Allentown NIZ drives $1b in development, spurs growth

Since it was established by the Pennsylvania State Legislature in 2012, the Neighborhood Improvement Zone (NIZ) in downtown Allentown has helped to generate more than $1 billion in investment. 

But still, there remains a great deal of confusion over just what the NIZ is and how it operates. 

For example, it is truly one of a kind. 

The zone was designed specifically for Allentown, said Loren Keim of Century 21 Keim. 

“It’s one of the most unique economic development tools in the country,” Keim said during a recent webinar on the zone. “It’s a completely different animal than other economic development zones with incentives that don’t exist elsewhere.” 

Steven Bamford, executive director of the Allentown Neighborhood Improvement Zone Development Authority (ANIZDA,) said the zone is laser focused and specifically designed for Allentown, capturing and redirecting certain state and local taxes and applying them towards financing for development. 

What it’s not is a tax credit program, or a tax abatement program. 

Bamford said that businesses within the NIZ pay no more or less in taxes than they would if they were located outside the zone. 

What they do is file the amount of taxes paid in the prior year with ANIZDA by Jan. 31 of each year. The authority then calculates what money can be distributed towards debt service that promotes development. 

Zac Jaindl, chief operating officer of Jaindl Enterprises and the lead on The Waterfront development in the NIZ said some projects within the zone aren’t getting the direct benefit of the funding but wouldn’t have gotten built without the NIZ. 

“This is highly administered and overseen,” Jaindl said. “This is not just Mr. Monopoly dropping big bags of money off for developers.” 

To be approved a project must show that it will bring rehabilitation and economic development to the city, and not all projects are created equal. 

Because income tax is not collected as part of the NIZ, apartments are actually not big beneficiaries of NIZ funding. 

But, most apartments being built in the downtown are mixed-use buildings that also contain restaurants, retail or even office space, which do take in sales taxes and income taxes. 

Still, they’re worth building, because the value added to the zone by the investments. 

For projects that do bring in larger amounts of taxes, such as offices with high earning professionals, developers are able to use the NIZ funding to either charge lower rents or make buildings of a higher quality than they could otherwise afford. 

Having Class A office space, which is in the highest demand post-pandemic, attracts the other development downtown in a symbiotic way that creates an overall dynamic environment. 

Jaindl said The Waterfront development his company is building in a largely undeveloped part of the city on former Lehigh Structural Steel property, would not have happened without the support of the NIZ. 

“The Waterfront wasn’t feasible without tax incentives,” Jaindl said. 

Too much work needed to be done on the site to make it flood proof and to remediate contamination on the site in order to build the $475 million office, residential and retail buildings that will ultimately make up The Waterfront. 

“The NIZ gave those a fresh perspective on the possibilities for the project,” Jaindl said. “If we can go back to my roots as a farmer, the NIZ helps infertile land to grow.” 

In fact, Bamford said he feels strongly that major downtown anchors such as Talen Energy, which has 500 employees downtown and ADP, which has 1,000 employees downtown may have located elsewhere if it hadn’t been for the zone. 

And PPL, which recently moved out of the historic PPL Tower, still stayed downtown moving to higher quality, new office space right down the street, which he also said he believes was influenced by the benefits of the NIZ. 

But Keim, whose firm is listing the Allentown Brew Works building for sale in the NIZ, cautions those looking to invest in the downtown, that there are limitations to what they need to do to quality for NIZ funding from a property in the zone. 

“An investor acquiring property int the NIZ can’t assume there is a benefit,” Keim said. “This is not to stimulate investment properties but to spur redevelopment and construction.” 

Bamford agreed that simply buying a building isn’t enough to qualify. 

“We’re not refinancing existing mortgages, we’re not funding investment properties,” Bamford said. 

He gave the Americus Hotel as s a good project made possible by the zone. The hotel had been abandoned, was restored and redeveloped using NIZ funding. 

He added, however, that being in the NIZ, does make lenders more comfortable in lending to projects, so the zone is helping on a broader scale.