Sorting Out The NIZ Mess

The NIZ ball game changed a bit last night. Allentown's next-door neighbor, South Whitehall Township, entered into litigation against the project (the litigation, by the way, is basically against the state). With South Whitehall going against it, the city is truly being isolated now on the project. Bethlehem's Mayor appears to be out against it. The other Executives and Mayors appear to be silent on it. Legislators aren't saying much yet, but that's because this will probably be something they vote on this year.

There's a few legal issues now, and several issues of political importance to the public. Looking at the legal issues, they look like this:

1. Can the Commonwealth take EIT money away from municipalities and move it somewhere else. I think the obvious answer here is YES.
2. Can the Commonwealth draw a couple of blocks out of one municipality, and just divert the EIT money within that specific zone? This is the issue that seems to be driving the lawsuit from the communities. 
3. Can the Commonwealth and city use diverted tax dollars to finance the said community and several developers poaching businesses from surrounding municipalities. I'm guessing that legally they can, unless the court finds them to have overreached.

So my guess remains that the Commonwealth of Pennsylvania will win this lawsuit, if it goes to trial. If it loses, it will be because of point two, not one or three, if I had to guess.

Now that the legality issue is out of the way, let's talk governance, then politics.

On the governance side, there's the impact on all the municipalities involved. Quite literally, if Allentown can do this, it changes the ball game, which is why you're not hearing much from the County Executives or the other Mayors. Easton and Bethlehem will be the next communities presumably, as fellow third class cities, that could do something like this (though this NIZ is special, and literally limited to Allentown). On the other hand, they will lose their EIT's the same as all the other communities. If you're any of the boroughs or townships around here, you're scared of this. You can consistently lose revenue to these projects every time, while your costs will probably not drop. Over the next 30 years, the Allentown NIZ would currently keep all EIT money from the zone, rather than just the state's EIT, as in a standard NIZ. Allentown offered to allow the other municipalities to keep their current EIT's within the zone, which is frankly a drop in the bucket compared to what it's supposed to get to with the office space built. The regional benefits, in tangible terms, will all go into Allentown's government. In addition to taking the EIT money, many companies will leave existing office space around the Valley, and relocate into the NIZ, as they use the EIT money to subsidize dirt cheap rents. This will suck more tax revenue out of the other municipalities, and into Allentown. So Allentown will both reap the new benefits, and the old ones, while the other municipalities take a net hit here.

The only way this would be stopped, by the way in my view, is through the legislators of the Valley pushing a repeal. I'm kind of shocked that A Republican legislator pushed this in the first place too, which leads into the politics.

IF this goes to trial, Mayor Pawlowski should drop his ambitions to run for Governor or Lt. Governor, because neither one will happen. He won't carry the surrounding municipalities. Heck, I don't know that the Phantoms don't pull out if this goes to trial, as it would slow the project and sour their potential customers. The project is now politically toxic. The smart politics for anyone running for either County Executive job is to run against it, as is the same for anyone running for Mayor, State legislature, or Congress, outside of Allentown. No one who doesn't live in Allentown is going to want to vote for this. Sure, some folks who are super-pro-urban may, and some interest groups in the project might, but be serious, you can't win an election on that, or on telling the rest that you support taking their EIT money for  this, as well as their office-dwellers. 

All of this leads to the worst part- I'm not even sure the arena will be a success now. I wonder if there will be serious ill will from this later. If the arena is a failure, and the city just takes existing businesses from the other municipalities, most of the Valley will call it a failure. They will also not support future big projects, which is really bad in an emerging metropolitan region. 

I want to see the arena built, and I want to see re-development in Allentown. Both are great. I don't like the way it's getting done, even though I think it's legal. I think they should have used an RACP (called an RCAP) to build the arena, run a standard NIZ around it, and then looked to expand that with successes. Doing it this way may be transformational, but probably not in a good way.