Municipalities continue joining Allentown hockey arena lawsuit, despite settlement offer

Stockertown has become the seventh town to officially join the lawsuit, despite a settlement offer extended by Allentown Mayor Ed Pawlowski.

Despite a settlement offer extended by Allentown Mayor Ed Pawlowski, municipalities have continued to join a lawsuit challenging the hockey arena tax district.

On Friday, Stockertown officially became a party to the lawsuit filed by Bethlehem and Hanover townships challenging the constitutionality of the neighborhood improvement zone.

Stockertown is the seventh municipality to do so, along with Hellertown and the townships of Upper Nazareth, Lower Nazareth and Bushkill, according to court documents.

The neighborhood improvement zone legislation establishes a 130-acre zone in downtown Allentown that diverts all new state and local nonproperty taxes to fund construction and other development in the region.

That could include earned income taxes — usually about 1 percent of income — which would normally be remitted from the employer back to the employee's home municipality and shared with the local school district.

Pawlowski last week extended a settlement offer that would establish an up to $8 million reserve account to ensure earned income taxes that existed before the neighborhood improvement zone be immediately returned to the municipalities.

Pawlowski expressed disappointment that towns continued to join the suit despite the settlement offer, but said if a settlement is reached, it would affect all of the municipalities.

"They can go to court and if they win, still nobody gets anything because if there's nothing but a big hole in the ground. Nobody gets anything," he said. "Or we can work together on something that will benefit everybody."

Hanover Township Manager Jay Finnigan, who has been leading the legislation effort, declined to comment on the settlement discussions.

The deadline for municipalities to join the suit is Monday, according to court records.

South Whitehall and Lower Saucon townships have voted to join the suit, but have not yet done so.

Palmer Township supervisors will discuss whether to join during their Tuesday meeting, according to Supervisor Chairman David Colver.

Stockertown Mayor Sherman Metzgar acknowledged there were likely very few borough residents who would work in the neighborhood improvement zone, but said he was more concerned about the precedent the legislation could set.

"We (joined the lawsuit) figuring if Allentown gets away with this, maybe Easton or Bethlehem or whoever end up doing the same thing, and eventually it could really hurt us," Metzgar said.

"Morally, I think, borough council felt it was wrong what Allentown was doing," he said.

Members of Northampton County Council last week discussed the possibility of entering into litigation of some sort involving the neighborhood improvement zone, according to a broadcast of the meeting.

Although the county does not collect earned income tax revenue, council members expressed concern that developers who benefit from the neighborhood improvement zone could steal commercial tenants from Northampton County by offering subsidized rental prices.

Northampton County Executive John Stoffa said the solicitor's office has indicated they have no standing to join the ongoing municipalities' lawsuit because they do not collect earned income tax, but that doesn't mean they could not bring their own lawsuit on different grounds.

"Part of it is whether we have significant standing to file a lawsuit, but I haven't made my mind up either way yet," Stoffa said. "I'm just hoping some sort of compromise will develop and that this whole thing will work out."

Northampton County Councilwoman Peg Ferraro said council's economic development committee will further discuss the issue May 5.

Alicia Karner, Northampton County's economic development administrator, will provide them more information about the impact the neighborhood improvement zone will have on the county during that meeting.

"I think there's thoughts both ways on this and I think we need to vet the entire issue before we make a move," Ferraro said.

Contact Allentown reporter Colin McEvoy at 484-894-2549 or cmcevoy@express-times.com.

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