Monday, April 16, 2012

Will NIZ Supporters Put Any Stock in Stockton's Cautionary Tale?

Ever hear of Stockton?

It's a lot like Allentown.

It's just about the same distance from San Francisco as Allentown is from NYC. It will never be another San Francisco, just as Allentown will never be another New York.

Much like NYC, San Francisco has shed itself of much of its poor. NYC's poor have migrated to Allentown, Bethlehem, Scranton, Easton, Harrisburg and Reading in search of less expensive housing. In the Bay Area, it's Stockton.

Like Allentown, Stockton has no "soul." That is, it has no "brand value" to lure companies to locate there. I cannot imagine any solid national or international firm with either Stockton or Allentown on its radar screen.

Like Allentown, Stockton decided to build a sports complex, including a hockey arena, to attract visitors to its crime-ridden downtown. That was in 1995. Now, its downtown is still crime-ridden, and a City of 300,000 is nearly $1 billion in debt. Its police force has been reduced by 25%, and a bank has grabbed three City parking garages after the City missed a bond payment.

The big difference between Stockton and Allentown is that the NIZ bonds will be backed by the entire Commonwealth, not just Allentown. The revenue to pay off those bonds - despite the EIT tax grab - is predominantly coming from State taxes.

But Stockton's story should make people aware that City revitalization is never easy. Crime, in Stockton's and Allentown's cases, are still very relevant and contribute to middle-class flight and disinvestment.

In some ways, Allentown's situation is actually worse. In Stockton, public funding went to an Arena, an empty City Hall and public infrastructure to encourage private development on the waterfront. But in Allentown, public money has gone directly to a private developer, J.B. Reilly, to underwrite capital costs.

That's what makes the NIZ so "unique" and unprecedented as far as economic development incentives go. Moreover, that's what makes the NIZ so potentially market destabilizing.

38 comments:

Anonymous said...

Sounds like the creedo of the modern Republican Party.

Doc Rock said...

Those bonds may be backed by taxpayers across the state, but if Allentown defaults, the entire Lehigh Valley can kiss goodbye state aid of any kind for a long time.

Hey, maybe that's the real plan for "leveling the playing field!"

Anonymous said...

Isn't that the place Ben Cartwright did his shopping?

Allentown Democrat Voter

Anonymous said...

Your wrong, It wasn't Ben Cartwright, It was the BARKLEY'S.

They were part of the Big Valley.

The show was on television during the late 60's and early 70's.

Stockton was a better place then,just like Allentown.

John.Jay said...

The difference is that the real driver of economic progress in downtown Allentown will be the NIZ which makes it cheaper for commerce to return to the downtown which hopefully creates a self-sustaining recovery over time. The arena is a small piece of that development. And, I agree with your quote from Bastait, thing is, if you think about it from my perspective you can see how it applies to the developers in suburbia who have had every tax break and subsidy under the sun for the last 65 years. If you want to talk about establishing a positivist legal structure, lets talk about the 1965 enabling act, lol, or low gasoline excise taxes or home building tax credits, etc.

Anonymous said...

Give me you Tired, Poor, and those yearning to be Free...etc

Is now replaced with..give me your drug addicts and lazy who wish to live off of the taxpayers.

Jon Geeting said...

The NIZ works by lowering office rents. The point of the zone is to attract a cluster of professional jobs with low rents.

That is not what they tried in Stockton.

Anonymous said...

@ 7:52 No matter how you look at it, it's "Corporate Welfare"!

Corbitt and his entire Republican administration are cutting programs that hurt those in need and giving the tax dollars to those well connected and not in any kind of need but greed!

Anonymous said...

Retired ASD teacher here.

John.Jay and Mr. Geeting,

Both of you make it sound as if urban areas, like Allentown, have not enjoyed government assistance benefits before. That now, it's Allentown's turn. Wrong.

Truth be told, the many benefits utilized by the Allentown's of the country, have proven NOT to be enough. Now, Allentown is looking to its neighbors to share in paying for its sustenance, to financially back the visions of Allentown's leaders.

No thanks.

Anonymous said...

Anon 8:29,

You DO know that it was Democrat Governor ED RENDELL who signed the NIZ into law?

To WHOM has all the campaign cash from the likes of J.B. Reilly, etc., been going to?

CHAIRMAN ED PAWLOWSKI?

A DEMOCRAT?

Uh, check that out sometime.

For the record, it's "Corbett" ...

CAPTAIN DUMBASS WHO NEVER MADE IT PAST SECOND GRADE

Anonymous said...

Allentown City Council, the clowns who rubber stamp this $ 160.0 million dollar Palace of Sport ...

... all Democrats.

TIME FOR THE INTELLIGENT TO HATE ON REPUBLICANS SOME MORE

Anonymous said...

Yawn.

Anonymous said...

The Republicans only want dirtier air, diriter water, children with Down Syndrome and Autism fending for themselves.

Obama told me so, therefore, it must be true.

ALLENTOWN DEMOCRAT VOTER

Anonymous said...

"Yawn"

That is what I'll be doing when it's time to buy hockey tickets to the magnficent Palace of Sport.

We will see who is laughing then ...

I HEART NIZ CHEERLEADERS

Anonymous said...

These arena schemes really work.

Sincerely,
City of Reading, PA

Anonymous said...

The 2011-12 AHL season has ended, so let's review some numbers ...

AMERICAN HOCKEY LEAGUE
Average Attendance Per Contest

2011-12 ... 5,638
2010-11 ... 5,380
2009-10 ... 5,100
2008-09 ... 5,115
2007-08 ... 5,270
2006-07 ... 5,472

Interesting to note that AHL attendance is up ... and 5,600 or so every night watching minor league heavyweights throwing haymakers on Hamilton Street at the magnificent Palace of Sport STILL would leave Chairman Pawlowski far short of his bold and public projection of 2.5 million visitors annually.

For the record, every AHL club had 38 home dates this season ...

Anonymous said...

source

http://theahl.com/stats

Anonymous said...

Adirondack Phantoms
AHL average attendance

2011-12 ... 4,631
2010-11 ... 3,575
2009-10 ... 4,018

Philadelphia Phantoms
AHL average attendance

2008-09 ... 6,459
2007-08 ... 6,679
2006-07 ... 6,698

Looks like the Phantoms could not even crack 7,000 per game, on average, even when they were in Philadelphia ...

... but I sincerely wish Chairman Pawlowski all the best with that 2.5 million visitors annually thing.

Anonymous said...

You guys do all know that we’re not talking subsidies here with the NIZ, don’t you? We’re talking massive taxpayer giveaway.

Just to recap -the taxpayer is picking up 100% of the construction costs, 100% of the financing costs, 100% of the operating costs, and 100% of the developer’s construction management profits? And the developer’s operating profits are supported for 30 years by free money provided by taxpayers?

You need to tell it like it is, all this making shit up is getting ridiculous. Even if you believe that the suburbs received subsidies, there is no comparison to what’s going on with the NIZ. Oh, and even with those supposed subsidies, suburban developers still put their own money up and it was at risk. Reilly hasn’t put one nickel of his own money up, and will never have to.

The NIZ is not a subsidy. It is a massive giveaway.

ironpigpen said...

"Will NIZ Supporters Put Any Stock In Stockton's Cautionary Tale?"

Sure, all kinds of it ... if they are allowed to finance it with everybody else's money ...

... and then blame it all on a co-opted RINO and the evil Gubner Corbitt.

Future Downtown Arena Attendee could explain it so much better than I could, though.

Anonymous said...

What is the NIZ again? I forgot

Anonymous said...

Retired ASD teacher here.

It's never been about the arena for me. That will struggle, I'm certain. But, build the darn thing!

It's the funding scheme I find outrageous.

No one will object to low interest loans to anyone who chooses to buy-in to Allentown's plan. That will be someone else's nut to crack. Not mine.

monkey momma said...

One difference between Stockton and Allentown is the benefit of hindsight being 20/20. We know now that the housing boom of the 90's won't last. They didn't know that in Stockton when they built their arena and blew their budget. They just believed (stupidly) that housing values would continue to go UP UP UP.

Here in Allentown in the year 2012, we're not building an arena because we're rolling in money, which was Stockton's poor excuse. Now, we KNOW we're broke, but...I guess we're gonna spend a bunch of money anyways. That makes Allentown's leaders that much more stupid than the folks who drove Stockton into the ground.

BTW, I love anon 9:17's comment!

Anonymous said...

If the NIZ is unacceptable what can be done for the LCounty core city?

Not looking for off the wall racist ideas or more "I hate Allentown comments"?. Just what would work?

The option of doing nothing eventually means the state takes over and that may not be financailly and socially pleasant.

The state could create out of the city low income housing, combine entities, force big regionalization efforts.

ironpigpen said...

Finance this magnificent $ 160.0 million dollar Palace of Sport thing privately and I'll be your biggest fan.

I have always loved hockey and I got the requisite scars to prove it!

I just played in a tournament this weekend down at the rink at Jordan Meadows (American Parkway and Gordon Street) in Allentown.

The Morning Call was not there, unfortunately, to log the results or snap a few pictures.

I guess hockey just isn't all that popular at the moment in the City With No (Spending) Limits ...

... but the impending arrival of the Phantoms will certainly change everything, right?

Anonymous said...

Retired ASD teacher here.

Anonymous 10:00AM,

The Lehigh Valley's "core" city can make itself more attractive WITHOUT government handouts to chosen saviors.

Allentown's citizens(however many actually vote)can replace their current leadership and DEMAND that local quality of life issues become top priority. Goals such as:

increasing city police numbers.

regular clean-up of litter.

tough zoning regulations.

efficient building inspections.

better permit enforcement.

strong enforcement of traffic and parking laws.

better oversight of landlords.

assistance to the school district in keeping attendance numbers low.

easier free parking nearby business establishments.

mow and tend to public planted areas.

maintain roads and bridges in excellent condition.

immediately remove graffiti.

address noise violations.

provide tax incentives for working persons to move within city limits.


Do the above, make it obvious. In a few years, your city WILL become more attractive, on its own.

Your turn.

Anonymous said...

They're spending money like it's not their money - because it isn't. I love sports and love attending live events. I'll never attend anything here because they already rifled my wallet without asking. They should gave asked me. Boycotts can be difficult. This one will be easy.

Anonymous said...

10:24
A number of good ideas for livability. A lot of these are in place, but budget constrained.Certainly more could be done.

I don't think it's mostly a poliical party(or office holder)specific problem? But, some diversity of politics would help.

Many efforts to do enforcement work result in lots of back lash from every one impacted. I'm glad I don't hold political office and wonder why people do it.

Doc Rock said...

For once, I agree with Geeting,

"The point of the zone is to attract a cluster of low rents."

Anonymous said...

Retired ASD teacher here.

Anonymous 11:22AM,

That's exactly it. Until the list I provided is addressed to nearly everyone's satisfaction, a speculative investment like an arena, and a few artificially supported buildings for "friends" must be put on hold.

No, this is not a caution to a particular political party. However, in my mind, Allentown's current leadership has its priorities all wrong.

The current, cleared downtown space will still have value, probably more value, at a future time, WHEN Allentown becomes "naturally" attractive. What is being pushed now is an expensive, easy attempted fix.

You describe how several items on my list are constrained by budget. You could be correct. Then, why stretch things even more by maintaining a building that will be empty and unproductive half the time?

What then, would I build in Allentown? Safe,secure,attractive senior citizen housing. Not only a great choice for the state hospital grounds, but maybe, downtown. Go ahead, call me crazy.

Like you, I want no part of elected office. I'm too old and no longer Allentown-eligible. Besides, it's much easier to serve as a "sofa expert."

Anonymous said...

Allentown has its crime problems, no doubt, but they are not near the problems with crime Stockton has. 2011 crime stats have Stockton with a per capita crime rate of 189.3 placing it between Compton, CA 210.37 and Reading 150.86. Allentown is 93.53 so it has slightly less than half the crime of Stockton. Allentown has crime problems like many other cities but statisticaly it is safer than Philadelphia, Pittsburgh and Reading.

J. SPIKE ROGAN said...

The Mt. Pocono area is where the poorest of NYC's poor come to. Mainly from the Bronx and Brooklyn. Also many who can't afford Newark and Jersey City come here.

J. SPIKE ROGAN said...

Anon 9:16 I am in no way defending Palowski. But it would be fair and accurate to also point out the Phantoms numbers you cite are averages. And they had plenty of home games that had to compete with Flyers home games across the street, Eagles and Phillies home games down the street, and even at times Sixers and Philadelphia Soul home games across the street.

While the Spectrum could sit around 17K for hockey, who would want to sit in that traffic for some of the bigger events to see a minor league hockey team.

They also always sold out post season games. But what do I know, I just use to cover sports.

Anonymous said...

Bernie, nice job on the Bastiat quote. You get better every day. For those of us in the dark science of economics (and it's pronounced "eeeeconomics," not "eck-onomics," for all you pretenders) a Bastiat citing can make one's day. Well done and thanks.

Anonymous said...

Perhaps an offer to the municipalities should include season tickets to the NIZZER's.

A good marketing company should be hired to market the free loading Phantons and rename them the Nizzer's. People were upset when the Iron Pigs called their original mascot Pork Chop.

They should be more upset with the Reilly's and Toppers of the world who are eating out of the pig trough.

Twinkles said...

atleast this is localized, unlike the Philadelphia eagles, Philadelphia Phillies, Pittsburgh Steelers and Pittsburgh Pirates who all got hundred of millions of dollars to house their billionaire owners cronies for sporting events

Anonymous said...

Anon 9:16 : you do realize that phillies at one times averaged 10K a game when they sucked, and you might see that happen again in the very near future. Where is your average for Phantoms games during the NHL lockout season of 2004-05?

the economy tanked and people stopped going to fringe sporting events, back in the late 1990s the phantoms were averaging 10k a game at home.

the years you state for the Philadelphia version was for seasons in an arena that was 40+ years old with no upgrades, the Adirondack team plays in an even worse arena.

we get it your are against hockey in Allentown, you probably were against the IronPigs coming to allentown as well

Anonymous said...

We can't afford this type of Corporate Welfare and Urban renewal...Our elected Representatives , Goveror, Cabinet, Judges, etc. all need a 25% Pay increase plus an increase in benefits.

They have been working w/o a pay increase for years.