That's what I thought when I first heard that State Senator Jarrett Coleman was seeking more transparency with Allentown's Neighborhood Improvement Zone (NIZ). After all, his predecessor (Pat Browne) authored legislative changes in 2021 that basically prevents the public from seeing revenue sources created as a result of the NIZ. Moreover, Coleman is a freshman senator with no real ties to anyone, except perhaps for the people who voted him into office. But he did it. On Wednesday, he persuaded the state senate to adopt a fiscal code that included language to make Allentown's NIZ more open to public eyes.
The NIZ is the mother of all tax breaks. It was buried in a Fiscal Code Bill penned by former State Senator Browne 14 years ago. Most legislators who voted for it had no idea it was even there. It creates a special tax district in Allentown, the only one of its kind in the state. It enables developers to use state and local taxes generated in the zone to finance debt service on projects financed within the special tax district. Because developers can use state and local taxes to finance buildings, they can charge rents below the going market rate. This incentive attracts businesses that might otherwise shun Allentown. But instead of attracting nonlocal businesses, many of the tenants inside the NIZ are formerly from other parts of the Lehigh Valley.
In his remarks to the State Senate, Coleman stated:
“Over $500 million has been invested in Allentown’s Neighborhood Improvement Zone (NIZ) over the last decade. To date it has not been possible to conduct objective analysis to determine the success of the program in meeting its legislative intent.
"In June of 2021, the fiscal code was changed to stop the public from learning how tax dollars are moving through the NIZ. Taxpayers were also denied the ability to understand the individual sources and amounts of revenue that were being generated from taxpayer dollars. Accessing this information is vital to understanding whether the NIZ functions as advertised and sold to the public. Has it been an engine of economic development or real-estate development, and at what cost? These two things don’t always line up. If we’re going to answer that question, then we need access to specific financial details.
"The original fiscal notes, or calculations of cost to the Commonwealth, indicated that there wouldn’t be any negative impact to tax revenues. That conclusion assumed that activity in the NIZ was new activity, and not shifting from other municipalities. There are questions about whether that is what happened. Hundreds of millions of dollars in tax revenue have been attributed to the NIZ. Questions surrounding the implementation of the NIZ law and its impact on the overall financial health of the Commonwealth can only be answered if we have access to this information.
" Taxpayers have a right to know if their money is being spent wisely. Today, the changes we are making to the fiscal code will ensure that the public has access to information around how tax dollars are being spent. These changes are vital for transparency and to ensure that we all have access to the information needed to evaluate the effectiveness of the program.”
Senator Nick Miller, who also represents Allentown, spoke against Coleman's proposal on the Senate floor, claiming it "adversely affects the City of Allentown and the Neighborhood Improvement Zone.
"This program has been phenomenol in the city and our neighborhoods.This legislation would kill at least $300 million in projected projects in the NIZ. Those are family sustaining jobs that our going to be killed by this leagislation.
"Thisprogram is also audited annually by the state,and those reports are made public. ... Why just this program?."
Perhaps because it's the only one of its kind in the state, and it might be discouraging economic development outside of Allentown."
According to Allentown's website, more than $1 billion is real estate development has already been completed. With that kind of money, much of it from government tax breaks, the potential for mischief and waste is obvious. Moreover, the NIZ might be helping Allentown at the expense of other municipalities and businesses who also have family sustaining jobs. How could anyone rationally oppose a little more of a spotlight on the finances? "Sunshine is the best disinfectant."
The Fiscal Code adopted by the Senate on Wednesday is an essential part of s state budget. The House has yet to act. Instead of working on a budget, they are in recess until mid-September.
