SOS In The News

August 24, 2004

Developer: Steel deal next month

Latest Bethlehem Works planners expect mid-September sale.

By Matt Assad
Of The Morning Call

After seven years in which one developer after another has kicked the tires of Bethlehem Works and left, Michael Perrucci said he's ready to buy the 120-acre former Bethlehem Steel property.

Perrucci said Monday his BethWorks Now development group is deciding how it will turn the land into an entertainment, office, residential and retail district, but he has scheduled a mid-September closing date to buy the land for $4 million.

The deal would bring an end to a frustrating period in which several developers performed lengthy — in some cases, years — due diligence, only to walk away without buying the land.

''I know the history of this property has brought a lot of skepticism, but we're committed to this project,'' said Perrucci, a Phillipsburg attorney and a principal in BethWorks Now. ''We're seeing a lot of interest, and we have some exciting plans. We intend to close the deal next month.''

Laying out grand plans to develop the former Steel plant land is nothing new, but buying the property to do it is. Bethlehem Steel in 1997 proposed transforming the property into a shopping, entertainment and museum district that would represent the city's economic rebirth.

Developers stepped forward to invest, in some cases calling news conferences to announce their interest, but in every case they backed away without buying the land. Bethlehem Steel filed for bankruptcy in 2001, and International Steel Group of Cleveland bought its assets last year, including the vacant South Side land.

Most recently, Delaware Valley Real Estate Investment Fund of Philadelphia ended nearly two years of interest in buying the land by quietly allowing its exclusive sales agreement to expire.

Perrucci stepped into the picture in April. In general, the development will take the shape of a small-town Main Street lined with trendy shops, restaurants and recreation businesses, he said. It would be accompanied by office space and condominiums or apartments. However, it is yet to be determined how much of each use will make up the development model, or how long it will take to do it.

One model would have him develop the land piece by piece, enabling him to begin at least part of the project within a month.

But a second model would involve developing the entire property as an integrated plan that would take longer, Perrucci said.

''How soon we get started depends on which avenue we take,'' Perrucci said. ''Will the whole thing get built in a year? No, but either way we think we can bring a lot of development relatively soon.''

But first things first, and that means closing the deal next month to buy the roughly 120-acre tract that includes vacant plants, the former Bethlehem Steel headquarters on E. Third Street, parking lots and the five rusted blast furnaces that tower over the Lehigh River.

Perrucci said he recently cleared the last major hurdle when he bought insurance to protect his investors in the event the property contains hazardous materials that must be cleaned up.

No other major hurdles to the sale are apparent, said Roger Ochse, an International Steel Group consultant arranging the land deal with BethWorks Now.

''The ball is in their court,'' Ochse said. ''If they say they're ready to buy, then we are ready to sell.''

After spending $10 million to build roads into the property, Bethlehem officials are ready, too. City officials for years have pinned much of the city's economic future on the idea that its tax base can be expanded by developing the former Steel lands.

Despite enduring years of broken promises, Tony Hanna, Bethlehem's director of community and economic development, said he likes what he sees — so far.

He takes some comfort in knowing BethWorks Now includes deep-pocketed investors such as prominent Manhattan attorney Richard Fischbein and Barry Gosin, chief executive officer of Newmark Real Estate, one of the largest independent real estate firms in the nation.

''While they've showed us only a general idea of their plans, I'm impressed with Mr. Perrucci's partners and their background,'' Hanna said. ''I'm encouraged that finally this property is going to be in the hands of people who have the means to develop it.''

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