ALLENTOWN, Pa. — About halfway through its scheduled three-decade-plus run, Allentown's Neighborhood Improvement Zone is ahead of schedule.
The city’s one-of-a-kind special tax district has generated about $1.2 billion in development since it was written into law in 2009 by state legislators, according to the man charged with overseeing the district.
Steve Bamford, who leads the Allentown Neighborhood Improvement Zone Development Authority, gave that presentation to Allentown City Council members Wednesday night.
“I think it’s fair to say it’s exceeded expectations."Steve Bamford, ANIZDA executive director
That influx started with the PPL Center, which opened in 2014, and since has brought many modern office buildings and residential complexes to Center City.
The 128-acre NIZ district also covers the western bank of the Lehigh River, where Jaindl Properties is building out its Waterfront complex.
The NIZ — the only taxing district of its type in Pennsylvania — incentivizes developers to invest by letting them use state and local taxes to pay off bank loans or bonds they used to fund their projects.
Those incentives are set to dry up in 2042, according to the law that established the zone.
Though most tax revenues generated within NIZ borders are funneled back to developers, the city, Lehigh County and the Allentown School District receive millions in additional tax payments each year from the district, according to a report on its effectiveness.
Tax revenues generated from the NIZ also have helped fund a series of downtown public improvement projects, including the Allentown Transit Center and ArtsWalk.
“I think it’s fair to say it’s exceeded expectations,” Bamford told LehighValleyNews.com when asked to grade the NIZ’s impact so far.
Serious questions remain
But serious questions remain about its overall benefit to the city and its residents.
The NIZ has helped transform Center City Allentown by letting developers use more than $1 billion in state and local tax revenues to support their construction efforts since 2009.
That number grew almost $75 million last year.
Allentown’s most prominent developer has benefited from more than $150 million in NIZ tax revenues over the past three years.Financial records
But that money has gone to fewer than a dozen companies, Bamford said Wednesday.
City Center Group — helmed by J.B. Reilly — has been the major benefactor of the NIZ, using the district’s tax incentives to help fund a slew of projects.
Those include the PPL Center, a series of office towers and residential buildings, and the Renaissance Hotel revamp.
Allentown’s most prominent developer has benefited from more than $150 million in NIZ tax revenues over the past three years, financial records show.
Jaindl Properties received $61.5 in NIZ funding for its 615 Waterfront office facility and looks set to get about $69 million more to build its River House apartment complex next door.
And Alvin H. Butz Inc. used more than $28 million in NIZ funding to build its corporate center in the 800 block of Hamilton Street.
Other NIZ-funded projects include the $65 million Da Vinci Science Center, a $16 million project to revamp the Americus Hotel and St. Luke’s University Health Network’s renovations at the Sacred Heart campus.
NIZ not for small biz: ANIZDA officials
Councilwoman Gerlach questioned whether that investment benefits small businesses in downtown Allentown.
ANIZDA Chairman Sy Traub said it’s not meant to.
“Unfortunately, this program is not really geared to facilitate small business."Sy Traub, ANIZDA board chairman
“Unfortunately, this program is not really geared to facilitate small business,” Traub said, noting many would not “generate enough taxes” to access NIZ benefits.
Small businesses “benefit indirectly” from the NIZ through better buildings, potentially lower rents and additional foot traffic spurred by other properties and companies that take advantage of the district’s tax incentives, Bamford said.
“They benefit from the fact that there is … business being developed all around them,” Traub said.
Council President Santo Napoli, who owns two downtown businesses, said he doesn’t directly benefit from the NIZ because he doesn’t generate much taxes by selling clothing.
But the businesses and buildings made possible by the NIZ’s incentives provide him with a “captive audience; and that’s what helps me survive,” Napoli said.
Vicky Kistler, who runs Allentown’s department of community and economic development, said small businesses would struggle to take advantage of redevelopment-related tax incentives through the NIZ.
But City Hall has other support for small businesses, such as a revolving loan fund and mentorship programs, she said.
“The NIZ itself may not be the tool for that small business, but we have those tools,” Kistler said. She urged more local owners to take advantage of Allentown’s programs.
Council President Santo Napoli, who owns two downtown businesses, said he doesn’t directly benefit from the NIZ because he doesn’t generate much taxes by selling clothing.
Gerlach also questioned whether gentrification within the NIZ helped fuel positive statistics, such as a reported 16-point drop in the area’s poverty rate and a 58% rise in the median household income.
Controller Jeff Glazier said much of the NIZ was populated by commercial properties when it was established, limiting how many people were pushed out by development.
He estimated about 100 people who lived within NIZ borders may have lost their homes because of its launch.
