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the historic center of the city.

By most accounts, the Sands casino has neither helped nor hurt businesses in the historic center of the city.

Matt Assad was covering a variety of matters at Bethlehem City Hall for the Morning Call newspaper, as well as some general assignment work, when he was handed what essentially became the casino beat in 2005.

He told BusinessWest that he probably filed more than 100 stories on the broad topic over the next several years, including a few involving a community roughly 1,500 miles to the west.

That would be Council Bluffs, Iowa, where three casinos had opened over the previous few years.

Assad visited that community of 63,000 people to gain some perspective on what happens when a casino opens its doors, with regard to everything from business to crime to the character of the city in question. Summing up what he learned rather quickly, and in no particular order, he said there was no prostitution (at least that anyone knew of), no mob figures patrolling the casino floors, no huge impact (good or bad) on existing business, some problems with gambling addiction, and, overall, few people with many bad things to say about the arrival of organized gaming.

And seven years later, he says that essentially the same things have happened, or not happened, as the case may be, in Bethlehem and surrounding communities.

That was the gist of the message he left with the City2City delegation from Greater Springfield that visited the Sands Casino Resort Bethlehem late last month. In fact, as he addressed that group, he apologized (sort of) to the man sitting two seats down from him at the head table, Robert DeSalvio, president of the casino, before noting, “if you didn’t come to Bethlehem to visit the casino, you probably wouldn’t even know it’s here. And I guess that’s a good thing.”

In a later interview with BusinessWest, Assad said there has been an increase in crime, but about what would be expected from any enterprise that brings 20,000 people into a community each day, be it a casino or a shopping mall or an amusement park. And there have been some unexpected problems, such as the need for the county’s court system to hire employees who can speak Mandarin and Cantonese — spending necessitated by mostly minor crimes committed by the thousands of Asians who come to the casino from the New York metropolitan area, only 85 miles to the northeast, every day.

But overall, Assad wore out the phrase ‘neutral’ to describe the overall affect of the complex at 77 Sands Blvd.

“It hasn’t been as beneficial as the advocates said it would be,” he said. “And it hasn’t been as bad as the naysayers predicted.”

Assad told BusinessWest that, while there were never any guarantees that a casino license would be awarded to Lehigh County, it was generally believed that the region’s close proximity to New York and New Jersey and what he would call in one of his stories the “Asian invasion” — it is a shorter ride from those areas to Bethlehem than it is to either Atlantic City or Central Connecticut (Foxwoods and Mohegan Sun) — would make it an attractive option for casino operators.

And eventually there were several proposals for that area, including one in Allentown and two in Bethlehem, he said, adding that one of the plans for the latter, a greenfield proposal, never gained a strong measure of support from city officials.

This then left Allentown pitted against Bethlehem and a proposal for the old steel mill there, in what he described as a fairly bitter contest.

“Allentown and Bethlehem … there’s quite a bit of tension between them because the mayors don’t like each other at all,” said Assad. “And the mayor of Allentown’s contention all along was that Allentown needs this more than Bethlehem.”

That argument didn’t prevail at the state level, he went on, adding that, perhaps in an effort to ease all that tension, a revenue-sharing agreement between those communities and a few others was worked out. It’s a strategy he believes Western Mass. leaders should attempt to replicate.

Looking back, Assad said there was both support for a casino in Bethlehem and opposition, primarily from the large and vocal Moravian community. And while there were fears about crime, prostitution, and problem gambling, perhaps the biggest concern was that the city would lose its character, he noted.

“People thought that Bethlehem had found its niche in historic preservation, tourism — it was the Christmas City,” he said. “The city had kept to its roots of sort of being that quaint, historic town, and many felt it didn’t have to do anything as unseemly as a casino.”

As things have worked out, that reputation has not been compromised, he went on, adding that, in his opinion, Bethlehem hasn’t become a casino town — it’s simply a community with a quaint downtown and a huge piece of American industrial history just a few blocks away, that also has a casino.

Meanwhile, that casino’s operators have collaborated with the city and several nonprofit agencies to bring additional development of the massive former Bethlehem Steel plant, which had lay mostly dormant for many years after it ceased all operations in 1995, said Assad, noting that the casino has, in some ways, been a force in economic development.

It has not, however, been any real help to existing businesses, especially in the area around it, what’s known as South Bethlehem.

Indeed, while those who don’t come to Bethlehem for the casino might not know it’s there, the great majority of those who do come for it don’t see anything else, said Assad, adding that revamped traffic patterns make it all too easy to get into the casino and then back on the highway and home.

“Most people who go to the casino never see Bethlehem in daylight,” he explained. “They come in their car, they get out of the car in the parking garage, they do their thing, and then they leave again. They never really see any of Bethlehem.”

Still, the casino has a huge overall economic impact, he told BusinessWest, noting the $9 million in real-estate taxes and that $19 million host fee paid annually.

These numbers, along with the related developments at the steel site, the revenue-sharing agreement, and the few negative effects on surrounding communities, lead Assad to conclude that the Sands is probably the most successful casino operation in Pennsylvania, for all parties involved

He advises Western Mass. leaders to take what they can from that experience, but above all, to understand the huge stakes involved, short and long term, and “get it right.”

 

— George O’Brien

Law Sections
Divorce Mediation Growing in Popularity

Bruce Clarkin (seated, with Michael Frazee and Kathleen Townsend)

Bruce Clarkin (seated, with Michael Frazee and Kathleen Townsend) says mediation empowers a divorcing couple in ways litigation cannot.

Michael Frazee has a pithy way of explaining the benefits of divorce mediation.

“When two people divorce, they live in the problem,” he said. “In mediation, they live in the solution.”

If that’s true, then more divorcing couples than ever are living in the solution, turning not to a judge to hammer out their finances and parental rights, but to an impartial, certified mediator, who guides the couple, through face-to-face conversations, to a negotiated settlement of their issues.

“There’s an old saying that one way a judge evaluates the success of a divorce is if both clients are equally unhappy,” said Bruce Clarkin, founder of Divorce Mediation Group in Springfield, where he partners with fellow attorneys Frazee and Kathleen Townsend.

“Our perspective in mediation is just the opposite,” Clarkin told BusinessWest. “We’re not looking for unhappy clients; we’re looking for our clients to put together a functional arrangement that meets their needs and the needs of their kids. It’s a totally different perspective.”

It’s important to remember, he said, that divorce isn’t just the end of something, but a beginning for at least two  — and often more — individuals. “We’re helping people transition to the next phase of their lives in such a way that they’re meeting their goals.”

In 1990, the first year Clarkin began offering this innovative service, he had just two or three cases. “The concept just clanged off people’s consciousness,” he said. “It was such a foreign concept. When the phone rang, it was an act of God.”

It turns out Divorce Mediation Group was ahead of its time; over the past 22 years, awareness of the mediation model has grown, and academic programs in the field have become entrenched at law schools.

“In the beginning lawyers were resistant to the idea; they potentially saw us as competitors for the same consumer expenditure,” he said. “But as the idea became appealing to consumers, they encouraged their lawyers to be open to it as well — and give the bar credit; they’ve become increasingly open to mediation as a way to help people resolve cases.”

Attorney Carla Newton knows that well; divorce mediation — alternative dispute resolution in general, actually — is a significant part of her family-law work at Robinson Donovan in Springfield. She said mediation carries a number of benefits over traditional litigated divorce.

Carla Newton

Carla Newton says the benefits of divorce mediation range from control to privacy to cost.

“The parties have more control over the calendar of the mediation process,” Newton said, “so if they want to try to get things resolved in a way that accommodates their personal, family, or business needs, they can do that much more easily through mediation.

“Second,” she continued, “there’s a substantial issue of privacy, and in many cases you’re dealing with families that have either personal issues surrounding the divorce or personal financial issues, or just a general desire to not have to stand in front of a courtroom of 20 to 30 people and talk about their income or assets or other personal details. In mediation, you can deal with all those issues, but they’re not played out in a public venue.”

Finally, Newton said, mediation almost always costs less than a traditional divorce, again due partly to the fact that the splitting couple can plan it according to their own schedule and not that of the court or the opposing party. “You have much more control over how much time you want to spend in mediation, and that helps people better manage the cost of going through a marriage dissolution — which can be pretty substantial.”

In fact, Clarkin said, the cost is also typically well under half that of a traditional proceeding. “And in terms of timing, you can do a divorce mediation in a couple of months, although sometimes they’ll take longer for various reasons. It’s hard to do a litigated divorce in less than a year.”

For these reasons and others, he said, “you can see why it’s appealing to a lot of people. For the most part, people’s first instinct remains to get a lawyer, but increasingly, we’re seeing their first impulse being to go to a mediator.”

 

Impaired State

One reason mediation is appealing, Clarkin said, is that the anger and alienation common to divorcing couples is often exacerbated by the contentious nature of a court fight.

“When you’re in a divorce, you’re in an impaired state; common emotions are fear, anger, and pain,” he said. “And when they’re in that state of mind, people don’t make the best decisions. Often, they’re emotionally driven, and they’re thinking, ‘I need to protect myself.’

“But what people have learned,” he continued, “is that part of our job as mediators is to create this very safe environment where they can be heard and have their needs recognized, and they can come up with a resolution that makes sense.”

And one of the ways where mediation beats slugging it out before a judge, he added, is that the couple can begin implementing parts of that resolution right away — selling a house, for instance — instead of freezing finances until the end of legal proceedings.

“To a large extent, divorce is a huge planning opportunity,” Clarkin said. “And it’s not unique or terribly complex: where is each parent going to live? Where are the kids going to live? How will the couple support themselves and divide their property? Mediation helps people answer these questions in a common-sense, intelligent way. We’re trying to help people make proper decisions about their lives, decisions that are quality — and enduring.”

Those decisions are often complicated, Frazee said, by the fact that the stagnant economy has increasingly forced couples to live together while going through a divorce, and often their mortgage payments aren’t up to date, or the house is underwater because of depressed market values.

Particularly in painful situations like these, he noted, the speed of mediation helps a divorcing couple move efficiently into their new lives at a time when finances must be dealt with quickly. “It’s very important how a couple transitions from one house to two, and to consider how that affects everyone, especially the children.”

That said, mediation isn’t for everyone, Newton noted. For instance, “generally, you should probably screen out mediation in a case where there had been any kind of abuse issue.”

Even absent such traumas, mediation isn’t always the best path. “When acting as a mediator, you need to evaluate, when the parties first meet with you, whether or not they have the ability to communicate appropriately in mediation,” she said. If not, “it’s not going to accomplish anything, and their objectives aren’t going to be realized.”

Still, Clarkin said, divorcing couples don’t have to come to the table with any particular level of warmth or even civility — as long as they’re serious about working toward an agreement.

“It’s a misconception that the only people who can be successful in mediation are people with a low conflict level,” Clarkin said. “I find that mediation can work for people with a low, moderate, or high conflict level, provided there is a desire to succeed and a willingness to participate in the process. My experience is working with couples who can’t agree. My sense is that my job begins when each person says ‘no.’”

And a couple doesn’t have to show up with a great deal of trust in each other, he added, calling the very concept of trust “overrated” in any divorce proceeding.

“Everyone has a level of mistrust. Everyone’s been hurt, violated, or degraded in some way. Everyone we work with has a reduced trust threshold,” he explained. “At the same time, each of these people has a capacity to agree. They have a history that includes both agreement and disagreement. Our job is to find the ability in them to agree. The trust comes along with that. We’re not asking people to trust each other, but we do ask them to take small steps toward agreement — and then keep their word.”

 

Let’s Talk

By all accounts, attorneys who specialize in mediation are hearing their phones ringing more often these days.

“Certainly, more people are doing mediation than in the past,” Newton said, adding that all divorce attorneys are now instructed to advise their clients about the option of mediation.

“It’s on the mind of every attorney who does domestic work: should this case go to mediation? Is that the best route for this family in terms of finances and other issues involved? Will this be the best opportunity for a prompt resolution? The courts want us to be mindful of utilizing mediation where that’s appropriate.”

Another wrinkle in the mediation trend is what Newton called “attorney-assisted mediation.” Simply put, the divorcing couple attends mediation sessions accompanied by their own attorneys. “Sometimes that’s appropriate when you have a case with complex financial issues, or where one party might not otherwise participate in mediation because they feel they’re not as well-equipped to advocate for themselves as their spouse might be.”

Whatever the case, Frazee said, there’s an element of satisfaction in mediation work that can be tough to come by amid an ugly courtroom divorce.

“It’s extremely gratifying when you know you’ve put people on the path to agreement, while also laying the groundwork for parenting and cooperating with each other,” Frazee said, noting that there’s an element of anxiety in letting a third party make critical decisions about parental rights and finances.

“In litigation, they are giving their authority to their attorney and the court system — authority over their finances, authority over their children. In mediation, they retain that authority.”

Clarkin characterized mediation as empowering, and litigation as disempowering. “After all, who knows your kids any better than you?”

While divorce is usually sad on some level, Frazee said the mediation process itself often brings a little healing, or at least understanding.

“Many times, even if they’ve lived under the same roof with three children, the mom will turn to the dad and say, ‘I never knew you felt that way.’ In the dissolution of their relationship, they hadn’t discussed these issues; they went to their separate rooms and stewed about it.

“Mediation is not therapy, but there are therapeutic aspects to it,” he continued. “They’re finally sitting down in a room together, in a safe environment, and even in the midst of a very difficult time, they’re able to discuss these things with each other.”

It’s gratifying, he told BusinessWest, to get two people started on the road to better communication and better parenting, adding that divorces increasingly involve children under age 10, and both parents typically want to stay involved in their children’s lives and plan for a healthy future.

“They’re laying the groundwork for when they become teenagers — college and the financial planning that has to go on,” Frazee said. “They want these things to remain as intact as possible, so we work with the divorcing couple to make sure that happens.”

To put it another way, Clarkin noted, “sometimes mediation can be so mellow, it can replicate times in their marriage when things were good. That’s amazing to me.”

To an increasing number of soon-to-be-exes, it certainly beats being equally unhappy.

 

Joseph Bednar can be reached at [email protected]

Features
A Resilient Square One Goes Back to the Drawing Board

Joan Kagan

Joan Kagan says the gas blast that heavily damaged another Square One facility will further complicate efforts to rebuild following last year’s tornado.

If adversity really does build character, as many would suggest that it does, then Joan Kagan believes that she and the rest of the staff at Square One have all the character they will ever want or need.

“We’d been tried, and we really didn’t need to be tried again,” she said while talking with BusinessWest, for the second time in 18 months, in a setting that looked straight out of Beirut in the mid-’80s, standing in front of what used to be a Square One facility.

This time, it was at the agency’s damaged and now-condemned Chestnut Street Center, located next door to the gentlemen’s club that was erased by the Nov. 23 natural-gas explosion. A year and a half ago, it was beside a pile of rubble that was the company’s headquarters on Main Street, one of many buildings razed after a tornado tore a path through Springfield’s South End.

Now, as then, the talk centers on moving forward, not looking back, and about finding opportunity amid calamity — although there first had to be some reflection (although not much) on the winning-Powerball-like odds of disaster striking the same enterprise twice in such a short time.

“When they told me what happened, I didn’t know whether to laugh or cry,” said Kagan, the agency’s long-time director, who said she was getting ready to board a plane for home after visiting family in St. Louis for Thanksgiving when she received word of the blast. “I was thinking, ‘it’s November, so this is not an April Fool’s joke,’ but it was almost unbelievable that it could happen twice to Square One.”

This latest calamity, which, like the tornado, resulted in no injuries to students or staff, took out seven classrooms, the reading room, the kitchen, and play areas at the Chestnut Street Center, essentially displacing 98 children and several educators. They have since been relocated to other facilities, including some within the Square One portfolio, said Kagan, adding that, from a bigger-picture perspective, the damage from the blast sends the company back to the drawing board as it tries to blueprint a rebuilding plan for the future.

Indeed, the explosion came exactly one week (almost to the minute) after the agency reached a final settlement with its insurance carrier on the various kinds of damage done by the June 2011 tornado. The numbers in that settlement don’t come close to covering all the losses, Kagan told BusinessWest, estimating that they represent maybe 60% to 70% of the actual total. But simply knowing the number was necessary for Square One to perhaps move ahead with plans to rebuild somewhere in Springfield’s South End and once again be an anchor in that neighborhood.

Now, the agency has to recalibrate, she went on, and decide not only what to build — perhaps one facility to replace both that were leveled — but also where; the Chestnut Street facility served many families living and/or working within a few blocks of that building.

To adequately serve that clientele, the company may have to explore creation of another facility in that area, perhaps in Union Station, which is currently being renovated into an intermodal transportation center, Kagan noted, adding that Square One may not have the resources for such an undertaking.

“We had made some preliminary plans about rebuilding in the South End, but needed to know what our number was going to be,” she explained. “We had planned to reconvene after Thanksgiving, start to look at options, focus in, and drill down on a plan involving what we were going to build, where we going to build, and when. Now, we have more on our plate and many things to think about.

“We’re marching onward and upward, and this is just another challenge — that’s how we’re looking at it,” she continued, adding that there hasn’t been time or an inclination to say ‘why us again?’ “And we’re asking ourselves, ‘does this once more provide us with opportunity?’ It gives us some other things to look at and some other scenarios that could play out.”

For this issue, BusinessWest talks with Kagan — again — about staring down adversity and moving on with the agency’s 130-year-old mission.

 

Time and Space

Kagan’s temporary office in the Scibelli Enterprise Center, which she moved into more than a year ago, remains quite sparse; her printer still sits on a cardboard box, for example.

There are a few pieces of art on the walls — including a print involving some landmarks at her alma mater, Columbia University — but mostly large expanses of barren square footage. Time and energy have much to do with this, she said, adding that both have been devoted to matters far more important than decorating. Meanwhile, many of her personal and professional belongings, such as her diplomas, were lost in the tornado’s fury.

But there is also some psychology at play, she told BusinessWest. Indeed, by not covering the walls and filling the shelves, Kagan believes that somehow she might be shortening her stay in this building, which houses mostly startup ventures and was once part of the Springfield Armory complex, and accelerate a move into a new Square One facility.

The natural-gas blast has thrown some cold water on that thinking, she said, noting that it adds new layers to the already-complicated process of rebuilding for the future. And for the short term, it gives the company something it certainly didn’t need — more practice in the art and science of bouncing back from disaster.

This time it has been considerably easier than it was in the summer of 2011, she told BusinessWest, adding that the tornado took out the company’s headquarters and everything in it, leaving staff members without the barest essentials as they went about crafting a recovery plan.

After the gas blast, the scrambled staff members had offices, desks, computers, and files, she went on, and communication was much easier. Also, many staff members saw their homes damaged by the tornado, adding more and different layers of anguish that didn’t exist with this latest disaster.

The basic strategy moving forward after the gas blast was to keep students together as much as possible, said Kagan, noting that continuity is important to both children and staff. And for some in both constituencies, this was the second time they had been uprooted by calamity.

She said 60 of the uprooted children have been placed in other Square One facilities, in slots that had been taken offline, while another 40 have were moved to two borrowed classrooms in the New Beginnings Childcare Center on State Street. In general, there has been minimal disruption — students were in their new settings within days of the blast — and impacted families are pleased that new accommodations were made so quickly, Kagan noted.

But while some measure of continuity has been achieved, Square One has essentially lost 60 revenue-producing slots for students, said Kagan, adding that this lost business is one of many things she will have to hash out with insurance carriers and Columbia Gas, which accepted responsibility for the blast and is in the process of handling claims from impacted parties.

Another is replacement of the estimated $500,000 worth of equipment, learning materials, and supplies — from computers used by the children to toys and games — lost to the gas blast.

Overall, this latest disaster has left the agency with seriously depleted resources and reserves, said Kagan, adding that replacing everything lost to the tornado was an expensive proposition.

“In order to replace all that — our computers, servers, printers, and furniture — we had to invest a lot of money to get ourselves back in operation,” she explained. “And we didn’t get totally reimbursed for that from our insurance, depleting our resources and reserves.”

Elaborating, she said that, after the tornado, the company had equipment in storage to outfit two donated preschool classrooms. This year, it didn’t have such inventory available.

While exploring options for replacing supplies and negotiating with the insurance company and Columbia Gas, Square One is also looking at many possible scenarios for the long term, said Kagan, who told BusinessWest last June, at the one-year anniversary of the tornado, that Square One is essentially committed to being an anchor in Springfield’s South End — even as the prospects for a casino in that neighborhood add more question marks to the prospect of rebuilding there.

But with the loss of the Chestnut Street Center, there are now more questions about what to build and where to best serve clients across the city.

“The Chestnut Street facility has always been very popular, and it was always full,” Kagan explained, adding that there was a waiting list for slots.

“We’re going to reassess and talk to the families,” she said. “What we want to find out is whether, if we doubled our capacity in the South End, families would be able to use that facility. Some might say they work at [nearby] Baystate Health or Mercy Medical Center, or downtown, and that a South End center would take them out of their way.

“If we were going to build a facility for 100 children, do we now have to build one for 200 children?” she continued, adding that there are sites to be considered downtown and in the North End, including Union Station, although talks with city officials have not taken place on that location yet. And the reality, she said, is that the company doesn’t have the resources to rebuild in the North End at this time.

 

Not at a Loss

Looking around her office, Kagan noted some recent additions to the landscape, specifically several gift baskets from companies and individuals wishing to lift the spirits of those at the company, especially its director.

There have been many other expressions of support, she went on, citing monetary donations of many sizes, including a $25,000 contribution from the Penn National Gaming Foundation and the Peter and Melissa Picknelly Charitable Fund.

Such help from the community will be needed, she said, because the task of rebuilding from twin disasters and replenishing resources and reserves will be difficult and expensive. “We need all the help we can get.”

One thing she and the rest of the staff don’t need any more of is character spawned by adversity. They have plenty of that already.

George O’Brien can be reached at [email protected]

Opinion
Collaborative Model Spurs Redevelopment



From historic mill buildings stretched along our rivers to vacant properties in our downtown centers, Massachusetts is home to challenging brownfields in need of critical redevelopment. Through our combined experiences working with local officials and promoting economic development, we are committed to revitalizing these contaminated sites to increase housing, business growth, and job creation across the Commonwealth.
Through a collaborative model known as the Brownfields Support Team (BST) Initiative, we are targeting brownfields cleanup and partnering with municipalities to transform once-stalled, blighted parcels into prime development opportunities. We are experiencing tremendous results, including an improved environment and regional economic growth.
First launched in 2008, the BST has coordinated 24 state, local, and federal agencies over the last several years to tackle some of the state’s most complex brownfields. By working closely with key stakeholders, including our partners in the state Legislature, we have delivered more than $18 million in funding to accelerate cleanup, streamline processes to overcome technical roadblocks, and reuse more than 300 acres of valuable property for community and economic development.
We have made great strides in each BST community thanks to the hard work and dedication of municipal leaders, including Mayor Domenic Sarno in Springfield and Mayor Michael Bissonnette in Chicopee. For example, Springfield’s Indian Orchard Park, consisting of 54 acres, was approved by the Springfield Redevelopment Authority to use 12 acres for a 2.2-megawatt solar-power-generating facility. The success of this collaborative approach in redeveloping the site was recognized at the Brownfields 2011 Conference Transaction Forum in Philadelphia.
In neighboring Chicopee, the former Facemate Property was designated in the second round of the BST. Since 2010, we have worked with the city to demolish unused property and help pave the way for mixed-use redevelopment. Construction began on the first phase of the new complex — now known as RiverMills at Chicopee Falls — earlier this year to create a 21,000-square-foot senior center.
Similar success is underway in other BST communities, including Worcester, Grafton, Fall River, and Haverhill, each designated in the first round of the BST initiative, and Gardner, Attleboro, Somerville, and Chelmsford, designated in the second round. We have also collaborated with the city of Brockton to assess a list of sites in need of redevelopment.
In both our leadership roles, we often hear about the need to balance environmental protection with economic development. Fortunately, these are not mutually exclusive goals. By increasing collaboration across state agencies and working with stakeholders, we have made brownfields reclamation a priority for the Patrick-Murray administration and the Commonwealth.
With local, state, and federal government working together, once-blighted and contaminated parcels are becoming launching pads for community renewal and business growth.
Massachusetts has been recognized nationally for the success of the BST model. Most recently, the U.S. Environmental Protection Agency noted our strategy in redeveloping complex brownfields sites and awarded $6.75 million to Massachusetts.
This federal funding is a testament to the effective approach we are using in our communities, and we are extending the BST strategy to more cities and towns across Massachusetts. During Brownfields Month in November, sites in Ludlow, Fitchburg, Boston, Amesbury, and New Bedford were designated in the latest round of the BST Initiative.
We look forward to engaging more communities to transform brownfields into development-ready parcels and spur housing and job creation. With this strategy, we will continue to promote this partnership to help deliver long-term economic growth and environmental sustainability in Western Mass. and beyond.

Timothy P. Murray is lieutenant governor of Massachusetts. He launched the Brownfields Support Team Initiative in 2008 with Gov. Deval Patrick. Marty Jones is president and CEO of MassDevelopment, a key member of the Brownfields Support Team and administrator of the Commonwealth’s Brownfields Redevelopment Fund.

Departments Picture This

Send photos with a caption and contact information to:  ‘Picture This’ c/o BusinessWest Magazine, 1441 Main Street, Springfield, MA 01103 or to [email protected]

 

Night at the Museum

Partygoers recently donned their most elegant outfits for an annual fund-raising event, the Springfield Museums Holiday Gala. Guests gathered in the Science Museum for cocktails and hors d’oeuvres, where they toured the Gingerbread Fairy Tales exhibit, then enjoyed dinner in the Michele & Donald D’Amour Museum of Fine Arts and the Lyman & Merrie Wood Museum of Springfield History. The event helps underwrite the many educational programs at the Springfield Museums. Top: from left, Carol Moore Cutting, owner, WEIB; Beverly Hill; and Willie Hill, director, UMass Fine Arts Center. Middle: from left, artist Doug Brega; Carol Leary, president, Bay Path College; and Richard Flynn, president, Springfield College. Bottom: from left, Debbie DeBonis, payroll manager, Mass. Career Development Institute; Rick DeBonis, senior vice president, Hampden Bank; Mark Bartos, account executive, abc40/FOX6; Mary Ellen Scott; and Roy Scott.

(Photos by Ed Cohen)





























Ringing the Opening Bell

To celebrate the bank’s transfer from NASDAQ to the New York Stock Exchange, Michael Daly, CEO of Berkshire Hills Bancorp Inc., the parent company of Berkshire Bank, rang the NYSE opening bell on Nov. 29 at 9:30 am. Transfer to NYSE is a significant step in the growth and success of the company. Before the transfer, the company’s stock was listed on the NASDAQ Global Select Market. The company began NYSE trading on November 19 and retains the ticker symbol BHLB. Seen here, from left, are Pat Sullivan, executive vice president, Commercial Banking and Wealth Management; Richard Marotta, executive vice president, Risk Management; Sean Gray, executive vice president, Retail Banking; Daly; Larry Bossidy, board chair; Linda Johnston, executive vice president, Human Resources; and Kevin Riley, CFO.





Bacon and Basketball

UMass Minutemen basketball coach Derek Kellogg, pictured at top before a filled Center Court, was the keynote speaker for December’s Affiliated Chambers of Commerce Breakfast Club at the Naismith Memorial Basketball Hall of Fame. Middle: emcee Scott Coen of the River 93.9 and WHMP congratulates Claudine Gaj, owner and chef of the Magic Spoon catering company, who was one of the companies saluted during the morning event. Bottom: Steve Hayes of the Drama Studio introduces a young actress to perform a scene from The Little Princess.

Law Sections
A New Entity Has Been Created for Socially Responsible Businesses

Jeffrey Fialky

Jeffrey Fialky

While businesses continue to move forward through difficult and uncertain fiscal times, some companies have chosen to ensure that their growth and prosperity is directed not only toward the benefit of their stockholders and owners, but also toward the general public good.

For those companies, a new Massachusetts law that became effective earlier this month provides a new form of legal entity that permits companies to form as, or convert to, a ‘benefit corporation.’ This means that it has the purpose, in addition to pursuing the company’s underlying business, of creating a ‘general public benefit.’

The way a benefit corporation is formed, operated, and managed is similar to that of traditional for-profit corporations. In fact, the true distinction between the two is the concept of the benefit corporation focusing on the general public benefit, which the statute defines as “a material, positive impact on society and the environment, taken as a whole, as measured by a third-party standard, from the business and operations of a benefit corporation.”

The enabling legislation creating the new benefit-corporation entity was due in part to the work of B Lab, a Pennsylvania-based nonprofit whose mission is to “solve social and environmental problems.” Massachusetts was the 11th state to enact legislation permitting benefit corporations, and Pennsylvania has subsequently become the 12th.

A benefit corporation should not be confused with, and must be distinguished from, a nonprofit corporation. Nonprofit corporations are formed pursuant to a different section of Massachusetts law and permit the further application to the Internal Revenue Service for tax exemption. While there are many types and forms of nonprofit and charitable corporations, such entities generally exist either for the greater good of the general public or, in the case of membership-driven nonprofit organizations, such as trade organizations, chambers of commerce, and religious institutions, for the benefit of congregational and other members.

The primary distinction between nonprofit companies and benefit corporations is that, unlike benefit corporations, whose stockholders would still be entitled to pecuniary benefit from the success of the business, participants in nonprofit entities are prohibited by law from the ability to receive distributions of business profits. In addition, a benefit corporation would not be permitted to tax exemption at the state or federal level.

One of the most significant elements of the new business-corporation law pertains to the duty and standard of care to which corporate officers and directors are held. In a traditional corporation, officers and directors are held to the so-called ‘business-judgment rule,’ which holds such individuals liable for unfavorable business outcomes to the extent that such individuals did not act in good faith and as a reasonable person would have acted under those circumstances.

Through the new legislation, however, the scope of what can be considered by officers and directors in discharging their duties has been greatly expanded to include the public-benefit concept. In discharging their respective duties with respect to the benefit corporation, both officers and directors of the company would be obligated to consider not only the effects of their decisions upon shareholders of the corporation, but also:

• Employees and suppliers;

• Customers and clients as beneficiaries of the general public benefit of the corporation;

• Community and societal factors, including those of each community in which the business operates;

• The local, regional, and global environment, and

• The ability of the benefit corporation to accomplish its general public-benefit purpose.

Importantly, and unlike similar legislation in other jurisdictions, the statute specifically protects officers and directors from personal liability for monetary damages arising out of claims for the failure of the benefit corporation to pursue or create a general public benefit.

The practical effect of the expanding consideration of officers and directors is that they may not be subject to a stockholder derivative action as a result of taking actions that, while more costly to the business, would benefit the greater public.

For instance, a board of directors may elect to lease or purchase a more expensive facility in which to house the business, with such a decision having been based upon environmentally friendly and renewable-energy determinable factors, as opposed to pure utility and cost. Under such circumstances, stockholders would likely not prevail in a derivative action against the board.

However, while officers and directors have relief from liability for pursuing these general public benefits, the legislation nonetheless includes mechanisms to ensure that the corporation fulfills its obligations as a benefit corporation.

Specifically, benefit corporations may appoint an officer as a designated ‘benefit officer,’ and charge him or her with the duty to oversee the public benefits provided by the corporation, as well as to prepare an annual benefit report setting forth the company’s successes or challenges in pursuing its specific or general public benefits goals. Much like the annual report of a traditional corporation, the annual benefit report will be filed with the Secretary of the Commonwealth, in addition to being sent to stockholders and posted on the company’s website.

Parties, including shareholders, directors, and beneficial-interest owners who believe the company is not fulfilling its obligations in this regard, may initiate a benefit-enforcement proceeding as their sole remedy, but may neither bring an action against officers and directors nor claim damages for failure of the benefit corporation to pursue or create a general or specific public benefit.

Not only can new companies form as benefit corporations, but existing companies may also convert from their existing status to take advantage of the benefit-corporation status. Likewise, companies formed and operating as benefit corporations would nonetheless have the subsequent ability to terminate this status via an amendment to their bylaws.

If you think that a benefits corporation may suit your business, or if you have questions in this regard, it would be wise to consult your corporate attorney.

 

Jeffrey Fialky is a shareholder with the regional law firm Bacon Wilson, P.C, specializing in business, corporate, municipal, and real-estate law. A former assistant district attorney in Hampden County, Fialky joined the firm after a decade of holding senior attorney positions within some of the country’s most prominent telecommunications and cable-television companies, where he negotiated large-scale licensing, acquisition, and distribution agreements; (413) 781-0560; baconwilson.com/attorneys/fialky

Sections Women in Businesss
Unity First’s Janine Fondon Mixes Diversity and High-tech Savvy

Janine Fondon

Janine Fondon says she’s always managed to stay atop trends in communications.

In the spring of 1946, Irene Morgan, a black woman, boarded a bus in Virginia headed to Baltimore. She was ordered to sit at the back of the bus, as Virginia state law required, but she objected, saying that, since it was an interstate bus, the law did not apply. Morgan was arrested and fined $10.

Attorney Thurgood Marshall and the NAACP took on the case … and won, thus striking down Jim Crow laws in interstate travel. In 1955, Rosa Parks refused a bus driver’s order to move for white riders on a city bus, which initiated the Montgomery Bus Boycott and eventually a precedent-setting win in the Supreme Court.

Irene Morgan — whose bravery and tenacity paved the way for Rosa Parks to become an icon of the Civil Rights movement — was Janine Fondon’s aunt.

Fondon is now the successful president and CEO of Unity First Direct Inc., a marketing and public-relations consultancy business, which she founded with her husband, Tom Fondon, in 1996. That business was soon followed by its website counterpart, UnityFirst.com — a national distributor of diversity-related e-news — that grew, as the world grew, with the explosion of workplace computer technology and the burgeoning Internet.

Her ability as a young African-American woman to forge a career in what are mostly male-dominated industries stems from that same bravery and tenacity that her Aunt Irene demonstrated more than 65 years ago. With each new position, all involving communications of some form, Fondon has deepened her public-relations and communications abilities, while picking up emerging technology skills.

Looking back at her family history and career, she noted that, somewhere along the road, she realized she’d been ahead of the curve at almost every point. A persistent focus on the future and an ever-growing skill set that she acquired in various positions — and a particular interest in computers, which she repeatedly referred to as ‘fun’ — ensured that she showed up at the doorstep of each new opportunity with confidence.

For this issue’s focus on women in business, BusinessWest spoke at length with Fondon about her intriguing background. Her keen eye for concrete workplace skills, mixed with an awareness of different cultures and human behavior, has enabled her to launch a small consultancy group that has evolved into a growing, diversity-focused web destination targeting African-Americans and others seeking information of interest to multicultural communities.

 

Right Time, Right Place

Straight out of Colgate University, young New York native Janine Fondon landed her first job with ABC-TV New York in the public relations department as a broadcast analyst. In that position, she would hear viewer responses about programming content, news personalities, and sports analysts, and report back to the network.

“Working for ABC Sports … every time they mentioned things like ‘Hail Mary’ passes, the Catholic Church would not be too happy,” Fondon laughed. But strong miniseries like ‘The Winds of War’ and docudramas with controversial topics were great introductions to a broad variety of perspectives — and watchdog groups that were concerned about how the network was representing women, culture, or some specific issue, Fondon said. WJLA in Washington, D.C. helped expand her work in large metropolitan areas, especially the promo coverage she did in January 1987 when the space shuttle Challenger exploded after takeoff, just one of the milestones that helped her hone her writing skills.

“Those days of writing good stories, getting to the heart of the message … it was really exciting figuring out what the real story was,” she explained. “Those positions made me think how I might pursue something else in the communications field, and honestly, that field has changed every two years since I’ve been involved in it.”

A move to Boston for a PR job with the Unitarian Universalist Assoc. wasn’t a great fit, but with the New England area going though high-tech growth, she was thinking, as always, of the future. She targeted Digital Equipment Corp. and landed in its Corporate Communications department as the associate editor of Digital’s worldwide internal publication, Decworld.

“At Digital, we were communicating internally and with the world, much like we do with Facebook and other forms of communication today, but we were doing it before the mainstream,” Fondon told BusinessWest.

The jump from religion to technology wasn’t an issue. “This was a global company, and I would be able to see what it was like to build this global effort,” she said. Later, with the eventual demise of Digital, her communications and technology skills made her a solid fit in the financial industry which was entering a new age of online sharing of highly confidential financial information.

Working for BankBoston, she was writing not only for the internal print magazine but online vehicles as well — the early development of online communications for the masses. People were using WordPerfect, and everyone still wanted hard copies, and her co-workers were resistant to online bulletin boards and new computer programs. Fondon thought they were great. “I don’t know about you, but IBM Selectric was not my idea of fun, so anything that made it easier, I was all for it,” she laughed.

“Everybody was asking, how are we going to deal with all this change — change in management, change in technology, and the efforts to bring more women into the workplace?” she continued. Meanwhile, she was experiencing major changes in her own life — a husband who came from the world of IBM, and a baby daughter, had her reevaluating her path.

 

Worldwide Change

Fondon can remember people saying that newsrooms weren’t diverse. “I said, ‘if you think newsrooms aren’t diverse, you should enter into corporate communications!’”

Merging her past positions, her skills, and what she saw as a need in all workplaces, Fondon created a small consulting company that she named Unity First Direct. Her husband, Tom, with his IT skills, joined her soon after. She kept busy with magazine writing, brochures, reports, and the like, and within that same year, she and her husband noticed that diversity really was becoming a buzzword, and more venues for community outreach were needed.

So she launched the Unity First newspaper and built a small following, but discovered a growing need for different avenues of diversity awareness. Through e-marketing, outreach, and public relations, Fondon could help clients engage new audiences and build their brands with diverse, emerging markets, including people of all backgrounds, experiences, and geographic locations.

“As we moved from being a print publication to online, and more diversity consulting,” she said, “we saw companies had all the pieces, so we would work to help them connect the dots.”

Eric Gouvin, director of the Center for Innovation and Entrepreneurship at Western New England University, has worked with Fondon on many occasions, having used her as an expert panelist and through co-sponsored events. “We’ve had diversity events that focus on inclusive management,” he said. “Your workforce has its own sets of traits and properties: the way you manage young folks versus old folks, women versus men, people of color versus other races … there are ways of handling all that, not heavy-handed, but sensitively.”

As Fondon described this aspect of her work, “if a company has a project and they want to develop it to meet this 21st-century approach through demographics, content, and tone, then we can help them shape that project.

She explained what she means by ‘tone.’ “Companies that are trying to position themselves in today’s workplace need to reflect diversity inclusion in their internal communications, external communications, community relations, and media approach, and they need people like us to help them sharpen those skills.”

She prefers to not spend energy on the negative, which includes all the things that can happen when a proper approach to tone is ignored — everything from diminishing one’s culture to lawsuits — but to focus on positive outcomes, the companies that make a respectful and educated difference and, thus, enhance their own success.

Today, UnityFirst.com is a growing voice on the Internet and one of the most in-depth resources for connecting with diverse communities and press across the U.S. and beyond. Engaging more than 2 million readers from corporations and boards to cross-cultural business leaders striving for new bottom-line success, the site is a content driver of news, with more than 4,000 national press members, including top mainstream business publications; television, Internet, and radio sources; and press from the African, African-American, Caribbean, Hispanic/Latino, and Native American communities.

In addition, UnityFirst.com delivers content to ForbesDiversity.com, an outgrowth of Forbes.com that offers special sections with comprehensive subject matter from different perspectives.

 

Driven to Success

In addition to a multitude of speaking engagements, Fondon is an adjunct professor at Baypath College and Westfield State University. She and Tom are also targeting young local middle- and high-school students through two projects, the Digital Ambassadors Program and the Common Ground Leadership Forum and Awards.

“It’s our initiative to work with young people around the technology and diversity topics,” said Fondon. “Both programs emphasize the importance of digital learning, inclusion, and leadership.”

Part of her work with students is to keep the dialogue applicable to young people’s interests. Considering the speed at which technology and young people’s interests evolve, Fondon said, “as a teacher, when you think you’re making it relevant and interesting, revisit what that means, because either you got it right, or you didn’t.”

Gouvin agrees, and praises Fondon’s ability to consult with employers. “If you want to be effective, you’ve got to find a way to connect with the people who are working for you,” he said. “It’s not a matter of being PC [politically correct], or doing it because that’s what everyone’s doing; there is sense to it. Janine has always made a case for diversity that is compelling.”

Along with her tenacious and pioneering qualities — like those that spurred her Aunt Irene to such groundbreaking action — Fondon will continue to assist clients with marketing, educate communities about diversity awareness through digital, print, and verbal communication, and help individuals and corporations realize their full potential.

In short, she’s keeping them ahead of the curve.

 

Elizabeth Taras can be reached at [email protected]

Opinion
Some Things We’d Like to See in 2013

As we prepare to put an intriguing, if unremarkable, business year behind us, it’s time to look ahead to 2013, with some hopes, expectations, and concerns.

Here’s a quick list of some of the things we’d like to see, or not see, in the year ahead.

• First, we only want to see Square One director Joan Kagan’s picture in the newspaper, or this magazine, if she’s at the annual tea wearing one of those big hats or, even better, wielding a ceremonial shovel at a groundbreaking for a new facility in Springfield’s South End. After the tornado in 2011 and the gas explosion in 2012 erased two facilities with Square One signs on the front, it’s time for this nonprofit agency and its leader to get a break and eventually turn these twin calamities into opportunities.

• And now, we return to the issue that dominated 2012 in every way — casinos. It is our hope that the process to determine the winner of the Western Mass. casino moves more quickly, and more civilly, than it did over the past several months. As we said back in the summer, it’s unlikely that anything else is going to get done around here, and especially in downtown Springfield, until we determine where the casino is going to go. So this needs to get settled. And while we understand that this is a competition with very high stakes, we’d like to see more energy put into making these projects work for the region and less energy spent criticizing rival plans.

• Meanwhile, we’d like the players in this market to take a page from the script written in Northeastern Pennsylvania (see story, page 6), where a revenue-sharing agreement was worked out among the communities around Bethlehem, where the casino was eventually built. This casino fight shouldn’t be a winner-take-all proposition. Many area communities will share in the headaches that come with a casino, and they should also share the wealth.

• And while the casino battle plays out, area economic-development leaders have to push ahead with other initiatives because the phrase ‘a casino is not a cure-all’ is not rhetoric — it’s a fact. This region will need other sources of new jobs and other efforts to spark revitalization efforts in area downtowns. We’re encouraged by the work both Springfield and Holyoke are doing to build opportunities with and around the creative economy, and these must continue and expand. At the same time, the region needs to continue to explore new job-creating opportunities in green energy, the life sciences, and other fields.

• UMass will celebrate its 150th anniversary in 2013. It should be a big, year-long party. We’d like to see it capped off with strong movement toward creating a satellite campus in downtown Springfield. Such a facility, perhaps undertaken in conjunction with a casino development, would bring young people and a huge amount of energy to Springfield’s central business district. The timing isn’t good — the state budget situation is getting worse, not better — and there are many other priorities for the state university. But an expanded presence in Springfield would serve both the city and the school, and now might be the time to strike.

• Lastly, we’d like to see more area employers gain the confidence to start hiring again. There are many reasons why most people in business believe we’re still in a recession (even though technically we are not), but the jobless nature of whatever recovery we’re seen is the primary culprit. With more people working, spending should increase, and businesses across every sector would benefit. It’s all a matter of confidence, and we hope that, in the year ahead, this region can find some.

Law Sections
National Labor Relations Board Takes Aim at Employer Policies

John S. Gannon

John S. Gannon

Recently, the National Labor Relations Board (NLRB) has been attacking workplace policies that are common in both union and non-union workplace settings.

Previous BusinessWest articles have discussed the NLRB’s intrusion into social-media polices and at-will disclaimers. Unfortunately, more common employer practices are under siege, including internal workplace investigations and policies and rules that limit off-duty employee access to the workplace.

 

Non-union Employers Are Fair Game

Employers are often surprised to learn that the National Labor Relations Act (NLRA) applies in a non-union environment. The NLRA is considered by many to be a federal law that regulates only employer-union relations. However, you may be surprised to learn that the law covers a wide range of employer activities, both in companies that are unionized and in companies where there are no unions at all.

In particular, Section 7 of the NLRA protects the right of all non-supervisory employees to engage in “concerted activities” for the purpose of collective bargaining or other “mutual aid or protection.” This gives employees the right to come together to discuss any terms and condition of employment, including wages, benefits, or working conditions. Employer actions that impede or “chill” an employee’s exercise of these rights violate Section 7.

 

 

Discussion of Internal Investigations

Employers often initiate a workplace investigation when an employee brings a report or complaint of misconduct to management. The first step is to interview the complainant and employees who may have witnessed the allegedly inappropriate or unlawful conduct. Employers often discourage employees from discussing the substance of these interviews with others, particularly to protect the integrity of the investigation.

Employers that routinely require employees to keep investigative discussions confidential might need to alter their practices. The NLRB recently concluded that a blanket rule requiring employee confidentially during internal investigations violates Section 7. According to the board, requiring employees to keep quiet during investigations conflicts with their right to openly discuss their working conditions with co-workers. Although the board recognized that employers may have a legitimate interest in keeping investigative discussions under wraps, this does not outweigh their employees’ Section 7 rights to engage in concerted activities.

The NLRB did, however, outline circumstances that could justify a request for confidentiality by an employer. To lawfully implement — and justify — a confidentiality request, employers should determine at the outset of an investigation whether confidentiality is truly needed. To make this determination, employers must examine whether: (a) witnesses are in need of protection; (b) evidence is in danger of being destroyed; (c) testimony is in danger of being fabricated; or (d) there is a need to prevent a coverup. Satisfying this standard is no small task, and failure to properly consider these or other factors could result in an unfair-labor-practice charge.

Employers should consult with labor and employment counsel before asking employees to keep the substance of internal workplace investigations confidential.

 

Employee Off-duty Access

Employers frequently institute policies prohibiting off-duty employees from entering the workplace. These rules help ensure employee or customer safety and ease administrative burdens on supervisors. They also have particular importance during union-organizing drives. Off-duty rules help to keep off-duty employees who might support a union from disrupting the workplace during non-working hours.

For more than 35 years, the NLRB has considered off-duty employee access rules to be permissible, as long as the restriction (a) limits access solely to the interior of the facility; (b) is clearly disseminated to all employees; and (c) applies to off-duty access for all purposes, not just union activity. However, in another controversial decision from the NLRB, the board determined that an employer policy prohibiting off-duty employee access to the workplace was unlawful.

In that case, a hospital restricted hospital employees from entering the interior of the hospital except to visit a patient, receive medical care, or conduct “hospital-related business.” Employees were occasionally permitted to return to work to pick up a paycheck under the hospital-related-business exception, but other than that, they were typically disciplined for entering the facility for non-work purposes.

The board took issue with the hospital-related-business exception to the hospital’s off-duty rule. It ruled that this exception gave management too much discretion to permit or deny off-duty employees to enter the facility. Conceivably, it could be used to limit union-organizing activities, but permit other activity at the employer’s discretion. This violated the NLRA’s stance on off-duty access.

Notably, this ruling was consistent with a recent decision where the board concluded that a rule permitting off-duty access to attend employer-sponsored events, such as retirement parties and baby showers, but barring other access, violated the NLRA because it was an impermissible chilling of the employees’ Section 7 rights.

 

Bottom Line

By taking aim at workplace investigations, off-duty access rules, at-will statements, and social-media polices, the board is clearly seeking to regulate employer practices that go beyond the traditional unionized environment. Employers need to carefully evaluate existing practices to ensure compliance with NLRA.

If you have concerns about how these decisions could impact your workplace, you should contact experienced labor and employment counsel for assistance.

 

John Gannon is an associate at the management-side labor and employment firm Skoler, Abbott & Presser, P.C.; (413) 737-4753; [email protected]

City2City Sections
City2City

Allentown’s new, $230 hockey-arena development

Allentown’s new, $230 hockey-arena development also includes a 220-room hotel, office space, restaurants, and other retail uses.

Mayor Ed Pawlowski lost the battle to host the Lehigh Valley area casino, but he believes he may have won an even bigger prize for Allentown in something called a neighborhood improvement zone, or NIZ.

The concept, which became reality only after a prolonged battle in the state Legislature and then several court fights, stipulates that all state and city tax revenue, except real-estate taxes, collected by businesses within the NIZ will be used to repay 30-year bonds issued by the Allentown Economic Development Corp. to fund various development projects in the zone.

That list is topped by a new, $230 million arena that will host the Lehigh County Phantoms (the displaced affiliate of the Philadelphia Flyers), but also includes a new 220-room hotel, perhaps 2 million square feet of new office space spanning two initiatives, new restaurants, and other forms of retail development.

The NIZ has spawned considerable debate about what the lost tax revenue — perhaps $15 million annually, by some estimates — will mean for the Commonwealth of Pennyslvania, and also whether the NIZ activity represents new development or simply moving business from one side of Allentown to the other.

But what can’t be debated is how the zone has changed the landscape in this city in Eastern Pennsylvania, visited by the City2City Springfield delegation late last month.

Indeed, there is now a 30-foot-deep hole at Seventh and Hamilton streets, covering roughly three city blocks of what had been vacant or underutilized properties taken by eminent domain for the creation of what will be known as City Center.

This was the site of an elaborate groundbreaking ceremony for the arena project on Nov. 29, at which city officials and Phantom executives used special hockey-stick-handled shovels to move some dirt around.

“We are breaking ground on the future of Allentown,” said Pawlowski at the event, using that phrase to describe both the ceremony and the NIZ itself, which is a novel concept and unique to Allentown.

In a later interview with BusinessWest, he said the zone, and the broad City Center project, came about as Allentown was searching for ways to spark new development in a community struggling to recover from both the recession and a region-wide loss of manufacturing jobs to other parts of this country and other nations.

Allentown was one of a handful of communities in Lehigh County that were targeted by casino operators after enabling legislation was passed roughly a decade ago, and eventually became a finalist in the contest won by neighboring Bethlehem.

The 130-acre NIZ and what is taking shape within its boundaries is not officially described as ‘plan B,’ said the mayor, but that’s what it amounts to, and he believes it has the potential to be as much of a game changer as a gaming facility would be.

“It’s a huge economic-development tool,” he told BusinessWest, suggesting that officials in Springfield look closely at trying to do something similar. “It’s something that would be incredibly viable and help attract business from other states if it’s done right.”

Pawlowski said city officials looking for alternative financing models needed to build an arena and bring the Phantoms to Allentown, researched tactics used in other cities, and eventually focused on a strategy used in Arizona involving state-tax revenues — in ways similar to how tax-increment-financing, or TIF, packages involving local property taxes are utilized — to finance public and private initiatives.

The NIZ is in many ways better than a TIF project or zone, said the mayor, because local property taxes are not lost to the community or its school department. “It’s a cost-neutral proposal for the state, but a net-plus for the municipality and for economic development.”

And in the case of the Allentown’s NIZ, it encouraged development across many sectors, expanding the project well beyond the arena.

“We realized that just putting in an arena wasn’t going to be the end-all answer for development,” he explained. “It could be a key anchor to bring people and resources back into the urban core, but we needed other elements to also occur around it.”

The eventual legislation passed in Pennsylvania works on a simple theory — that state and local taxes essentially deferred to cover bonds floated for redevelopment projects will be recovered, and perhaps far surpassed, by taxes generated by new development taking place within the neighborhood-improvement district.

It’s a noble experiment that was met with some initial skepticism and opposition, said Pawlowski, as well as some concerns from institutional investors involved in the project about whether the Legislature could someday repeal the measure.

That led to follow-up legislation with a clause stipulating that the law couldn’t be repealed, and then eventually another modification involving earned income tax, an issue that spawned several lawsuits that delayed work within the zone.

“It actually passed the Legislature three times and was signed by two governors,” said Pawlowski. “It was no easy task — it was a monumental task — but we were able to pull it off, and it’s generated lots of revenue: all state taxes, all incremental taxes, for the next 30 years, for both public and private development.”

The arena, first office complex, and hotel are slated to be completed by 2014, said the mayor, adding that other components will be in place within a few years after that. And much of it represents what he considers new development.

That includes a new division, involving sports medicine and orthopedics, for Lehigh Valley Hospital; a consolidation initiative involving Penn National Bank; a new headquarters facility for Lehigh Fuels; and new office facilities expected to bring many law firms and accounting firms.

Adding all this up, Pawlowski believes the NIZ will likely have more long-term benefits for Allentown than a casino.

“I think it’s better than plan A,” he said. “They can have the casino; the casino has helped, but it is not a catalyst for other economic development.”

 

— George O’Brien