Bethlehem Tp Nixes Allentown's Proposed NIZ Deal

President Paul Weiss

In a unanimous vote at a crowded May 21 meeting, Bethlehem Township Commissioners have openly rejected an offer to settle their legal differences with Allentown over its downtown hockey arena, hotel and office buildings. In their first open discussion since filing suit on March 29, they were quick to applaud the Queen City's attempted "transformation". But President Paul Weiss added, "We do have some problems with how it's been funded."

The NIZ Challenge

Allentown's proposed downtown hockey arena, along with a hotel, wellness center and office building are all located inside an expansive, 130-acre Neighborhood Improvement Zone (NIZ), the only one of its kind in the state. Under a 2009 law, state and local earned income taxes generated inside that district can be used to fund the costs of improvements over the next thirty years. This includes the current and future earned income taxes of people who work inside the NIZ, but live in places like Bethlehem Township.

Bethlehem and Hanover Townships, represented by the Broughal & DeVito law firm, have led a legal challenge to the NIZ in Commonwealth Court. They argue it's a special law that only applies to Allentown, in violation of the state constitution. So far, 18 municipalities and 1 school district have either joined that suit, or have filed an independent action. The Pennsylvania State Association of Township Supervisors, lobbying arm to 1,455 townships throughout the state, has also intervened. Developer Abe Atiyeh has also filed a lawsuit that mirrors the municipal litigation.

In an attempt to resolve their differences, Allentown has proposed returning current EIT to municipalities immediately, along with the right to participate in a specially created "development fund". But townships would rather see the size of the NIZ reduced.

Solicitor Jim Broughal told Commissioners that Allentown's proposal actually circumvents state law, and could be set aside by a court as being void as against public policy. He would prefer to continue negotiation, but that would have to include an amendment to current legislation "to make it constitutional, to take out the earned income tax language and, to some degree, to reduce the size of the NIZ" and create a level playing field.

Faye North approaches podium as reporters take notes

Unions: NIZ Challenge a "Job Killer"

Constitutional concerns were the last thing on the minds of five trade union members who spoke to Commissioners after Broughal. Union organizer and carpenter Francis Loughney, who lives in New Tripoli, called their NIZ challenge a "job killer." Bethlehem Township carpenter Bruce Allen stated he's been out of work for three years. "I'm paying taxes, I'm paying your salaries, I need you to do something to help me out," he argued.

Another Township resident, school teacher Faye North, worried about the legal fees and the "crazy infighting" among the communities. "Working together! That's what's going to make the Lehigh Valley strong," she stated. "We have to work together."

But Barry Roth was a bit more selfish. Diverting EIT to Allentown, Roth argued, would make it more difficult to hire public works employees and police officers. "Those are the guys who plow my streets. Those are the guys who protect my butt in this Township. ... I want it here, for these guys."

Mike Hudak - Shrink the NIZ

Commissioners Want Leaner NIZ

After listening to the public, Commissioners weighed in with their own views.

Marty Zawarski made clear he is "very much" in favor of the arena, but is opposed to the diversion of tax revenue from the state, municipalities and school districts. He complained that the legislation was created for a "few, select group of players." He stressed that any NIZ amendment should be done transparently, ethically and to benefit all.

Mike Hudak, who is a union contractor and a Commissioner, observed that Allentown has refused to budge from its original settlement offer. "They've reworded their proposal, they've moved paragraphs around, but the fundamental crux of their argument has not changed from Day One." He claimed he would support a downtown NIZ, but not one that includes 90 acres along the riverfront as well. "Shrink the NIZ," he suggested. "When you start using taxpayers' money to subsidize private development and private businesses down along the riverfront, that's what's going to hurt."

Hudak also complained about the duration of the NIZ. "This goes on for thirty years. This isn't a one-time grab It gives Allentown the capability of taking tax money for thirty years Yeah, that adds up to a lot of money. But when you ask Allentown how much money is involved, they say 'We don't know. We'll tell you later. We just ask you to rubber stamp this and we'll tell you later.' That's not how we represent our citizens"

Lead NIZ Attorney Jim Preston

Sympathizing with trade union members, Phil Barnard reminded them that his role is to help the entire Township.

Last but not least, Tom Nolan introduced a resolution that rejects Allentown's current settlement proposal, or any future deal that circumvents the NIZ legislation. It calls on Allentown to do three things. First, amend the law to make it constitutional. Second, remove any EIT tax diversion. Third, reduce the size of the 130-acre NIZ.

Nolan's motion passed unanimously.

Most everyone had a voice last night. But one person was crouched quietly in the peanut gallery, saying nothing, not even to reporters. Jim Preston, the lead attorney in the constitutional challenge, left soon after the vote.

Tonight at 7 PM, Hanover Township Supervisors will also take up the NIZ in an open meeting.