The city, which endured decades of decline as businesses moved away from the downtown area, is now undergoing an impressive renaissance. Allentown has experienced significant redevelopment, largely driven by the formation of a Neighborhood Improvement Zone (NIZ). Storefronts that were vacant for years are now occupied and businesses are moving back to the city.

The NIZ and Other Legislation

Pennsylvania State Senator Patrick Browne drafted legislation that was enacted in 2009 to create an NIZ to offer tax incentives to developers to encourage revitalization in downtown Allentown and along the city's waterfront. The NIZ covers approximately 128 acres in the city's Riverfront district and promotes revitalization by permitting state and local tax dollars generated by the businesses locating there to be used by developers to offset debt service associated with qualifying development projects. It is estimated that the NIZ has generated over $1 billion in new development. A focal point of the redevelopment has been the construction of the PPL Center, an 8,500-seat hockey arena located in the heart of the city's central business district. The center, which opened in September 2014, is home to the Lehigh Valley Phantoms (the Philadelphia Flyers farm team) and also serves as a venue for concerts and other activities.

Allentown was the only city in Pennsylvania to meet eligibility for the NIZ designation. In 2013, a second law was passed creating a City Revitalization and Improvement Zone (CRIZ) program. Although this program provides less generous tax incentives, its purpose is to encourage revitalization in other cities in the Commonwealth. CRIZ designations have since been awarded to Bethlehem and Lancaster.

The PPL Center complex is one of several major projects developed in downtown Allentown, PA, with state and local tax incentives provided in a state-designated Neighborhood Improvement Zone.

The PPL Center complex is one of several major projects developed in downtown Allentown, PA, with state and local tax incentives provided in a state-designated Neighborhood Improvement Zone. The mixed-use complex includes an 8,500-seat hockey arena and entertainment venue, a 200,000-square-foot office building, several restaurants, and a 170-bed hotel.
Photo Credit for "After" Image: Peter Gourniak

Other Positive Changes in Allentown

This redevelopment has yielded other positive changes in Allentown's central business district and its surrounding neighborhoods. Eight companies have come together to provide $550,000 in annual funding for each of the next six years through the Neighborhood Partnership Program (NPP), a Pennsylvania state tax credit program. The NPP funding will be used for a variety of initiatives, including revitalization of the neighborhoods around the central business district and support for a new public high school geared toward experiential learning and problem solving and developing career pathways. The high school, Building 21 Allentown, which is modeled after Building 21 in Philadelphia, will enroll its first freshman class of 150 students in the fall of 2015.

Allentown's story of resilience is extending beyond its commercial corridors. The city is gaining national recognition for its comprehensive community development efforts. In 2014, US2020, a program geared toward mentorship in science, technology, engineering, and math (STEM), selected Allentown as one of seven communities nationwide to receive a grant that will support the Mentor Allentown coalition. The coalition, which is led by the DaVinci Science Center, strives to strengthen STEM mentoring programs for students in grades K-12 in collaboration with the local business community. Also, late last year, Local Foods, Local Places, a federal initiative that promotes local farmers and small businesses and encourages community access to locally grown foods, selected Allentown as one of 26 communities nationwide to participate in its program.

National Penn Bancshares relocated its corporate headquarters from Boyertown, PA, to Allentown, PA, and became the lead tenant in a new office building that is part of the redevelopment of downtown Allentown.

National Penn Bancshares relocated its corporate headquarters from Boyertown, PA, to Allentown, PA, and became the lead tenant in a new office building that is part of the redevelopment of downtown Allentown. The 11-floor building is almost 300,000 square feet.

Collaborative Leadership Central to Allentown's Revival

The success of Allentown's commercial corridor revitalization is largely attributable to collaborative leadership and the partnerships formed between the government and the private for-profit, nonprofit, and philanthropic sectors. Four community development leaders were invited to share insight on the positive trajectory of Allentown's central business district and the broader impact that this revitalization is having on the surrounding neighborhoods. These leaders also highlighted strategies being implemented to ensure that all residents benefit from the economic growth and have access to new jobs and other opportunities.

What are the effects of Allentown's downtown revitalization on the surrounding neighborhoods?

Private Sector: Don Bernhard, Community Development Director, Downtown Allentown Community Development Initiative (DACDI)a

The success of the NIZ in transforming the central business district of Allentown has quickly called attention to the need for a unified, comprehensive effort to revitalize surrounding neighborhoods. The nonprofit and philanthropic sectors are key parts of this effort.

Perhaps most remarkably, the business sector has quickly rallied to coordinate and enhance the resources it is making available to center city Allentown neighborhoods, such as funding a comprehensive plan for improvement through the Neighborhood Partnership Program.

The DACDI has launched Live Near Your Work PDF  External Link, a program to subsidize downtown employees to purchase center city houses. In addition, leadership and funding are being provided for major education initiatives, such as Building 21. A Pay for Success External Link initiative is well underway and has incredible potential with the very real possibility of delivering on a promise of high-quality early childhood education for every center city child.

Of course, the most immediate impact of the NIZ on the neighborhoods has been a significant increase in employment opportunities.

(a)The DACDI was formed in 2014 by 12 large private-sector employers in Allentown to focus on revitalization efforts in the city. Bernhard is the inaugural director. Prior to this appointment, Bernhard was director of community affairs at PPL Corporation.

Nonprofit Sector: Alan Jennings, Executive Director, Community Action Committee of the Lehigh Valley (CACLV)

Anecdotal reports suggest rents for housing have increased in the immediate "collar" neighborhoods that surround the NIZ, such as Old Allentown and Jordan Heights. Prices for mixed-use buildings on Seventh Street have increased substantially.

The attention around the NIZ has led more people to pay attention to Allentown. There is a consensus that the NIZ's success will be judged partly by whether the wealth gets shared. Surveys of residents indicate a difference in opinion between those who are bullish and those who are cynical and skeptical.

Philanthropic Sector: Ed Meehan, Executive Director, The Dorothy Rider Pool Health Care Trust and The Rider-Pool Foundation

We view the NIZ as transformative, not exclusively for the economic stimulation of downtown, but for community development for the city and region as a whole.

Our strategy is to focus on place-based community development and educational success based on measurement of results in the neighborhoods surrounding the NIZ.

Private-sector leadership invested in the NIZ, as evidenced by the DACDI, is serving as a multifaceted anchor that can support and stimulate jobs and homeownership and facilitate improvements in public education, health care, and human services.

It is still very early in the game, but the trends are positive, and we are very optimistic.

How could Allentown residents most benefit from the NIZ-inspired development taking place?

Private Sector: Don Bernhard, Community Development Director, DACDI

Taken from a broader view, there are more than 1,000 jobs in the PPL Center block alone. Many of these jobs were in the hotel, restaurants, or arena and were filled by neighborhood residents who were assisted by the Allentown Employment and Training Center.

There are almost 3,000 new jobs currently in the NIZ, and there are another 2,000 in the pipeline in additional approved NIZ projects. These numbers include new jobs and office jobs relocated to the NIZ.

In addition to the direct impact of these jobs, the change in center city Allentown has brought an entirely new positive attitude about center city Allentown and has greatly enhanced interest not only in working but also in living downtown. With that interest has come a realization that a comprehensive approach involving not only housing but also education, safety, and infrastructure improvements is necessary to truly revitalize center city neighborhoods.

Government Sector: Sara Hailstone, Community and Economic Development Director, City of Allentown

One of the most rewarding aspects of the city’s revitalization has been the reaction from residents in the neighborhoods surrounding the central business district. The people who live here in Allentown are very proud and excited about the transformation underway. They see new and growing opportunities, and they want to be part of them.

The city is committed to ensuring that Allentown residents benefit from the positive economic changes that are occurring. Our goal has been to break down all the barriers that may prevent residents from realizing these economic benefits. One key example is creating pathways, such as easier access to associate degrees through our community colleges, for neighborhood residents to find gainful employment, public-private partnerships matching workforce needs, and training while providing “hands on” experience in Allentown’s central business district. Furthermore, as the business district continues to improve, there will be a need to extend this positive momentum in other areas, such as neighborhood revitalization, safety, and education.

Nonprofit Sector: Alan Jennings, Executive Director, CACLV

There are several ways the development could benefit residents. For example, growth in the tax base will result in better schools, services, and public safety. In addition, the job creation might finally begin to raise the median income of residents in the neighborhood.

On the other hand, there could very well be people displaced by gentrification. It could become another "tale of two cities."

What workforce development efforts are being made to ensure that residents have job access and opportunity?

Private Sector: Don Bernhard, Community Development Director, DACDI

There is closer alignment than ever before between regional economic development and workforce development. The Lehigh Valley Workforce Investment Board (LVWIB) and the Lehigh Valley Economic Development Corporation (LVEDC) are working closely together on analyzing workforce gaps, particularly those related to clusters of the economy that are growing.

At the city level, workforce development is an integral part of Allentown’s economic development. Allentown Mayor Ed Pawlowski has made jobs for residents a priority and aligned the city’s economic development plans with the region’s workforce plan.

The LVWIB, in partnership with the City of Allentown and Lehigh Carbon Community College, established the Allentown Employment and Training Center in the middle of Allentown’s redevelopment zone.

Government Sector: Sara Hailstone, Community and Economic Development Director, City of Allentown

In collaboration with the city, Allentown Neighborhood Improvement Zone Development Authority, Lehigh Carbon Community College, and the LVWIB opened the Allentown Employment and Training Center so that neighborhood residents can learn about new job opportunities, obtain assistance on résumé development and job search techniques, and gain access to other training and resources. There is also an online job portal where all new job opportunities are posted.

The majority of the new jobs created are in the hospitality sector for positions in a new downtown hotel, the arena, and restaurants. Many neighborhood residents do not have the service-related skills for these roles. Therefore, Lehigh Carbon Community College and Lehigh Career and Technical Institute have developed programs to provide the soft skills needed for various positions within the hospitality and food industries. In addition, we partnered with the Allentown School District to send automated telephone messages to parents to alert them of upcoming job fairs.

Philanthropic Sector: Ed Meehan, Executive Director, The Dorothy Rider Pool Health Care Trust and The Rider-Pool Foundation

While not directly involved in the short-term aspects of job creation, The Rider-Pool Foundation is engaged in initiatives that support education and skill development that will lead to meaningful employment. High school graduation rates in the neighborhoods around the NIZ are 30 percent below that of our more prosperous suburban school districts. That is why we are so actively engaged in the establishment of the new high school, Building 21 Allentown. In six to eight years, we could have a workforce that is prepared to step up to the expanding and meaningful employment opportunities in the NIZ.

What are the major challenges and issues that Allentown faces in light of its downtown redevelopment?

Private Sector: Don Bernhard, Community Development Director, DACDI

Improving center city neighborhoods requires a comprehensive approach and the careful coordination of public and private resources to be certain that the newfound prosperity of the NIZ spreads to residential areas. It also requires patience. Many of these neighborhoods have a history of residents from all economic strata. It will take time to convince people who have economic choices that these neighborhoods are desirable, vibrant, safe, and thriving once again, as the NIZ provides an engine for economic success.

Making the public education system in center city into the asset it once was will take time, the persistent effort and assistance from the private sector, and a change in the equity of the Pennsylvania education funding system.

Government Sector: Sara Hailstone, Community and Economic Development Director, City of Allentown

Our work is not done. We will continue to focus on attracting and retaining businesses in the downtown area.

We will also need to place greater emphasis on key initiatives in different parts of the city. Over the past five years, a significant amount of time and resources have been dedicated to the NIZ, which was critical to its success. In the future, the city will need to focus on other economic development areas, such as plans to create small-scale manufacturing opportunities through the city's reindustrialization strategy.

Nonprofit Sector: Alan Jennings, Executive Director, CACLV

Simply stated, the question is: How do we make it work for everyone?

Philanthropic Sector: Ed Meehan, Executive Director, The Dorothy Rider Pool Health Care Trust and The Rider-Pool Foundation

The biggest challenges will be process challenges. We must change the narrative regarding the success of the downtown area and the enormous opportunity for the entire Lehigh Valley. We must also focus on fostering respectful, clear channels of communication among the array of public, private, and civic players. Including neighborhood residents in authentic and inclusive design and implementation of projects, consistent with the culture, style, and preference of the community, is also critical.

Finally, identifying major indicators of success and working toward those indicators is essential. This process includes real-time quantitative and qualitative data analysis and synthesis, and developing "systems"-level problem-solving capacity.

What "lessons learned" can you share on the use of tax incentives for other smaller cities that want to redevelop their downtowns?

Government Sector: Sara Hailstone, Community and Economic Development Director, City of Allentown

Large-scale revitalization projects such as this require collaboration with a wide range of stakeholders representing both the public and private sectors. It is important to consider who should be engaged at each stage of the project and bring those stakeholders to the table early. It is also important to recognize what you don’t know so that you can bring those new perspectives from the outside.

In addition, it is important to consider the predevelopment time. With the NIZ, we completed an extensive series of studies before construction began, ranging from financial assessments to overviews of parking and traffic patterns. Spending adequate time on this predevelopment work was critical to the long-term success of the project.

Nonprofit Sector: Alan Jennings, Executive Director, CACLV

Pennsylvania rules (related to land use planning, funding and governing public schools, financing infrastructure improvements, and pension reform) are so stacked against cities that the NIZ had to be extremely generous with subsidies. Pennsylvania cannot afford that level of subsidy for every city. Fixing those rules would be a lot cheaper, but not everyone, particularly those outside of the urban areas, would agree to that approach.

Philanthropic Sector: Ed Meehan, Executive Director, The Dorothy Rider Pool Health Care Trust and The Rider-Pool Foundation

It might be early for lessons learned, and it will be important to reevaluate the impact of the NIZ in the coming years. However, early, meaningful engagement of all stakeholders among the community, private, and social sectors is extremely important. You can’t communicate too much with regard to momentum, timeliness, and the collective opportunity to create win-win-win scenarios.

For further information, contact Donald Bernhard at; Sara Hailstone at or visit; Alan Jennings at or visit; and Ed Meehan at or visit

The views expressed here do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.