Bootstraps for Building

What does it take to bring new life to the center of a city that saw its industrial core head for the hills decades ago?

Creativity in helping to offset the costs of new development is a good place to start. A pay-as-you-go option as new buildings and new tax revenues rise might be just the ticket. For a successful example of this innovative approach, look no further than Allentown, PA.

Allentown, located in the heart of the Lehigh Valley and the third most-populous city in Pennsylvania, has a glorious history. Founded in 1762 by William Allen, a wealthy shipping merchant and former mayor of Philadelphia, it’s the place where patriots hid the Liberty Bell from the British during the Revolutionary War.

When the industrial revolution unfolded in the 1830s, Allentown became the center of Pennsylvania’s iron industry and a railroad hub. Iron workers could quench their thirst on beverages provided by several notable breweries that put down roots in Allentown, including Schaefer Beer, which as we all know is the one beer to have when you’re having more than one. [Is there any other way to drink beer?]

Hard times hit following the Panic of 1873 and something the locals called the Long Depression, but economic recovery came in the early 20th century with the blossoming of the silk and textile industry. By 1928, there were more than 140 silk and textile mills in the Lehigh Valley. The beginning of the last century also saw the rise in Allentown of what would be its core industry until the century ended–heavy industrial manufacturing, which literally came roaring into town like an 18-wheeler with the arrival of Mack Trucks in 1905.

Fast-forward to the end of the 20th century. Mack Trucks and other major factories that made Allentown a manufacturing hub headed for greener pastures (Mack moved to North Carolina) or overseas; the last major silk company closed its doors in 1989. Like many other older cities, a decades-long decline in manufacturing coupled with urban flight left the downtown populated by discount retail stores and pizza parlors. The decline of Allentown was immortalized by Billy Joel’s 1982 tune of the same name, which began “Well we’re living here in Allentown, and they’re closing all the factories down.”

A state initiative called the Neighborhood Improvement Zone (NIZ) program aims to change all that, and it’s already yielding solid results in Allentown. A five-block area of the city’s downtown is being transformed by a $340-million, multi-use development that’s is tapping into NIZ incentives.

NIZ allows developers to use designated tax revenues to pay off bonds and loans issued for capital improvements in the specified zone. In the Allentown project, according to a report in The New York Times, revenues from tenants’ tax bills will be used to pay down some of the debt incurred during the cost of construction of a development that is bringing 600,000 square feet of new office and retail space to the heart of Allentown. Hotels and a new 5,000-seat hockey arena soon will follow.

As the Times reports, access to tax dollars that would normally go to state or local general funds enables the developers to offer attractive rents to companies bringing in new workers. These new workers, in turn, may move into new housing (and eat in new restaurants and shop in new stores, etc., etc.) and help create a rising economic tide that lifts all boats in a self-sustaining cycle. An estimated $135 million in development costs for the downtown project in Allentown will be offset by the application of NIZ incentives.

National Penn Bancshares, an anchor tenant of the new development, will be paying up to 25 percent below the Suburban Class A market rent for its 125,000 square feet of office space in its new 11-story headquarters building, according to the newspaper report. Lehigh Valley Health Network, Allentown’s biggest employer, will be occupying seven floors of the new office tower, bringing about 500 employees to the city center this June.

The city-run Allentown Neighborhood Improvement Zone Development Authority will own the new arena, which will be home to the minor-league Lehigh Valley Phantoms. City Center developers also are set to break ground this month on a second office building and will begin the renovation of several historic properties on Hamilton Street which will be converted into shops, restaurants and apartments.

Measured in people as well as buildings, this dynamic effort to revive the urban core of a great historic city can already be called an unqualified success: Allentown, pop. 119,000, is one of the fastest-growing cities in Pennsylvania.

To that we tip our hat and raise our glass, and yes, we’ll be having more than one.