Tuesday, April 10, 2012

Why the NIZ Should Be Nixed

Most of the controversy over Allentown's Neighborhood Improvement Zone (NIZ) has focused on its negative tax implications in surrounding communities. Hanover, Bethlehem, Lower Saucon, Upper Nazareth and Bushkill Townships, along with the Borough of Hellertown are all upset to see their EIT grabbed to finance an arena and other improvements in Allentown. They've all voted to challenge the constitutionality of the special legislation creating the NIZ in 2009.  But even as Allentown Mayor Ed Pawlowski appears to be blinking on that issue, some other very big boots are getting ready to drop.

Bethlehem. Developers. And most of all, us. Let me explain it to you.

Back in 2009, when Pennsylvania lawmakers finally adopted a budget after a record-setting 101-day stalemate, State Senator Pat Browne slipped a little piece of language into the Fiscal Code update. Buried amid the definitions of "little cigars" and "cigarettes" was legislation that set aside twenty-eight million dollars  for something brand new - the "Neighborhood Improvement Zone. (NIZ)"  Most legislators thought they were voting for a budget. Shrouded in secrecy, that's how the NIZ was born.

Even its paternity is in dispute.

Hey NIZ, Who's Your Daddy? 

Both State Senator Browne and State Rep Jenn Mann claim they are the parents. But are they? I learned yesterday, from a highly placed official, that the real author of this legislation is none other than J.B. Reilly himself. He's the developer millionaire who hopes to become a billionaire on a NIZ that operates like a TIF on steroids. Reilly, and the tenants he selects, will be able to use state tax revenue, even cigarette taxes, to fund the cost of improvements within a 130-acre noncontiguous parcel in downtown Allentown and along the Lehigh River waterfront.

In crafting this legislation, Reilly greedily threw in everything he could. Because nobody really read the legislation, he never had to give anything away.

There is no obligation, for example, to require that tenants be drawn from outside of a certain radius, say 25 or 30 miles, so that other Lehigh Valley developers can still make an honest buck.

At least by their standards.

The legislation imposes It imposes no obligation to produce jobs that provide a living wage. There is no penalty or clawback if goals are never met.

Browne, more messenger boy than legislator, slipped special legislation into the Rules Committee that makes a NIZ available for any local government with a population between 106,000 and 107,000 in the 2000 census.  He reportedly left specific instructions to notify him immediately if anyone became too curious. But at that time, everyone was so worked up over a budgetary logjam that nobody seemed to notice that the NIZ could benefit one, and only one community.

Allentown.

And the Queen City had just been handed a tool that allows the Lehigh Valley to cannibalize itself.

Biggest Victim? Not the 'burbs

Meanwhile, the Christmas City has finally begun to turn the corner on a precipitous drop in its tax base. That happened in 1993, when it stopped making steel. (I'll have more to say about the good news in Bethlehem later this week). After years of juggling finances to keep taxes down, the City has finally stopped intragovernment borrowing. It was even able to end 2011 with a $650,000 cash surplus.

But the City still has some major development problems, not the least of which is an 1,800-acre brownfield left by Bethlehem Steel as a parting gift.

Bethlehem is also home to Martin Tower, tallest building in the Lehigh Valley and ... largely vacant.

Did you know that Martin Tower is located just one mile from the NIZ? How is that building's developer supposed to attract tenants when J.B. Reilly is offering rents of $5 per square foot just a stone's throw away?

Martin Tower's core area, that is the percentage of each floor's footprint taken up by things that don't generate rents (elevator shafts, hallways, fire towers, etc.) is around 40% or so. Modern office buildings, built by owners interested in more than providing corner offices for every mid-level executive in the company, restrict the core area to around 20%.

So this venerable building is already hurting, and the NIZ is a death knell.

Can you imagine what Mayor Pawlowski would be doing if the PPL building, another biggie, was vacant?

As you can see, the effort to "save" Allentown is not really regionalism, but cannibalism. Allentown is sucking the rest of the Lehigh Valley dry.

In Bethlehem, much of the land in that 1800-acre brownfield, especially along the Route 412 corridor, in intended as office space. But who will pay $20 per square foot there when they can get away with $5 per square foot inside the NIZ?

As you can see, one the biggest victim of this faux regionalism may very well be the Lehigh Valley's most successful urban core - Bethlehem.

PennCap Gets PennCrap

But as badly as Bethlehem loses, even worse hit are developers like PennCap. About this time last year, PennCap spent $124 million to buy 32 office complexes from Liberty Property Trust at Lehigh Valley Corporate Center, Stabler Corporate Center, the William Penn Business Center and Lehigh Valley Industrial parks.

PennCap will get Penncrapped as its tenants are lured away.

Absent "new" jobs being created, the market will have to absorb all the new office space in the NIZ by causing vacancies elsewhere. More office space (increased supply) with no corresponding increase in demand will lower rents across the board, even without the subsidies to the NIZ developers.

I can do graphs, too. 
Office building owners outside the NIZ get a double-whammy. First, they have to compete against artificially low rents in the NIZ. Second, they're in a market that already has a surplus of space available. The NIZ will only grow that surplus.

And it will do it locally. New Jersey is aggressively providing tax incentives to firms willing to grow their NJ "footprint." So the Valley's prime source of relocations has dried up.

The above diagram illustrates what the subsidy to the NIZ office owners does: more office space (outward shift of supply) comes into the market, causing a drop in the market clearing rental rate for office space (equilibrium price), and a corresponding fall in the market price of all office buildings.

If this does not kill the developer, it kills his bottom line.

In the late 1980s, we learned what happens when various tax credits and other government incentives make investing in commercial real estate artificially (and only temporarily) profitable for some.

It was called "The S and L Crisis" and cost taxpayers about $400 billion before the carnage was over after the commercial real estate markets collapsed.

The NIZ has the potential for creating a sequel to that crisis locally. Some office owners won't be able to generate sufficient cash flow to pay their mortgages. They'll simply hand the keys to their buildings to their lenders and walk away. Others will "tough it out" longer, bleed cash, demand lower property assessments, and attempt to renegotiate their loans. They'll also rent space to far less creditworthy tenants (some rent is better than no rent) which increases the risk profile of their buildings. Lenders will demand higher interest rates, making it even tougher for owners to pay their mortgages. Lenders will also pressure politicians to stem the carnage and threaten to "redline" the LV if relief is not forthcoming. Investment capital, on both the equity and debt side, will flee the Valley. The Valley will get a (justly deserved) reputation as a bad place to develop office space. Developers and their tenants (read "job creators") will flee for greener pastures. Stories will hit the national wires on the desperate circumstances in the Valley. The PA legislature will get the message, and pull back much of the NIZ goodies in an effort to help the Valley recover.

I've been told that another suit is coming, and this one will be filed by office landlords.

We're all victims!

When office landlords demand lower assessments, they will get them. This will mean less tax revenue to the counties, school districts and municipalities. There will be no choice but to increase taxes or make tough decisions about reducing services or programs.

The very people we were told this NIZ will benefit will actually suffer. By that time, J.B Reilly and Joe Topper will have already sold their equity interests to outsiders, and will spend their time counting their cash and laughing at the fools who made them obscenely rich.

Us.

Updated 11:00 AM: Martin Tower was reported as being 1 mile from the NIX. It is closer to 4 miles. It is about a mile from the Allentown border.

107 comments:

FutureDowntownArenaAttendee said...

Bernie, you make many points on the side of people that are against it. However you do not make one point on how the law suit will succeed. Why?

My speculation is because that even though people are upset about the legislation it doesn't even come close to violating one law.

What is a shame is that once the claim that the "NIZ" is deemed constitutional. That the crowd will claim that the judges are in the pockets of the politicians.

The fact is in my opinion is that the lawsuit will be shot down... and shot down quickly. When this happens the people that are grasping at straws will attempt to grasp at something else, but there will be nothing else to grasp at.

Also Bethlehem will never join the NIZ, the same with Easton. They both realize that they dont want to shoot down the chance of them having a NIZ like chance. The suburbs have drawn too much for far too long... the tide has turned and development in this century is from the inside out. Not the outside in.

PS... standing by for the naysayers, ROFL(The biggest troll), Scott A, Retried ASD etc..

FutureDowntownArenaAttendee said...

Bethlehem will never join the NIZ lawsuit*

FutureDowntownArenaAttendee said...

Oh and btw... your graph is beyond ridiculous.

This is not simple supply and demand... if everything was that simple there would be only one curve in all economics... this is completely different.

Don't deceive your readers by posting a simple "Butter and Guns" graph... You are more intelligent than that.

Rich said...

FDAA and Bernie,

Two things:

1.) No, the legislators knew they were voting on a fiscal code. They vote on an amended one annually, in addition to the budget. I agree that Brown snuck it in, but it's the job of the others to read it, or have their staff do so.
2.) Never say never on the other two cities joining. There's a lot of anger from the other municipalities, especially in Northampton County. Remember, we "shared the wealth" on the casino with Lehigh County, and some towns are mad that Allentown's taking it, in their view, now.

Bernie O'Hare said...

"Bernie, you make many points on the side of people that are against it. However you do not make one point on how the law suit will succeed. Why?"

Because it appears that Pawlowski has blinked and conceded the EIT issue. Why argue something on which he is willing to concede? Did you check my link to the WFMZ-TV69 news account?

I am sure that Bethlehem and Eastn would very much like to have their own NIZ, and if they did, that would go a long way to creating an even playing field. Right now, it is not. It is not the suburbs who will feel the biggest hit, but other urban cores like Bethlehem.

Let me ask. Is it fair to have the largest building in the LV sit empty, when just a stone's throw aay, rents will be subsidized?

Does Allentown have an 1800-acre brownfield?

You might say Bethlehem has a casino. OK, Is Allentown going to return the $4.5 million per year that they get from that? You see, that is true regionalism. But what Allentown is proposing is true cannibalism. We're eating each other bc the legislation went thru untouched.

In the end, we will all see our taxes go up bc of the loss of office space in areas outside of Allentown.

FutureDowntownArenaAttendee said...

Rich,

Is it not interesting that only Northampton county boroughs and municipalities are fighting the NIZ. They need to be careful with the "share the wealth" fight... as they are getting the wealth from the casino and I am sure they dont want to lose that. That is big money. They dont complain when the receive money(obviously) but when they lose it they lose their minds... they need to be careful or they will lose it all. Hence the 1965 EIT law.

They need to be careful or they will lose it all. The casino, the EIT, etc... They are placing a huge bet that they may lose bigger than they know.

Bernie O'Hare said...

I doubt Bethlehem will join bc it is not its style, but don't kid yourself. I know Bethlehem is plenty hot about this. It has just clawed its way out of a financial hole, and this NIZ could easily throw them back in it.

Rick, I KNOW that most LV legislators did not have a frickin' clue about the NIZ, especially the EIT tax grab. It was a midnight job, and I would not expect them to know. You can claim it's their job to know and crap like that, but they didn't.

All the more reason to trash this monstrosity.

As for the graph, it is not a simple supply and demand graph.

Doc Rock said...

FDAA,

Post your own graph.

Show us how this giveaway to a few "one percenters" will work to the benefit of everyone else.

Go ahead. Make my day!

FutureDowntownArenaAttendee said...

Bernie,

Most succeseful regions have their suburbs taxes higher.... i.e. New Jersey(NYC), Maryland/Virginia(DC/Baltimore), San Jose(San Fran) even Chester(Philly). That is what happens with successful metro areas. The suburbs thrive on the cities, not other way around.

Pawlowski has not conceded anything. For one he did not write the legislation.

FutureDowntownArenaAttendee said...

DOC Rock,

"One Percenters" makes you a Occupy movement person...there is no reason to explain anything to you. Your ideology is too deep to have a conversation with.

Bernie O'Hare said...

No, we now know that JB Reilly and his attorney, Joe Fitzpatrick, are the proud parents.

Also it sure sounds like Pawlowski is trying to throw in the towel on the EIT tax grab. He might not be able to do it but it sure sounds like he wants to do so.If he has such a strong legal position, why would he do that?

FutureDowntownArenaAttendee said...

West Chester*

Doc Rock said...

FDAA,

Taxes are higher in the NJ suburbs than in Manhattan? Yeah, right! That's why more than a million people incur the additional time and expense of commuting to work in Manhattan from the suburbs rather than living in Manhattan.

Brilliant, FDAA, just brilliant!

You better stop smoking whatever you're smoking. It's not only made you ugly, it's made you stupid.

FutureDowntownArenaAttendee said...

Bernie,

You have not proved one thing... you present speculative ideas... name one thing that you have been successful as on blog.. I mean even something as simple as Gracedale blew up in your face. You speculate way too much with zero weight beyond you statement...

However, here is something that you cant speculate about. The arena, and the development around it will be built. When JP is done with his 500 million growth in 10 years you will be in ground eating worms... The interesting part is that all the naysayers about this are established baby boomers that are far right republicans... this is more about party politics than it is about growth. Hess's, Leh's etc are gone... time to move on.

FutureDowntownArenaAttendee said...

Doc Rock...

NJ has the highest taxes in the country you fool... put down your crack pipe... You just made yourself look like the biggest fool of them all...

Doc Rock said...

FDAA,

San Jose is a suburb of San Francisco? Laughable!

Baltimore is a "successful" region? I caution you against going there any time of day or night unless you have a police escort. By your definition, so is Reading. And, Detroit.

Taxes are so high in Chester because there is only one person in Chester who pays taxes!

FutureDowntownArenaAttendee said...

Yes, San Jose and all of Silicon Valley exists because of San Fran.. you that foolish. Yes, Baltimore City and County is a very successful region. That includes Columbia, Anne Arundell, Montgomery counties etc... read the facts before you spout off..

Bernie O'Hare said...

Martin Tower's location, less than a mile form the NIZ, is not speculative, but fact. Bethlehem's 1800-acre brownfield is not speculative, but fact. The attempted poaching of many tenants from Bethlehem and other communities is not speculative, but fact. PennCap's recent $124 million purchase is not speculative, but fact. That the NIZ applies only to Allentown is fact. That tenants are being poached from surrounding communities is fact.

I am not necessarily opposed to a NIZ per se, and know few who are. In fact, this appears to be the brainchild of conservative republicans like Reilly who really belong to the money party.

But this specific NIZ is fraught with too many problems, from the lack of transparency surrounding it to the obvious greed and lack of a level playing field.

Given the fact that Allentown has a huge hole in the ground, it would be foolhardy to pull the plug completely. But I'd suggest some changes: (1) No EIT; (2) a 25-30 mile radius of exclusion for potential tenants; 3) clawbacks if performance goals are not met; 4) a separate web page listing all beneficiaries, and the amounts paid; 5) an annual payment in lieu of taxes to the Allentown School District; 6) a reduction in the size of the NIZ; 7) legislation establishing the formation of other NIZs in urban communities, even boroughs; 8) legislative language providing that all persons working within the NIZ must be paid a living wage; rstictions on NIZ board membership by people like Grube, whose Cosmo restaurant will benefit.

With those changes, I could hold my nose. But right now, this really stinks to high heaven. I'm surprised you can still defend it, even if you're being paid.

FutureDowntownArenaAttendee said...

Oh and back my point about San Jose... The Census Bureau considers San Jose as part of the San Fran CSA

http://en.wikipedia.org/wiki/San_Francisco_Bay_Area_Combined_Statistical_Area

FutureDowntownArenaAttendee said...

So "Conservative Republican" Reilly, Republican Browne, Democrat Pawlowski, Democrat Mann, Republican Corbet, Democrat Rendell all set out to have a bipartisan scheme?

If you believe that for one second you are out of your mind... this is a bipartisan law that is/was agreed by on both sides of the isle.

The people who hate it are the ones that just hate government in general. It is unfortunate.

FutureDowntownArenaAttendee said...

aisle*

Anonymous said...

Northampton County communities are upset with the NIZ but did not complain when Mr. Stoffa gave over half the casino money to Lehigh County and Allentown.

Don't blame Allentown for looking out for itself, that's what you expect from your leaders. Northampton county sold its citizens down the river by giving away the majority of its casino revenue.

Anonymous said...

Well Bernie, clearly you hit a nerve here with your reporting. You kept FDAA awake all night defending the impossible. If anyone doubted that this poster was not directly connected to the project this all nighter should settle that once and for all.

Scott Armstrong

Anonymous said...

There's a little something disgusting about a business leader making money off cigarettes when lung cancer is epidemic.

Anonymous said...

Outstanding synopsis O'hare. Take it to the bank and mark it down now, the NIZ and this arena will be the biggest, fattest white elephant this area and the state have ever known.

Jon Geeting said...

Supply creates its own demand. Cheaper office space means businesses can get a better deal. They'll be able to get the best deal in Allentown, but as you say, suburban office parks will have to cut their rents to compete, and they'll attract more tenants too from all around the region. You're making a huge error in assuming that relocations will only come from within the LV. The actual market is much larger than that. Anyone looking to locate a business anywhere in the Philly-NYC-North Jersey orbit is a potential tenant. The whole LV is going to attract more businesses through lower rents, but Allentown is going to attract most of them. If suburban office parks can't fill up the space after a certain amount of time, then they should bulldoze the buildings so they're not dragging down neighboring property values.

Anonymous said...

Retired ASD teacher here.

Bernie, congratulations on being one of the few Lehigh Valley journalists left who is willing to "peel back the onion" all the way.

FDAA, I'm not against government, just BAD government.

Allentown, Mr. Topper, Mr. Reilly, etc. should build their complex. Unfortunately, the funding scheme developed is simply dangerous, not just locally, but statewide.

Litigation happens when citizens come to recognize the effects of bad government are adverse. In this country, we still have a means for redress. Often, BETTER replacement legislation is created. That's what's needed here.

This NIZ design is fraught with troublesome possibilities. These must be rooted out, and they will.

Anonymous said...

Good, the suburbs should feel the pain. That way of living is inefficient and wasteful. I am glad commerce and people are moving back downtown at the expense of suburbia.

Anonymous said...

FutureDowntownArenaAttendee said...
West Chester*

1:57 AM

What about West Chester??

John.Jay said...

You do understand that the tax incentives in the 1965 local tax enabling act and myriad other government subsidies meant to make suburban living cheaper effectively destroyed the downtown (just like you are saying is now going to happen to the outlying municipalities). Neither the city or the burbs would be what it is today without government intervention. As the previous poster says, lets concentrate our resources on making the downtown work because it is inherently efficient. We made a huge mistake when we made positive choices that destroyed the downtown. Let's not continue to make those choices. The suburbs owe far more than a little NIZ revenue to the urban cores.

Anonymous said...

I completely disagree with the way the NIZ was enacted and it's structure, but let's assume mayor Ed and his disciples are correct and with the help of the rest of the lehigh valley EIT they rebuild Allentown into a thriving city(very doubtful but follow me) Let's also assume that all those new workers relocate from outside the lehigh valley too. Do you think they are going to live in the city of Allentown? No. Their likely destination will be the suburbs. Raising the expenses of the townships while providing no EIT and creating a need for more schools and even higher taxes.
The NIZ manipulates free market supply and demand and there is absolutely no scenario in which any municipality benefits from the false regionalism except for Allentown.

Anonymous said...

Future Downtown Arena Attendee :

Do you know the difference between a 10-minute misconduct and a game misconduct?

Actually, it doesn't matter.

I'm just not buying tickets to Chairman Pawlowski's magnificent $ 160.0 million dollar Palace of Sport.

And I don't care who is pulling your strings and for how much money.

ROFL

Anonymous said...

Has anyone seen or heard from Semator Browne? Perhaps we need a Federal Grand Jury to look into him, his wife, JB, Topper and now perhaps Joe Fitzpatrick.

Anonymous said...

ROFL

10 minute misconduct: player sits for 10 minutes in the p-Box, no on ice advantage.

Game misconduct: 10 minute penalty charged to team and player gets to visit the shower early. No one ice advantage.

Anonymous said...

Why don't you just set up your own Propaganda Blog already, FUTURE DOWNTOWN ARENA ATTENDEE?

Face facts.

You have no guts.

This is why you have no blog of your own.

zoid said...

Great article Bernie, in addition to everything you noted what about the impact to the state's financial situation with the tobacco tax and others going to feed this war machine. Corbet has been slashing funding everywhere and this monster will be taking money out of the state's pocket that it cal ill afford to lose.

Anonymous said...

Anon 8:42,

Tell us something IMPORTANT ...

... like who is paying FDAA and how much?

:)

ROFL

John.Jay said...

Also, about Martin Tower. I feel bad that the tallest building in the valley sits vacant. But, that's the consequence of building something monolithic like that in the suburbs and unconnected to the urban core. Its like a giant bit of brooding hubris that now blights the valley. And granted this argument is entirely aesthetic and not economic, but, aesthetics matter to arguments (ask your dad's buddy Mr. Vonnegut). Every time I pass Martin Tower, I say to myself, look, these people tried to bend culture to their whim. To make a building that to be useful required tremendous inefficiencies (everyone driving, no nearby vendors or services, no professional density, etc.). eventually revenue will run thin and the inefficiencies will win and then you're stuck. Just what happened with Bethlehem Steel. And just what will happen if America doesn't try to fix their suburban problem.

Anonymous said...

Geeting,

You really don't have a clue regarding what you are writing. Business leases and rent in the Lehigh Valley are already cheaper than NYC, North Jersey, and Philadelphia. Why aren't businesses flocking to the LV? Infrastructure? PA Regulations? Nothing else around these "bad" locations? Your rememdy - taking a bulldozer to everything. Thank God nobody listens to you anymore. I won't be paying attention after this, either.

Anonymous said...

"If he has such a strong legal position, why would he do that?"

To get the bonds issued without delay.

Bernie O'Hare said...

"Also, about Martin Tower. I feel bad that the tallest building in the valley sits vacant. But, that's the consequence of building something monolithic like that in the suburbs"

The suburbs? Are you out of your mind? It is in one of the busiest commercial quarters of Bethlehem, for Christ's sake. But you call it suburban bc it completely contradicts your argument. The area is also well served by mass transit. It's one mile from the NIZ and certainly will never be developed, or not to the extent it cold be, with an uneven playing field like that.

That's why you should expect to see another suit soon, this one from the developers.

Anonymous said...

Bernie, can you confirm Bushkill's participation in the suit? I had not heard or read this until now. Thank you for your work on this important topic.

Doc Rock said...

Boy Wonder Geeting:

Suppose your boss (assuming you have some kind of real job) came into your office and told you he was cutting your salary by 70% - below a living wage. Would you "bulldoze" yourself so as to not negatively affect the values of those around you?

Anonymous said...

Re: Bushkill: Sorry, just scrawled down. Your blog is action-packed today. Thanks, again.

Bernie O'Hare said...

"As the previous poster says, lets concentrate our resources on making the downtown work because it is inherently efficient. We made a huge mistake when we made positive choices that destroyed the downtown. Let's not continue to make those choices. The suburbs owe far more than a little NIZ revenue to the urban cores."

First, I disagree that the suburbs owe the urban cores a damn thing.

Second, this NIZ hurts the urban core. I just spent an entire post explaining how it hurts the LV's most attractive urban core - Bethlehem. Where the hell have you been?

Third, this NIZ is inherently unfair bc it provides something for Allentown that can't be used anywhere else. That's why it's called special legislation. That's why it is unconstitutional.

Anonymous said...

Yes!!!...kill the NIZ...pawn shops, pawn shops, pawn shops, yeah!!!!!

Bernie O'Hare said...

"Re: Bushkill: Sorry, just scrawled down. Your blog is action-packed today. Thanks, again"

No problem. The NIZ is the biggest story in the LV, Lernean Hydra. But is there a Hercules to slay this monster? Its nine heads include gentrification of Hamilton Street at the expense of the mostly minority merchants, Pawlowski's gubernatorial ambitions, the poaching of businesses from other LV communities, the diversion of local taxes without the consent of the governed, the stonewalling and refusal to answer questions, the diversion of state taxes that should be going to the human services and outright greed by people like J.B. Reilly.

John.Jay said...

I consider where martin Tower is to be in the Burbs for the sake of argument because it is not within a walkable / safely bike-able business district which is for my purposes what I consider a downtown / urban core. (i.e. a downtown is somewhere you can live and work where all material goods and services can be purchased within a reasonable walk). If you can offer a better definition of downtown, i'd be happy to consider it. But in terms of what I just said, why, is the Martin Tower surrounded by massive parking lots and right off of I-378 if it is part of the walkable downtown. Where would employees go for lunch if they worked at Martin Tower (particularly when it was built in the 1980s). What other professional offices are within walking distance of the tower? This concept of walk-ability / bike-ability is absolutely critical to urbanness.

Bernie O'Hare said...

"congratulations on being one of the few Lehigh Valley journalists"

Thanks, but I'm not really a journalist. I have no training and don't buy into that objectivity thing. But I like to look thru the garbage and find out what the hell is going on. I'm a bottom feeder.

Anonymous said...

Martin Tower is much more than one mile from the NIZ. At least 3 times that.

Get you facts straight.

John.Jay said...

O.K. Well, here is my solution then. Because we both agree the 1965 tax enabling act creates economic distortions in the economy, and because government interference in promoting one group over another is supposedly not favored by conservative ideology, we should repeal the 1965 tax enabling act. This would allow both the "home" municipality and the "work" municipality to levy their own tax independent of one another. The consequence would be that the person who lived where he worked would only pay one tax whereas the person who worked and lived separate places would be taxed twice. Do you favor that system instead? I certainly do because it would promote people living where they work. If you don't like this double tax system, and prefer the 1965 enabling act, then you are also committed to proposition that the 1965 tax enabling act has harmed the cities by allowing people to move to the burbs.

Bernie O'Hare said...

" consider where martin Tower is to be in the Burbs for the sake of argument because it is not within a walkable / safely bike-able business district which is for my purposes what I consider a downtown / urban core."

Once again, you're out of your mind. Martin Tower is located in perhaps the most walkable and bikable areas of Bethlehem, if not the LV. To the east, there is a massive park and rec fields. To the north, busy roads with wide lanes to make it very safe for cycling. To the west, all kinds of commercial and residential development. To the south, industry.

You call an urban area suburban bc it completely contradicts your argument.

And we haven't even begun to discuss the 1800 acres of brownfield in South Bethlehem. That must be suburban, too.

Look, the simple reality is that this NIZ will hurt, if not destroy, the one urban core in the LV that actually has weathered the storm. So you'll call an urban area suburban, kinda' like putting a square peg in a round hole.

Anonymous said...

I can't wait until OBAMACARE sets a precedent for what the Government can make people buy ...

... such as ice hockey tickets to the magnificent $ 160.0 dollar Palace of Sport.

Shaibu!

VIKTOR TIKHONOV

Bernie O'Hare said...

" Because we both agree the 1965 tax enabling act creates economic distortions in the economy, and because government interference in promoting one group over another is supposedly not favored by conservative ideology, we should repeal the 1965 tax enabling act"

Is that comment addressed to me? If it is, I'd have to say I have in no way conceded anything about the 1965 act, and would have to study it before reaching any conclusions on legislation that is nearly 50 years old. Second, this should not be a matter of ideology, which you seem to find necessary to bring up. It's about whether creating uneven playing fields works. It does not. History has proved that, time and again. That's not an ideological argument, but is based in historical reality. I'm all for what works.

But even if the NIZ concept, by itself, was a good thing, this one is fraught with so many problems that I find it astonishing that you can still support it.

Bernie O'Hare said...

"Martin Tower is much more than one mile from the NIZ. At least 3 times that."

You may very well be right. Let's say it's close. The two cities adjoin each other, after all.

John.Jay said...

I would say the only "urban" areas in allentown / bethlehem are allentown running from the fairgrounds to the Lehigh river between Tilghman and Walnut and maybe South Side bethlehem. The rest of the area is either inner-circle suburbs (like west Allentown around Muhlenberg or Bethlehem on the North Side) or outer ring suburbs.

Your other comment "It's about whether creating uneven playing fields works. It does not." is frankly ludicrous. There is currently an unequal playing field and it is tilted EXTREMELY heavily in favor of suburbs. What with housing subsidies, mortgage interest subsidies, low gas taxes, huge infrastructure to support cars, no carbon emission taxes, house building subsidies, revenue shifting schemes like the 1965 tax enabling act, etc.) There is no equal playing field. The market will always be tilted on way or another by incentives. That fact has been with us since human being first institutionalized power and is never going to change. That's why ideology is needed, because the real work comes in determining how the power is expressed. It is impossible to run away from ideology if you are being honest.

Anonymous said...

Wow! This caliber of analysis and I didn't have to pay $1.50! One of your best peices of journalism yet! Nice job. I love the reference to Pat Browne as a "messanger boy". Man has his star fallen. You can bet that Pat and Heather thought they were so brilliant and that the idiots who pay his salary are so stupid.

John.Jay said...

"Martin Tower is located in perhaps the most walkable and bikable areas of Bethlehem , if not the LV . To the east , there is a massive park and rec fields."

I'm not talking about walking for the sake of walking, I'm talking about walking as a person's main mode of transportation. When I lived in Europe, I could leave my apartment and on my 10-minute walk to work could buy all of my groceries, a new pair of shoes, books, gardening supplies. Literally everything I would need to live. I doubt there is actually anywhere in the entire Lehigh Valley where someone could support their entire life within a walkable area. But, for the sake of emphasis, i think the places I pointed out are as close as we come to it.

Bernie O'Hare said...

"Your other comment "It's about whether creating uneven playing fields works. It does not." is frankly ludicrous. There is currently an unequal playing field and it is tilted "

Assuming arguendo that this is true, does that justify another piece of legislation like the NIZ, fro the very body that by your analysis screwed things up in the first place? I'd be willing to look at the '65 act if that is what caused the problem. What you are doing is creating another legislative problem instead of fixing what you perceive to be the original problem.

Bernie O'Hare said...

"That's why ideology is needed, because the real work comes in determining how the power is expressed. It is impossible to run away from ideology if you are being honest."

That's baloney, Andrew or John Jay or whatever your name is, at least in the context of conservative v. liberal ideology. These are businessmen. Conservatives. They propose a NZ bc it works. For them. Nobody else. You support it bc of some childish notion of a urban utopia, with everyone dancing around a maypole, throwing out organic lettuce grown in their little patch gardens.

I'm a realist. So was FDR. I believe in doing what works. This does not. It will help one group of people - the Reillys, Toppers, Brooks Bros. Everyone else takes a dive.

I have explained how this hurts urban communities like Bethlehem, and now I learn Bethlehem is not urban. I learn that none of the LV is really urban. If that is so, we don't need the NIZ.

Bernie O'Hare said...

" When I lived in Europe, I could leave my apartment and on my 10-minute walk to work could buy all of my groceries, a new pair of shoes, books, gardening supplies."

You could do all of those things within 2 miles of Martin Tower. You just don't know what you're talking about on this point. Sorry. You need to spend a little more time in bethlehem and a little less time in the 'burbs before reaching these ridiculous conclusions.

Bernie O'Hare said...

"One of your best peices of journalism yet! Nice job."

Thanks, but this is lousy journalism. I did not name my sources, and won't. The MC and ET have both done an outstanding job in writing about this saga, and broke the story about the EIT tax grab, the cigarette taxes, etc. he MC's Kraus and Assad, along with the ET's McEvoy, have been nothing short of excellent.

John.Jay said...

Ideologically, I tend to favor policies that incentivize people to waste the fewest resources and to live more simply. The # 1 way to accomplish that in my book is to increase population density to the point that most people walk as their main mode of transportation. I think the NIZ-EIT transfer helps to accomplish this. And, I would have been vehemently opposed to the 1965 tax enabling act back in the day. But, people were sold on the idea of suburbia when we had virtually unlimited resources. Times have changed and we need to address our structural problems and recognize that we made mistakes back in the day because we didn't consider a future where we controlled less of the world's capital and resources.

And, true, I wish the 1965 act would go away. But, that is not a political reality. The unequal playing field (like suburban developers / the real estate industry who can hire lobbyists) would never allow a state-wide reversal of the the entire EIT system. In politics you take your gains where you can and hope it eventually adds up to enough of a narrative to address larger problems.

Bernie O'Hare said...

" If suburban office parks can't fill up the space after a certain amount of time, then they should bulldoze the buildings so they're not dragging down neighboring property values."

Wow! What a maroon! It's what I'd expect from someone who dances on the grave of another simply bc he has the wrong ideology.

ironpigpen said...

Psst, FDAA :

THIS is how you do Propaganda properly ...

"SC BERN - EUROPE's BEST TEN YEARS RUNNING, BEAT EIGHT NHL TEAMS"

and

"WILLKOMMEN - POST FINANCE ARENA"

http://www.goironpigs.com

---------------

So, why can't YOU find the courage to produce your own blog, FDAA?

Do you need me to offer you another FREE blog, like I did over at Molovinsky's?

BTW, my brother lives in Mill Valley and laughs at your San Jose comments ... but he is way too polite to do it in your face.

He would appreciate it if you could learn to spell my name correctly, too, but he sincerely doubts if you have the intellectual capacity to do so and is, therefore, prepared to cut you some slack today.

Bernie O'Hare said...

"Northampton County communities are upset with the NIZ but did not complain when Mr. Stoffa gave over half the casino money to Lehigh County and Allentown."

This was a revenue sharing agreement in which numerous community leaders were involved. It's called regionalism, asshole. True regionalism under which the benefit of the casino is shared with surrounding communities. The NIZ, in contrast, sucks everything from surrounding communities. The NIZ is actually anti-regional.

John.Jay said...
This comment has been removed by the author.
Bernie O'Hare said...

" this is a bipartisan law that is/was agreed by on both sides of the isle."

Yeah, the Greed Party.

John.Jay said...

Bernie , you are honestly trying to tell me that if i lived in house next to Martin Tower and wanted to walk as my main modality of life that I could do it in any way that was a reasonable facsimile of , say , living in downtown new york or philadelphia, or even downtown Allentown? Its just not the same , its not urban in the same way , and I ' m sure you can appreciate that fact . No where in the Lehigh Valley is really urban in the same way as that . Maybe if over the past 65 years we hadn ' t had so much suburban development it would be more like that instead . But the area around Martin Tower is not walkable and it is not urban .

The NIZ is needed , as I have noted previously , to help forestall some of that suburban development and force attention back into the urban cores .

Bernie O'Hare said...

No, I am honestly telling you that you could do all three things you mentioned within a 2-mile radius of Martin Tower. If you would rather live in Manhattan, move there.

I am amazed to learn that the North Side of Bethlehem is suburban. What? The quintessential Main Street, suburban? The State's oldest and most successful Historic District, suburban? One of the oldest "urban" industrial communities in the country - Historic Bethlehem's Colonial Industrial Quarter - suburban?

Your arguments, while not quite as ridiculous as Geeting's, are pretty lame today.

ironpigpen said...

How can you be sure my Propaganda is any good, FDAA?

Go to the official Facebook page of SC BERN and you will see that they prominently display an article I wrote about their world-famous rink two years ago ...

... anytime you want some of the Goodness, get a hold of me and we can negotiate.

I can be a mercenary, too, you should understand.

And, unlike you, I would not having a problem admitting such.

Honesty is good for the soul.

Try it some time ...

John.Jay said...

fair enough, ill cede there are pockets of urbanism within northern bethlehem. Problem is much of the main street is a tourist attraction, which, while beautiful, does not offer too many amenities for actual life. Same with the other pockets of urbanism, there may be density, but, you still have to venture far outside of them for simple things like fresh produce or shoes, or books, etc.

And, please don't tell me to move to Manhattan. I moved back from there so i could be closer to you! More seriously, I realize suburbia isn't going away in the valley. But, it would be nice to have a little bit of an alternative and a little bit of a real urban experince. That is what is developing with the help of forward looking people and the NIZ, and I think we are gonna be all the stronger for having that choice.

Doc Rock said...

John.Jay said...
Ideologically, I tend to favor policies that incentivize people to waste the fewest resources and to live more simply. The # 1 way to accomplish that in my book is to increase population density to the point that most people walk as their main mode of transportation. I think the NIZ-EIT transfer helps to accomplish this.

Utterly one of the dumbest statements I heard!

Walking has not been the main mode of transportation for people living in the developed world since the invention of the horse!

In your Distopia, the urban landscape would be made up of insular neighborhoods where no one ventures outside the immediate confines (walking distance) of their residence. Where, in the developed world, do you have any densely-populated city where its residents do not rely heavily on mass transportation, the automobile, trucks, and other vehicles to sustain their lives?

Who is crazy enough to say, "I'm going to work, play, socialize, get medical care, and tend to all my other needs primarily within walking distance of my residence." ?

Answer: someone who lives a very inefficient, I repeat, very inefficient life.

Anonymous said...

Again I ask, has anyone seen Pat Browne?

Why is the Mayor so interested in settling ........ flawed legislation?

Anonymous said...

Trying to compare the casino to the NIZ is CRAZY. The Casino is not being funded by the suburbs and the owner of the casino is the one giving back to the surrounding area.

The Casino is not into someone else pocket like the NIZ legislation allows.

Anonymous said...

You can be sure that PHANTOMS CHARITIES will exist and spend a great deal of time and energy ...

... as do the Lehigh Valley IronPigs ...

... constantly telling you exactly how much money they are donating to this cause or that cause ...

(to justify the $ 30 million or so dollars used to help construct TAXPAYER PARK)

No brainer to assume that, since the cost overruns will probably bring the final tab for the PALACE of SPORT somewhere in the neighborhood of $ 200.0 million dollars ...

... the Phantoms will need to promote THEIR CHARITABLE WORK six or seven times as much as the IronPigs ...

... and so they shall.

ECONOMICALLY-DISADVANTAGED, "CITY WITH NO SPENDING LIMITS YOUTH" IN DESPERATE NEED OF DEMOCRATS TO SAVE ME WITH FREE HOCKEY TICKETS!

Anonymous said...

I saw someone believes the EIT in the NIZ from outside the city is a consevative $1Million or maybe 2 $Million.

Isn't the EIT generally 1%? So there are $100 to $200 million in earnings in that 130 acre zone?

Look at the site. A lot of open lots and empty buildings. Other than the hospital and Morning Call where are the workers that are making a hundred $million+?

Anonymous said...

Has anyone ever figured out exactly how many full-time jobs (and at what salary) Coca-Cola Park can now claim credit for having brought here to the Lehigh Valley?

John.Jay said...

@ Doc Rock

Please don't take me so literally. Will some mass transportation, cars, trucks, and airplanes be required? absolutely. Though, hopefully to a much smaller extent. I can tell you, when I lived in Dublin (a city in some ways comparable to Allentown) I probably only needed to use a method of transportation other than foot power or bike power maybe once or twice a month (if that). This was true for most of my friends and I don't see the inefficiency you are referring to? Do you possibly mean less work for lawyers because there is less drinking and driving, lol?

@ Bernie, yeah, there are some pockets of urbanism in North Bethlehem like main street. Unfortunately, it would still be really hard to organize your life around mostly-only walking / biking if you lived there. For instance main street is aesthetically nice for tourists, but, where am I going to go grocery shopping? This is my gross definition of urban (where there is enough density to reasonably live your life without a car). Its merely a definition of the concept of "urban" not an argument past that. I welcomed you to create a definition of urban if you didn't like mine and you haven't done so.

LVCI said...

Bernie O'Hare said... "No, I am honestly telling you that you could do all three things you mentioned within a 2-mile radius of Martin Tower"

Westgate Mall

John.Jay said...
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John.Jay said...
This comment has been removed by the author.
Anonymous said...

WE ELECTED A "nORTHASMPTON cOUNTY eXECUTIVE" NOT A REGIONAL EXECUTIVE, ASSHOLE. tHIS WAS WOSRE THAN THE niz. tHE FOOL VOLUNTARILY GAVE AWAY MOST OF THE MONEY.

Bernie O'Hare said...

John Jay or Andrew bench, None of your comments have been personal attacks, and you have identified yourself. So no, I did not and would not block you. That would be pretty poor form on my part.

Your comments were in my spam folder, unknown to me. I just checked and published them. It happens to other commenters, too. I apologize. Your opinions are very welcome, even though we dsagree.

I believe I actually responded to some of your comments, not knowing they had gone into spam. Once again, I am sorry.

John.Jay said...

@ LVCI. Again, we are being too literal. What I was trying to get across is that the normal person interacts differently with the Martin Tower because it is not located within a "walkable" downtown. Certainly it is apparent that the neighborhood, around the PPL is different than the neighborhood around Martin and that people interact with it differently. That seems self-evident to me. My larger point is that Martin was set up to create an "artificial" and inorganic type of interaction that failed, in part, as a result of hubris for tempting inefficiencies.

John.Jay said...

@ Bernie. Thanks for the update. I deleted my angry response. Its weird how emotional one can get on a forum. I am sorry to have disparaged you.

Anonymous said...

Some of us grew up in the suburbs, where our parents were raised, and have raised children and grandchildren there. I love my yard and my view and my driveway and my quality of life. My doors are sometimes left unlocked at night. Suburbs didn't pop up yesterday. Perhaps it's time to let cities continue to depopulate and stop being crime ridden economic drains with gigantic wasteful infrastructures and all the costs associated with one party politics. John Jay's brand of engineering is what resulted in the unintended effect of emptying cities in the first place. More scheming won't fix it. It will likely make it worse, if history is a guide. Think Reading.

Bernie O'Hare said...

John Jay, No problem. I manage to piss everyone off. it's a gift.

John.Jay said...

@ 3:01. I'm not saying that you shouldn't be allowed to live in suburbia anymore. But my tax money should no longer be spent to subsidize you doing so.

Anonymous said...

Central Planning always sucks.

HERB BROOKS

Anonymous said...

Freedom and Liberty always suck.

NIZ CHEERLEADER

Anonymous said...

All the NIZ will do is move jobs from the suburbs to center city allentown.

Does this sound faintly like the stimulus recovery act.

What, 300 real jobs created in Easton, Bethlehem, Allentown & Reading.


The mayors scheme makes the stimulus sound good!

Anonymous said...

Bernie,
Thanks for your hard work on this issue. In a few days I will read about this in the Morning Call. I hope to get the pleasure of meeting you someday.

zoid said...

Bernie, kudos to you for an awesome article and summary on the NIZ, you have been on this like a lot of us and I truly believe there is a lot more dirty laundry there than we know about. We need to stay the course. Curious where the Northampton County TCC is on this at their meeting this week. I will be there.

Screw FDAA and all the other naysayers, you printed nothing but facts. If the lawsuit had no merit or basis why then is King Ed looking to throw in the towel, fact is we have them and they know it!!

I do not think the lawsuit will get dropped just by them not grabbing the EIT, it is a much larger picture as you painted with regards to developers and property owners that they will be poaching. King Ed will have to do a lot better than that sorry letter he sent out to all the municipalities, that in itself will not fly. Further if they continue down this road, they will go down. An aside, where is Reilly and Browne in all this mess, have not heard word one from them.

You nailed them!!!!

Keep up the good work.

Anonymous said...

Rumor central: Big meeting next Monday of the major developers in the Valley.

If you thought the mayor was fighting an uphill battle against the municipalities, the BEST is yet to come!

Their millions of dollars of capital is pale to JB and Topper. Forgot, they don't have public funds lining their pockets.

zoid said...

Great to hear!!

And I thought I hated the smell of skunks!!

Anonymous said...

Retired ASD teacher here.

Seems to me, Allentown's mayor is trying to get this whole thing to go away BEFORE any more light is shown upon the bigger picture.

Again, this legislation has flaws. Let's allow opportunity and time to reveal those flaws, then re-write something else that makes EVERYONE content.

We're not there yet. That much is clear.

Anonymous said...

Hysterical stuff, this :

"Bernie O'Hare is coming close to understanding the THODE-GEETING THEORY of the NIZ," writes JON GEETING at his comedy blog.

-------------

"Mr. Geeting:

Please do not mention my name and yours together. My analyses are always cogent, thoughtful and balanced. Your opinions are none of these things.

I repeat, do not associate me with anything you write. Ever."

Steve Thode

-------------

So much for the not-so-famous THODE-GEETING THEORY of the NIZ ...

No Future Downtown Arena Attendees were harmed in the production of this embarrassing tale.

"ONE OF BERNIE's GOONS" - KMA

Guy Williams said...

The reason Martin tower is vacant is the fact that the design has low ceiling heights which makes it expensive to retrofit.

Anonymous said...

"You could do all of those things within 2 miles of Martin Tower. You just don't know what you're talking about on this point. Sorry. You need to spend a little more time in bethlehem and a little less time in the 'burbs before reaching these ridiculous conclusions"

Sure can, just a few blocks up Schoenorsville Road to the Westgate Mall in Bethlehem Township. Wait...that's in the burbs and does not count as a core community.

Bernie O'Hare said...

Westgate mall is still Bethlehem. You'd have to go about 6 miles east to hit Bethlehem Tp.

FutureDowntownArenaAttendee said...

Oh FOLF... I love when you post. It makes you look more and more like an fool. You kill your credibility on itself.. or should I say "No neck Lee"?!?!? We know who you are.

Anonymous said...

Working hard tonight at nearly 1:30 in the morning, Future Downtown Arena Attendee.

Hopefully, such late hours brings in time and a half for you.

The people pushing the $ 160.0 million dollar Palace of Sport are the ones who need credibility.

And a whole lot more ...

Anonymous said...

... say ...

... should you not be over at What-Am-I-Gettings-From-Big-Government advising Carpetbagger Boy who he should ban from his site formerly known as Lehigh Valley "Independent"?

Your own credibility would skyrocket if you could only tell the public your real name, Future Downtown Arena Attendee.

But we both know you do not have the requisite courage.

Perhaps it's just the people and places you hang around.

GEETING LIKES TO DANCE ON THE GRAVE OF DEAD GUYS - HOW COOL IS THAT?

Anonymous said...

Lehigh Township, Northampton County, voted last night to intervene with the lawsuit.

The issue is the constitutionality of the legislation, in that it created a law that is not uniformly applicable across the commonwealth.

The legislation is so specific that only Allentown is eligible. It had to be, else every municipality would create their own NIZ, and the already complicated EIT distributions would become completely unmanageable.

Requests to Allentown/Berkheimer/the State for information as to the REAL financial impact are going not only unanswered, but when they are answered, the answer is "We don't know". It is as ridiculous as "We have to pass this legislation in order to know what's in it".

Someone HAD or HAS to know what the financial impact is, else the bondholders would have incomplete information, and no bonds would be issued.

Anonymous said...

Bernie, there are no small businesses, restaurants etc. in easy walking distance of Martin Tower.
Come on Bernie.
Attractive area? Yes.
Parks? Yes.
Close to a lovely downtown? Yes.
A nice walk thru a park to a lovely downtown? Yes.
Services in a walkable area for everyday needs? No man. Come on. You know that.

Anonymous said...

8:37. FREE MARKETS? HERE IN THE USA?

The country is controlled by big oil, WALL ST., big $$ in general and the deck is stacked completely in their favor! Both parties do their bidding.

FREE MARKETS? Dream on man.