Justin Simmons has contacted me to explain the NIZ, how it was enacted and what can be done about it. According to him, it's too late to repeal it. Here's what he has to say.
This was one of the many reasons why I decided to challenge my predecessor in the 2010 Republican primary. Since this is complicated, I'm going to send you bullet points of what each vote meant. There are several things to keep in mind here. First, the NIZ for Allentown was created in 2009 which included the borrowing of EIT funds from other municipalities. Second, because this was passed in 2009, we couldn't repeal it. The basic reason why the NIZ language was in the fiscal code of 2011 was that Allentown was and is still in the process of building the arena. Third, we have to pass a fiscal code in order to enact a budget. It's huge and it outlines every precise detail and tax zone in the Commonwealth.
I would ask former Representative Beyer why she thought this was good for the other municipalities she used to represent besides Allentown.
• The Neighborhood Improvement Zone (NIZ) was first established in the 2009 Fiscal Code
• o HB 1614 – the vehicle that was used to enact the 2009 Fiscal Code
The legislation which eventually became Act 50 was originally voted in the House on September 17, 2009 was sent over to the Senate for consideration. When the legislation was sent to the Senate, the NIZ language was not present in the bill. The final passage vote to sent the bill to the Senate was: 192 – 4.
The legislation was amended in the Senate. The amendment inserted by the Senate included the NIZ language.
When the bill returned to the House for a concurrence vote on Senate amendments, the bill passed on an almost party line vote. The only two Republican “yes” votes were Rep. Beyer and Rep. Denny O’Brien.
• SB 907 – the vehicle that was used to enact the 2011 Fiscal Code
While this legislation made some changes to the NIZ program, it did not significantly change the language that was implemented in 2009
Because the project was already under way in 2011 it would have been very difficult to change the language
The changes we did make were to ensure that
• (1) the governing body of the zone (in this case the City of Allentown) was not able to “sit on” taxpayer funds – a clause was added to the language stating that if there were excess monies in the NIZ fund, they will be distributed first to the State and then to the local municipalities if any monies remain
• (2) to safeguard the interest rates of the bonds that are issued. The Commonwealth is on the hook for these bonds and in order to ensure the taxpayers received the best possible interest rates, we needed to clarify the Commonwealth pledge language.
• (3) we limited the term of the bond financing to 30 years. It is our understanding that 30 years is the length of the bonds being issued. We wanted to ensure that whenever the bonds were refinanced, that they were not extended beyond the initial 30 years period.
• It is important to note that without the changes in 2011, the taxpayers would be potentially be liable for increased expenditures based on interest rates and the length of the bonds being issued.
• The language was not new in the 2011 Fiscal Code, it was already enacted.
I hope this helps to clear things up.