Bethlehem Township's vote follows a similar resolution by Northampton County Council on July 21 as well as Hanover Township's Board of Supervisors on July 26. According to Hanover Township Manager Jay Finnigan, other Lehigh Valley municipalities are scheduled to vote on this matter in coming weeks.
Hanover and Bethlehem Townships are the two local municipalities that first filed legal challenges to the NIZ law, based on its diversion of earned income taxes. Sixteen townships and boroughs, along with a school district, eventually joined them. State legislators ultimately amended the NIZ law to remove the controversial language that authorized an EIT tax grab.
Now it's a diversion of local hotel taxes collected inside the NIZ.
Northampton and Lehigh County will collect about $4.5 million this year from a 4% hotel room rental tax imposed on the Lehigh Valley's 57 hotels. A healthy chunk of this money funds Discover Lehigh Valley, the area's tourism agency, and Lehigh Valley Economic Development Corporation (LVEDC), whose focus is on getting and keeping jobs. Lehigh County uses some of its hotel taxes to pay for the Iron Pigs. Northampton County hosts an annual round of hotel tax grants for everything, from the Blue Valley Farm Show to the State Theatre.
There will be less money to go around this year, thanks to a last-minute change to Allentown's controversial Neighborhood Improvement Zone (NIZ). Buried in the Fiscal Code by Senator Pat Browne as part of the state budget, it's yet another handout to developers in what is already the most heavily subsidized tax zone in the state. Hotel taxes collected inside the NIZ will be diverted to build new or upgrade existing hotels. This means less money for the tourism bureau and the job creation that LVEDC CEO Don Cunningham has engineered.
"Hotels don't need subsidies to be built," Haines told Commissioners."If the demand is there, and the developer puts 20% down, he can get financing from the normal markets without ever having to be subsidized by the state, the City, or the County or anybody else."
He said the diversion of hotel taxes inside the NIZ is "unfair competition" to developers who did it the "old fashioned way" and used their own money. he observed that hotels outside of the NIZ will now fund a tourism and economic development engines, but hotels inside the NIZ making no contribution will reap the benefit.
"I know highway robbery when I see it, and this certainly qualifies," observed resident Craig Storrs, Jr.
By a 4-1 vote, Commissioners approved the resolution condemning the diversion of hotel taxes, and Haines stated he would ask Bethlehem City Council to express it approval, too.
The sole No vote, Michael Hudak, denied that he was opposed because of his membership in a trade union. "You know me," he said after the meeting "I vote what I think is right." He added that the only real change would have to come from the state legislature.
Updated 11 am: Hellertown Borough also adopted a resolution at their ugust 1, 2016 meeting, condemning the hotel tax grab.