A view of the skyline in Allentown, Pa. (Getty Images)
A showdown between Pennsylvania Revenue Secretary Pat Browne and the state senator who pushed Browne out of his former Senate seat two years ago appears to be set for the legislature’s return to session next week.
Commonwealth Court on Tuesday refused requests by Browne and Senate Democrats to block a subpoena requiring Browne to testify in the Senate about Allentown’s one-of-a-kind economic development zone that he created as a lawmaker representing the district.
Sen. Jarrett Coleman (R-Lehigh) defeated Browne in a 2022 primary challenge and has since pushed for a legislative audit of Allentown’s Neighborhood Improvement Zone (NIZ), where developers can use state tax revenue to pay for capital improvements to their properties.
Coleman told the Capital-Star on Wednesday that the goal of the audit by the joint Legislative Budget and Finance Committee would allow the Senate to determine whether the NIZ brings a net economic benefit to the Lehigh Valley region or it has “poached” businesses from surrounding communities for Allentown’s benefit.
“When the subsidies disappear and the private developers are no longer able to use the subsidies to pay their debt service … will Allentown be able to ride off into the sunset of a prosperous future … or will Allentown become a void,” Coleman said. He added that assessing the program’s impact is essential when it diverts hundreds of millions of dollars of state tax revenue in a state that could be used for other programs.
“We want to be sure that the Allentown Neighborhood Improvement Zone has been a tool to fuel economic growth and not just to subsidize private real estate development,” Coleman said.
The Revenue Department filed a lawsuit Oct. 7 to block enforcement of the July subpoena issued by the Senate Intergovernmental Operations Committee seeking more detailed information about the NIZ. The Senate responded Oct. 8 by adopting a resolution instructing its sergeant-at-arms to bring Browne to the upper chamber to be declared in contempt and jailed in the Dauphin County Prison unless he provides the data.
In brief orders published late Tuesday, the Commonwealth Court rejected efforts to block the subpoena that said the case wasn’t ready for it to intervene because “there had been no confrontation.”
Senate Minority Leader Jay Costa (D-Allegheny) said in a statement Wednesday that he was disappointed with the court’s decision, which he believes is incorrect, and promised to “renew our efforts to have this subpoena thrown out on the merits” if the Senate attempts to hold Browne in contempt. A spokesperson for Browne said the Revenue Department had nothing to add beyond its court filings.
Created through a series of legislative acts starting in 2009, the NIZ allows developers to harness most of the state tax revenue generated by businesses in their properties to cover the interest on loans. According to the authority that oversees use of the tax money, the program has spurred more than $1 billion in new development and redevelopment projects in the 128-acre zone centered on the city’s central business district and Lehigh River waterfront.
But Coleman said he and others in the Lehigh Valley have questions about the program’s impacts and want to see detailed data about the taxes that businesses in the zone report to the Revenue Department. Specifically, Coleman said he wants to know more about taxes on liquor, malt beverages and tobacco sales in the zone.
“The big glaring question is, is Allentown being built on the backs of disease and addiction?” Coleman said.
The state’s cigarette tax was an early driver of development in the NIZ including the 10,000-seat arena that houses the Lehigh Valley Phantoms, a minor league hockey affiliate of the Philadelphia Flyers. City Center Development, the beneficiary of roughly one-third of all state revenue invested in the zone, purchased a tobacco wholesaler and structured the company’s sales to allow the NIZ to capture the cigarette tax revenue it generates.
Dean Browning, a Lehigh Valley business executive who has made unsuccessful runs as a Republican for Congress and state Senate, said there is concern throughout the Lehigh Valley that the NIZ has created winners and losers. As Allentown attracts companies to relocate to the zone, the surrounding townships lose tax revenue and support for ancillary businesses.
And according to the Allentown Neighborhood Improvement Zone Development Authority, roughly two-thirds of the investment in the zone has gone to one company, City Center Development Corp. City Center owners J.B. Reilly and Joe Topper were contributors via a lobbying firm to Browne’s unsuccessful 2022 re-election campaign.
“To me, if you are going to bestow that benefit on one individual or one set of individuals you want to be sure that there is a net benefit to the region or not,” Browning said.
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