Friday, April 27, 2012

Pawlowski's Latest Offer to Settle NIZ Dispute

(Updated 10:25 AM, to point out that the settlement offer is not as clear as I thought it was.)

Allentown Mayor Ed Pawlowski, upset at the disinformation he claims is being reported in the press, has taken it upon himself to communicate his latest offer to settle the NIZ dispute. Yesterday, he shot an email with his latest proposal to all tax collection committee officials in both counties.

First, the City is now willing to return all EIT to municipalities, even future EIT. EIT to municipalities. (It is now unclear to me, based on reader comments, whether this does include future EIT, as I thought in my first read. If it does not include future EIT, this is obviously a lousy deal).

Second, to sweeten the pot, a "development fund:" will be established for surrounding municipalities, funded by NIZ developers with an annual $1 per sq ft of office space occupied payment. This development will not include the arena block.

The Morning Call reports it has obtained a copy of Pawlowski's proposal.

So have I.

I've posted it below.

Now you have it, too.

April 26, 2012
TO:                     TCC MEMBERS
FROM:               MAYOR ED PAWLOWSKI
You no doubt have read or viewed various news accounts of the City of Allentown’s proposal to settle the lawsuit filed by Hanover and Bethlehem townships and subsequently joined by other municipalities relative to the arena project and the Neighborhood Improvement Zone (NIZ).
I am concerned about various inaccuracies that have been leaked and reported in the news media.  Accordingly, I have attached a copy of the proposal for your consideration. 
I also understand your concerns regarding your current Earned Income Tax (EIT) and let me be clear; this proposal ensures that current EIT monies within the NIZ are not in jeopardy.  This proposal is applicable to all taxing bodies in Lehigh and Northampton counties, regardless of whether or not they have joined a lawsuit.
Please feel free to share this with the elected officials in your respective governmental bodies. 

Description: Description: ALLENTOWN_LOGO_4COLOR-EMAIL
Ed Pawlowski
Mayor
435 Hamilton Street
Allentown, PA 18101
Phone: 610-437-7546
Fax: 610-437-8730



Allentown Neighborhood Improvement Zone Development Authority Revenue Sharing Proposal

ln an effort to provide local taxing bodies with their current Earned Income Tax (EIT) receipts from the Neighborhood improvement Zone (NIZ) area, the City of Allentown will develop a Baseline Payment fund to provide for the timely disbursement of current EIT back to Lehigh and Northampton County taxing bodies. The fund will be structured as follows:

Baseline Payment Fund:
º A baseline payment will be calculated on the EIT generated within the NIZ for the first quarter of 2012, and then annualize for the year 2012 (the “Baselìne"). Berkheimer will establish the 2012 Baseline by mid-June, 2012.

º Commencing approximately the later of the issuance of the Allentown Neighborhood Improvement Zone Development Authority (ANIZDA) financing of bonds or October 2012, ANIZDA will pay to the local taxing bodies their prorata contributed share of the Baseline with the first payment being the equivalent of prior withheld quarterly payments in 2012, and then quarterly thereafter, pay the prorata of the Baseline for the life ofthe Bonds for the Arena Block Development.

º The initial source of revenue to support payment by ANIZDA of the Baseline for 2012 and 2013 will be borrowed money against non NIZ revenue. Future sources will be non NIZ and surplus revenue.
In addition to the Baseline Payment Fund, and to provide a vehicle for local taxing bodies to share in future NIZ development opportunities, ANIZDA will create a Development Fund which will be administered in the following manner:

Development Fund:
º ANIZDA will create a fund for distribution to local taxing bodies from new office development within the NIZ but outside of the Arena Block by charging a fee to Developers of commercial office projects utilizing NIZ financing proceeds.

º Each office development will pay an annual fee upon occupancy of $1.00 per rentable square foot occupied.

º Annually, by June 30th, from the fund, ANIZDA will distribute the receipts to the local taxing bodies located in Lehigh and Northampton County based on the percentage of EIT collected from residents within the local taxing body working in the NIZ for the prior year as calculated by Berkheimer.
Conditions:

To participate and receive Baseline Payments and Development Fund distributions, the local taxing body must accept, approve and enter into the settlement agreement with ANIZDA.

All pending lawsuits by taxing bodies must be withdrawn by all litigants who are a party hereto.

The local taxing body shall also assign to ANIZDA its right to receive disbursement of surplus up to the amounts advanced to it by the ANIZDA payments made under this agreement so as to avoid double payment to the local taxing body.

ln the event any local taxing body sues to challenge the validity of the NIZ Act, the settlement agreement shall terminate immediately for all taxing bodies.

Bond counsel, the PA Dept. of Revenue and the ANIZDA Board must all approve the settlement agreement.

18 comments:

Anonymous said...

No way this came from Hizzoner. There are no spelling errors.

Anonymous said...

That has nothing to do with FUTURE EIT, only current based on 2012. They will take the first quarter and then annualize it for the life of the NIZ.

Anonymous said...

Sounds like a pretty good deal. I would take it.

Anonymous said...

Why is everyone so worried? I thought Allentown was a horrible, dirty, crime ridden place where no one would even consider locating a business or family.

Anonymous said...

The mayor’s proposal is insane. Why would any municipality or school district waive future EIT earnings in the 130 acre NIZ. Any job created anywhere else in the Commonwealth the EIT goes back to the individual’s municipality of residence.

Now let’s talk about the mayor’s attempt to negotiate in the press. Someone in city hall “leaked” the offer to WFMZ. Anyone think it came from anyone other than Edwin himself. Then in order to make sure everyone has the whole story the mayor releases everything to the press. Can you spell stupidity?

I heard from my Tax Collection Committee representative that 440+ municipalities are affected by the tax grab. Can you explain to me how the mayor is going to get 440+ municipalities to sign off on a deal considering the law is unconstitutional?

The ice just got thinner in center city. Hizzoner needs to be in the market for a lifeboat.

Anonymous said...

So he sends an email that references disinformation, then he blows off the developer's meeting and a chance to talk people about this and dispel that disinformation.

Unbelievable.

Every time I think he can't fuck up any worse, he proves me wrong.

Anonymous said...

Bernie -

As a previous poster pointed out, the settlement is only for current EIT and local municipalities would be crazy to accept such a deal.

Also, since the two components of the "compromise" offer would pay out proportionately to local taxing bodies in Lehigh and Northampton Counties, wouldn't that also include the City of Allentown and Allentown School District?

If so, it would seem that Ed is offering as a "compromise" to outside municipalities a deal that would primarily benefit the City of Allentown and Allentown School District (both of whom presumably would benefit the most).

That doesn't seem like much of a compromise, if outside municipalities are in line behind Allentown.

Anonymous said...

The deal includes current EIT taxes a portion of the $1 payment per square foot of office space developed in the NIZ, outside of the arena block, proportionate to the current EIT distribution in the NIZ among municipalities in Lehigh & Northampton County.

This is a good deal. The more space developed, the more money suburban townships make even if no new residents work in the NIZ, ever.

Bernie O'Hare said...

Nt a good deal, if it does not include future EIT. Sorry. I doubt townships will accept this.

Anonymous said...

It could be better.

There is no guarantee any township will receive one nickel more in EIT than they do today. You assume new employees will want to live in their township. Maybe they will, maybe they won't. With this deal at least they are guaranteed additional revenue beyond current EIT levels as long as new floor space built.

Anonymous said...

If the only thing developed over the next ten years is the arena block. Then the townships get $0.00 total square footage payments. Pretty empty offer.

future downtown arena unattendee said...

Stick a fork in Mayor Ed and this project - it is done. I just read the latest article on Lehigh Valley Live about the alleged renegotiated offer to the lawsuit plaintiffs. The handwriting is on the wall. No way they will be able to float those bonds in time, so they can begin the first stages of work. The Mayor knows this, so he will agree to anything to make that lawsuit go away. IT'S ALL OVER!!!

Anonymous said...

Enjoy your weekend Edwin. Monday starts another BAD week.

Anonymous said...

Why isn't the attorney general in PA suing when the whole thing is unconstitutional and Corbett vetoed the bill?

Anonymous said...

Rendell signed the bills into law. Corbett had nothing to do it with it.

Bernie O'Hare said...

Corbett would have signed the 2011 bill into law.

Bernie O'Hare said...

"Why isn't the attorney general in PA suing when the whole thing is unconstitutional and Corbett vetoed the bill?"

Corbett vetoed a bill with similar language. He signed this bill. It was buried in a budegt package, both in 2009 and 2011.

Anonymous said...

This was not over looked twice, or even once. It will be upheld but will will not see hockey until 2014.

Corbetts office will defend it vigorously.