Though Allentown’s mayor is facing corruption charges in an alleged pay-to-play scheme cited in a federal indictment issued in July, officials, including the mayor, say the city’s economic resurgence will continue.
They also note that the city has been growing economically the last couple of years despite the news that broke in 2015 that the FBI was investigating public officials.
“I don’t think it’s going to impact it in any way, shape or form,” Mayor Ed Pawlowski said. “With projects coming out of the ground, more to come on the way, I don’t think it’s had any impact.”
Allentown’s economic development growth has been steady since the 2014 opening of the ice hockey arena at PPL Center and surrounding new construction of office and residential buildings.
But when federal agents raided Allentown City Hall in 2015 seeking documents and information related to a potential pay-to-play scheme, a dark cloud dampened the mood.
Groundbreakings and new construction continued in the downtown but there was no denying the news sent a fissure of uncertainty to existing and potential future business development and investment.
At the same time, a similar investigation targeted Reading City Hall. Both ongoing investigations are exploring a potential link between political campaign contributions and the awarding of government contracts.
Before long, the enthusiasm, though tempered somewhat, quickly returned as businesses from other parts of the region moved into new office spaces in Allentown and tenants began filling new apartments and retail spots.
However, last month, the U.S. Department of Justice issued two indictments, one for Pawlowski and the other for former Reading Mayor Vaughn Spencer. A grand jury delivered more than 50 counts against Pawlowski, and both Spencer and Pawlowski pleaded not guilty.
According to the indictment, Spencer is charged with bribery, wire fraud and conspiracy, while Pawlowski’s charges include bribery, extortion and wire fraud. Pawlowski said he would not step down as mayor.
Published reports said nine people have pleaded guilty in the case since 2015, including several contractors and Allentown officials — all of whom implicated a public official who is unnamed in court documents but matches only Pawlowski’s description.
NO THREAT TO CITY’S ECONOMY
The release of the indictment in July does not pose any threat to Allentown’s economic future, according to Pawlowski.
Pawlowski, who was interviewed last week, said he had met with a developer that day who was looking to build housing in the city.
Pawlowski maintained his innocence, said he has done nothing wrong and is running for re-election this fall, having won the Democratic primary in May.
“I’m not going anywhere,” he said. “I truly believe the truth is going to come out. For two years, they attacked my name and reputation.”
RECORD OF SUCCESS
Pawlowski listed a litany of accomplishments the city achieved while he is mayor, such as a dozen years with no property tax increases, including the past two budgets that were passed while he was implicated in the FBI investigation.
“I don’t know what tomorrow’s going to bring,” Pawlowski said. “For anyone to say Allentown is standing still isn’t looking at the facts.
“We have new businesses coming into the city; we’ve had a pretty good track record of success.”
TURNOVER AND VACANCIES
Since the FBI investigation began, the city has seen a lot of turnover in the city’s Department of Community and Economic Development, with employees also resigning in other departments.
Not counting unfunded positions, City Hall has 20 vacancies, Pawlowski said. Overall, the city has 840 employees, with many of the recent vacancies attributed to people retiring after serving for decades, he said.
While the FBI investigation could slow the issuance of such things as building permits and tax certificates on the municipal end, it has not, Pawlowski said.
NIZ STILL ATTRACTIVE
Some believe the investigation won’t slow development in a key area: the city’s Neighborhood Improvement Zone, where most activity is occurring.
The NIZ brings tax incentives that are a powerful draw for tenants.
Under the NIZ, tax revenues flow back to developers and help to subsidize monthly mortgage payments. The developers, in turn, can then offer lower monthly rents to businesses.
NOW INDEPENDENT OF CITY HALL
The NIZ is overseen by the Allentown Neighborhood Improvement Zone District Authority and its nine appointed members who review projects not funded by the city, said State Rep. Peter Schweyer.
Published reports showed ANIZDA previously had city employees working for it, but that was changed in 2016 with an amendment in the NIZ act. Now, ANIZDA is fully independent from the city, officials said.
“That’s given us a nice separation between the two. Developers feel comfortable with the ANIZDA. It’s really isolated the ANIZDA from a lot of the problems of City Hall,” Schweyer said, referring to the FBI raid.
Seymour Traub, chairman of ANIZDA, said in an email that nobody knows the impact of the indictment. Projects and plans still need approval from city entities such as planners and zoners.
“I don’t believe anybody knows what impact the recent indictment of the mayor has on a developer considering investment in the city,” Traub said. “However, the investigation has been going on publicly for years and look what has been developed and what is coming. Local developers have moved forward, and the downtown and soon the waterfront areas of the NIZ are thriving.
“With financing in place, the process for NIZ projects requires ANIZDA approvals and normal governmental approvals for construction,” Traub said. “The indictment should have no impact on this process.”
Schweyer, though, said the turnover at City Hall contributes to a slowdown in administrative tasks such as the issuance of permits. But the independence of ANIZDA is the reason there is very little overlap between the city and the ANIZDA board.
The redevelopment is continuing, he added.
Projects in the NIZ, including City Center Lehigh Valley and Alvin H. Butz Inc.’s developments in the downtown core and The Waterfront along the Lehigh River continue to move ahead, Schweyer said. No one from City Center, Butz and The Waterfront has been implicated in the FBI investigation.
“There is no slowdown there,” Schweyer said.
THEY ASK QUESTIONS
Schweyer said investors and developers will ask questions about the impact of the investigation on the city, but once they learn about the separation between ANIZDA and municipal government, it gives people a lot more confidence.
Schweyer, a former city councilman, said Pawlowski should resign.
“He’s certainly entitled to his day in court,” Schweyer said. “He has lost the confidence of just about everybody in the city. At the very least, he’s going to be extremely distracted.”