Lehigh Valley Economic Development Corp. endorses Neighborhood Improvement Zone

The organization says the program, criticized by some suburban communities, is critical to urban revitalization. Vote in the NEWS POLL.

The region’s economic development agency is endorsing the Neighborhood Improvement Zone, a hotly contested program that redirects tax dollars to support development in Allentown.

Lehigh Valley Economic Development Corp. Chairman Don Bernhard said the group’s executive committee, a 19-member body that charts the organization’s direction, agreed to support the policy after a spirited meeting today.

“As a leader of economic development in the Lehigh Valley, it was incumbent upon us to take a position,” Bernhard said.

“If we say in our strategic plan we are going to do significant things to advance urban and sustainable development, that’s hard to ignore,” he added. “Part of this is doing what we said we are going to do.”

Read the LVEDC statement here.

Bernhard characterized the discussion as “civilized and lengthy” but ultimately favorable toward supporting the NIZ.

“It was not a close vote,” said Bernhard, who declined to specify the final tally. LVEDC’s executive committee meetings are not public.

LVEDC Vice Chairman Richard Thulin, an executive committee member and a developer who has stated reservations about NIZ, could not be immediately reached for comment.

The NIZ consists of 130 acres in and around Center City Allentown targeted for redevelopment. Pennsylvania legislation diverts all new state and local non-property taxes within the zone to fund construction of downtown projects, most notably the hockey arena under construction.

The program has sparked opposition from suburban communities upset about potentially losing revenue. Critics also say it distorts the commercial real estate market.

NIZ funding could include earned income taxes — usually about 1 percent of a wage-earner’s income — normally remitted from the employer back to the employee’s home municipality and shared with the local school district.

Bethlehem and Hanover townships, Northampton County, filed suit against the zone March 29 in state court. Lower Nazareth supervisors last week voted to join litigation. Allentown has since offered a settlement.

Allentown Mayor Ed Pawlowski and other proponents have maintained that revenue other than earned income taxes diverted by the zone will be enough to cover bonds that finance arena-area development.

Alan Jennings, executive director of Community Action Committee of the Lehigh Valley and a board member of the Allentown Neighborhood Improvement Zone Development Authority, said he was glad for LVEDC’s endorsement.

“This initiative is consistent with LVEDC’s strategic plan and urban revitalization goals,” Jennings said. “I’m glad they resisted any opposition that surely existed on the executive committee and hopefully this moves us one step closer toward making this happen in the Lehigh Valley.”

LVEDC said it will market NIZ sites to companies outside the Lehigh Valley like it does other properties but it won’t be lobbying local businesses, who might be enticed by lower rents in the zone, to relocate from within the region.

The Bethlehem-based organization, funded by private and public money, seeks to add and retain Lehigh Valley jobs by luring companies to locate here with the help of incentives.

“LVEDC is not going to start knocking on doors (asking Lehigh Valley companies) to move from here to there; that’s not our job,” Bernhard said. “Will there be some of that happening? Sure.”