Pawlowski's Latest Offer to Settle NIZ Dispute

(Updated 10:25 AM, to point out that the settlement offer is not as clear as I thought it was.)

Allentown Mayor Ed Pawlowski, upset at the disinformation he claims is being reported in the press, has taken it upon himself to communicate his latest offer to settle the NIZ dispute. Yesterday, he shot an email with his latest proposal to all tax collection committee officials in both counties.

First, the City is now willing to return all EIT to municipalities, even future EIT. EIT to municipalities. (It is now unclear to me, based on reader comments, whether this does include future EIT, as I thought in my first read. If it does not include future EIT, this is obviously a lousy deal).

Second, to sweeten the pot, a "development fund:" will be established for surrounding municipalities, funded by NIZ developers with an annual $1 per sq ft of office space occupied payment. This development will not include the arena block.

The Morning Call reports it has obtained a copy of Pawlowski's proposal.

So have I.

I've posted it below.

Now you have it, too.

April 26, 2012

TO:                     TCC MEMBERS

FROM:               MAYOR ED PAWLOWSKI

You no doubt have read or viewed various news accounts of the City of Allentown’s proposal to settle the lawsuit filed by Hanover and Bethlehem townships and subsequently joined by other municipalities relative to the arena project and the Neighborhood Improvement Zone (NIZ).

I am concerned about various inaccuracies that have been leaked and reported in the news media.  Accordingly, I have attached a copy of the proposal for your consideration. 

I also understand your concerns regarding your current Earned Income Tax (EIT) and let me be clear; this proposal ensures that current EIT monies within the NIZ are not in jeopardy.  This proposal is applicable to all taxing bodies in Lehigh and Northampton counties, regardless of whether or not they have joined a lawsuit.

Please feel free to share this with the elected officials in your respective governmental bodies. 

Ed Pawlowski Mayor 435 Hamilton Street Allentown, PA 18101 Phone: 610-437-7546 Fax: 610-437-8730 Ed.Pawlowski@allentownpa.gov http://www.allentownpa.gov

Allentown Neighborhood Improvement Zone Development Authority Revenue Sharing Proposal

ln an effort to provide local taxing bodies with their current Earned Income Tax (EIT) receipts from the Neighborhood improvement Zone (NIZ) area, the City of Allentown will develop a Baseline Payment fund to provide for the timely disbursement of current EIT back to Lehigh and Northampton County taxing bodies. The fund will be structured as follows:

Baseline Payment Fund:

º A baseline payment will be calculated on the EIT generated within the NIZ for the first quarter of 2012, and then annualize for the year 2012 (the “Baselìne"). Berkheimer will establish the 2012 Baseline by mid-June, 2012.

º Commencing approximately the later of the issuance of the Allentown Neighborhood Improvement Zone Development Authority (ANIZDA) financing of bonds or October 2012, ANIZDA will pay to the local taxing bodies their prorata contributed share of the Baseline with the first payment being the equivalent of prior withheld quarterly payments in 2012, and then quarterly thereafter, pay the prorata of the Baseline for the life ofthe Bonds for the Arena Block Development.

º The initial source of revenue to support payment by ANIZDA of the Baseline for 2012 and 2013 will be borrowed money against non NIZ revenue. Future sources will be non NIZ and surplus revenue.

In addition to the Baseline Payment Fund, and to provide a vehicle for local taxing bodies to share in future NIZ development opportunities, ANIZDA will create a Development Fund which will be administered in the following manner:

Development Fund:

º ANIZDA will create a fund for distribution to local taxing bodies from new office development within the NIZ but outside of the Arena Block by charging a fee to Developers of commercial office projects utilizing NIZ financing proceeds.

º Each office development will pay an annual fee upon occupancy of $1.00 per rentable square foot occupied.

º Annually, by June 30th, from the fund, ANIZDA will distribute the receipts to the local taxing bodies located in Lehigh and Northampton County based on the percentage of EIT collected from residents within the local taxing body working in the NIZ for the prior year as calculated by Berkheimer.

Conditions:

To participate and receive Baseline Payments and Development Fund distributions, the local taxing body must accept, approve and enter into the settlement agreement with ANIZDA.

All pending lawsuits by taxing bodies must be withdrawn by all litigants who are a party hereto.

The local taxing body shall also assign to ANIZDA its right to receive disbursement of surplus up to the amounts advanced to it by the ANIZDA payments made under this agreement so as to avoid double payment to the local taxing body.

ln the event any local taxing body sues to challenge the validity of the NIZ Act, the settlement agreement shall terminate immediately for all taxing bodies.

Bond counsel, the PA Dept. of Revenue and the ANIZDA Board must all approve the settlement agreement.