|Excavation at 7th & Hamilton continues|
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.