Lehigh Valley

Allentown files countersuit over hockey arena

Pawlowski, Allentown file lawsuit

ALLENTOWN, Pa. - Allentown is fighting back. After being slapped with two lawsuits threatening to stop the downtown hockey arena project, the city on Monday filed a massive counter-suit of its own.

It demands $50 million in damages from developer Abe Atiyeh, but does not go after the suburbs who are also suing over how the arena is being financed.

That could be because Mayor Ed Pawlowski may be close to a settlement with them.

"I think it's comical," said Atiyeh, in response to the suit.

The lawsuit claims Atiyeh's legal challenge to the hockey arena is frivolous and could delay the whole arena project up to a year, costing the city millions.

"I've never seen more bull in my life from a lawsuit," said Atiyeh.

The suit also reveals new details about the project.

According to court documents, the arena is now expected to cost $174 million dollars -- $16 million more than figures the city has been using.

Also, as rumored, it will be built by Alvin Butz Construction, which plans to expand its headquarters across the street.

In all, according to the lawsuit, Allentown plans to borrow $220 million for the project.

The lawsuit says the city had planned to sell bonds to raise that money by May 1, but the sale is now indefinitely on hold.

The suit only goes after Atiyeh though, and not the nearly 10 suburbs who have lined up to sue over how the arena is paid for. That suit was filed weeks before Atiyeh's.

"Why didn't they sue the municipalities?"asked Atiyeh. "Why aren't they mentioned here?"

It could be because Pawlowski is negotiating a possible legal settlement with the suburbs, one that could be accepted as early as Tuesday night.

The mayor declined an interview request, but issued a written statement saying, "While the City much prefers to resolve issues amicably, it will take aggressive action to challenge any effort that jeopardizes the arena development project and its positive impact on the City and the region."

Atiyeh said he believes Pawlowski is using him as a scapegoat to force the suburbs to settle.

"It could end up being a pit in the ground," he said of the arena. "It could happen, and somebody's going to have to pay the consequences."

If intimidation was the goal, townships suing the city said it will backfire.

"If it is, that won't work. They know that," said John Diacogiannis, chairman of the Hanover Twp. (Northampton Co.) Board of Supervisors, which initiated the legal action against the arena. "I don't think it is."

Diacogiannis said Monday night that he is waiting on a counter offer from the city of Allentown.

He said supervisors asked for changes to Pawlowski's initial settlement, which involves creating an approximately $8 million reserve fund to send suburbs' tax money back immediately.

The original deal was considered by many to be a non-starter because it only affected current employees who work near the arena site, not future ones. Neither Diacogiannis nor Pawlowski would disclose terms of the new offer.

Diacogiannis said if supervisors get a new offer in time, they could discuss it in executive session Tuesday night, and possibly vote whether to drop their lawsuit. Bethlehem Twp. would also have to approve the deal.

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