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Nazareth, Pa., United States

Thursday, March 15, 2012

Allentown Has No Answers on EIT Diversion

Lehigh Tp's Cindy Miller: "We were blindsided."
How could Allentown could divert earned income taxes intended for Lehigh Valley municipalities? Why would local taxes, some of which are set aside for open space, be diverted to finance a hockey arena and business improvements in Allentown's 130-acre Neighborhood Improvement Zone? What impact will this have on their own bottom lines?

These were just some of the questions that members of Northampton and Lehigh's County Tax Collection committees had for Allentown Finance Director Garret Strathearn during a rare, combined meeting in February. Strathearn had few answers, but promised he'd be back in March. He asked only that all questions be reduced to writing and supplied to him in advance.

David Woglom, who administers the Tax Collection Committees, did just that. On February 22, Woglom sent a 16-question letter. "[W]e need to know what the financial effect will be on our budgets, particularly during these challenging times," Woglom told Strathearn.

But when the combined Tax Collection Committees of Northampton and Lehigh County met again on March 15 at Hanover Township Community Center, there still were no answers. No Strathearn either.

Steve Miller, Solicitor to Lehigh County's Tax Collection Committee, told municipal officials that Allentown is still working on assembling the information. "I don't think they're trying to stonewall," he assured everyone.

Miller also corrected some misinformation about the EIT collection process. Previously, municipal officials were told that EIT revenue would be refunded 100%. "That's not quite the case," stated Miller, who noted there will be no refund unless the revenue is in excess of the debt service on bonds floated to finance the arena and other improvements. Miller added that the debt service would be paid, proportionately, from both EIT and state tax revenue.

"Not good," stated Upper Nazareth Township Supervisor Scott Sylvanius after the meeting.

Lehigh Township Supervisor Cindy Miller, who stated her Township is considering joining Hanover in litigation to stop this EIT diversion, was also disappointed. ""I'm more disappointed that this was enacted and nobody's prepared. Everyone was blindsided."

Woglom is hopeful there will be answers before the Tax Collection Committees meet again in April. But it's unclear whether those answers will be supplied before bonds are floated for this project.

38 comments:

Anonymous said...

Allentown has even "poached" itself!
A number of businesses already announced they're moving into the NIZ zone who were previously located in other areas outside the NIZ but were in Allentown's city limits previously. I estimated a couple of hundred employees who were paying EIT into the city budget will no longer. How can anyone still say that Allentown taxpayers aren't going to get stuck with the tab on this? Looks like everybody who's a taxpayer is getting screwed to me whether they live outside of Allentown or in the city itself!

Anonymous said...

Retired ASD teacher here.

More stalling. Usually an indication the answers will not be swallowed easily. More time is needed to craft something vague, more stealth.

From what little we know, there is no binding requirement to return any monies to the townships. Those funds now appear more necessary than originally explained.

To me, Allentown can build whatever it wants, on the backs of ALLENTOWN taxpayers. Citizens there elected officials to act on their behalf, not mine.

Neighboring municipalities do NOT serve their taxpayers well if they accept any mandated financial responsibility for non-essential spending decisions made by some other neighbor.

I encourage all of you to contact your own municipal officials. Tell them you want Allentown to stand on ITS own. Expect them to join in any challenge to this ill-advised plan. A plan to spread risk over others, involuntarily.

If you are so inclined, support the Allentown arena and related developers by purchasing admission and products. Your CHOICE, as it should be.

zoid said...

To retired ASD teacher. You are right there is no requirement to return any monies to the surrounding municipalities yet Sen Browne has stated that the EIT money will not be needed the project will support itself if so then why are you taking it. He is full of shit. Cudos to Hanover Township and I hope Bethlehem Township commissioners look and listen and jump into this with Hanover and the rest of the gang. We will never see any of this money back to our coffers for the duration, 30 years. Further the statement made today at the TCC meeting that all of the EIT money would never be returned. More smoke and mirrors. Stay on top of this Bernie, it smells like a "Rat" and it is a rat, like all those union bozos that stand out there next to their inflated pet when they should be out finding work.

Anonymous said...

municipalities filing law suits are going to be in for a rude awakening. All taxes levied by municipalities are only levied with authority granted by the state. the state can change that authority how it wants. this is how philly gets to charge a wage tax while other municipalities don't. it is how allegheny county can charge a booze tax. local gov't can sue, but they will lose. they always do. why? b/c they are suing the state, the place where the money will be remitted.

the only ones that will make out in this legal process are the lawyers. not surprised. they get paid no matter the outcome.

zoid said...

i do not agree with you the Broughal camp through their thorough research apparently explained to the Hanover Board and there is a basis that what is going on here in not in accordance with the state constitution. It is UNCONSTITUTIONAL just like all the other bullshit going on with this project. They should just drop a bomb on Allentown and start over. The lehigh valley would be a lot better off.

FutureDowntownArenaAttendee said...

Mark my words.

This lawsuit will never be filed. When they do analysis on how much it will cost to sue vs what EIT they may lose they will make the decision that it is not worth it. Especially since they are going to sue the state on a law that was passed by both houses and signed into law by the governor. Calling it "unconstitutional" is the funniest part about this. How is it unconstitutional? If taking money from one location and giving it to another area is unconstitutional than the 1965 law that established the current EIT rules is also unconstitutional.

The supervisors dont even know how much money they receive from employees that work in 130 acre NIZ. Lets do some simple math. There are 10,866 residents in Hanover Township. Lets say for arguments sake that there are 100 people(very liberal #) who work in that 130 acres. The average median income for Hanover township residents is $44,363. That would mean that EIT that Hanover receives each year is $44,363(1% of 4,436,300). A more realistic number is that there are probably only about 50 people who work in the 130 acres. Making the EIT closer to $22,181.

With that simple analysis they will realize the lawsuit will cost them much more than $22K. Also in the end game it wont matter since all the EIT is going to be returned anyways. The annual debt service is going to be around $10 million per year. Last year the 130acre NIZ collect over $7 million in taxes(http://www.mcall.com/news/local/allentown/mc-allentown-phantoms-arena-state-taxes-20120228,0,3091470.story) and that doesn't include all the new development. $10.5 million will be easily reached. The lawsuit is the biggest waste of time and money. If I lived in Hanover Township I would be pissed that they were wasting my tax dollars on such a ridiculous lawsuit.

Anonymous said...

blah, blah, blah

$ 160.0 million dollar palace of sport

blah, blah, blah

Anonymous said...

$ 160.0 million dollar palace of sport

keep it simple, stupid

Anonymous said...

Retired ASD teacher here.

FDAA-

Assuming the so-called "tax grab" runs for 30 years, the total amount diverted to Allentown will be substantial.

I, for one, do not believe there is any intention to repay the money.

I suggest the law be amended to include a defined payment of interest on the "loans" from the other municipalities. Include also, a firm penalty on the arena group for any monies not repaid annually by a certain date.

The very fact the arena "might" be delayed for a year, or more, by what you see as a frivolous, losing suit should be of real concern to arena proponents. There is a risk of losing the hockey franchise, and other parties.

My suggestion is for the arena group to write-out funds garnered from other municipalities and get on with things NOW.

Collateralize the bonds with Allentown-owned lands and properties.

A problem with that? According to your analysis, their funds aren't really needed.

Bernie O'Hare said...

FDAA is willing to make all kinds of pronouncemtns here anonymously. But when Allentown was asked to provide some answers, it was not there to do so. I believe it is stonewalling until it can float the bnds. There are already inconsisten stories about what will happen to EIT. And you have pretty much destroyed your own credibility, FDAA.

Doc Rock said...

It is silly to argue whether the lawsuit will go anywhere. That is, largely, irrelevant.

What is relevant is that Allentown has "declared war" on its neighbors. Those neighbors are now defending themselves against this attack, and geniuses like FDAA are shocked!

There are dozens of ways Allentown's neighbors can retaliate - most so subtle that they won't even be noticed.

In this "war," Allentown's army is greatly outnumbered. King Edwin should immediately sue for peace. If not, the war will be "all Hell" and the collateral damage will be great.

FutureDowntownArenaAttendee said...

Lose my credibility? Like you were disbarred from practicing law in the state? Talk about losing credibility.

Bernie O'Hare said...

See what I mean? These personal attacks are the last refuge of those who have no argument. I have written about my 1985 suspension many times. People are free to hold it against me. But I admit who I am and take responsibility for everything, including that. You can't even take responsibility for your own name.

FutureDowntownArenaAttendee said...

The irony of your statement is that I am making a personal attack because I dont have anything to add but it was you who makes the attack that I am anonymous. That is your argument! You cant retort to the facts that I present to other than saying that I am anonymous.

Oh and since we are on the subject of taxes? How much did you pay last year in school, county and municipality taxes last year? Let me answer that for you. You paid ZERO!!! Why? Because you are a renter. You don't even own a home in Nazareth. How ironic is that? A person who writes a blog about tax dollars being "stolen" but doesn't even pay taxes himself. Talk about credibility.

Anonymous said...

"To me, Allentown can build whatever it wants, on the backs of ALLENTOWN taxpayers. Citizens there elected officials to act on their behalf, not mine."

Allentown did not enact the NIZ, YOUR elected officials representing you in Harrisburg did in the best interest of the State of Pennsylvania. Go pound sand.

Anonymous said...

Just exactly what IS your name, Future Downtown Arena Attendee?

Joseph Goebbels?

Joseph Stalin?

Chairman Pawlowski's Equipment Manager?

Whoever you are, you have zero credibility and your Propaganda continues to suck ...

Future Downtown Arena Avoidee said...

By consolidating their efforts, costs will be minimized, and eventually awarded to the municipalities. The price is well worth it, as Easton's Panto and other poor stewards of poorly run cities attempt the same NIZ money grabs to support their idiotic schemes.

Anonymous said...

the only people being ripped off are the fools paying Future Downtown Arena Attendee for the obvious and tireless services

ironpigpen said...

Just can't sell it Future Downtown Arena Attendee, can you?

You need a catchy slogan, Slick.

Like "Hope and Change" or something ...

FutureDowntownArenaAttendee said...
This comment has been removed by a blog administrator.
Anonymous said...

The lost revenue mentioned by 12:34 within Allentown will be greatly offset by new real estate tax revenue.Allentown does not get stuck by the NIZ

It only is a possible big issue for EIT collected by the state in the NIZ that relates to employees working there who live in muncipalities outside the NIZ.

Agree the lack of timely info is causing people to project problems that what will probably be much less severe.

There are only so many non-Allentown people in the NIZ. The intuitive number is maybe a thousand. That's about $500,000 against a total EIT approaching $200 million. Somehow the impact to any one of the smaller townships seems to be low.

Anonymous said...

Retired ASD teacher here.

Anonymous 6:08pm -

"There are only so many non-Allentown people in the NIZ. The intuitive number is maybe a thousand. That's about $500,000 against a total EIT approaching $200 million. Somehow the impact to any one of the smaller townships seems to be low."
(end quote)


THAN REMOVE THE TOWNSHIPS AS A SOURCE OF FUNDING!

Dave said...

Bangors boro Treasurer was in attendance today. Have not talked to her yet but will tomorrow. Will we join the fray? Our solicitor is away right now and I would want to hear his opinion. As much as I hate what Browne has done..can it really be amended to death as it is not repealable? No sense wasting money on a suit that has no chance of getting the desired result. Even Boscola is now on board with the Atown clowns. She needs to go as well as Browne. How about an Attorney General investigation? Proving unconstitutionality would be hard similar to harrasment charges..It just doesn't look good from where I sit. Is it a winable war?

Bill Coker said...

Just a note.

Every renter pays his share of real estate, school, etc. taxes.
Every landlord figures that into the rent. As a former landlord, I speak from experience.

Anonymous said...

Love how the long desired regionalism is not called "declaring war on neighbors." What an absolute tower of hyperbole. This whole issue is so trivial, it is embarrassing. You all wanted to be called "the Lehigh Valley" and now you change your mind because it is ALLENTOWN getting assistance and not your one-horse town?

Sad to be a native.

Dave said...

One horse town? I resent your inference that we are somehow of less importance than the city of Allentown. We never were part of the Valley and now you want us to pay for your Grand Illusion? Call it what it is..theft by deception.

THE observer said...

geez us

how much money can possibly be @ stake? If han-norco wants numbers why don't they run them they should have them. this is grand standing.I could see if SWT or even Whitehall or Salisbury[or other abutting TWSP] filed.
Wait here's an Idea lets take tax monies from han norco for letting suburban sprawl happen up 512
Peeps on here are saying they should blow-up allentown.........
well they are tearing out the heart[7th &Ham] and trying to start over.
Yet you bitch.. I guess i do not get it.
By the way I work in the NIZ and do not live in the city. And I know something needs to be done and the town Elders are trying......

Anonymous said...

Observer -

Pawlowski has a history of failed economic development attempts. If you're comfortable with him betting even more on another even riskier scheme, then move to Allentown and live with the results of that bad bet.

As others have said, if the money from outside municipalites is so little, then why do they need to take it?

Anonymous said...

Regarding real estate taxes, the city (and school district, and county) is already behind due to the loss of taxable real estate to the arena, which will be run by an Authority and therefore tax exempt.

Wouldn't it be nice if the city had calculated and released the real estate, earned income, business privilege and other taxes that were being brought in by the properties they just tore down? Only then could one calculate the improvement (if any) from the NIZ.

Of course, all we'll hear about are the taxes (if any) being brought in by the new properties. We won't be reminded about the taxes that were lost. In the meantime, taxpayers will be subsidizing the loss of tax revenue from the arena footprint with their own tax dollars.

Hopefully the taxpayers won't have to wait 30 years to see some benefit from this project.

Dave said...

You want to work there but you don't want to live there? Gee..why not? If it is such a holy quest.. why do you run out of town every night? Afraid to walk the streets? Afraid you might get mugged or worse? This is lipstick on a pig. Solve the crime problem and then come ask me for entertainment money for the rich and famous of the Valley.

Anonymous said...

Solve the crime problem. You guys are funny. Every city of any size has a "crime problem" that is merely managed.

The ratty old business torn down would out perform the arena in taxes, too?

Bwahahahahaaaa. Some people just have no idea what the hell they are talking about.

Dave said...

If it isn't safe..nobody will stay anyway. You gonna walk the streets after the hockey game? I think not! Viable business razed for what? Plowed into the dirt for a boondoggle. Why do people keep electing this clown faced boy?

Anonymous said...

All of these stories are further evidence of the need to KILL RHE ARENA DEAD!!!

Repeat after me - "Pawn shops, pawn shops, pawn shops!"

Anonymous said...

Waaah, I'm too scared to go to the pawn shops!

Anonymous said...

Where is MAN CHILD!

Anonymous said...

A few $100,000 between friends is nothing right?

All this money being spent on a wistful dream and no one really seems to know how it is going to get paid. Really, who cares anyway?

These clowns really think this is going to work? That Allentown is going to be a yuppie mecca? Who the f*** do they think they are kidding?

The city is shot. It will be bankrupt before the arena is built, if it is ever built.

I hope the municipalities do sue. At least we can be assured someone or some entity has the b**** to stand up to the administration and it's army of carpetbaggers.

This will be interesting to watch with new developments everyday. BTW where is my toilet paper FDAA?

Dave said...

From what I hear..the Northampton County TCC is joining the suit. That organization does not need the permission of any of the municipalities it serves to join the suit. They have their own monies to file. Will other muni's join in? Not sure but this bears watching. Since the school districts have more votes..at the TCC..than the towns..you can see whose budgets this is really going to impact. They are driving the bus and are hissed. I'm sure this is not happy news to the ears of King Edward.

Anonymous said...

Retired ASD teacher here.

Again, take the neighboring communities out of the funding stream. This has become a public relations nightmare for Allentown, Browne, developers, etc.

If the current wording that lays claim to E.I.T. is CRITICAL to making an arena in Allentown happen, I suggest the project has much bigger problems than we know.