NorCo Council Poised to Condemn NIZ Hotel Tax Grab

Hotel taxes from Historic Hotel Bethlehem
will subsidize its competitors 

Last Wednesday, at about 3 pm, a state revenue package that included a lengthy Fiscal Code that no one had read was introduced in the state legislature. It went through the state house (you can see the votes here), state senate (you can see the votes here), and despite Ken Kraft's denials, was in fact signed by Governor Wolf. This all went down in about four hours. Buried on page 195 is a provision that diverts NIZ hotel taxes away from Discover Lehigh Valley, the Lehigh Valley Economic Development Corporation (LVEDC) and Lehigh County. Instead of promoting tourism and economic development,the money will go into the pockets of hotel developers. According to The Morning Call, it's about $300,000.

This impacts Northampton County because the services provided by Discover LV and LVEDC benefit both counties. Less money for them hampers their ability to provide service to the Lehigh Valley, including Northampton County.

"Nobody knew about this," noted NorCo Council Prez John Cusick at yesterday's Finance Committee. "Nobody here certainly knew about it. LVEDC and DiscoverLV woke up to find out they were going to be short $300,000."

Cusick had problems with the way this legislation was adopted and the diminution of services that will necessarily follow from DiscoverLV and LVEDC.

Ken Kraft is a union business agent who has represented trade union workers inside the NIZ, where he helped negotiate a Project Labor Agreement for the arena and may very well be conflicted. He attempted to downplay the obvious diversion. Kraft indicated Northampton County will be paying about $20,000 more per year to Discover LV and LVEDC. "It's really insignificant in the whole pot."

Council members who have no financial interest in building or renovating hotels inside the NIZ had a much different view than Kraft.

Matt Dietz noted that hotels outside of the NIZ will be paying into the hotel tax program while hoteliers inside the NIZ will be doubly benefiting by being able to divert hotel taxes for construction while still receiving services from DiscoverLV and LVEDC.

"It didn't seem to be done on the up and up," added the Colonel, Hayden Phillips.

"It just doesn't sound right," agreed Peg Ferraro. "All these other hotels are contributing hotel tax, but this group of hotels get to keep the taxes. ...It's just a very flawed thing ... like Obamacare. Once you pass it , you can read what's in it."

"That's a really poor analogy," complained Kraft.

Tonight, Council will introduce a resolution condemning the uneven playing field created by requiring hotels to pay a tax that benefits other hotels that compete against them. If adopted, it will call on the legislature to repeal the diversion of hotel taxes.