A possible deal is in the works to end a lawsuit over Allentown's new hockey arena, according to Mayor Ed Pawlowski.
The suit threatens to delay the massive $158 million project, designed to revitalize Allentown's center city.
Two nearby townships are suing because the city is redirecting some of their income tax dollars toward the development. Several other suburban municipalities have also voted to join the lawsuit.
"We're trying to work out a scenario right now, and we hopefully will be able to present to them in the next week or two, where we won't keep their revenues," Pawlowski said in a phone interview Monday.
Under the new proposal, Pawlowski said the city would not keep any suburban tax dollars. Employees who work near the arena would have their income taxes sent back to their home communities, just as they were before.
Pawlowski said the city would replace the money with other funding sources, including parking revenue, but said further details are still being developed.
"We're still working that out, okay, and I'm not going to tell you now that we've worked out all the details for sure," Pawlowski said.
The city has good reason to compromise. The lawsuit has threatened to delay Pawlowski's centerpiece project, designed to revitalize downtown, just as the city is about to sell bonds to pay for it.
The arena will host the Philadelphia Flyers' top minor league hockey team, as well as concerts and conventions.
A seven-story office complex will also house a new Lehigh Valley Health Network sports medicine facility, expected to generate hundreds of new jobs.
Developer J.B. Reilly has also committed to building three office complexes and a high-end hotel in the area.
But as developers line up, so too are Allentown's neighbors, complaining that their money is being used to help pay for the project.
"We've been stonewalled, pretty much," said Rosemarie Nonnemacher, Macungie's Earned Income Tax collector.
All along, the city has insisted the suburban municipalities would get their money back as soon as the arena zone starts generating its own tax dollars, although it could take nine months or more. But just how much tax money we're talking about is still in the air.
"We've gotten a lot of, 'Well, we don't have this information at this time,'" said Nonnemacher.
In February, the city's finance director estimated it was half a million dollars total, but Nonnemacher and others think it's a much bigger amount.
"I think a million is super conservative," she said. "I wouldn't doubt if it's $2 million."
The two townships that filed the lawsuit, Hanover Twp. (Northampton Co.) and Bethlehem Twp., declined to comment Monday. Their attorney did not return a call for comment.
Pawlowski said he hopes to have a finalized deal ready to present to them in the next two weeks. If they don't accept, he said the city is prepared to counter-sue for the cost of any project delays.