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Cascade: No. 88, Summer 2015

Deep Tax Incentives Fuel $1 Billion in New Development in Allentown, PA: Four Perspectives*

Walking down one of Allentown's main commercial corridors, Hamilton Street, is much different today than it was at this time last year. 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 complex includes an 8,500-seat hockey arena and entertainment venue, a 200,000-square-foot office building, and a 170-bed hotel.  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 External Link , 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 External Link , 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 External Link External Link , 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. The 11-floor building is almost 300,000 square feet.    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?

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

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

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

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

For further information, contact Donald Bernhard at dmbernhard2@gmail.com Email Link ;
Sara Hailstone at sara.hailstone@allentownpa.org Email Link or visit www.allentownpa.gov/ Neighborhood-Improvement-Zone External Link ; Alan Jennings at ajennings@caclv.org Email Link or visit www.caclv.org External Link ; and Ed Meehan at edward.meehan@pooltrust.org Email Link or visit www.pooltrust.org External Link.

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