Thought this might fit in this thread.
It's a new TIFF type program I have not heard of before. Has both arguable pros and cons but could be an over all positive in some circumstances.
http://www.nytimes.com/2014/03/05/realestate/commercial/tax-program-aims-to-reverse-decades-long-decline-in-allentown.html?_r=4ALLENTOWN, Pa. — More than 600,000 square feet of office and retail space is being built in the long-depressed center of this city, spurred by an unusual state-sanctioned project that permits revenues from tenants’ tax bills to be used to pay down some of the debt incurred during construction….
The new development in this city of 119,000 has been spurred by the Neighborhood Improvement Zone, a state program that encourages businesses to move in by allowing developers to use designated tax revenues to pay off bonds and loans issued for capital improvements in the zone.
Aided by tax dollars that would otherwise go to state or local general funds, developers should be able to offer attractive rents to companies that bring in new workers — who in turn might move into or buy new apartments and support new shops and restaurants in what had been a blighted urban landscape.
National Penn Bancshares, one of the development’s anchor tenants, will be paying 20 to 25 percent below the suburban Class A market rent for its new offices spanning 125,000 square feet, said J.B. Reilly, president of City Center Lehigh Valley, the developer. The bank began moving employees in this week.
The 11-floor building, which will be National Penn’s new headquarters, contains 272,000 square feet of office space plus 28,000 square feet for restaurants and retail on the first floor.
Mr. Reilly said in an interview that some tenants are attracted not only by the favorable rents but also because they want to take part in reviving Allentown. “You are trying to incentivize development in challenged urban areas,” he said.
The development also includes a seven-floor, 186,000-square-foot office building whose principal tenant will be Lehigh Valley Health Network, Allentown’s biggest employer, which is scheduled to move into the new building on June 1, bringing about 500 employees to the city center.
Dr. Ronald Swinfard, chief executive of the nonprofit, said it would benefit by paying less rent per square foot than it does in its current suburban location — where it will retain some operations — but that it was mainly attracted to the new building because it will add to facilities for the community medicine that the group already offers elsewhere in Allentown.
“We wanted to be part of the revitalization of downtown Allentown,” he said….
Two other Pennsylvania cities, Bethlehem and Lancaster, have recently been designated as City Reinvestment and Improvement Zones (“CRIZ”) under a more recent law that is similar to the NIZ but restricts the tax benefits to revenues from out-of-state companies or, in the case of companies moving from elsewhere in Pennsylvania, to additional revenues that are generated in the new location.
The strength of the improvement zone model is that it depends on the developer’s ability to attract revenue-generating tenants and is not based on state handouts, Mr. Reilly said. “They are pledging the tax revenues related to the developer’s project to the developer’s lender,” he said. “It’s really market driven. If the developer can’t attract tenants, then the developer’s going to be on the hook for repaying the loan.”
But the program has its detractors. Stephen F. Thode, a professor of real estate at Lehigh University, argued that the improvement zone legislation is flawed because it does not require developers to create jobs in return for what he called “subsidies” in the zone. “It’s not true economic development. It’s simply moving existing businesses and existing jobs from one location to another. No new jobs are being created,” he said.
But Mr. Thode said the legislature “got smart” when it passed the city improvement zone because that law links the use of tax dollars to job creation….
“It’s taking an area that was an eyesore and breathing life into it,” Mr. Cunningham said.
To rebuild a city center, it is necessary to create a compact, safe, walkable environment that meets the needs of younger workers, not only for good jobs, but also for an urban lifestyle that is replacing the suburban environment sought by the previous generation, Mr. Reilly said.
“People are not clamoring to that suburban lifestyle like they were in the ’70s,” he said. “It’s a different day.”