bethlehem Commerce Center. Both the Bethlehem Commerce Center and Bethlehem Works will likely be fully redeveloped in five years, a remarkable transformation given the scale of the brownfield.

Tony Hanna has been involved with the redevelopment throughout most of the 20-year process. Beginning in 1998, he was director of Bethlehem's Department of Community and Economic Development. Since 2010 he has been executive director of the Bethlehem Redevelopment Authority.

Looking back, Hanna identifies a number of factors that sustain the redevelopment's success — community engagement, transparency, strong partnerships between the public and private sectors, and having the right zoning in place — but draws particular attention to the early investment of the Bethlehem Steel Corporation.

"The city was fortunate," Hanna points out. "At the time of the plant closure the Bethlehem Steel Corporation was still an active corporation and was headquartered here. They were very committed to ensuring that the property would be redeveloped properly, and they spent money accordingly."

He adds that the company hired the right team of professional planners, engineers, and attorneys to prepare a master plan. "Those early, front-end planning efforts helped municipal personnel make a case for significant state, federal, and local funding to support the city's role in the property's development," Hanna says. "The city of Bethlehem would not have had the resources to accomplish this effort alone, so Bethlehem Steel's assistance was both welcomed and necessary."

Master plan

The Bethlehem Steel Corporation was deeply tied to the city. Robert Sayre founded the company there and in 1863 began operating an innovative iron works and rolling mill precisely where the SteelStacks Arts and Cultural Campus now stands. The plant expanded its Bethlehem facility as it prospered and looked beyond the Lehigh Valley to acquire mines, port facilities, and other mills across the globe.

In the 1970s, corporate executives began closing obsolete operations at the Bethlehem plant. The plant hemorrhaged jobs for the next 20 years. The corporation shut down the blast furnaces in 1995. It mothballed the entire site in 1997.

Plant workers in Bethlehem lost their jobs, but employees at the corporate headquarters continued managing the conglomerate's holdings from a high rise on the north side of town.

That the site was in the executives' backyard unquestionably influenced their actions: They spearheaded the former plant's redevelopment. "With investments both strategic and generous," recalls Hanna, "Beth Steel groomed the site for a new era."

Two ambitions would guide the redevelopment: recapturing the site's former commercial vitality and preserving a group of buildings and structures in the oldest part of the plant as a living monument to Bethlehem's steel-making past.

The professional team hired by Bethlehem Steel developed a master plan in 1998 with two redevelopment zones. According to that scheme, most of the site — 1,600 acres — would be transformed into an industrial park, Bethlehem Commerce Center. Existing rail lines would remain and become part of an intermodal transit hub tied to the nearby interstate highway system. A new power plant, new roads, and new infrastructure would accommodate light and heavy industry, office buildings, and warehousing and distribution.

The remaining 200 acres would be knit into Bethlehem's long-established South Side neighborhood, with its pedestrian-friendly 3rd Street commercial corridor. Zoned for retail, entertainment, museums, education, manufacturing, office, and housing, all 200 acres would be integrated with neighborhood streets and municipal infrastructure and include a special 126-acre district where the former plant's most historic structures are concentrated. Bethlehem Works, the special district, would maintain its industrial character by preserving and adapting the existing structures, and infilling the construction-ready parcels in between with new buildings and public space compatible with the forms and materials of the district's historic building fabric.

"Bethlehem Steel considered it their civic responsibility to redevelop the Bethlehem Commerce Center site," says Hanna. "Their interest in Bethlehem Works struck deeper chords: They wanted the historic district to live on as a tribute to the company and the company's founding plant."

Shovel ready

The master plan drew support from local business and business associations, nonprofits, community groups, and government personnel at the city, county, state, and federal levels. Bethlehem Steel ultimately invested $40 million to make the master plan shovel ready.

Between 1997 and 2000, Bethlehem Steel demolished most of the buildings and standing structures in the Bethlehem Commerce Center and all but 33 structures in Bethlehem Works. It cleared the entire site of debris, including 70 acres of slag piles.

The Bethlehem Steel consultants worked with state legislators to pass environmental remediation legislation that resulted in less regulation and the elimination of owner liability for negative impacts that might emerge from past environmental hazards on remediation-certified property. Bethlehem Steel then remediated the entire site and by 2001 obtained remediation certification from the Pennsylvania Department of Environmental Protection and U.S. Environmental Protection Agency.

Corporate executives worked with the city administration, city planning commission, and city council to rezone the brownfield in 1997 for a flexible mix of uses, including light and heavy manufacturing, warehousing and distribution, entertainment, education, retail, office, and residential.

In addition, the planning team worked with the city, Northampton County, and the Bethlehem Area School District — the three real estate taxing bodies with jurisdiction over the site — to create a 20-year tax increment financing district for Bethlehem Works in 2000. Most of the real estate tax generated on the site would be used to finance the site's capital improvements: new streets, utility systems, public parking, and open space.

Bethlehem Steel began selling outlying parcels in 1997. Shovel ready and favorably zoned, it put the bulk of the site on the market at the beginning of 2001. By mid-2001 it had sold a handful of properties just outside the Bethlehem Works site, including land for a tech center. On the industrial park side, the corporation sold its railroad network to Lehigh Valley Rail Management, a forge to West Homestead Engineering & Manufacturing, and 50 acres to Conectiv Energy for a new power plant.

In October 2001, however, the corporation filed for Chapter 11 bankruptcy protection, bringing all its redevelopment efforts in Bethlehem to a sudden stop. In April 2003, the U.S. Bankruptcy Court in Manhattan liquidated the Bethlehem Steel Corporation and approved the sale of its former assets — including the Bethlehem properties — to the International Steel Group.

Bringing a casino to a historic industrial district

The International Steel Group put the entire Bethlehem plant on the market and quickly sold all its holdings in the planned Bethlehem Commerce Center in two transactions: California-based Majestic Properties purchased 441 acres, and the Lehigh Valley Industrial Park, Inc., acquired the Bethlehem Commerce Center's remaining available 1,000 acres.

No investors immediately approached the International Steel Group with an offer for the western parcel and its planned Bethlehem Works district. As its landmark structures rusted away, regional concerns for their survival spread to the national level. In 2004, the National Trust for Historic Preservation designated the district among the 11 most endangered historic places in America.

In 2005, four individual investors formed a partnership and purchased Bethlehem Works. Led by Mike Perrucci, an attorney and real estate developer, the partners came into the project fully aligned with the master plan's vision for the district. They had experience in adaptive reuse (one partner owns the Flat Iron Building in New York City) and were electrified by the redevelopment possibilities embodied within Bethlehem Works' historic structures.

As Perrucci explains, "We all felt the 'bones' of the site were amazing. You just can't find property like this anymore in America. We were particularly fortunate that the blast furnaces had not been torn down."

The city agreed to lay the redevelopment's groundwork by installing streets, utility lines, and related municipal infrastructure, to be paid for with TIF revenues. Generating TIF revenues depended on attracting significant enterprises to the district. A number of credible proposals were floated, including plans for a Faneuil Hall-style marketplace and a museum of American industry, both to be located within century-old and cavernous industrial sheds. These and similar schemes appealed to the community but lacked investment to get them off the ground.

John Callahan, who was the mayor of Bethlehem at the time, recalls, "We were bringing together stakeholders and nothing was working. We needed a powerful economic engine, and there are very few of them out there."

Bethlehem Works' prospects changed when the Pennsylvania legislature passed a law enabling casino gambling. Six slot licenses would be awarded in 2006 by the newly created Pennsylvania Gaming Board. The Las Vegas Sands Corporation took notice. It scouted for promising sites in the state for a future casino resort and selected Bethlehem Works. (See "When Casinos Are Too Much of a Good Thing," March.)

Like businesses moving to the Bethlehem Commerce Center, Las Vegas Sands valued the city's close proximity and easy access to large population centers: 30 million people live within 100 miles of Bethlehem (New York City is 80 miles away via Route I-78; Philadelphia is 50 miles southeast of Bethlehem via Route I-476). Sands also valued the site's architectural quality and intended to draw on it when developing its facility. Sands joined the original Bethlehem Works partners, and planning began for a casino complex at the eastern end of the district.

Many in the community regarded a casino development as a godsend, but most Bethlehem residents opposed it. Without wide community support, the Sands' bid for a state gaming license was doomed.

To win public support, Sands personnel and their supporters collaborated with members of the community on the architectural design of the casino and resort. Both the community and the Sands wanted the facilities to blend with the scale and architectural quality of the district. A design emerged that did just that.

To address concerns that a casino would spawn unsavory businesses in adjoining areas, supporters worked with the city council to amend the zoning code to prohibit check-cashing businesses, pawnshops, massage parlors, and other related enterprises in the vicinity of the casino.

"Opinion went from 60 percent against to 60 percent in favor of gaming when people were asked whether they would approve a casino if it meant saving the Bethlehem Works site," Hanna says. "We were willing to introduce gaming because it was a way to jump-start redevelopment throughout the Bethlehem Works site. We wouldn't have brought a casino to Bethlehem otherwise."

Sands submitted its proposal to the Pennsylvania Gaming Board with community support and was granted a slots license in 2006. Bethlehem Works was getting a casino: The TIF enacted in 2000 for the district's redevelopment was now in play.

While Sands built a $800 million casino complex on former iron ore and coke yards, the Bethlehem RDA borrowed $40 million against future casino-generated TIF revenues to construct streets, install utilities, create parking, and develop public spaces to merge Bethlehem Works with the South Side neighborhood.

The casino and cultural campus

Today, the Sands Casino Resort Bethlehem is a 15-acre complex with a gaming hall, hotel, conference center, restaurants, retail outlet, and performance auditorium. Its architecture borrows from the industrial forms and materials around it and blends with the district's historic structures, including the five remaining 20-story blast furnaces, which the Bethlehem Works partnership illuminated to draw visitors to the district while forming a dramatic nighttime backdrop to the cultural campus.

The campus — half a mile west of the casino resort — opened in July 2011 on 9.5 acres donated by the Bethlehem Works partners to the city and two nonprofit organizations. It's an inviting civic center with three new buildings, two restored and repurposed historic buildings, and a network of flexible, landscaped open spaces including three public plazas, a picnic grove, a playground, and an amphitheater lawn that accommodates audiences of 2,500.

Campus buildings and outdoor space serve a wide array of activities: music concerts, dance performances, cinema, exhibitions, sporting events, educational programs, shopping, and dining. In 2014, the Urban Land Institute named the SteelStacks Arts and Cultural Campus a winner of its prestigious Global Awards for Excellence.

Bethlehem RDA funded the construction of campus outdoor space, the Levitt Pavilion SteelStacks, the restoration and adaptation of the 1863 Stock House into the Bethlehem Visitor Center, site-specific artworks, the restoration and adaptation of the Hoover-Mason Trestle, and parking facilities, largely with TIF revenues generated by the casino resort. The local Public Broadcasting Service affiliate, PBS39, and ArtsQuest (a nonprofit that programs most of the campus's activities) financed the buildings they constructed on the campus with government grants, philanthropic donations, nonprofit funds, and private investment.

TIF funds also built a public greenway that runs the length of Bethlehem Works' southern border. With the Hoover-Mason Trestle elevated park at the northern boundary, the greenway at the south, the casino resort at the east, and the arts campus at the west, the periphery of the historic district is fully redeveloped and activated. Private enterprises — including a destination retailer and a microbrewery — are developing plans to restore and adapt several of the largest and most dramatic buildings within the historic district's core.

Just outside Bethlehem Works on property that was once part of the steel plant, privately financed construction of new office, residential, and retail developments are under way — a spillover from the SteelStacks investments and success.

Redevelopment momentum continues to build, and Perrucci expects Bethlehem Works to be fully built out in five years.

The industrial park today

After the Bethlehem Steel Corporation bankruptcy settlement, voters in Northampton County passed a bond to fund a boulevard through the center of the master plan's new 1,600-acre industrial park — the Bethlehem Commerce Center — and to improve highway connections between the park and nearby Route I-78. This kicked off a steady redevelopment process tied to the site's rail and highway connections.

The two entities that purchased the park's undeveloped land — Majestic Realty and LIVP — built roads off the new boulevard and extended site infrastructure throughout their parcels.

Majestic Realty today is approaching its build-out goal of eight million square feet with a projected $500 million investment. Its Bethlehem tenants occupy offices, data storage facilities, and warehouse and distribution centers, including part of a two-building, 2.5-million-square-foot facility Walmart recently leased as it goes toe-to-toe with Amazon for e-commerce dominance.

Eleven companies are currently part of the LVIP 1,000-acre portion of the Bethlehem Commerce Center. They include Cigars International (corporate headquarters, call center, warehouse, and a 40,000-square-foot humidor), United States Cold Storage (warehouse and distribution center), and the software programmer
Synchronoss Technologies.

Conectiv Energy built and now operates a power plant that sells electricity to businesses in the Bethlehem Commerce Center and to customers across the region. The Norfolk Southern Railroad manages the intermodal terminal, which connects cargo between the Norfolk Southern and Canadian Pacific railroads and Route I-78 (a train-to-truck and truck-to-train transfer).

I asked Kerry A. Wrobel, president of LVIP, what attracts businesses to the Bethlehem Commerce Center. "Bethlehem's location and highway connections," Wrobel said. "We're ideally positioned to serve the Northeast and Mid-Atlantic. Rail is available on the site for up to 80 percent of the parcels. There's a property tax abatement program. We established covenants that protect the interests of the business owners."

Wrobel, too, is bullish: He expects total build-out of the Bethlehem Commerce Center in less than five years.

Plan legacy

"The only significant difference between the Bethlehem Steel master plan from the 1990s and the built-out site today," notes Hanna, "is the project that brought Bethlehem Works to life. Instead of a national museum of industrial history, a casino ignited the district's redevelopment." Regarding the project's impact, Hanna says, "When redevelopment of the former steel plant is complete, the site's new businesses will provide tax revenues that will equal or exceed those paid by Bethlehem Steel when the plant was in full operation."

An outstanding success on many levels, the role of historic preservation sets this redevelopment apart. The region's preservation advocates — including Bethlehem Steel executives — discounted the prevailing national practice of obliterating all remnants of a site's heavy industrial past as an initial real estate redevelopment step, and successfully preserved what is arguably America's largest intact 19th and 20th century smokestack district.

The effort is paying off. Bethlehem Works and its merger with South Side is attracting a mix of businesses and people who are reinventing Bethlehem while embracing a cherished industrial past.

Darl Rastorfer is a freelance writer whose range of services includes documentation, research, and editing. For more information: darlrastorfer.com

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Resources

Images: Top — The ArtsQuest Center is one of three new buildings at SteelStacks. Its second floor and mezzanine-level cafe and music venue overlook the iconic blast furnaces. Photo by Paul Warchol courtesy Spillman Farmer Architects. Middle — A drone captured this image of the SteelStacks Arts and Cultural Center at twilight. At left are the old blast furnaces (SteelStacks); the lighted Hoover-Mason Trestle provides a linear park from the Bethlehem Landing visitor center to the Sands Casino. In the center of the photo is the amphitheater and Levitt Pavilion; on the right is ArtsQuest Plaza. WRT designed the campus landscaping, Levitt Pavilion SteelStacks, and the linear park supported by the Hoover-Mason Trestle. Christenson Photography for WRT. Bottom — Once a narrow-gauge railroad, the 2,000-foot-long Hoover-Mason Trestle at SteelStacks now lets visitors get close to the blast furnaces it once served. Patriotic fans at SoccerFest 2015 in PNC Plaza at SteelStacks celebrate the winning American team during a viewing party for the FIFA Women's World Cup. Photos by Mark Demko.

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