Choice of Building for Business Incubator Explained

Bethlehem City Council took no action on a plan, , to convert the second floor of Cantelmi’s hardware store into a new incubator for fledgling high tech business. As it turns out, it did not need to.

The city’s enterprise zone funds already were kept in an escrow account that the city could draw from without making a budgetary transfer that would require council approval, according to Joseph Kelly, the city’s director of community and economic development.

Nonetheless, council’s Finance Committee got a presentation on Monday night from city Community and Economic Development staff, including an explanation of how it picked the Cantelmi building at 521 E. Fourth St.

Space in the city’s Keystone Innovation Zone is hard to come by, which is one of the reasons why the city wanted to develop a new incubator in it, said Bekah Rusnock, the city’s enterprise zone coordinator.

Keystone Innovation Zones were established by the state to provide financial incentives for new high tech businesses to locate near college campuses to encourage job growth and entrepreneurship. Bethlehem’s KIZ, near Lehigh University, was the first to receive such a designation from the state in 2004.

Among the financial benefits is the potential sale of tax credits from eligible businesses, which can be used to infuse money into a new venture, said Steve Melnick, the vice president of entrepreneurial development for the Lehigh Valley Economic Development Corp.

The city was able to identify six potential spaces that could host an incubator inside the KIZ, Rusnock said. Of those, two of the spaces were unavailable; one was too small to meet the incubator’s needs; and two more had little or no parking and were more expensive to lease than the hardware store, Rusnock told council.

has 30-off street parking spaces, a rare commodity in South Bethlehem, Rusnock said.

The city plans to invest between $500,000 and $700,000 in the building for renovations, most of which will go toward building a new elevator tower that will make the space compliant with the Americans with Disabilities Act.

The money will come from a $1.02 million fund established when the city sold its two previous business incubators to private industries. Since the money to build those incubators came from Keystone Enterprise Zone funds, the city is required to reuse those funds in one of its enterprise zone, which the KIZ also lies within, Rusnock said.

The city will lease the 8,000 square foot space from Cantelmi for $2.55 a square foot per month and re-lease it to tenants at $12 a square foot. The proceeds will go back into the city’s enterprise zone fund, which it will use to provide loans to businesses that locate in one of the city’s enterprise zones.

There could be about eight tenants in the building once the renovations are complete, Rusnock said.

There was almost no discussion of the matter at Tuesday night’s regular meeting, with the exception of frequent courtesy of the floor speaker William Scheirer, who encouraged the administration to make the details of the lease with Cantelmi public once it is executed.

Scheirer said doing so would “quiet the suspicious people out there, of which there are too many,” who have noted that the mayor has a familial relationship with hardware store and building owner Rick Cantelmi. In fact, Callahan is married to a daughter of one of Cantelmi’s cousins.

In other matters, council on Tuesday did give final approval to a resolution that would encourage continued negotiation between the city and East Allen Township for the