A view of the skyline in Allentown, Pennsylvania. (Getty Images)
A showdown between Pennsylvania Revenue Secretary Pat Browne and the senator who pushed Browne out of his former Senate seat two years ago appears to be planned for the Legislature’s return next week.
The Commonwealth Court on Tuesday rejected requests from Browne and Senate Democrats to block a subpoena requiring Browne to testify in the Senate about the unique Allentown economic development zone 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 Capital-Star on Wednesday that the purpose of the audit by the joint Legislative Budget and Finance Committee would allow the Senate to determine whether the NIZ will provide a net economic benefit to the Lehigh Valley region or whether it will benefit businesses from the surrounding region has ‘robbered’. communities serving Allentown.
“When the subsidies disappear and the private developers are no longer able to use the subsidies to pay off their debts… will Allentown be able to ride into the sunset of a prosperous future… or will Allentown become a void ,” said Coleman. He added that assessing the program’s impact is essential when funneling hundreds of millions of dollars in state tax revenue into a state that could be used for other programs.
“We want to make sure that the Allentown Neighborhood Improvement Zone has been a tool to stimulate economic growth and not just subsidize private real estate development,” Coleman said.
The Revenue Department filed a lawsuit on October 7 to block the execution of the July subpoena issued by the Senate Intergovernmental Operations Committee seeking more detailed information about the NIZ. The Senate responded on October 8 by passing a resolution directing its sergeant-at-arms to take Browne to the House, where he would be held in contempt and incarcerated in the Dauphin County Prison unless he provides the information provided.
In short orders Released late Tuesday, the Commonwealth Court rejected attempts to block the subpoena saying the case was not ready 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 said was incorrect, and vowed to “renew our efforts to have this subpoena dismissed on the merits ” as the Senate attempts to hold Browne in contempt. A spokesperson for Browne said the IRS had nothing to add beyond the court filings.
Created through a series of legislative acts initiated in 2009, the NIZ allows developers to leverage most of the state tax revenue generated by businesses on their properties to cover interest on loans. The program has generated more than $1 billion in new development and redevelopment projects in the 300-acre area surrounding the city’s central business district and the Lehigh River waterfront, according to the authority that oversees the use of taxpayer dollars.
But Coleman said he and others in the Lehigh Valley have questions about the program’s impact and want to see detailed data on the taxes that area businesses 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 question is: Is Allentown built on the backs of disease and addiction?” said Coleman.
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 about a third of all state revenues invested in the zone, bought a tobacco wholesaler and structured the company’s turnover to enable the NIZ to capture the cigarette tax revenue it generates.
Dean Browning, a Lehigh Valley businessman who ran unsuccessful campaigns as a Republican for Congress and the Senate, said there is concern throughout the Lehigh Valley that the NIZ has created winners and losers. While Allentown attracts businesses to move into the zone, the surrounding townships lose tax revenue and support for supporting businesses.
And according to the Allentown Neighborhood Improvement Zone Development Authority, roughly two-thirds of the zone’s investment has gone to one company, City Center Development Corp. Downtown owners JB Reilly and Joe Topper contributed to Browne’s failed 2022 re-election campaign through a lobbying firm.
“To me, if you’re going to give that benefit to one individual or a group of individuals, you want to make sure there’s a net benefit to the region or not,” Browning said.
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