Saturday, April 28, 2012

Weekly Summary: All the NIZ That Fits the News

Excavation at 7th & Hamilton continues
This is a weekly summary of this past week's twists and turns in the fast-moving NIZ story.

Allentown's Neighborhood Improvement Zone (NIZ) is a 130-acre redevelopment area, located both in the downtown and along the riverfront. It's the result of state legislation first adopted in 2009. What makes it attractive to investors is that virtually all state taxes generated zone can be used to fund other improvements. In addition, the earned income taxes of people who work there can be used, regardless where they live.

That's how Allentown plans to fund its much anticipated Phantoms hockey arena. Other improvements, including a luxury hotel and office complexes, have also been planned. Mayor Ed Pawlowski calls it "transformational," but surrounding communities worry that it will draw other Lehigh Valley businesses, sucking the lifeblood from municipal budgets on an uneven playing field in which other developers will be unable to compete.

Here's a quick summary of what has happened in the past week:

Monday, April 23:  Just one business day after developer Abe Atiyeh filed a constitutional challenge to the NIZ, he is hit with a $150 million counterclaim. The colorful businessman is accused of conspiring "with others yet unknown" to interfere with is projects. Atiyeh accuses Pawlowski of using intimidation tactics, both to chill his constitutional rights and scare off other developers and municipalities.

Whitehall Township and Whitehall-Coplay School District vote to join the NIZ challenge, undeterred by Pawlowski's litigation. "The only difference between the NIZ and Jesse James is that Jesse James used a gun and wore a mask," states the President of Whitehall Commissioners, Linda Snyder.

Allentown rejects an offer to settle parallel litigation filed by a growing number of municipalities, spearheaded by Hanover and Bethlehem Townships. Their proposal was to allow Allentown to keep all EIT, but reduce the size of the NIZ to the downtown area around the proposed arena.

Tuesday, April 24:  Word leaks that the Governor's office is concerned that the NIZ might be unconstitutional special legislation because it could only ever apply to Allentown. It's nearly identical to similar legislation vetoed by Governor Corbett in July.

Palmer Township becomes the 12th governing body to join the NIZ challenge. With Hanover and Bethlehem Townships acting as the spearhead, other participants include Bushkill, Lower Nazareth, Lower Saucon, Lehigh, Palmer, South Whitehall, Whitehall Townships, Hellertown and Stockertown Boroughs and Whitehall-Coplay School District.

Hanover Township meets in executive session with NIZ Attorney Jerome Frank, to review a new settlement offer. Hanover officials leave the closed door meeting without taking official action or discussing the new proposal.

Wednesday, April 25:  Concerned that State Senator Pat Browne "may attempt an 'end-run' in the NIZ litigation by seeking to amend Act 50," Tax Collection Committee officials in both counties begin a lobbying effort with state representatives. The Pennsylvania State Association of Township Supervisors begins to monitor the situation from Harrisburg.

Bethlehem Township Commissioners convene in executive session to discuss the latest NIZ offer, but leave without taking official action or making any announcement.

In a meeting attended by 200 people, hosted by Congregations United for Neighborhood Action, Allentown Mayor Ed Pawlowski stated the arena is located downtown because that's where it will have the greatest economic impact. "I wanted to stick it somewhere where people would benefit from the positive impact this development will have."

Thursday, April 26: Over thirty local developers meet at Hanover Township's Best Western to discuss the potential adverse impacts of a NIZ on their own business operations. Those in attendance include Arcadia developer Richard Thulin, The Frederick Group's Don Frederick, Roma Corporate Center's Tom Roma, Martin Tower developer Lou Ronca, PennCap Propertes' Lisa Pektor and NIZ litigant Abe Atiyeh.

State Senator Bob Mensch and Bethlehem Mayor John Callahan also attend this meeting. Mensch is sympathetic to developer concerns about the uneven playing field created by subsidized rents within the NIZ. Callahan wants Allentown to succeed, but not at Bethlehem's expense.

NIZ developer J.B. Reilly denies poaching local businesses for the NIZ although all tenants recruited so far have come from the Lehigh Valley. Reilly admits he conducted no research on the local market for office space.

Developers are concerned about the size of the NIZ, especially along the riverfront, but J.B Reilly states only 26 acres are developable at that location. 

An attorney is retained to research the formation of a corporate shell to insulate developers from any countersuits filed by Pawlowski in the event they decide to seek judicial relief.

Later that evening, Salisbury Township Commissioners vote unanimously against joining the NIZ litigation.

Friday, April 27: Concerned about "various inaccuracies that have been leaked and reported in the news media," Pawlowski releases Allentown's latest settlement offer. In addition to allowing municipalities to keep their current EIT, he proposes a "development fund" for municipalities. This would be financed by an annual assessment of NIZ developers, based on occupied office space. There is no offer to reduce the size of the 130-acre NIZ, or to return future EIT to municipalities.

This week, the Allentown Neighborhood Improvement Zone Development Authority will meet on May 3, 5 p.m. at the Allentown School District Administration Building. This is the entity that will float and oversee the revenue bonds, estimated at $220 million, to finance the arena project. The litigation filed by Townships and Atiyeh has made that unlikely.

53 comments:

Anonymous said...

And this just in from all the area state reps.......

Anonymous said...

I thought the SLAPshot suit was for $50M?

Bernie O'Hare said...

There are 3 counts, and in each, over 50MM is sought.

Anonymous said...

When the idea was first proposed to move the Arena from the original suggested sight along the Water Front to the Center Square area. A group of us downtown residents were the first to outraged at the stupidity of it. Now that the whole financial "ball of wax" has been melted down to it's core. (that is, who really benefits from this)We applaud the Townships law suits. It is too bad these beautiful historic buildings had to destroyed beforehand. Crime and filth will not abate till an entire downtown clean-up program is properly administrated by a really truly concerned City Hall.
Thanks for keeping on top of this Bernie, along with M.M. You gentleman are great!!......

Bernie O'Hare said...

Thanks. MM was the first to pay attention. The MC's Matt Assad & Scott Kraus have been superb. The ET's Colin McEvoy has broken big stories, too. None of this would matter if this were confined to A-town, a one party town that questions nothing and has abdicated its democracy to make Pawlowski a king. But he's learning his Kingdom does not extend into the rest of the LV, whose citizens will ask questions. Even if he sues them for $150 MM.

Anonymous said...

I was at the CUNA event and thought that the Mayor's comments were right on target. He's willing to work with the community and give them a place at the table. The community members were reasonable, too.

Bernie O'Hare said...

The Mayor never came out and committed to a community benefit agreement, but was reasonable, eh? Aren't you fortunate!

Your comment is a perfect illustration of what I was talking about at 7:41.

Baaaaa.

Anonymous said...

Bernie. You still need to dig a bit deeper. Hear what I'm saying? There's more. It will come out , it's just a matter of when.

Mark Baker said...

"hockeygate"

Keep up the good work BO et all.

Anonymous said...

Bernie

I thought Upper Nazareth was in too?

Bernie O'Hare said...

I have read that in some news accounts, but remember a contrary conversation with an U Naz. Supervisor. They were against it, but did not want to go to court. I will attempt to clarify.

Anonymous said...

What about an impact fee for neighboring communities? Hell if Allentown can justify the millions it gets from the Sands revenue, surely the NIZ could be used for traffic control, or infrastructure improvement along access points to the Arena.

Anonymous said...

This whole EIT was a big distraction and shame on Browne for including that provision in the bill.

Calling it Allentown Arena is fine, however the Brooks brothers should buy a paper and move into town. Since the Valley is contributing to this project, they would be wise to call them the "Lehigh Valley" Phantoms. That will help with regional appeal.

Bernie O'Hare said...

"I thought Upper Nazareth was in too?"

You are correct. That has just been confirmed.

Anonymous said...

http://www.news-register.net/page/content.detail/id/535581.html

A good link on the Brooks brothers

Bernie O'Hare said...

Fascinating story. I really haven't even looked at them. But it certainly seems they can't be trusted, either.

Anonymous said...

Bernie, is federal money in this project? According to this press release they may be using New Market Tax Credits.

http://www.allentownpa.gov/Portals/0/files/lease%20signing%20press%20release.doc

Anonymous said...

Retired ASD teacher here.

Don't know much about the Brooks Group, but I'll say this, they were given an amazing deal to come to Allentown.

Any money they are required to commit will be covered by whomever they sell the building naming rights to. The other benefits they receive, with this, mean the Phantoms have no significant risk to their own funds here.

Because Allentown "gave a way the store" to the Phantoms, the arena will have difficulty attracting a franchise of another sort. That's too bad because the building will need more than one regular tenant to survive.

I'm certain the Brooks Group will will wait through a one year delay due to current court challenges. However, if they have an escape clause in their agreement with Allentown, and a facility host somewhere else comes forward, they could bolt. At that point, Allentown will sit with an empty lot, and debt to prove it, for several more years.

Anonymous said...
This comment has been removed by a blog administrator.
Bernie O'Hare said...

Stay on topic, please.

Bill Coker said...

4:25's link was certainly eye opening on the Brooks brothers (I remember when they had great suits). Fits with King Paws plan perfectly.

However, with the suburbs wising up to the King P, Reilly fiasco, bet the Brooks Boys will fly to next feathered nest. Suckers are born every day.

Anonymous said...

The audacity of asking to be called the Lehigh Valley Phantoms after this temper tantrum!

Newsflash: Rich people are always going to make out on these projects. In the end, we get a cool arena and Flyers farm team.

Mountain, molehill. It's to be expected. It's a shame how you all have turned on Allentown. I guess most are too young to remember what Allwntown has meant to the Valley...

Anonymous said...

I'm certain the Brooks Group will will wait through a one year delay due to current court challenges. However, if they have an escape clause in their agreement with Allentown, and a facility host somewhere else comes forward, they could bolt. At that point, Allentown will sit with an empty lot, and debt to prove it, for several more years.

And you all should be SO proud if that happens.

Anonymous said...

an illustration:
The Americus hotel.
all the fanfare.
King pud found a new tenant (dupe) to revive the old hotel.
got them to put up their own money with the stories of a viable business.
screwed into oblivion by plans for a NEW, BIGGER, BETTER, luxury hotel in a more suitable location.
Potential investors, aside from reilly and butz, should be VERY wary.

Anonymous said...

Retired ASD teacher here.

11:09PM-

Should everything fall through, I'd feel no pride, just sympathy. Sympathy for any taxpayers left holding the debt. When elected officials create an ill-prepared, unfunded obligation on the backs of citizens it's a sad day.

I prefer to be less concerned about the entire project, but I can't! My community is being brought into the deal against its will.

When the E.I.T. component is removed, much critical opposition will go away.

Anonymous said...

maybe shoving a $ 160.0 million dollar Palace of Sport down my throat just was NOT a good idea after all

maybe Big Government just should NOT be involved in the risky business of financing sports arenas

EVER

maybe the Dummyrats in the City With No (Spending) Limits will figure it all out someday

but i doubt it

Anonymous said...

I don't think all that much "critical opposition" will just up and vanish if the whole EIT fiasco goes away.

The PALACE of SPORT and the rest of PAWLOWSKI's POTEMKIN VILLAGE is all about the spending.

And it IS outrageous.

Next thing you know, the Dummyrats will be wailing that they don't have any money to pay for BREAKFAST and DINNER programs at Allentown schools, no money for computers and textbooks, no money for free cell phones for the "disadvantaged", etc.

Yeah, I've seen the Dummyrats play before. Their strategies and tactics are very old. And very tiring.

The Crony Capitalism is abosultely sickening, Hypocritical Dummyrats.

Can't blame this one on Bush and is just goes to show how much chaos and confusion ONE genuine "RINO" (yeah, that's you, Senator Browne) can cause when he gets in bed with a bunch of Dummyrats (led by some joker from Chicago).

YOU WANT MY MONEY (AND POLITICAL SUPPORT) --- I WANT FREE HOCKEY TICKETS ... I HEAR COMPROMISE IS JUST SO DAMN COOL --- SO LET'S GET STARTED!

Anonymous said...

"absolutely"

you Dummyrats make me so ill, all of a sudden I start spelling like I'm Chairman Pawlowski trying to write an email

:)

what the situation REALLY requires is a bunch of children holding signs that play well for the media!

speaking of sending out emails ...

(oh, yeah, i just went there)

Elijah LoPinto said...

10:13

your cute, what with the fake commie speak and all, but the dems are not commies and they alone are not behind this. Good old pat browne is a republican, remember. you know, those guys who give out tax welfare breaks to the rich. so what we have here is the oldest conjob out there. one side passes laws restricting the amount of taxes that can be charged by certain groups (the riches bracket of the sliding scale, corporations, etc) the other side, we will call them democrats, goes on about how we need to keep our children safe and create regulations that hinder small business like the FDA meat safety laws passed by clinton that have, under obamas monsanto run FDA, arrested amish farmers for selling raw milk, but have done nothing about the E.coli tainted chicken coming from tyson (farms, not iron mike) (psst, clinton also got rid of glass stegall and created much of the financial mess we are in now)

so to get back on topic, side one, browne the republican, passes the legislation that put the NIZ into play. side two, pawlowski the democrat, uses the NIZ to finance his buddies at city center development.
it's like the pro wrestling match where no matter how much the iron sheik and hacksaw jim dugan seem to hate each other, they still get arrested for smoking marijuana together after the match.

most of the politicians, republicans and democrats, care only about how they can screw you, the hardworking taxpayer, out of your money. and any difference between them is just lipservice to keep us, we the people, playing alone with their looting of the country.


maybe is independent molovinsky had won our manorial race we wouldn't have a giant hole in downtown, but at least we know where we can bury our shame...

Anonymous said...

"manorial", Elijah?

I think you mean to say "MAYORAL" as you attempt to take a weak shot at Mr. Molovinsky ... don't you?

Chairman Pawlowski = DEMOCRAT

Rubber Stamp Counicl of Apparatchiks = DEMOCRAT

O'Hare has some nice charts showing the developers giving all their campaign contributions to ... DEMCORATS

Anonymous said...

"manorial"

that's cute

Anonymous said...

"your"

that's cute, two

:)

Bernie O'Hare said...

Actally, Elijah is right on the money, and I don't think he was criticizing MM. Reilly is a member of the Money Party and contributes to Democrats and Republicans who he thinks will best help him.

Here's a link to a story I wrote about it last month.

Anonymous said...

Why do the teabaggers continue to go crazy about this as a Democratic thing. It is the age old alliance of politics and big corporate money. It transcends politics. Hell, the architect was a Republican state senator. These baggers wonder why they are held in such low esteem, they need only read the nonsense they write.

Anonymous said...

Retired ASD teacher here.

Bad legislation is bad legislation, no matter WHO creates it.

I have no concern if this all was made possible by a Democrat or a Republican. In full disclosure, I am a Republican.

More people need to understand this is an INCREDIBLE amount of money being pledged. It's also a 30 year commitment, not a puzzle that can be solved with everyone's satisfaction next year only.

Everyone likes to say, especially today's Express-Times editorial, "Look at the bigger picture." I like to think that's exactly what I'm doing by raising so many concerns.

Anonymous said...

I am just surprised they did not relocate a gas drilling company to the NIZ so they could keep the impact fee?

Anonymous said...

I am just surprised they did not relocate a gas drilling company to the NIZ so they could keep the impact fee?

Anonymous said...

I prefer to be less concerned about the entire project, but I can't! My community is being brought into the deal against its will.

You see, that's the problem. You project your own feelings on the rest of us. Many of us 1.) want AHL hockey, 2.) feel the AHL hockey will bring the community together the way all professional sports are apt to do in a community, 3.) want a real venue for concerts and shows, 4,) are not afraid to go into Allentown, 5.) and do not mind pennies in taxes going to feed the greater good of the LEHIGH VALLEY.

It's disturbing to me that Valleyites like you would rather destroy progress rather than embrace it.

Anonymous said...

The PALACE of SPORT and the rest of PAWLOWSKI's POTEMKIN VILLAGE is all about the spending.


IronPigPen - PLEASE, enlighten us with exactly how much each citizen will pay in increased taxes. You seem to have it all figured out. You can even round to the nearest $10. I'll be waiting.

Anonymous said...

Over 30 years I would not be surprised at all to see the total amount of NIZ grants to exceed $1 Billion. Could even perceive, considering inflationary increases in the cost of construction, for that number to be $3 Billion. (30years at $100 million/year)

Anonymous said...

Retired ASD teacher here.

Here's what you are missing, 9:04 AM.

If the arena and surrounding district appeals to me I'll support it by purchasing tickets, meals, and services. That will be MY decision!

I believe the whole thing is very risky for multiple reasons. I would not opt to invest my capital creating it. Please allow those who feel the same way a means to avoid financial risk.

It certainly seems the Phantoms, the developers, etc. are hoping to spread around a significant amount of their own risk to others. No?

Anonymous said...

Sure, just like the Penguins and Allegheny County. Would you prefer a 1% sales tax to fund the stadium? The only thing I'm missing is the emotion that causes one to grouse about paying an extra quarter here or there to help the region. You may not think it helps but studies have shown again and again that pro sports helps cities in more ways than just financial.

People like you and BOH are just against everything. If it wasn't this stadium, it would be something else. The IronPigs stadium is a prime example except now that's great.

Anonymous said...

If it was actually about doing the best thing for the region (and not center city Allentown) then the arena would be built near the casino or near Coca-Cola Park without NIZ thievery.
All the benefits you tout of a sports franchise being good for the region would still apply and there would be no opposition from members of this great Lehigh Valley community, because the project would not be robbing the piggy banks of the suburban municipalities.

Anonymous said...

Retired ASD teacher here.

Nah, Anonymous 12:34.

My community wasn't tapped to help pay for Coca-Cola Park. Besides, what new commercial establishments, housing units, came to our community as a result of Coca-Cola Park? Don't mention any existing bars that have been re-named.

I'm not against everything. Truth be told, I invested heavily in Sands stock when it was $1.85. So far, so good. Best of all, that was MY decision.

Here's an idea. Allow surrounding communities the CHOICE to invest their revenues into your venture. Give them a chance for a return on their investment, maybe even an equity interest in whatever buildings result as a result of their monies. You know, the same protection any commercial bank will require when dealing with you.

I have confidence in my township leaders (Lower Saucon) to make the right choice. If they don't, I'll work to remove them.

Anonymous said...

If it was actually about doing the best thing for the region (and not center city Allentown) then the arena would be built near the casino or near Coca-Cola Park without NIZ thievery.
All the benefits you tout of a sports franchise being good for the region would still apply and there would be no opposition from members of this great Lehigh Valley community, because the project would not be robbing the piggy banks of the suburban municipalities.


And that's what it boils down to folks. People just don't want ANYTHING good to happen in Allentown.

I'll ask again. Do businesses in the Steel brownfields get special tax concessions?

Anonymous said...

Here's an idea. Allow surrounding communities the CHOICE to invest their revenues into your venture.

Does this mean I can pass on paying county taxes? Why should I pay for YOUR stuff? I want to keep it ALL.

Anonymous said...

Lower Saucon? Are those the brainiacs who wouldn't allow an exit from 78? Thanks, but I'll take my financial advice from people who actually understand economic development.

Anonymous said...

Retired ASD teacher here.

Well, you CAN choose not to pay county taxes by choosing not to own property there. But, since we all choose to live somewhere, we should contribute to our chosen locale to help cover many essential services.

The question here, is it OK for some of the revenue your county receives from you to be diverted to pay for an amusement center in Philadelphia County, because Philadelphia County has decided, not your officials, that it's a good idea?

I'm pleased there's no I78 exit in Lower Saucon. I've seen what that has meant to Hellertown.

It is rightfully your choice to take your financial advice from whomever you want. Not sure the connection here.

Bernie O'Hare said...

"Do businesses in the Steel brownfields get special tax concessions?"

Not really. Bethlehem has no KOZ. There is no TIF at that site. there is a LERTA, but that is based on the increase in value. Also, it has to be agreed to by the affected municipalities. That did not happen with the NIZ.

Bernie O'Hare said...

"Are those the brainiacs who wouldn't allow an exit from 78? "

In my opinion, a very wise decision. And guess what? L Scn has the 2d highest per capita income in NC.

Bernie O'Hare said...

"Does this mean I can pass on paying county taxes?"

No. What this means is that if you live in Lehigh County, you should not have to pay Northampton County taxes.

Elijah LoPinto said...

"5.) and do not mind pennies in taxes going to feed the greater good of the LEHIGH VALLEY."

okay, so pennies huh, well lets look at the math shall we.

first the arena, current costs are $220 million (it took a law suit to get those numbers by the way)

next up city center development, so far $155 million, and that's only for two buildings plus the hotel added to the arena and the sports medicine complex. Reilly has shown plans for another three buildings on the 700 block from walnut to hamilton. also, as the morning call showed on october 13th he (J.B.Reilly) has recently bought many other properties that in november, when the actual NIZ zone was set up, all happen to fall within it's borders (even if those borders had to jump off to the side to make sure Reillys properties were included)

Okay, so without including the other sites city center has said it is going to develop with NIZ funds we are at $375 million spent so far, also both Butz and Jaindl has stated they will seek NIZ funding (for the Butz building expansion and the LSS site respectively) the word is the NIZ developments will top $800 million but mind you that does not include interest on the bonds, those bonds have yet to be sold and we do not know the full term but lets give it a small payout, say 2.5%

now that leaves us with 1,137,600,000 that we have to repay over 30 years or almost 38 million a year. not quite pennies were talking about here. oh and I would like to point out one more thing. in the past, when a city wants to build an arena, they creat a new tax to fund their development zones, but here they are using the existing taxes and guess what that means, someone who used to get tax money now dosent, wel many places money went no longer get those funds. and to show how much these lost taxes will hurt here is one example. http://www.lehighvalleylive.com/allentown/index.ssf/2012/04/allentown_school_officials_sug.html

that's right, school taxes will go up next year to pay for the lost funds from the NIZ (well less money from that state, but the NIZ takes state taxes so...) the only question is how much they will go up, and there is a good chance they will more then double. that's a metric shit ton of pennies.

oh and yes, I meant mayoral, sorry my typo offended some of you so much, and as Bernie pointed out I was not taking a "weak shot" and Molovinsky, I wish he had won the mayors race because I trust him to care about both the history and future of the valley, not just screw the taxpayers over and try to run for governor as Pawlowski has claimed he wishes to.

Anonymous said...

In my opinion, a very wise decision. And guess what? L Scn has the 2d highest per capita income in NC.


A very wise decision which makes in extremely inconvenient for anyone in NC to travel route 309.

Who cares about the per capita income? That doesn't mean they understand economic development. It means they understand how to make and keep money for themselves. And they are STILL #2.

Also, I seem to recall something about a regional health bureau, regional policing, etc. Taxes go to lots of things you don't directly benefit from.