The city is proposing developers within the arena zone pay a fee to help offset the taxes local municipalities and school districts will lose to the hockey arena development.
View full sizeA rendering of the plans for the Allentown hockey arena block.The city now proposes that developers within the arena zone pay a fee to help offset the earned income taxes local municipalities and school districts would lose to the hockey arena development.
That comes in addition to a proposal offered earlier this month to establish a reserve account of up to $8 million so municipalities may immediately get back all EIT tax revenue generated prior to when a special 130-acre tax district went into effect.
Hanover and Bethlehem townships sued last month, challenging the constitutionality of the Neighborhood Improvement Zone law that would divert all nonproperty taxes -- including EIT normally remitted back to them -- to fund the downtown Allentown construction.
Allentown officials have been attempting to settle the lawsuit quickly so it will not further delay construction of the arena, which is slated to be finished in September 2013 in time for the Phantoms hockey season.
In the most recent settlement offer, a two-page document obtained by The Express-Times, the city proposes that developers with commercial office projects utilizing NIZ proceeds pay a fee of $1 per square foot.
Those fees would create a development fund that would distribute money to the affected municipalities and school districts as future development opportunities arise, according to the document.
Money from the fund would be distributed based on the percentage of EIT collected from residents within those taxing bodies, which is expected to be calculated by mid-June, according to the offer.
Allentown Mayor Ed Pawlowski did not respond to an inquiry for comment, and city spokesman Mike Moore has declined to discuss ongoing settlement discussions.
The board of supervisors for both Hanover and Bethlehem townships have reviewed the settlement offer in closed-door meetings this week. Representatives from both boards have declined to discuss it.
Eleven municipalities are listed as plaintiffs in the lawsuit as of Friday, according to court records, and others who are not yet listed have previously voted to join the suit.
As a term of the proposed settlement, all taxing bodies would withdraw from the lawsuit and any agreement reached would apply to all of them, according to the offer.
View full sizeThe future site of the planned Allentown hockey arena, as seen from the north side of the 700 block of Hamilton Street.Additionally, a number of local developers have been holding meetings to discuss their concerns about the NIZ and the possibility of filing their own lawsuit to challenge it.
The developers fear that tenants in their own office buildings could jump ship to rent space in the NIZ, where those developers can offer more competitive lease rates due to their tax subsidies.
Developer J.B. Reilly, who has proposed $500 million in long-term development over a 10-year span, met with those developers Thursday in an attempt to ease those concerns.
Stephen Thode, a Lehigh University professor of finance and spokesman for the developers, said they have requested an economic impact study of the tax zone be conducted.
They have also expressed a desire to shrink the 130-acre zone so it be more limited to the downtown arena area itself. The current zone includes about 40 acres around the arena and 80 acres at the Allentown waterfront.
"The sense I got from speaking to several people was if it is limited to the downtown area, and had defined boundaries, and wasn't 130 acres but something less than that, there was a sense that they could probably live with that," Thode said.The developers are also looking into forming a collective organization, Thode said, which would protect the individual developers from personal liability if they do sue.
Atiyeh, who filed his own separate lawsuit, was countersued by the city for $150 million. The city argued his suit was a frivolous attempt to delay or stop the arena construction.
Unlike individuals, Thode said municipalities and school districts are protected from such personal liability, so their lawsuit does not run the risk of such a countersuit.
In addition to Hanover and Bethlehem townships, other plaintiffs in that suit include Stockertown, Hellertown and the townships of Whitehall, Upper Nazareth, Lower Nazareth, Lower Saucon, Plainfield, Bushkill and Lehigh.
Palmer Township, South Whitehall Township and the Whitehall-Coplay School Board have also voted to join the lawsuit, but are not yet listed as parties as of Friday, according to court documents.
In a routine maneuver for such lawsuits, attorneys representing Gov. Tom Corbett -- who is listed as a defendant -- requested and were granted a 30-day extension to respond to the lawsuit.
On Thursday, Salisbury Township commissioners voted 5-0 against joining the lawsuit, and instead voiced strong support for the arena project as a whole.
Salisbury Township Commissioner Debra Brinton said she believes Pawlowski and the city are acting in good faith and expressed confidence they would quickly receive back all their EIT from before the NIZ took affect.
"We believe this will help improve Allentown, which will help improve Salisbury, and we're being a good neighbor," Brinton said. "I think that they have everybody's best interests at heart, and we all felt that way."
Contact Allentown reporter Colin McEvoy at 484-894-2549 or cmcevoy@express-times.com.
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