Today's one-liner: "The shortest way to the distinguishing excellence of any writer is through his hostile critics." Richard LeGallienne
Local Government TV
Monday, February 27, 2012
Taxes Up in Second-Hand Smoke at Allentown's NIZ
According to the news account, Topper and Reilly made an offer to East Side Allentown cigarette wholesaler Dorward Wholesale, and are moving operations from there to the NIZ so they can take advantage of the $1.60 per pack tobacco tax, estimated to bring in a cool $7.2 million each year. That tax money will be diverted for their $50 million office complex.
Instead of the tobacco tax revenue going to fund state programs, it will be converted into building equity for J. B. Reilly and Joe Topper in City Center. Is this economic development or economic alchemy? This is an economic development shell game at best, and tax larceny at worst.
Senator Pat Browne, who now looks like the little Dutch boy trying to put his finger in the dike to stop the flooding, keeps telling us not to worry. The spokesman for Lehigh Gas, says this is a good thing for all of us and par for the course.
I feel better already.
We get no new businesses moving into the NIZ, just another one from another part of Allentown - its forgotten East Side. Worse than that, these guys have figured out a way to "game the NIZ." In fact it's the closest thing to the elusive concept of alchemy I have ever seen.
If Tom Corbett sits silently for this one, if the rest of the Lehigh Valley doesn't see what is really happening here, then we are all fools and deserve to have these thieves laugh all the way to the bank - literally and figuratively - since that is what 702 Hamilton was and is.
Irony has a funny way if being ... ironic.
The barbarians are at the gates and they will use this NIZ to get their buildings built for free. We haven't seen the end of it, since the waterfront development is still to happen. If you don't think that Mark Jaindl and his partners won't try to leverage the NIZ benefits to their advantage, then you haven't been out to the townships that his brother has devoured courtesy of public subsidy - new highways, new sewer lines and new water lines - and even more importantly, some of the most favorable rezoning this side of New Jersey.
Hey, here's an idea for old Topper and Reilly. Talk to tax collector Berkheimer about "relocating." They collect the per capita tax for a lot of school districts and EITs for a lot of municipalities (Bethlehem included).
The per cap tax for BASD alone probably is somewhere around $1 million.
I'm sure, with Berkheimer's massive staff, they'd need gobs of office space (maybe a couple thousand sq ft max). I think Reilly would have an attractive lease for them.
Let's not forget about the fact that you have Lehigh Gas' state gasoline taxes that are being used to build the new building, too. Assad and Kraus did a good job of projecting what this little wholesale tobacco and candy company would generate in state taxes, I am sure they could do the same for Lehigh Gas' taxes on gasoline sold.
This is truly an example of the "law of unintended consequences." I cannot believe that this scenario was envisioned when the legislation was discussed - even though it was with a very small group of decision makers - and that something like this would be condoned. I guarantee you that every wholesale tobacco outlet in the State - the low-hanging Lehigh Valley fruit will be picked first - is fair game for these two.
This is just incredible. Now, if they could just move the PLCB's "cage" in Harrisburg to the NIZ, they'd have a billion+ more in liquor taxes to play with.
"Sir, have you no shame?"
While Topper and Reilly have made sure they took care of themselves, let's see how Allentown has taken care of you. For that, you'lll need to read the post below.
28 comments:
You own views are appreciated, especially if they differ from mine. But remember, commenting is a privilege, not a right. I will delete personal attacks or off-topic remarks at my discretion. Comments that play into the tribalism that has consumed this nation will be declined. So will comments alleging voter fraud unless backed up by concrete evidence. If you attack someone personally, I expect you to identify yourself. I will delete criticisms of my comment policy, vulgarities, cut-and-paste jobs from other sources and any suggestion of violence towards anyone. I will also delete sweeping generalizations about mainstream parties or ideologies, i.e. identity politics. My decisions on these matters are made on a case by case basis, and may be affected by my mood that day, my access to the blog at the time the comment was made or other information that isn’t readily apparent.
Let`s not forget about Butz getting office space and not paying any taxes including state taxes. How big of him.
ReplyDeleteBernie
ReplyDeleteDo you know your arena friends from Allentown were on Fox Sunday News at 8 a.m. photo and all?
What is the Mayor's plans for the Allentown city blocks on Hanover Avenue between Jerome and Maxwell.
ReplyDeleteIn this area we have a number of closed businesses. For instance -The Car dealer, the hot dog stand, the 7-11 store.
And now the enticement of the Dorward establishment.
The Mayor and the Senator forget that East Allentown is part of the City.
The Mayor and the Senator must define their vision for our neighborhood.
If they have no vision for our area i suggest that they resign from their present duties for malfeance
Dennis Pearson
Dennis Pearson
let's hear from all the libs who beieve that government intervention in economic matters is so important.
ReplyDeleteThis Allentown NIZ mess is a typical outcome
Any R, any conservative, any Libertarian, and tea party adherent needs to make sure Pat Browne is sent far away from office. The only way he saves his thin and greasy political skin is to switch parties. What a slippery, sleazy ethical oil slick. He's what's wrong with the entire process. He is the epitome of bad government.
ReplyDeleteJust out of curiousity - have Topper and/or Reilly ever managed a tobacco distribution company?? What makes them think they will be successful?
ReplyDeleteAs the comments section in the Call points out, Dorward was the recipient of a letter containing a "white powdery substance" this past August. I'm sure that's a coincidence, too, huh???
This just gets better and better, doesn't it? Anywone who thinks these guys are acting in the average Allentonian's best interest had better find something stronger than cigarettes to dull the pain in a few years.
If you are THE state, you are pretty worried about this NIZ stuff. You know for sure equally desperate cities like your Scrantons and your Readings will want their own NIZ.
ReplyDeleteAnon 7:00 -
ReplyDeleteCan't disagree with you, and Bernie's already mentioned Browne might not be running. But who takes over Browne's seat - Schlossberg, Schweyer, Guridy?
Will a change make things better?
I think the country got burned by the "change for the sake of change" argument four years ago.
Wasn't Reilly top dog at Lehigh Valley Health Network?
ReplyDeleteDid he resign or was he kicked out for this proposed anti-health move?
No wonder tax frees are so profitable if this is any indication of the values of the people they elect to top leadership positions.
Dam*, this hole keeps getting deeper and deeper. But heh!, what the frig, it's just business!
Bernie -
ReplyDeleteYou bring up the issue of why are these businesses coming to the NIZ, or why they're being lured here. Is it because the NIZ is the best place for the business to be, or because it serves the needs of the developers? I think you've answered that question.
This all brings up the larger economic principle of supply and demand. There doesn't appear to be any cap on what can be built in the NIZ or how much it will cost. The usual models used to hold down costs and determine the size of any project are out the window.
Unlike the Field of Dreams, I'm not so sure that "If you build it, they will come" applies to Pawlowski's Field of Schemes.
The story that just WON'T go away! I am surprised but pleased that the MCall is letting these guys run with this issue. It's like peeling an avocado. The more you remove..the more it reeks of greed and entitlement. Breathlessly awaiting the next installment.
ReplyDeleteAgree, there seems to be a misused tax grab on the tobacco business.The company HQ is not exactly the location of the sale of the product.
ReplyDeleteI don't think the Berkheimer move is remotely likely. They have a big investment in their Northampton operation.This appears to be a red herring.
" I'm sure that's a coincidence, too, huh???"
ReplyDeleteI would think so. The envelopes Reilly & Topper would send would have a green substance inside.
"Do you know your arena friends from Allentown were on Fox Sunday News at 8 a.m. photo and all?"
ReplyDeleteYes. I blogged about it over the weekend.
Bernie, Thanks to The Morning Call we all know the complexity and brilliance involved in drafting this NIZ legislation.Actually diverting the $1.60 state tax per pack on cigarettes to private control.This idea was not hatched in some saloon.It had to be developed,approved by The City,County Executive,The State Legislature and signed by the Governor.Were all these folks corrupt? No they were not.They never gave it much thought.Only these nasty Bloggers knew this NIZ didn't smell right but they were ignored.
ReplyDeleteBernie, Please reread the article.
ReplyDelete"Waldron added that he had no knowledge of the tax implications "
"It's unclear how much tax money the new City Center Wholesale will generate, or even how much of the cigarette tax it collects will be eligible to flow into the NIZ fund,"
"Exactly how much cigarette tax goes into the escrow account will depend on how the state Department of Revenue applies the Neighborhood Improvement Zone law."
Not once in the article did it said that it WOULD be taking the tobacco tax. It said it is not understood if it could be used. However you write a blog saying "are moving operations from there to the NIZ so they can take advantage of the $1.60 per pack tobacco tax, estimated to bring in a cool $7.2 million each year. That tax money will be diverted for their $50 million office complex.
Instead of the tobacco tax revenue going to fund state programs, it will be converted into building equity for J. B. Reilly and Joe Topper in City Center. "
Which at this time is false since it is not known "Exactly how much cigarette tax goes into the escrow account will depend on how the state Department of Revenue applies the Neighborhood Improvement Zone law."
It is very clear they will try to grab as much of the cigarette tax as they can. These guys are in business to make money, not "transform" Allentown. I'd prefer to note the possibility now.
ReplyDeleteFuture Downtown Arena Attendee, I am so glad you have informed me that these tobacco taxes will continue to go to Pennsylvania's coffers.It did seem that this NIZ legislation was so carefully drafted and the tobacco company being purchased was not too much of a coincidence. 'Southern Man'
ReplyDelete"CLOCKING PEOPLE AT THE PALACE OF SPORT"
ReplyDeletehttp://www.goironpigs.com
Bernie, we don't need to worry about this anymore. Jon Geeting and Andrew Bench have already decreed that it's ok for rich white guys to make out like bandits on projects like this. The important part is the facade of helping people that liberals love so much. Doesn't matter how many poor and ethnic people get screwed as long as the facade is in place.
ReplyDeleteDon't you feel better now? Geeting's on the watch!
So, Future ...
ReplyDeleteIf you agree with Kramskorner (and you do) that the Brooks Group cannot count on concerts to fill the arena (you said you agree with all points in the article) ...
... how the hell is Chairman Pawlowski supposed to meet the lower of the two publically-stated projected goals --- 1.0 million people to the Palace of Sport in a single year?
Sorry, but it is a very rational question and I apologize sincerely if you do not have a valid answer for me.
R.O.
Yeah, Future.
ReplyDeleteYou decided to call me out a long, long time ago.
Here I am, then.
Yeah, I'm calling you out now.
Got any answers?
The above replacements for Browne make me wanna throw up...
ReplyDeleteWell at least they competitively bid the construction work and everyone got a fair shot...
ReplyDeletewait
This should end in indictments. This is an embarassment and a disaster. We should be ashamed as residents of the Lehigh Valley that any of us allowed this to happen on our watch.
This is a disgusting and nefarious twisting of legislation that was bad to begin with. At what point do any of them -- Pat Browne, Pawlowski....even the developers...realize that it's too much and jump ship and withdraw their support or even voice a concern?
This is very clearly and transparently criminal behavior.
So, the NIZ is going to fund the $160 million arena and the $50 million office complex. What else is the NIZ going to fund?? What, exactly, is the limit on the potential debt we can incur in Allentown as a result of this legislation?
ReplyDeleteThere is no limit, except as might be prescribed by the Debt Act. I'mm not sure that even that would apply to bonds floated by an authority.
ReplyDeletetypical fdaa
ReplyDeletecall people nasty names
crawl back under the anonymous rock
FDAA - One name on a blog, many authors. Not the same piece of work that started with the name is the one writing under it today!
ReplyDelete