A huge plot of government land was sold to a developer for a few million.
It was a bargain, but who got the better deal?

By Evan Schlotterbeck '25

As cars whizzed past the corner of 1600 Hanover Ave., a group of roughly 75 people assembled on the patch of grass leading to the entrance of what was once one of the largest health institutions in Pennsylvania. As people arrived, they were greeted with hugs and encouraged to spend time looking at the memorabilia set up on folding tables. On May 3, 2024, the Pennsylvania Historical and Museum Commission unveiled a marker to recognize the old Allentown State Hospital, the structure that once stood just over the hill, separating the past from the future for most folks gathered on the grassy corner. Many were part of the Allentown State Hospital community, having worked there during the 98 years years of its existence, and they felt a significant part of them was rooted in that community– one of vibrance and compassion for individuals who truly wanted to help the most physically, mentally or emotionally vulnerable.

Now,  the only thing that remains on this site to represent the old hospital and all who were a part of it is a historical marker. The hospital was demolished in 2020 to make way for a brand-new community.

After the demolition, Senator Pat Browne sold the 200-acre property, where the Allentown State Hospital once stood, for $5.5 million with seemingly no strings attached, to JB Reilly’s City Center in 2022. After the state spent $12.7 million to demolish all of the buildings and clean up the property, this blank canvas was sold for just $5.5 million. It sounds like a bargain.

If you walk about a mile and a half to the west of the Allentown State Hospital site, you will see a lot of new construction. Scanning archived Google Maps images of Hamilton Street, you can see buildings that have since been razed and replaced with luxury apartments and new storefronts. This change has been made possible by a special tax district created for Allentown called the Neighborhood Improvement Zone (NIZ). This investment downtown was fueled by a promise that it would bring in revenue to help revitalize a struggling neighborhood. But as the Voice previously reported, the impact has yet to be felt by those living on the outskirts of the NIZ. Walk down Hamilton Street on a Thursday night and you might be surprised to learn that the luxury apartments are currently filled with tenants. The street is eerily quiet, the new bars and restaurants mostly empty or already shuttered and out of business. A great example is the Downtown Allentown Market– a once ubiquitous establishment in Allentown that has now reduced its hours and decided to close at 3:00 p.m. and on weekends. Where is everyone?

A lesson that you could take away from the NIZ development is that investing in new buildings, restaurants, lighting, and sidewalks might make the neighborhood look better, but it doesn’t necessarily create a better neighborhood on the inside.

City Center Corp., owned by JB Reilly, has built roughly 1500 new luxury apartments in the NIZ. Giving JB Reilly access to more property in Allentown to develop and ultimately subsidize raises a question regarding the diversity of ownership in the city, and whether having one company in charge of so much benefits Allentown holistically. Reilly owns a large portion of the new properties that have been revamped in the NIZ and is showing no signs of slowing down.

Back in 2015, the Morning Call asked Executive Director of the Keystone Research Center Stephen Herzenberg his thoughts on City Center’s dominance in the NIZ. And while he said there are no problems on the surface of investment targeted toward revitalizing old buildings in a downtown area, he did have concerns. “When you put this much tax subsidy in the hands of one developer, it’s going to raise questions. We’d prefer they be invested in projects that are unquestionably for the public good,” said Herzenberg. But have the new City Center projects benefited the citizens of Allentown as a whole?

When the NIZ project began, there were a lot of predictions and promises about how much good the new development would bring to the city. In an interview with WFMZ, JB Reilly said the NIZ would not only bring development to Hamilton Street but drive other developments in the community. “Because of the poverty trends in Allentown,” he said, “a lot of these neighborhoods are predominately lower income. The only way you reverse a trend like that is with two things — economic development that creates job opportunities and improving education for people living in the neighborhoods so they are qualified to fill the jobs that will be available.” While critics worried about gentrification, Reilly contended that the development would benefit everyone. “If you draw a three-quarter mile radius around Seventh and Hamilton, as a community we should be able to transform all of the neighborhoods that are within walking distance of downtown,” said Reilly.

But not everyone was convinced. Councilperson CeCe Gerlach raised concerns over the NIZ and the foundational ideology. “I believe they are trying to force us out, to clear out the neighborhoods and bring higher-income people in,” she said to WFMZ. “What’s happening in Allentown is not new. It’s been done before. It’s not like we’re just imagining it.” She continued, “I’m 100 percent for development, but let’s do it the right way, and let’s focus on the people — not just the buildings.”

The proposed Northridge “master-plan community,” the vision for the Allentown State Hospital property, is another development that presents itself as a promising venture– but not without some controversy. The process of the sale of the property began in 2017 when Sen. Browne introduced the bill that authorized negotiations. After a failed negotiation, Browne introduced another bill allowing for a competitive bidding process to determine the outcome of the endeavor. However, a mere eight months later, the property was sold to none other than JB Reilly.

JB Reilly, once again, finds himself with a large canvas to paint upon and an immense responsibility to the City of Allentown to develop the property with the comprehensive needs of its residents in mind. But what are any lessons we can learn from the NIZ neighborhood development?

It might help to look at Seventh Street. Adjacent to the NIZ, a place that feels different from the glossy glass and brick buildings on Hamilton Street– busy sidewalks, vibrantly decorated storefronts, families and friends walking to their favorite restaurant, a grocery store, a barbershop. Things that make a place– a true neighborhood– feel alive.

Does your location, where you live in this country, determine your quality of life? This is a question that Dr. George Galster posed in a research paper in 1995. He described a concept he referred to as the geography of opportunity– an idea that housing on the inside is only part of the equation to a healthy community, and what surrounds those properties– stores, schools, parks, public transportation– contributes equally to a neighborhood’s vitals. “It’s like the housing package, all the stuff that comes with your house,” said Karen Pooley, a professor of practice at Lehigh University who researches neighborhood revitalization strategies. “On the inside, you have two or three bathrooms, but then it’s also all that stuff that’s on the outside. So parks, grocery stores, transit, good schools, and those kinds of things. And your pathway to all of that is through the housing that’s near it.”

A big issue with the geography of opportunity, though, is that the neighborhood amenities have been available to some and not others. “So that’s what we’re talking about with geography opportunities,” continued Pooley. ‘These are places that have everything people could possibly need for what they want to do in their lives. That’s where the opportunities are and if you look at where housing is affordable, or if you look at where rental housing is located, there’s some overlap but there’s not a ton.” As much as a strong geography of opportunity is desired in all neighborhoods, this is not the reality of the current social and economic climate. Certain areas of Allentown, like the NIZ, are receiving lots of investment, but to what end?– begging the question of how to create better neighborhoods on the inside.

At a December 6, 2023 city council meeting to approve new zoning regulations for the Northridge development, a representative from City Center suggested that the development would help with the housing shortage by creating housing for the middle class to free up other housing for those who would not be able to afford to live in Northridge. Councilperson CeCe Gerlach pushed back, saying that there is actually a surplus of housing for middle income and that what is actually needed is affordable housing for lower-income residents in Allentown. But a representative for the developer rebutted. “It is not possible for a private developer to build very low-income housing without massive public subsidies,” he said. “That’s true all across the country. There’s been some interest expressed that if there are particular partners that want to be involved in portions of the property that there may be opportunities to do different types of housing. But a private developer cannot build very low-income housing on their own.”

Building affordable, deeply-affordable and mixed-income housing requires partnerships between non-profits, private developers and the government. “It’s not that developers can’t build affordable housing, but the city has to be a partner,” says Josh Siegel, Pa. Representative serving Lehigh County. “For example, they can offer incentives like tax abatement, where they allow developers to not pay taxes on properties if they build affordable housing. Building affordable housing requires logistics and know-how, it’s not easy.” Local zoning laws often make it difficult to build multi-family housing, but Siegel is proposing legislation that would change zoning rules to make it easier. He also argues that the Northridge development, even with market-rate houses, will help with our overall housing shortage. “We are 9,000 housing units short, building more housing could lower future shortages. We need to build on steroids.”

Building housing suitable for a variety of incomes would not only help the underserved lower-income population but benefit the community as a whole. Research shows there are several benefits to mixed-income communities, including the deconcentration of poverty, racial and socioeconomic integration, the promotion of economic development and the creation of a healthy living environment for families. Some factors for sustaining successful mixed-income communities begin with a strong geography of opportunity, a uniform design for all units, a continuum of income levels and a fluid integration within surrounding neighborhoods. The National Housing Conference suggests that developers can benefit, too. They argue that when the housing market is strong, the market rate houses in a mixed-income development can generate enough profit to cover the costs of the affordably-priced units.

Allentown’s redevelopment as a whole has turned into a race between investors, developers, and the city’s affluent at the expense of the lower-class residents. Writing for Salon in 2019, Anthony DiMaggio, associate professor of political science at Lehigh University, argues that these renowned developers have essentially been handed “keys to the development kingdom,” yet have failed to address improving the living standards of the poor and underprivileged. DiMaggio argued that low-income residents were forced to relocate outside of center city to surrounding neighborhoods through the availability of federal housing vouchers. It is possible that the overall redevelopment in the city could have produced some benefits for Allentown’s low-income residents, however, the nearly full apartments on Hamilton Street seem to exist as a ghost city. Interior courtyards and attached garages mean the newest residents of downtown Allentown exist in their own city within the city.

Awarding the majority of the development to one company may hinder the chance for all voices to be heard as Allentown clambers back toward what it once was– a spirited neighborhood teeming with industry and business, attractive to residents and outsiders alike.

So, when you look back at Sen. Browne and JB Reilly’s vision for the NIZ, is it fulfilling the promise to transform all of the downtown Allentown neighborhoods?

And now we have the Allentown State Hospital property –a blank canvas waiting to be drawn upon. Geography of opportunity and mixed-income communities are proven positive options to lay strong foundations for beneficial development, especially one of Northridge’s scale. Yet, the lack of transparency regarding the sale of the property and the developer’s vision for Northridge as a market-rate community means the people of Allentown must have faith that this project will reap positivity for everyone in the city. City Center and JB Reilly have a gaping opportunity with almost no limits. The property was cheap, a mere $5.5 million for such a large space. One could argue quite the bargain. Yet, a bargain for whom?

Using the NIZ as a template, it is a concern that this project will follow suit in all the wrong ways, contributing further to the needs of investors and perpetuating the lack of addressing Allentown’s residents in need. As City Center works on final plans for the development, consider what you would do if you could build a neighborhood from scratch, and had a 200-acre property to work with? “I’d prioritize mixing uses and having what’s developed (both in use and in design) reinforce the Hanover Street commercial corridor and the adjacent East Side neighborhoods,” said Pooley. She also hopes the site will work towards the goals of the city’s new zoning ordinances, which get at the same kind of thinking.

Let us know, where would your focus go when given a space that could significantly benefit all residents of Allentown? How would you respect the community of empathetic hospital staff whose past is embedded within the space?  As you ponder this, consider what JB Reilly said about the NIZ, “We’re not building a casino here. We’re basically rebuilding a community.”

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