Several recent news articles have shed light on an apaprent overlooked piece of the 2009 state legislation that authorized Allentown's downtown Neighborhood Improvement Zone (NIZ). The NIZ law states that all local non-property taxes collected in the zone's 130 acres are to be collected to fund the area construction. This includes the BASD and the City of Bethlehem's share of Earned Income Tax (EIT).
EIT taxes are deducted from an employees pay and then returned to the municipality where the employee resides. BASD and the City of Bethlehem split the EIT revenues that are returned to the city. BASD also splits the EIT for residents of Bethlehem Township, Hanover Township, Freemansburg, and Fountain Hill. At this point the BASD is not aware of the total financial impact of this change, but it most certainly will be significant.
In addition to this the NIZ has allowed developers to offer discounted lease rates within the NIZ. To date this has attracted five companies to move their offcies to within the NIZ when construction is complete. These were not outsiders coming from New Jersey or New York. These are local business that bolted to the NIZ and are leaving buildings in other municipalities vacant. In addition they are also now shifitng their EIT dollars to various NIZ construction projects and away from struggling local school districts and municipalities. How long will this last you ask? Don't worry it's only for 30 years.
This way of financing is not in the best interest of the Lehigh Valley. We should be for the greater good, not just one area of one city. Luring a business from Easton or Bethlehem to Allentown doesn't make the Lehigh Valley a better place to live and work. However, this is not my main concern as a school board member. Let's look beyond the EIT issue. Let's ignore that some of the largest employers in Allentown are located in the NIZ. You can click here for a map and see for yourself.
Let's instead look at the basic funding of the NIZ. According to Allentown's NIZ website all state taxes collected will fund development in the NIZ including the arena and other projects. These are monies that should be paid to a state that made unspeakable cuts to education last year. Grants, K-12 education, and Community College's funds were all slashed in the name of fiscal responsibility. Now it is being given away, estimated at at least $10,000,000 per year for 30 years, to fund an arena and other private development.
The City of Allentown and hockey fans win out big time in this deal. What does the state get? Not much in my opinion. Even if some out of state business locate here the new tax created will never pay back the hundreds of millions of dollars given up over the 30 years of the deal. The more business that relocate the more money the state loses. That's the entire state by the way. That's school districts, children, and taxpayers from all 500 districts in the state that will suffer many more tough budgets all the while the State of Pennsylvania gives away bags of money to bring hockey to downtown Allentown.