Pennsylvania state Senator Jarrett Coleman (R-Allentown) last week sent a memo to colleagues asking them to support an upcoming resolution to audit Allentown’s Neighborhood Improvement Zone (NIZ).
Under the program state lawmakers established in 2009, developers can use state and local tax money to offset the debts they incur on construction and rehabilitation projects in designated parts of Pennsylvania’s third-largest city. Areas within the NIZ include the Lehigh River’s westside waterfront north of Union Street and south of American Parkway as well as the PPL Center hockey arena and many of its surrounding blocks. Allentown is the only city with a neighborhood subject to this program, but the state has created similar zones in Bethlehem and Lancaster.
The commonwealth has devoted roughly $700 million to the NIZ, with over $87 million going into it last year. Supporters of the program attribute about $1 billion in development in the economically struggling downtown area to the zone which is to remain effect three decades after its inception. But Coleman says the commonwealth cannot ascribe such success to the program without financial transparency.
The senator’s resolution would direct the Legislative Budget and Finance Committee (LBFC) to complete a performance audit of the NIZ and the Allentown Neighborhood Improvement Zone Development Authority which oversees it. The goal is to ascertain how well the zone has spurred economic development and hewed to the rules governing it as well as how tax revenue is attributed to business taking place in the NIZ. After the LBFC investigates, the committee would submit its conclusions and recommendations to lawmakers.
“To date there has been no official report by the state or by the legislature on the activity that’s occurring inside of the NIZ,” Coleman told The Pennsylvania Daily Star. “To me… taxpayers, legislators, everyone deserves to know what’s taking place in the NIZ for two reasons: If it’s working, this program should be spread across the state; we shouldn’t be in the business of picking winners and losers based on their geographical area. But if it’s not working or working as intended, we need to have some discussions on finding out if we need to change or reform the law.”
He said no policymaker should declare this program either a success or a failure without corroborating data, something NIZ backers have made it more difficult to obtain. Coleman’s predecessor, moderate Republican Pat Browne, amended the law to keep businesses’ tax information out of public view. Coleman, who defeated Browne in last spring’s primary, introduced legislation last month to let interested observers see what kinds of tax payments businesses in the zone are reporting (e.g., corporate income, tobacco, etc.).
Browne continues to partake in the NIZ’s administration in his new job as Governor Josh Shapiro’s (D) acting secretary of revenue, a role that will become full-fledged if a majority of senators confirm their former colleague. Responding to an email from The Daily Star, the Department of Revenue referred to a year-old Allentown Morning Call article wherein that newspaper reported it could no longer attempt to get NIZ revenue information because of Browne’s legislation.
The Morning Call piece said Brown feared “a legal loophole” would “jeopardize taxpayer confidentiality” if the commonwealth permitted the press to obtain tax data on NIZ-located businesses. The Pennsylvania Commonwealth Court sided with Browne in a ruling on the matter in December 2021.
Coleman argued that taxpayer confidentiality is a poor excuse for keeping hidden the information he wants revealed because he is not seeking tax returns, just the amounts the businesses are paying to the government in each tax category. He said this information will be useful to have in determining whether the NIZ is actually generating new business or simply bringing preexisting regional businesses into the zone.
“The fact that taxpayers can’t even see what they’re paying for, that bothers me,” he said. “It’s something that taxpayers from my district [in Lehigh and Bucks counties] want to know. People say they go down into the NIZ and they feel like it’s a ghost town or the only businesses they’re seeing moving in are businesses that were already in the area. And when they come to me and ask me my opinion — do I think the state program’s working? — I can’t really answer that question in good conscience.”
Democratic state Representative Peter Schweyer, whose district includes parts of the NIZ, has publicly complained that Coleman has not sought input from other lawmakers in the region when drafting his legislation.
The senator said he believes other Schweyer and other legislators representing the region ought to have been more inquisitive about whether a program they have extolled is performing as intended.
“Why am I the first lawmaker in 10 years that has asked a question here?” he said.
Last year, Schweyer received several large campaign contributions from developers working in the zone. Those included $1,000 from J.B. Reilly of City Center Allentown, $2,750 from Mark Jaindl of Jaindl Properties and the Waterfront Development Co., $1,000 from Joseph Topper of City Center Investment Corp. and $500 from Dolores Butz who is a retired employee of Alvin H. Butz, Inc.
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Bradley Vasoli is managing editor of The Pennsylvania Daily Star. Follow Brad on Twitter at @BVasoli. Email tips to [email protected].
Photo “Jarrett Coleman” by Senator Jarrett Coleman. Background Photo “Lehigh County Courthouse” by Atwngirl. CC BY-SA 4.0.
