Lehigh Valley

New details surface on Allentown hockey arena negotiations

ALLENTOWN, Pa. - As Allentown tries to settle a lawsuit holding up its multi-million dollar hockey area, 69 News has learned new details about the deal the city might be offering.

The information comes from a lawyer and a financial advisor involved in the negotiations.

Attorney Marc Feller, with Dilworth Paxson LLP in Philadelphia, and Scott Shearer, with Harrisburg-based PFM Group, said the city is offering even more concessions to get the lawsuit dropped.

The mayor's office says it will not confirm these details.

The lawsuit claims Allentown has no right to use suburban tax money to help pay for the arena project.

The city's Neighborhood Improvement Zone (NIZ) funnels the Earned Income Taxes of workers around the arena site back into the project.

The lawsuit claims the whole zone is unconstitutional. Although originally filed by two Northampton Co. townships, several others have since voted to join.

Mayor Ed Pawlowski, (D-Allentown), has been working for several weeks to work out a settlement to get the project moving again.

The city's original offer was to return all the suburbs' tax money immediately, but it only covered people who currently work in the NIZ. Any future employees' taxes would be kept. Pawlowski has said he hopes to borrow an extra $7 million to $8 million in bonds to pay for it.

Townships that are suing rejected that offer.

Now, according to Feller and Shearer, a new offer would send back EIT money for all future employees for the duration of the NIZ, which is 30 years.

Here's the catch, though. Under the plan, the money would be split between the city and suburbs under a revenue-sharing agreement.

The mayor's office would not confirm these details for 69 News.

Feller said the city is looking at non-tax revenues, like extra leasing and developers' fees, to cover any extra costs of sending EIT money back to the suburbs.

Allentown will present its latest offer to Bethlehem Township Commissioners Wednesday night, but the board will not make a decision until at least its next meeting.

Hanover Township Supervisors met with Allentown's attorney for two hours Tuesday night, but also did not make a decision.

According to others involved in the negotiations, a big sticking point involves the actual law that created the NIZ. Some townships want it changed to remove the EIT provision altogether. But Feller said, in the current environment, going back to the legislature could be a risky move for Allentown.

We need to amend a story that aired Tuesday on 69 News. In that story, we talked to a municipal bond expert who speculated that Allentown taxpayers could be on the hook to pay off arena-related debt if the bond issue to fund the arena were not successfully completed.

However, Feller and Shearer tell 69 News that the structure of the funding for the arena does not place taxpayers at risk.

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