S Whitehall set to vote on NIZ lawsuit as developers weigh legal options

New group in charge of project cancels second meeting

Posted: 4:32 PM EDT Apr 16, 2012   Updated: 6:51 AM EDT Apr 17, 2012
Allentown arena site work

Another one of Allentown's neighbors will decide this week whether to sue the city over its new hockey arena project.

Jon Hammer, manager of South Whitehall Twp., Lehigh Co., said Monday he expects a vote Wednesday night on whether to join a lawsuit challenging the taxing zone that's funding the arena and commercial development around it.

Meantime, the group that just took over the project has canceled its second meeting.

If South Whitehall commissioners join, it would be Allentown's closest neighbor to sue over the arena and would bring the number of suburban municipalities challenging the project's Neighborhood Improvement Zone to eight.

At the same time, a group of major property developers continues to weigh its own legal options. The group met last week and has now formed an ad-hoc committee to look at whether it should join the lawsuit or file its own court challenge.

Lehigh University professor Steve Thode chaired last Thursday's meeting. He said cheap, taxpayer-subsidized rents around the arena could draw tenants away from surrounding areas.

"Building owners are not going to be able to make their mortgage payments, lenders are going to find themselves owning properties that are worth a fraction of the money that they loaned on those buildings," Thode said.

No one in the group wants to kill the NIZ, but they do want changes to the law that created it, Thode said. With a crucial bond sale coming up, and an aggressive construction timeline looming, that's a time-consuming legislative move Allentown Mayor Ed Pawlowski hopes to avoid.

Thode said property owners especially want to shift incentives away from developers who simply build office space to companies who actually bring new jobs downtown.

"There's no bar that has to be met," said Thode. "The subsidies are there whether no new jobs are created or 100,000 new jobs are created."

Lawyers met last week to discuss Pawlowski's proposed settlement of the lawsuit, but some close to the case said it's a non-starter because it's a short-term deal.

The Mayor's office said Monday it had nothing to report on the negotiations.

If the case is not settled, developers have until April 27 to join the lawsuit.

Also Monday, the new group that just last week took over the arena project -- the Allentown Neighborhood Improvement Zone Development Authority, or ANIZDA -- canceled its second meeting, which was set for Tuesday.

With the lawsuit still looming, chairman Sy Traub said the group has nothing to vote on yet.