Arena Tax Deal Brings Frustration, Skepticism

Neighborhood Improvement Zone will divert $550,000 in earned income tax to arena, other Allentown development; away from other Lehigh Valley school districts and municipalities.

A special tax incentive zone set up to help Allentown build a hockey arena and redevelop other parts of its downtown and waterfront will skim an estimated $550,000 in earned income taxes from surrounding municipalities and school districts.

So reported Garret Strathearn, Allentown’s director of finance, who had the unenviable task of discussing and defending the Neighborhood Improvement Zone to a group of local government officials who gathered Thursday morning at the Hanover Township Community Center in Northampton County for a special joint session of the Tax Collection Committees of both Lehigh and Northampton counties.

By the end of the session, many of those officials remained as they were – frustrated about the apparent secrecy under which the enabling legislation was adopted and enacted and skeptical that the program would do any good for their municipalities and school districts.

There remained “more questions than answers,” said Jay Finnigan, the manager of Hanover Township, Northampton County.

“I’m appalled to see what’s going on here,” said Joanne Ackerman, a Salisbury Township commissioner who clearly expressed the outrage many in the room were feeling. She was angry with legislators in Harrisburg who allowed it to happen.

“Anyone looking at this can see that this was done for one purpose only,” Ackerman said. “It’s putting the screws to us.”

Finnigan along with South Whitehall Township Manager Jon Hammer and Lower Macungie Township Manager Bruce Fosselman were scheduled to meet with state Sen. Pat Browne, R-16, this week to discuss their concerns, but that meeting was postponed to a later date.

Browne crafted the legislation that created the Neighborhood Improvement Zone and remains a staunch defender.

Under the terms of what had been – until recent weeks – obscure state legislation that was adopted in 2009 and went into effect in January, earned income taxes collected from those who work within a 130-acre portion of Allentown will be funneled to a new city authority. The Neighborhood Improvement Zone Development Authority will pay the debt service on bonds to finance a $158 million hockey arena and other development inside of that zone over the next 30 years.

Under ordinary circumstances, earned income taxes paid in the municipality where someone works are forwarded to their home municipality where they are typically shared between the local government and school district.

Local governments are not the only entities forfeiting earned income taxes in the zone. State earned income taxes collected from workers in the NIZ will also be diverted into this bond fund, which Strathearn pointed out, is a much larger share of the money than the local municipalities and school districts will pay.

In theory, the development program will generate enough revenue to pay the annual debt service over the next 30 years and still have a surplus, which would then be returned to the taxing entities in the proportion by which it was contributed, said Strathearn.

The Allentown finance chief defended the program as one that will finance development and job creation in Allentown that will ultimately benefit the residents of all the surrounding municipalities.

Another joint session of the tax collection committees has been scheduled for March 15 at the Hanover Township Community Center in Northampton County. The discussion on the NIZ will continue then and there with, officials hope, answers their representatives get from Browne.

Correction: The size of the Neighborhood Improvement Zone is 130 acres. This version of the story has been corrected.

Dana Grubb February 18, 2012 at 01:01 PM
Daryl, In comparison, legislation that diverted casino host fees from Bethlehem to other Lehigh Valley communities was handled much more openly and represented a voluntary effort to share the wealth.


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