In the coming weeks, more than 300 businesses in Allentown’s Neighborhood Improvement Zones – NIZ –will begin getting visits from NIZ representatives who will talk to them about taxes.
No, they won’t be raising anyone’s taxes.
But they will want to ensure that all applicable taxes collected from those businesses properly are directed to NIZ, which will lead to redevelopment of those neighborhoods, which ultimately will benefit the businesses in them.
“We have to get people educated-- through marketing -- that it is important for them to fill forms out properly and maximize NIZ revenue,” said Seymour Traub, chairman of the Allentown Neighborhood Improvement Zone Development Authority (ANIZDA). "That’s not going to cost them any more money. It’s going to be beneficial to them because it will improve the city and improve the environment in which they operate. It’s not a burden or a bother. It’s something that will benefit them.”
Traub said many of the 316 businesses in the NIZ don’t have a clue that they will be required to file NIZ tax forms. He said there is a 10 percent penalty if they fail to file before the end of January.
“This needs to get going quickly,” said the chairman. “We have to get boots on the ground to help people file.”
On Thursday afternoon, ANIZDA approved having that “compliance function” work handled by Concannon, Miller & Co., certified public accountants and business consultants, and Compass Point, a business management consulting firm. Both have the same address in Hanover Township, Northampton County.
Board member Alan Jennings voted for approval, but first noted the companies are not in Allentown and wondered if a preference should have been given to a city firm.
In addition to making sure NIZ gets all the tax dollars it should, those working for the authority will educate businesses about why that’s to their benefit. ANIZDA has backed away from previously calling them “compliance officers.”
Authority member Robert Lovett noted that those carrying out the compliance function will deal with a broad spectrum of businesses – ranging from PPL down to mom-and-pop operations.
The recently expanded NIZ now covers more than 127 acres, said Traub. While the city refers to it a single zone, there actually are several designated zones in Allentown, including the future hockey arena site in center city and a long stretch along the west bank of the Lehigh River.
Traub called Thursday afternoon’s special meeting of the ANIZDA board primarily for the selection of a company to do the compliance function, so the work can start soon.
He said requests for proposals were sent to five “prominent” local accounting firms. ANIZDA received three proposals, including the joint proposal. An ad hoc committee met with all three companies and recommended the joint proposal.
Authority member Gregory Dudkin said all three firms had accounting expertise, but what set the Concannon/Compass proposal above the others were very good plans to get out to businesses “and get the word out.”
“This job is more than just accounting,” said authority member Robert Lovett.
Traub said: “What was attractive was they married an accounting and consulting business strategy to solve this unique problem we have -- how to collect data, obtain tax filings and get compliance under an entirely new law.”
He said Deana Zosky, executive consultant at Compass Point, will be the point person working with businesses and providing information “to help them help us.”
Traub indicated financial differences among the three proposals were not significant, adding that was not the basis for the authority’s decision.
He said the estimated cost of hiring the firms will be $100,000 to $200,000 for the first four months. Elaborating after the meeting, he said the principals will be paid $175 an hour, with no ceiling “because we don’t know how many hours it’s going to take. This is so new.”
Sara Hailstone, ANIZDA’s interim executive director, indicated the initial cost will be high because the compliance operation will be new and businesses will not be familiar with it. But it should become easier, and less expensive, in subsequent years because most businesses will be repeating what they do the first year.
Because ANIZDA has no operating budget, Jennings asked: “How are we paying for this?”
Traub and Hailstone said bond financing will cover costs for this year. “There is no other source of funds right now,” said Traub. “(But) we know clearly we can fund it through the bonds.”
In addition to being ANIZDA’s director, Hailstone is Allentown’s director of community and economic development.
Jennings said Hailstone is not being paid and asked if there will enough money to fund both her position and the compliance operation.
“Why wouldn’t we fund the executive director’s position too?” asked Jennings. “The city is trying to run all its community and economic development efforts and a pretty complicated NIZ with one super-human, extraordinary professional, but one that still probably could use some help. We cannot continue to have two extremely important positions in this city staffed by one person and have the city foot that bill.”
Traub said: “0nce bonds are floated, I believe we can absorb from those bonds the amount of money that’s necessary to reimburse the city” for Hailstone’s work plus handle the compliance work.
Jennings argued that a funding mechanism formally should be established by the authority along with approving the compliance function.
He suggested the board create a financing committee to review the issue. Traub said Jenning’s proposal to develop a budget and establish a committee to help to do that will put on the agenda for ANIZDA’s next meeting Oct. 4.
Hailstone said: “The long-term, 30-year arrangement for the NIZ authority still needs to be worked on.” She said lease payments could help fund ANIZDA, as could fees on developers or on new businesses that come into the NIZ.