The announcement was for two hundred upscale apartments at 7th and Linden Streets in Allentown. If ever there were two phrases that don't go together, it is
upscale and
7th and Linden. The apartments are to attract new residents into downtown, not the existing demographic. The existing demographic would be presumedly priced out, at $1,200 monthly rent. It wasn't that many years ago that The Morning Call prohibited property managers from using words such as
luxury and
executive in their advertising. We were told then that such adjectives were exclusionary, and promoted discrimination. Reilly, now tells us
"This is the next piece in transforming downtown Allentown into a place where people really can live, work and play." I suppose that those who currently live, work and play there aren't really people, at least not the upscale kind. I'm not an opponent of gentrification, or what the young urbanists call
mixed income neighborhoods. I know that Reilly could rent two of these units immediately. I know that over the course of a year that he could rent twenty such units, but two hundred? Until this Neighborhood Improvement Zone(NIZ) was created for Allentown's
transformation, public housing was taxpayers subsidizing the tenant, it's now taxpayers subsidizing the landlord.
above reprinted from October of 2012
ADDENDUM FEBRUARY 27, 2024:Students of this blog know that I have questioned the occupancy rates of the Strata Apartments(my name for all of Reilly's residential buildings). We now have built over 1000 units for Mr. Reilly. Jarrett Coleman's initiative to scrutinize the NIZ data has progressed to the point that a committee was formed in the state house. I believe that with Pat Browne now as Revenue Czar, getting true figures may be like pulling teeth. In my dogged opinion, the mixing of NIZ's commercial only authorization, and his new rental apartments is the biggest offense against the taxpayers. Who scrutinizes what proportion of the buildings are eligible for our tax dollars, the local NIZ board? Who oversees them???
Within the first 5 years it was evident to even private observers like me, the formula behind the whole NIZ will only lead to a growing deficit laid at the feet of all Pennsylvania taxpayers.
ReplyDeleteThe new business arrivals were all from corporations already based in other parts of Pennsylvania. Same for the employees they brought in. No new tax dollars generated! The apartment units were heavily leased in group to friends. Those remained vacant. There was a revolving door of restaurants and other commercial people, clearly demonstrating no one could make any money in that area.
One significant problem we have is recognizing these same downtown blocks were ALREADY bringing in a defined amount of tax dollars. . . without the NIZ construction loan obligation.
For the first five, or more, years the NIZ was creating NO, or very little, additional dollars into the equation. The baseline net tax revenue from that same footprint was now set to zero.
The new downtown Arena remains comparatively unused most days of the year. If attendees do visit, they quickly scoot out of the area, especially weeknights.
The Allentown NIZ created a money pit for Pennsylvania taxpayers from Day One, and that hole keeps getting deeper.
It’s long past time to ‘cut our losses’ and put this failed experiment to bed, and forever.
The NIZ taxpayer giveaway was never authorized for apartments. It is the reason that vacant storefronts (or vastly under-rented) storefronts are on the first floor of these Strata buildings. I question the pro-ration formula being muddled for Reilly's benefit.
DeleteThis is a basic issue of government transparency.
ReplyDeleteThe real issue here is not only that Pat Browne, now an appointed bureaucrat, continues to hide information. It’s that our CURRENT ELECTED representatives other than Coleman have fought this basic oversight tooth and nail. I’m talking about you Nick Miller, Josh Siegel, Mike Schlossburg and Peter Schweyer.
Every election season, these slugs crawl out of the darkness to tell us how much they care and are working for US. Instead, they’ve fought to hide the truth from us and protect elites like Reilly.
Were it not for Coleman’s efforts, this never would have happened.
I think that taxpayers should be grateful for Coleman's efforts. However, I started blowing the whistle long before Coleman even thought about running for office.
DeleteJarrod is a young guy compared to us and not even from Allentown. He challenged Pat Browne for a wide variety of reason with the NIZ being low on the list. Once in office it didn't take him long to see something was very wrong here. Instead of doing nothing, the safest route for new state officials he acted. Bravo! Imagine a government that works for the people! Jarrod, unlike every other elected official from the city apparently believes it should. The others are following orders and part of the problem.
DeleteOnce again, I call out the failure of our local news media, particularly the Morning Call, for failing to safeguard the public interest in refusing to dissect this unusual arrangement from the very beginning. That would have been quite simple. Had it done so, better assurances could have been built in to boost the plan’s chances for viability.
DeleteIn the beginning, we already knew the state coffers were taking in between 25-30 million dollars of tax revenue per year from the existing real estate. Unless, and until, those blocks started bring in revenue per year BEYOND that starting number, the entire scheme would not be working as a revenue generator. Forgo just one year, and the amount needed to break even jumps to nearly 60 million dollars.
Just moving one new tenant into our NIZ from some other Pennsylvania address means that previous locale is not contributing the state revenue it once did.
The other blunder not acknowledged was in not giving some sort of equity interest to the state in the finished product. In this way, upon eventual sale of any structure, taxpayers MIGHT actually realize some capital gain.
MM - That’s fine, but my observations were solely about those in office.
DeleteWhat makes Coleman’s efforts even more impressive, at least to me, is that he isn’t a career politician. He’s a first term state senator who I don’t believe had any previous ties to other politicians in Harrisburg.
Yet he fought hard for the people he’s elected to represent and somehow managed to get this legislation in place.
Imagine if all our representatives worked for us as hard as Coleman does!
But that also makes him dangerous. I can hardly wait to see the money and effort the democrats (and Reilly) will put into making sure he is replaced by a party hack rubber-stamp when Coleman’s up for re-election.
The Morning Call parcel, although on the other side of Linden Street from the rest of the NIZ map, was included in the zone. Consequently they benefitted from selling the property, and Reilly now owns the parcel. Furthermore, the paper acted as a advertising agency for each new building and restaurant opened by Reilly. Two years ago they finally tried to get revenue numbers from the NIZ, but were stymied by another obscure Pat Browne maneuver supported by the court.
DeleteThis new oversight is long overdue and it took the political defeat of the very powerful Senator Pat Browne and the political courage of his replacement Jarrod Coleman to get this done. There will be entrenched political opposition to keep the secrets, secret and one wonders if Shapiro's choice to bring NIZ creator and protector, Pat Browne in as his Treasury Secretary isn't part of that plan.
ReplyDeleteAll the while, these same public officials are planning to use the same tactic on a massive scale with the State Hospital land.
DeleteWhere have all other State Legislators and news media been throughout this whole thing?
These all are more excellent comments then I've seen in a long time. Very impressive.
ReplyDeleteThe NIZ has given us three "Allentowns". All of them are separate and largely non-interacting with each other it seems. The original one is the city we grew up with is now everything within the city limits, but outside the NIZ area. Its aged, looks more run down, is poorer than it was and in many places, overcrowded with residential homes turned into triple-decker apartments. It is where its really not safe to go out at night, as the noise of gunfire has replaced cars that backfire. The police are underfunded but can buy 'gunshot detectors' to tell them where the gunfire came from, after the shooting has occurred.
ReplyDeletePeople clog the streets and can't find places to park along the, as they were never designed for the number of people who live on the streets, and attend public schools that have become both expensive to operate, but are politically DEI correct. No matter how actually effective they are in educating their students. And, unfortunately people now want to leave, rather than live in.
The second Allentown really legally isn't Allentown. Its the townships surrounding Allentown that contain the former middle class residents of Allentown that have moved out of the city for various reasons. Greenspace, taxes, away from the crime, and I'm sure other reasons. The reason it isn't legally Allentown is that the city can't expand its jurisdiction to incorporate these areas; as the revenue to collect as tax revenue is something Mayor Turek would love to have, and that is something the residents of these areas are eternally grateful for. Especially those with school-age children who attend township schools like the ones their parents used to attend in Allentown. So it is kind of like the old Allentown, but it isn't either.
Then there is the NIZ Allentown, the Potemkin Village created by Sen Browne, Mr Reilley and some other minor players, but it's mostly Reilly who is engineering it. Its not really aimed at the people outside the NIZ, it's more to bring in the upwardly mobile, high discretionary income folks who have post-secondary educations. Those who don't shop at Target, but shop as smaller, boutiques and bistros. Who don't own cars, or perhaps electric scooters or EVs that plug in. There is very little of the former retail sector in the NIZ, as the major stores are now all gone, moved out to Whitehall Township over the decades, and largely replaced by apartment blocks with first floors of now mostly empty storefronts. Awaiting tenants that Mr Reilly approves of to rent his building funded by the taxpayers. There aren't really any supermarkets or gas stations. But there are plenty of restaurants, and cafe's, exercise rooms, and soon to be a music hall. Two nice hotels for business guests, with a third one under construction. However, the rates aren't really affordable for families. There is a very nice arena complex which according to former Mayor Pawlowski, was to be the growth pole for the downtown area. Well its empty mostly when the hockey team isn't playing there. The new Music Hall under construction, well If it has more attendance than the PPL Center, I'll be surprised, as the Allentown Parking Authority controls the parking and demands to be paid in order to park on the streets or its parking decks. The only real question is what happens to this village after all the tax money that built it goes away?
Good analysis, 9:06!
ReplyDeleteYour question about what happens later is well worth addressing. Does anyone even know the answer? Morning Call . . . anyone?
At some point, the buildings WILL be sold and used for some other purpose. I’ll assume the person listed as SELLER will be Mr. Reilly. Perhaps he can sell some of it back to the State (us) for agency office space, low income housing, etc.
What happens when any of the buildings need significant, high-dollar repairs, like a new roof, or HVAC? What happens if the hockey team moves to another city? How can the Arena be used during daylight hours during the week, etc., etc.
Finally, how can expanding the designated NIZ arena even further help make the initial plan a success? Or, will it just compete with downtown?
Is there a ‘ sunset date ‘ for this plan, or does it go on forever?
I'd venture to say that nobody opining on the NIZ knows more about it than me...I have been on its case from day 1. Although the debt service is met with diverted state taxes, the buildings are privately owned, almost exclusively by Reilly. The enabling legislation was for 30 years. Considering he got the buildings for free, affording a new roof after the designated time should be no hardship for him. Although the designation can be traded outside the map, parcel for parcel, the map is limited to the total of 54 acres. I do not foresee the NIZ being expanded or continued beyond it current authorization. Browne pushed it through with the state budget at the time. Very few of our legislators actually read the document.
DeleteMichael, these are all great questions and comments!!! As was commented on the buildings needing major repairs in the future. I can imagine the window seals on these glass towers needing replacement… sooner than later.
ReplyDeleteJust a Dumb Dutchman
Just another question. Is the Arena building handled in a separate way. I imagine Reilly doesn’t hold title to that place. A new roof there could cost $300-400 thousand. Where does that money come from? In the end, of course, the taxpayer.
DeleteEven the arena has some portion of Reilly ownership. While the "arena" owns the first floor of the front with their entranceways, the upper floors are owned and rented by Reilly to LVHN.
DeleteWhen will they accommodate lower income people who paid taxes in this city their whole life and can't afford to live here anymore because their rents are outrageous. No one in this town gives a crap about the people who struggle to pay bills on social security. Guess all the old timers have to move else where.
ReplyDeleteI'm so old I remember when Bill Heydt proposed building a hockey arena on the sight of the then recently closed Hess's. I believe he even lined up a semi-pro hockey team and private financing. If this project would have been allowed to move forward the downtown would have been a far better place than it is today and the historic building would still be standing.
ReplyDeleteScott, no disrespect intended, but Heydt had no better friend or bigger fan than you. He succeeded in having Hess's demolished and lining up a team, but not in securing the financing. Consequently, the former Hess's became a hole at 9th and Hamilton for three years, until which time the Plaza was built to accommodate PPL expansion into the energy marketplace.
DeleteI remember when eminent domain took away the businesses that actually had Downtown Allentown with a decent tax flow and we Creatives were able to create and bring in customers and visitors from inside and outside the Lehigh Valley by using our ingenuity and know how; I remember running for city council on the platform of Tourism and seeing people smile and shake or scratch their head; and I remember people getting upset when I stated Downtown Allentown was an overpriced movie set with alot of style but no substance. They said it would take 5 years for us to see the effects and that was over 2 billion dollars and 15 years ago.
ReplyDeleteHeydt had financing, ACIDA pulled the project because of pressure from PPL. Heydt was the only one to recognize the Hess’s structure needed to be raised as it was unusable to any future potential development, despite immense pressure to keep the building.
ReplyDeleteIf you are who I think, you would have been an asset on council. Much of the routing of former merchants and their customer base was classist at best, and racist at worse.
ReplyDeleteNGOs are coming to Allentown - Perhaps one building can be dedicated to this purpose. Seems illegals are showing up in the most unlikely places. They bring a stipend for rent and living expenses—guaranteed income for the fabulous folks of one city center and the Promised Neighborhood.
ReplyDeleteUnlike most investors, CityCenterRE does not need the revenue flow, his debt service is being met by the diverted state taxes. It is for that reason that he chooses to leave the units empty, rather than endure the upkeep caused by more problematic tenants.
DeleteI sent this to Senator Coleman immediately upon reading about investigation of NIZ status in Allentown:
ReplyDeleteHello Senator Coleman,
I am a resident of Allentown and just read of the Legislative Budget and Finance Comittee to investigate the economic impact of NIZ. Thank you for advocating in this direction. From my personal experience I doubt the local positive economic impact.
There are an awful lot of empty retail spaces on the artswalk. I went to The Market monday for lunch and had to beg to use their restroom because I didn't yet have a purchase receipt with a code. My friend Sally at Garden Gate Health Food store on 9th near Hamilton has seen NO economic benefit from the NIZ. There is still a lot of empty retail space all along Hamilton. Frankly 7th street is more bustling.
All these incomprehensible tax loopholes for the NIZ and then the mayor wants to hit us regular people up for a tax increase during last budget. No thank you very much.
Downtown Bethlehem and Easton are so much better. My measurement is primarily empty store fronts. Deadness. Stuff thats not open on the weekend. There is a new coffee shop at the bus stop thats not open on the weekends. How weird is that?
Allentown seems stuck in some weird transition phase or maybe I'm just being impatient. Or maybe the benefits are primarily for real estate developers. I have only lived here for nine years. Where is our organic farmers market with fresh grown mushrooms? Where is our vibrancy?
I try to support the downtown efforts. Many members of my community refuse to because they feel it is fundamentally based in elitism. I’m sure the real estate developers have and are benefiting but I am not interested in paying the bill for that as a taxpayer. The NIZ has been very successful in creating a whole lot of animosity in our city that’s for sure.
Thank you.