Palace Of Sport Coup? – Pennsylvania State Lawmakers Confront NIZ Senator

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“ALLENTOWN HOCKEY ARENA PROJECT – LEHIGH VALLEY LEGISLATORS WANT ARENA FUNDING LAW CHANGED”

by Matt Assad and Steve Kraus … The Morning Call … 6/15/2012

Fearing that Allentown’s hockey arena could be headed for a two-year court battle, some Lehigh Valley legislators with suburban constituents are lobbying for a change in the embattle state law that funds the project. A half a dozen Republican lawmakers want Senator Pat Browne, R-Lehigh – who authored the arena law to remove the use of earned income tax (EIT) collections of other communities outside the city to help build the arena. It is those collections that prompted 18 Valley municipalities and one school district, many represented by the six lawmakers, to challenge the law in Commonwealth Court, bring the downtown arena project to a halt.

For now, Browne still has faith that negotiations can settle the lawsuit by municipalities that are challenging the Neighborhood Improvement Zone that helps fund Allentown’s $ 220.0 million dollar arena project.

Changing the law, he said, would not be easy.

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“Yes, House Republicans have for weeks, even months, been asking that changes be made in the statute, but I’m not ready to go there yet,” Browne said. “I’m trying to find a solution, and right now, I still think that it’s at the negotiating table.”

State Representatives Justin Simmons, Ryan Mackenzie, Marcia Hahn, Joe Emerick, Gary Day and Julie Harhat have made overtures to Brown about finding a way to end the stalemate. The drumbeat for Brown to change the law has peaked because the best chance to do it appears to be this month, when the state (of Pennsylvania) is scheduled to pass its annual budget. A companion bill amending the state’s fiscal code, due by June 30, often includes other statutes and changes loaded into the bill by legislative leaders.

Allentown’s 130-acre Neighborhood Improvement Zone was created in the 2009 fiscal code bill, and when it was tweaked last year, the fiscal code was used again. Separate legislation can be also pushed through in June as part of the horse trading that accompanies budget negotiations. Once lawmakers depart for the summer, it could be months before any changes could even be considered. With the budget bill a must-pass piece of legislation, it can be the best vehicle for local legislation.

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But to get a law changed into the fiscal code amendment, Browne would have to get the endorsement of House and Senate Republican leaders. It’s even possible, if the budget vote is close, that he would also need the endorsement of top Democrats in each chamber. And even if he gets support from all of those, Governor Tom Corbett would have to agree to include the change in his budget.

All of that is made even more difficult now that the Neighborhood Improvement Zone has become a public issue. The law, itself, and the changes enacted last year largely flew under the radar. Since Hanover (Northampton County) and Bethlehem townships filed their lawsuit, arguing that is unlawful for Allentown to keep the earned income taxes of township residents who work in the zone to help pay for the arena, 16 other municipalities and one school district have joined the fight. In addition, the Pennsylvania State Association of Townships Supervisors, which represents 1,455 townships, has joined the lawsuit.

“There are alot of moving parts,” Browne said. “Making legislation is not easy.”

Simmons and Harhart said Browne has been approached individually and by a group to change the Neighborhood Improvement Zone law. But both say they have not approached their leaders and have received no commitment of support from outside the Valley.

“We’re moving in a direction that we hope can lead to a legislative solution,” Simmons said.

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That solution would likely inovlve at least two changes. One would eliminate earned income tax collections from people who live outside Allentown. Under the city’s unique taxing zone, all state and local taxes – except real estate taxes – in the zone can be used to help pay for the $ 220.0 million dollar arena complex.

The municipalities sued, arguing that it is unconstitutional for the city to use their income tax collections without their permission. The city has since proposed a deal to return all the EIT colllections, but municipal lawyers have rejected the offer, saing the law must be changed.

A report released last week estimated that $ 2.3 million in EIT is collected each year in the Neighborhood Improvement Zone. This law change would mean that the money is simply returned to the municipalities, as it was every year before the NIZ was created. However, the EIT collections for improvement zone workers who live in the city – amounting to about $ 432,000 a year – could be used for the arena.

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A second issue would seek to change the part of the improvement zone legislation that appears to be written solely for Allentown. In their lawsuit, municipalities argue that making the NIZ district available only to “third-class cities with populations between 106,000 and 107,000 as counted in the 2000 U.S. Census” is a violation of the state’s constitution’s prohibition of special legislation.

Browne says the law passes constitutional muster, but tinkering with those two areas would render the lawsuit moot, thus allowing the city to get the financing it needs to continue the project.

Without a law change, or a settlement with the municipalities, the first hearing for the Commonwealth Court case on the issue isn’t scheduled until September.

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BROADCAST RESPONSE from RADIO FREE ALLENTOWN :

“Another fabulous rah-rah piece, then, from the compliant and dedicated Comrade-columnists over at Pravda, er, ah, The Morning Call, obviously desperate to rally whatever scattered shards of public support that can be scraped together. The Morning Call’s building, coincidentally enough, just so happens to be located in the controversial and (soon-to-be-found?) unconstitutional Neighborhood Improvement Zone — for those who may not be aware of such. Make no mistake, the journalistic integrity and objectivity of the local Fourth Estate here in the People’s Democratic City With No Spending Limits has been on prominent, albeit disgraceful, display all throughout this acrimonious and drawn out struggle to build the transformative, if phenomenally expensive, $ 220.0 million dollar Palace of Sport.

For example, does The Morning Call ever question the wisdom of Chairman Pawlowski’s bulldozer-like and consequential decision to just go forth and dig up an entire square city block in the heart of the downtown area WITHOUT FIRST having made sure all the necessary financial ducks were lined up properly beforehand or was all of City Hall’s attention pre-occupied with effectively seizing the private property of powerless small business owners on Hamilton Street via Eminent Domain?

The Morning Call HAS lamented, in revealing and stark contrast, that it is difficult not only to attract the interest of potential investors but actually sell the financial instruments, themselves, to secure the requisite money for the spectacular Palace of Sport with a scary, if not potential game-changing lawsuit, pending in the Commonwealth Court.”