What this memorandum reveals is that the financial projections made here are pretty much on the money. Allentown is depending on future businesses, most of them poached from other Lehigh Valley communities, to be able to pay the bill.
Good luck with that!
February 27, 2012
Dear Lehigh and Northampton TCC Delegates--
Last Friday afternoon, Jay Finnigan of Hanover Township, Jon Hammer of South Whitehall, Stacy Gober of the Bethlehem Area School District, and I met with State Senator Pat Browne and several others concerning the EIT financing of the Allentown NIZ.
To begin the meeting, the Senator gave a presentation on the project, followed by presentations on the NIZ from Allentown Economic Development Director Sara Hailstone and Project Financing Consultant Scott Shearer of Public Financial Management (PFM). Bond Counsel Marc Feller of Dilworth Paxson was also present to answer various questions. From the presentations, we learned:
1. The expected cost of the entertainment arena is $80-100 million; the expected total cost including acquisition, soft costs, parking lots, and other expenses is $158 million;
2. The major portion of the project is the entertainment rink. There is currently also interest from several private parties for other development;
3. The total NIZ is 130 acres; 90 acres along the river and 40 acres in the downtown area;
4. The bond sale of approximately $158 million is expected to be in April 2012;
5. The expected annual debt service on the bonds is expected to be $10.9 million;
6. The total amount of revenue to be generated annually from all taxes is estimated to be:
a. $10.9 million from the taxes generated from the current businesses in the NIZ
b. $10.9 million from the taxes generated from the future businesses in the NIZ
7. Based on the fact that the total estimated revenue to be generated annually is $19.8 million ($10.9 + $10.9), while the estimated debt service is $10.9 million, it is expected that there will be an excess revenue at least in year one. Once the actual total revenues and debt service are known, it is estimated that refunds for the first year (2012) will be sent to the PSDs by May 2013. However, when asked, Senator Browne indicated that the Authority could decide in the future in to incur additional debt by adding on the project. If this occurred, the Authority could use more of the EIT revenue to cover the additional debt.
8. The channeling of EIT funds into the NIZ fund will not begin until January 2012, meaning that PSDs can expect that the amount of money they receive on EIT will not change until the 2012 first quarter receipts are sent to PSDs in April/May.
After the presentation was concluded, the focus of the discussion was on the estimated "loss" that PSDs will experience in 2012. Allentown officials as of yet do not know this. They told us that they are waiting for Keystone to provide them with the information. We reiterated that our main question was to get a listing by PSD of the historical EIT revenue generated in the zone. By the end of the meeting, it was agreed that
Allentown would work to answer this question through two means:
1. They will work to get a list of the actual EIT generated in the zone by individual PSDs from Keystone (the Allentown tax officer in 2011) for the third quarter of 2011 so that each PSD can multiply by 4 and have some idea of the annual, estimated loss. We all hope to have this information by our meeting on March 15.
2. They will work to secure a list of the actual EIT generated in the zone by individual PSDs from Berkheimer (the Allentown and Lehigh TCD tax officer in Allentown in 2012) for the first quarter of 2012 so that each PSD can see the most recent update. We will not have this information until June/July 2012.
We also asked Gary Strathearn of the City and Pat Browne to respond to the questions in our letter from last week. They indicated that they would but some of the answers would indicate that Allentown does not have sufficient information yet to respond.
I will keep all of you apprised of any developments between now and March 15.
David Woglom
Administrative Director, NTCC
Executive Director, LTCC
1 comment:
finnigan napping as usual. try to at least look concerned
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