Township Fears 'Significant' Tax Loss to Arena Project

Editor's note: This article corrects Mike Faccinetto's position as Bethlehem School Board president. 

South Whitehall officials are looking into the potential impact of Allentown's Neighborhood Improvement Zone on the township, following reports that all non-property taxes collected in the zone's 130 acres will finance construction of the new downtown hockey arena.

Township Manager Jon Hammer said Monday that he and two other township managers will meet in two weeks with state Sen. Pat Browne on the issue. They want to know: Was any study done on the impact of the zone on muncipalities, prior to its state authorization in 2009?

• If yes, what is the financial impact on municipalities?
• If not, why wasn't a study done? 

The NIZ has created a firestorm as local municipal officials recently came to realize they will lose earned income tax to the arena construction project. According to a recent report in The Morning Call, the earned income tax generated in the zone, by those working at such places as PPL and Sacred Heart, goes in the NIZ fund for arena construction rather than back to the muncipalities where those workers reside. Browne authored the law creating the zone, the report said.

Hammer said the loss of tax dollars to South Whitehall could be in the six figures. "We would be significantly affected, in my opinion," he said.

Salisbury Township Commissioner Joanne Ackerman is outraged that Salisbury will not receive the earned income tax of township residents who work in the downtown zone. Bethlehem School Board President Mike Faccinetto also said the impact on the Bethlehem Area School District .

Hammer said the creation of the zone is not an urban vs. suburban issue, as some people have suggested. Rather, he said, it's an issue of transparency.

Muncipalities or school districts that will be affected by state legislation should be alerted and notified prior to passage, he said, adding, "That would help with transparency."

Hammer said there is always an option of a legal challenge to the zone. He said the state legislature also could amend the legislation, though he does not see that happening in the near future.

"We can discuss the 'fairness' of the legislation," he said, "but the reality is that the NIZ is currently law in the Commonwealth."

Hammer knows the challenges facing cities such as Allentown. He was once executive assistant to former Allentown Mayor Bill Heydt, and he served as acting mayor when Heydt was on vacation. Still, he is concerned about the impact of the zone on South Whitehall.

"We wish the arena project and downtown development much success," he said, "but at a minimum, more discussion is needed."