As of Monday May 13, the East Penn School District will participate in the much-debated Tax Increment Financing plan for the proposed Hamilton Crossings shopping center. Only moments after voting this in the board of directors approved a final proposed budget whose star feature is a zero-percent tax increase.

The nays for the TIF plan came from Lynn Donches and Julian Stolz, along with an abstention from Michael Policano. Donches called it an attractive proposal with apparent benefits for everyone involved, but ultimately was uncomfortable voting for something she felt was not the best deal for the taxpayers. Donches twice attempted unsuccessfully to have the vote tabled or postponed until the next meeting based on her opposition.

Stolz in his statement declared, "It is not the place of government, in the American, free market system, to create jobs and pick winners and losers. If we approve this [TIF] we will be doing just that. As public officials, we either believe in free markets, or we don't. Our votes tonight will reflect what we believe." Stolz, on his blog the Stolz Report, encourages the developers, Tim Harrison and the Goldberg Group, to pursue their project in the "time honoured fashion" [sic] of capitalists-without government stimulus.

Similar sentiments were issued from a representative of Cedar Realty Trust, Inc., the group who owns and operates nearby Trexler Mall and Trexlertown Plaza. Jonathan Hugg of Cedar Realty presented a letter to the board advising them of his clients' objection to the resolution and urging the board to reconsider. Trexler Mall and Trexlertown Plaza, says Hugg, were invested with private money, at a cost of over $30 million over the last three years.

"By providing TIF assistance to the developers of Hamilton Crossings, the school board will effectively penalize Cedar for not coming hat in hand to ask the school district to fund Cedar's private development," Hugg said.

Hugg also pointed out the possibility of legal doubts of the resolution's compliance with the Tax Incremental Financing Act, the Uniformity Clause of the Pennsylvania Constitution and the Equal Protection Clause of the U.S. Constitution. Hugg posits the board will harm existing businesses at the Trexlertown sites, putting them at a disadvantage by offering government subsidy to a direct competitor in what he called "aggressive 'take it or leave it' lobbying by a developer who has threatened to walk away if it does not receive taxpayer money." Cedar may file suit now that the board has passed the resolution, but Hugg could not comment on his clients' next step.

It is essential to the TIF's survival and implementation that all three taxing bodies agree to participate; after Monday evening, if either Lehigh County Board of Commissioners or Lower Macungie Township does not agree the TIF plan and the development project do not exist.

Donches also expressed concern over transportation improvements built into the TIF plan and necessary for Hamilton Crossings' completion and that added about $11 million in construction costs to the project. The TIF plan states these improvements would be necessary with or without the project and Director Alan Earnshaw and board president Charles Ballard corroborated this. The improvements include widening Hamilton Boulevard and Krocks Road, sidewalks and turning lanes on Hamilton Boulevard and new traffic signals. The developers have applied for a $6.3 million grant from PennDOT transportation funding in addition to some $3.7 million in grants already achieved.

Directors Earnshaw and Samuel Rhodes argued fervently for the TIF plan. Earnshaw insists it is of great benefit to the taxpayer, either minimizing or totally eliminating tax increases for future years. Earnshaw ascertained from the developer the land was considered of poor quality, (it was deemed blighted by Lower Macungie in a resolution last November) and virtually useless for any other kind of development. Commercial development of this kind is exactly what the Route 222 Bypass was intended for, Earnshaw said.

Rhodes, who says he ordinarily opposes TIF plans on suburban areas, said he would be remiss to miss the opportunity to vote in money that funds public schools.

Ballard said the best way to battle tax increases and inflation is to increase tax revenue-more specifically, to erect big buildings and fill them with materials for sale. Ballard said the district has no liability and stands to lose nothing. And indeed according to the TIF plan the governing bodies are not responsible for the bonds issued to pay the development costs. Even in the circumstance of revenue for the next 20 years insufficient to meet the costs of the TIF, the developers are responsible for making up the difference.

As for the budget, superintendent Dr. Tom Seidenberger mingled his comments with pride as for the first time since 1997 (at the earliest) he was able to present a zero-percent tax increase budget to the board. It was passed unanimously.

The board's vote also encompasses the continuation of the senior citizen tax rebate program.

Seidenberger commented, "This will be the time to do right by taxpayers but as a skilled and, I think, seasoned superintendent, we know the difference between willy-nilly spending and when to stop the floodgates." The superintendent promised to look into parent concerns about overcrowded fourth- and fifth-grade classrooms at Macungie Elementary, saying the budget would certainly not be increased, but some things might be moved around and the school would be getting at least one additional teacher already.

At present the budget as proposed has a structural deficit of $5.5 million, the difference between its revenue and expenditure. Earnshaw says the current fund balance will be used to make up this difference and consequently be lower in the next fiscal year.

Ballard said that as always the wild card is the state budget; there is no official word yet from Harrisburg about the state budget. The final vote for the budget will be June 24.

In addition the school board was proud to accept a $22,000 donation to the Emmaus High School science department in memory of Chet Lewis Zazo, an 1988 graduate who passed away in 1996. A $3,000 per year scholarship has been awarded each year in Zazo's name and Monday evening the remainder of the fund was passed on to the school for the purpose of purchasing science materials and equipment for the department. Zazo worked for the Department of Environmental Protection, and his family described him as "an outdoorsman who embraced nature," hardworking and dedicated to his science.