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Did Taxpayers Wildly Overpay to Clear Way for a Hockey Arena?

Did Taxpayers Wildly Overpay to Clear Way for a Hockey Arena?

"There is no tangible evidence that there's going to be any net job growth because of this."


Typically, when a city starts going about using eminent domain to seize private property, those property owners believe they're being cheated.

Well, that's not the case in Allentown, Pennsylvania, where questions are being raised over whether the city in fact paid too much for a strip of business buildings in the push to clear out space for the town's new hockey arena.

Fox News reports that in order to proceed with the planned $160 million multi-purpose complex, the city paid $15 million to property owners in the zone. Oddly, some owners were offered even more than what they originally paid.

So how can Allentown afford to be so generous?

"Ultimately, the taxpayers are the ones that are going to foot the bill for what was paid to those existing property owners," said Stephen Thode, a finance professor and real estate expert at Lehigh University.

Fox adds:

Thode said he couldn't say for certain whether the city overpaid, but he noted the city hasn't been forthcoming with the appraisals for the properties.

"If they didn't overpay, they'd be more than happy to show the appraisals," he told FoxNews.com.

WFMZ-TV reported that one business owner who paid $150,000 for his building five years ago received $852,000 for the building and relocation expenses.

Another who reportedly paid $400,000 received $747,000 from Allentown a year later to leave the block where the arena is to be built

That business owner, tax preparer Paula Paredes, confirmed to FoxNews.com that she was paid $650,000 for two properties and an additional $97,000 for relocation expenses.

In response, a city spokesman said Allentown paid "the appropriate amount" for the properties. Conveniently, he noted that the slated stadium was actually what made the prices in the area jump.

"This project and the Neighborhood Improvement Zone will be transformational for the city," he said in an email.

Meanwhile, the city's economic director also told WFMZ-TV that taxpayers are getting a good deal with the complex that is slated to open next year.

The Fox report continues:

The arena and entertainment complex are part of a special district aimed at revitalizing business in the city. Those who got money to move out of the zone -- some of whom originally protested the plans -- could end up reaping the benefits, picking up business from foot traffic once the arena opens.

Thode said the reason the city paid so much is probably because it wanted to "avoid litigation."

"They didn't want anybody saying, 'no that's not enough'," he said. "Time is the enemy of any project like this."

Though the City Council authorized the mayor of the city to use eminent domain powers to seize the properties, they ended up just striking deals with property owners -- and avoiding court.

Thode astutely points out, however, whether an arena in a mid-sized city with a minor-league hockey franchise would reap the kind of results the city is hoping to achieve.  He also noted that the complex is hardly akin to bringing in a major business like a pharmaceutical company or other serious employer.

"There is no tangible evidence that there's going to be any net job growth because of this," he said.



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