How does the Neighborhood Improvement Zone benefit the state?

Three in a series explaining the Neighborhood Improvement Zone.

How does the Neighborhood Improvement Zone benefit the state?

State officials are making a bet that downtown Allentown will bounce back.

Imagine that in a decade, downtown Allentown is thriving. There’s lots of economic activity, so tax revenue keeps increasing.

Let’s say there are more tax dollars than needed to pay off the debt on the arena and other projects. The way the NIZ works, whatever tax revenue is left over after paying the debt goes back to the city and state.

That part about money going back to the government is crucial.

The state forecasts that eventually, businesses in the zone will pay enough in taxes to cover the debt and then some. It expects to collect more tax dollars from the area than it did before the zone existed.

How’s that going so far?The state hasn’t made back its investment yet.

Before the Neighborhood Improvement Zone launched, businesses in the same geographical area were paying about $22 million in non-property taxes each year. Now, that money is paying for Allentown’s revitalization.

Because downtown Allentown is doing pretty well and raking in a lot of new tax revenue, the authority has enough tax dollars left over to send some back to the government.

The authority estimates that for 2013, the government will get to keep about $16 million in taxes from the zone. But that’s still less than the $22 million it was getting before the zone launched.

Did this article answer all your questions about the Neighborhood Improvement Zone? If not, you can reach Marielle Segarra via email at msegarra@whyy.org or through social media @MarielleSegarra. Have a topic on which you’d like us to do an Explainer? Let us know in the comment section below, or on Twitter @PaCrossroads.