The Allentown Neighborhood Improvement Zone saw a modest increase in state and local tax revenue in 2024, but it was still a record.
The Allentown Neighborhood Improvement Zone Development Authority said Wednesday that businesses in the city’s one-of-a-kind tax subsidy zone generated $103.5 million in tax revenue last year, about a .6% increase from the $102.9 million generated in 2023.
Executive Director Steve Bamford said he expects revenue to fluctuate annually, but is happy to see any increase.
“There are so many different tax types that roll into total tax revenue,” Bamford said. “There are a variety of reasons why it does that. It’s all based on the facts and circumstances of each tax. It’s going to fluctuate, but I’m confident it will continue to grow.”
ANIZDA reported tax revenue of $78.3 million during the COVID pandemic in 2020. In 2021, it increased to $94.5 million, but fell back to $91.4 million in 2022.
About $22 million will go to the state Department of Revenue. The 130-acre zone downtown along Hamilton Street and the Lehigh riverfront was producing $22 million in state tax revenue before the NIZ went into effect in 2009. ANIZDA is legally required to return that full amount when the NIZ generates enough revenue beyond what’s needed to make debt payments, as it has in five of the last six years.
The city’s NIZ allows developers to tap virtually all the state taxes created by new projects to pay off construction loans. It also allows the city to harness state taxes paid in the zone to cover a $12.5 million annual debt payment related to the construction of the $180 million PPL Center.
Out of the $103.5 million, the bulk of the 2023 revenue went to City Center Group, $53 million that will go toward the developer’s project debt. Jaindl Enterprises received $10.5 million for its Waterfront project and Alvin H. Butz Inc., which owns the Butz Corporate Center, received $1.15 million. Other projects mixed into the $66.5 million total that went back to developers include Da Vinci Science Center, Vault 634, the Americus Hotel and the Neuweiler Lofts redevelopment.
A total of $36.9 million in pledged NIZ revenues is going toward debt service on PPL Center arena bonds.
Entities in the NIZ filed 655 tax reports by the Jan. 31 deadline, a decrease of 29 from last year. About 9% of businesses failed to report on time or at all, the same as the 2023 delinquency rate.
State tax revenue came in at $98.3 million, up 1.1% year-over-year.
Total employer withholding tax for activity in the NIZ from businesses and contractors came in at $20.5 million, which is about 20.8% of total revenue.
Total corporate taxes were about $66.3 million of state tax revenue, which included eight categories paid by relatively few businesses in the NIZ. That was down 1.1% from last year’s $67.1 million.
Among those is the liquor and beer tax paid by restaurants and bars, and the utilities gross receipts tax paid by Talen Energy, the PPL spinoff that has reduced its downtown workforce but maintains a presence in an office building at Sixth and Hamilton streets.
Also included is cigarette tax, paid in recent years by NIZ-based wholesalers (or cigarette stamping agents) that were all among the top five largest tax contributors to the NIZ from 2016-19, according to records shared annually with bondholders. During those years, the top five taxpayers collectively produced 76%-81% of all NIZ money. They include City Center Wholesale, which acquired T&B Wholesale in January 2021.
The Department of Revenue has declined to provide a more detailed breakdown because of confidentiality concerns.
State Sens. Jarrett Coleman and Nick Miller, who both represent Lehigh County, have introduced a bill to enable the statutorily required audits of local tax transfers. It specifically gives the independent auditor for ANIZDA access to a qualified NIZ business’ state and local tax information to conduct these audits.
Senate Bill 367 passed out of the Intergovernmental Operations Committee by an 11-0 vote on Monday. It will be taken up by the full body for consideration.
ANIZDA board Chair Seymour Traub said Wednesday the bill would allow audits of taxes that comprise “at most about 4% of the annual taxes collected in the NIZ.”
The Morning Call’s attempt to obtain the information was struck down by a Commonwealth Court judge Dec. 30, 2021, citing language inserted deep into a fiscal code bill by former state Sen. Pat Browne, a Lehigh County Republican who drafted the NIZ law 13 years ago. It added words including “reports” on taxes to a section defining “confidential information.” Browne is now state secretary of revenue and his signature is on the 2024 state reports for the NIZ.
The newspaper wanted to get information from the Department of Revenue on the total revenues generated by each tax collected in the NIZ for the years 2016-18.
The same court sided with the newspaper in February 2021 and agreed that taxes paid by three or more taxpayers in the “Other taxes” category should be disclosed. That category includes liquor and malt beverages, gross receipts and cigarette taxes.
NIZ businesses generated $5.24 million in local taxes that would otherwise go to Allentown, an 11.4% increase when compared to 2024. That includes $1.7 million in business privilege tax, levied on all transactions of NIZ-based businesses in the city. The latter is a 19% drop from last year’s $2.1 million.
Those businesses also generated $2.9 million of earned income tax, up 31% from the previous year.
Morning Call reporter Evan Jones can be reached at ejones@mcall.com.
