Oct 6, 2016

Allentown's NIZ, When Free Isn't Cheap Enough


Another business, paying minimum rent, bit the dust in Allentown's NIZ. Others, like Moravian Bookstore, are probably being paid to stay there. Pawlowski, The Morning Call, and a few apologists hoping for a crumb or two, keep saying that the sky looks bright, when in truth it has already fallen. The city, acting like a cannibal, would rather sacrifice Symphony Hall than say no to J.B. Reilly's subsidized real estate scheme. They keep hoping that perhaps he's right, in that a few more millennials will turn the tide. They don't understand that with the subsidizes there is not a normal relationship between demand and his new construction.  This boutique legislation, essentially crafted for him, allows him to attach ever expanding state taxes to his debt service, and nobody is counting those chickens. If and when the chicken count gets low, Pat Browne simply adds another amendment, finding yet another revenue source.

15 comments:

Dave said...

As long as the river of money flows into the NIZ, Reilly will keep playing musical chairs keeping the storefronts in it occupied.

After all, it's not his money and the sight of empty storefronts in this "success" goes against the grain, and might actually cause someone to notice and derail the money train.

Dave said...

What is unnatural about all of this is that the landlord in the NIZ selects the pennants they want. It's not that there are "for rent" signs in the window that any private entrepreneur can sign a lease, move in, and conduct business.

Scott Armstrong said...

Someone please tell me why anyone should go down there? It's expensive to park, expensive to eat, and if you don't like cold architectural interiors and exteriors you are out of luck. Saw one hockey game, sorry not a fan, never was will never be. If you are then by all means go for it and enjoy. I will be out enjoying a location that works for me.

Jamie Kelton said...

These subsidies are apparently only for businesses, and not residents in the NIZ. There is an extensive article in the Morning Call this morning with regards to the Strata Flats apartments, the existing, the under construction and the ones to be built on the Symphany Hall parking lot.

The article boasts that rentals in Strata II, or "Strata Symphony" as I suppose it will be called will be close to $2,000 a month for a 2 bedroom, presumably two floor townhouse-type apartment. That might work in Center City Philadelphia, where I lived after college, but it won't fly in Allentown. Then they interview a lawyer who loves the Strata Apartments who says he can walk to work, presumably Lehigh County Courthouse. We'll see if he does that when it's drizzling and 35 degrees outside.

But then, phantom renters for apartments paying phantom rents must be economically viable. With the cheerleaders saying that there will be thousands of new, well-paying jobs, presumably high-tech in the NIZ. Given our tax laws in Pennsylvania, high-tech entrepreneurs go to places like Texas or Tennessee where the business climate is much better with low taxes, lower costs of living, and an ambiance of a real city or a nice area to live.

Having a new bar called "99 Bottles" doesn't attract me to go to Hamilton Street, but then, I'm not a millennial that wastes my money drinking it away or giving it to a landlord for rent, or leasing a BMW 7 for $1,000/month for 36 months with mileage caps. Uuuugh those fools need to learn some serious money management if they don't like living paycheck to paycheck all the time with nothing to show for it. And the complaints about Reilly not building any "affordable" housing is a laugh. There is plenty on the north side of Linden Street.

Ok I've rambled enough.. I don't know why I read those stupid articles in the Morning Call...

michael molovinsky said...

jamie@10:12, the subsidizes are only for the property owner, who can offer his business tenant reduced rent because of them. But WHO is checking on WHAT? we're in an era when wells fargo itself creates bogus accounts using our identity. i would not be surprised if somehow the residential tenant's state income taxes are somehow being used for the debt service. that would explain the large number of empty apartments supposedly rented by corporations in strata 1.

doug_b said...

As a long time ex-Allentownian, I can only form opinions from afar. To me it seems the NIZ is based on the adage: Build it, and they will come. Like Henry Ford.

Pennsylvania bleeding jobs, population, prestige, money in it's coffers, hopes to resuscitate the third largest city by pumping money. This pumping has generated graft / greed / kleptocracy. PA behaving like a communist country, where 'they' will dictate / design the economy, I say good luck. Does A-Town have a 7 year plan?

PA can't straighten out the ghettos in Philadelphia or Pittsburgh. Building 6? blocks of new buildings isn't going to solve the ill's of A-town. While I disagree with BLM, I saw a video that one of the protesters (rioters?) said: Charleston has all these gleaming new buildings, but we have sh*t. I understood what he was saying.

It seems that the grand redesign revolves around office buildings / apartments / restaurants / entertainment. Once this is in place, A-town will be transformed!

Monkey Momma said...

I liked Crust. My husband and kids and I ate there quite a bit. The pizza was really good, and so were the sandwiches and salad. I knew for a while they were going to close, though. When they weren't open for arena events we attended, we kinda figured it's days were numbered. I am sad to see it go, to be honest.

99 bottles sounds like it's exactly the same restaurant, with a different name. Crust had a lot of (GOOD) beers. And, coal fired pizza, which is being touted as the main menu item at 99 bottles. Isn't that what Crust offered? THIS IS THE SAME RESTAURANT WITH A DIFFERENT NAME. Same management, too. Do they really think this will change the demand for the product??

Nobody is checking on the legality of any of these shenanigans. Why would anyone do that? Look how long it's taking the FBI to proceed with a case that already has 6 guilty pleas entered. There is no incentive, whatsoever, to enforce the law in Allentown. None. Zero. If City Center were to go under, the entire city center would implode, and out of the dust would emerge the same businesses that were there before the threats of eminent domain began. We've already seen the return of the pharmacy...

Monkey Momma said...

Doug B reminds me that these "gleaming new buildings" will be this city's future ghettos. Just watch.

George Ruth said...

I was aware that JB Reilly was the---you should pardon the expression---'phanton' owner of some of the new eateries down in the NIZ, but I didn't know that the Phantoms' owners, the Brooks Brothers, owned Crust. Another example that the NIZ is nothing more than an incesuous rich-get-richer scheme. I wonder what the game board will look like the next time the Chamber puts out an "Allentown-opoly" game. You can land on Reillyville, Brooksville and taxpayerville. I wonder who's photo will be in the 'Go To Jail' box.

Jeffrey Anthony said...

If you need other people's tax dollars to undertake development of any kind, then you don't have a viable business model.

Now, if we could somehow (magically) make Allentown a "sanctuary city" for net taxpayers and allow *only* net taxpayers to live here, Allentown would quickly find itself with one of the fastest growing municipal economies in America.

But, no, apparently the only acceptable options are ones that won't work.

Geoff said...

There really isn't much wrong with a municipality spending money to set the stage for economic development--it's just that Allentown's is a strategy for the world of 40 years ago.

1. Depending on "office workers" in this economy is crazy. Every business out there is trying to get rid of back office help. Allentown could try to get the outsourcing companies, but that doesn't seem to be in the cards.

2. Retail is a losing proposition these days. Communities of all kinds, even wealthy ones, are struggling to keep stores in retail spaces and Allentown is no different. This is going to be a huge change for all municipalities that depend on retail to pay some taxes.

Of course, our forward-thinking region opts to put warehouses on farmland so internet businesses can clog up our roads but not pay sales taxes in many cases. Makes perfect sense.

michael molovinsky said...

geoff@2:48, the morning call's articles on reillyville, by matt assad, are sickening by any standard, or lack there-of. worst yet, he keeps writing about retail in the "revitalized" downtown. one can make a claim for offices and restaurants, but retail?

Geoff said...

Allentown isn't any different in this respect from lots of towns--shopping habits are undergoing a rapid change and this is catching municipalities flatfooted.

Allentown is different in that it is spending a lot of money trying to graft first floor retail onto a world that has largely moved away from it. We're years away from a political consensus on how to pay for services in a world that doesn't pay taxes in the old way.

One option is that Allentown could work with what it has--an interesting range of ethnic restaurants (like South Bethlehem) that has the authenticity that people seem to like. A range of lower-cost, experimental restaurants like Easton has fostered would have a better chance of working than an astroturf restaurant like Shula's Steakhouse.

michael molovinsky said...

geoff@4:01, as i noted previously, the new residential strata's must have a commercial component, or storefronts, to comply with the stated NIZ debt service guidelines. i have doubts about how those designations are prorated, and who, if anybody, checks such prorations.

Geoff said...

Understood--my point is more that when you look at the strands of the strategy, it is difficult to understand what the hoped for outcome it, except for "different."

If Allentown is the next Brooklyn (okay, an overshot)...then probably a strategy tying in some kind of creative industry along with innovative restaurants at the mid- to upper-mid price range might have worked better, especially if Allentown could have marketed the long-standing institutions (Zandy's, Yoccos, etc.) as part of the attraction.

Allentown is unlikely to attract another major corporate headquarters in the near future (i.e. Talen, etc.)--the kind of businesses that keep a place like Shula's going. Yet the elements of what the city (and the board) is trying to do seem completely at odds with what is actually happening.