The Allentown Neighborhood Improvement Zone Development Authority board debated something new at Wednesday’s meeting.
On the agenda was a request from City Center Investment Corp. to transfer ownership of Three City Center at 513 Hamilton St. to Dechomai Asset Trust, a donor advised fund. Profits off the rents from operating expenses will be redistributed by the fund to the charity of its choice with City Center’s consent.
ANIZDA Executive Director Steve Bamford said City Center approached the board within the past week and asked for immediate consideration because of tax purposes in the new year.
Under the NIZ funding agreement, any transfer of ownership must be approved by the ANIZDA board. The NIZ is Allentown’s one-of-a-kind tax subsidy zone.
“This is the first time I think that we have a situation where a piece of property that is in the zone was being transferred out from an original owner to some other entity,” said ANIZDA Board Chair Seymour Traub. “There has been concern expressed. We know the people who are the developers and we have confidence that they’re going to meet the requirements of ANIZDA funding agreements and the bond agreements are going to stay to the fullest extent.”
Future transactions will have to be scrutinized to make sure a new property owner fulfills its NIZ obligations, Traub added.
The board approved the resolution by a 4-1 vote with Ann Bieber as the lone no vote. She had concerns about the speed of the consideration, noting that the board is not responsible for a business’s tax issues.
“What’s the hurry?” Bieber said. “You got this just recently, and you’re certainly doing the best you can, but why are we rushing? I don’t believe we would do that for any other instance that I know of on this board. Everything that has been brought forward to my knowledge has been full and complete.”
City Center will continue to manage the building with Dechomai as a passive owner. The 166,000-square-foot, mixed-use structure near city hall has Lehigh Valley Health Network, Morgan Stanley and the Norris McLaughlin & Marcus law firm as its main tenants.
“The intent is for the building to continue to operate exactly the way it’s operating,” said ANIZDA solicitor Jerome Frank, who gave a lengthy explanation of the proposal. “The tax revenues to be generated from the tenants are to be maintained exactly the way they have been up to now.”
He added that the profits off the rents from operating expenses will be redistributed by the fund to the charity of its choice with City Center’s consent.
Year-end financials
For the second year in a row, ANIZDA will end the year with surplus tax money to return to state and city coffers.
The board voted to split $2.6 million — $2.48 million to the state and $117,000 to Allentown. The revenue was on top of $22 million that was returned in the spring.
That $22 million figure represents the amount of state tax revenue downtown Allentown was generating before the creation of the NIZ. In other words, the governments received $2.6 million more tax dollars from downtown in 2022 than it did in 2011.
For fiscal year 2021, ANIZDA had $7.1 million in surplus tax revenue after no year-end excess in 2020.
In April, ANIZDA reported that it generated $91.4 million in state and local tax revenue in 2022, a drop of about 3% from the record $94.5 million in 2021.
Looking ahead, ANIZDA’s estimated operating expenses for 2024 is anticipated to be $1.38 million with a projected surplus of $341,043.
Bamford said anticipated estimated revenue from PPL Center will be $346,667, a drop of $100,000 from the previous year because rent will be going down in October. Fees from developers is expected to be more than $1 million, an increase.
Bamford said it’s anticipated to be more because of fees from bond issues for projects including the Neuweiler Lofts and Archer Music Hall.
The preliminary capital additions budget for 2024 is $ 674,105 that is deposited in a Pennsylvania Local Government Investment Trust fund. Those funds will be used for improvements to the parking garages attached to PPL Center.
“We are anticipating spending that full amount,” Bamford said. “At this point, with the age of the parking structures, they could use some attention in terms of repairs to the concrete surfaces, repairing cracks, those kinds of things.”
Morning 첥Ƶ reporter Evan Jones can be reached at ejones@mcall.com.
