March 01, 2012--Allentown's $158 million hockey arena -- future home of the Phantoms minor league hockey club --already has plenty of bells and whistles planned: a soaring atrium, a year-round sports bar, retail space and club boxes.

Now the city is negotiating with a private developer to add a hotel facing Seventh Street and a multi-floor office building that would rise 133 feet above Hamilton Street. Both would be integrated into the 8,500-seat sports complex scheduled to open in the fall of 2013.

City officials would not identify the developer or estimate how much the additional features would add to the project cost.

"That would be the private developer's cost," said Sara Hailstone, Allentown's director of community and economic development. "So we don't have that yet."

The Allentown Commercial and Industrial Development Authority will take plans for a 175-room hotel, a 200,000-square-foot office building and a parking deck on Linden Street to the Allentown Planning Commission for approval on March 13. The commission already has granted approval to plans for the arena itself.

The city wants to nail down Planning Commission approval to be ready to move forward immediately if negotiations end in a deal, Hailstone said.

"If we don't strike a deal with the developer, we're not going to build it," Mayor Ed Pawlowksi said.

The private developer has at least one tenant lined up for the office building, officials said. The new plans also include 750 parking spaces, most of them in the Linden Street deck.

The hotel and office building portion of the arena project would be financed using a combination of private equity and state and local tax revenues generated by the hotel and tenants of the office building. The tax revenues would be set aside through Allentown's Neighborhood Improvement Zone.

Similar financing is being used by City Center Investments to build a $50 million, 200,000-square-foot office building across Hamilton Street from the arena.

The 130-acre Neighborhood Improvement Zone was created in 2009 under state legislation written by Sen. Pat Browne, R-Lehigh. All state and local non-property taxes generated within its boundaries are set aside and can be used to finance the arena and other approved redevelopment projects.

The hotel, arena, office building and parking deck would all be built in the centrally located downtown block bordered by Hamilton, Linden, Seventh and Eighth streets.

"This is very exciting for the city," Hailstone said. "It does exactly what we had hoped the arena project would do. ... We think building additional uses on top of the arena is smart growth. In an urban environment, it is positive to build up and increase commercial density."

The hotel would be one of the Lehigh Valley's largest -- smaller than the 304-room hotel at Sands Casino Resort Bethlehem and the 220-room Holiday Inn in Fogelsville, but bigger than the 128-room Hotel Bethlehem, said Michael Stershic, president of Discover Lehigh Valley.

Who would stay at the hotel? People doing business with companies like PPL that are already downtown and new tenants of the attached office building, and other downtown office development such as One City Center, Stershic said.

The hotel also will host guests attending arena events such as hockey games and concerts, he said. And it could host attendees of some conventions, such as religious groups. That will depend on how much meeting space it includes.

"With the activities they are planning for the arena and the real estate activity that is going to be going on, I think that is a demand generator," Stershic said.

Browne said the hotel may be connected to the arena, but it has little to do with hockey.

"It's not just about hockey. It's about making the entire downtown viable, and a hotel is a key component of that," Browne said. "The people who stay at that hotel are much more likely to be visiting the companies in those new office structures than attending a hockey game."

Another hotel in town might force owners of the Holiday Inn at Ninth and Hamilton to upgrade, but it wouldn't put it out of business, Stershic said.

"I think what is going to have to happen is the Holiday Inn is going to need to step it up a bit," Stershic said. "It's not a bad hotel. What it means is they are going to have to upgrade and become more of a hotel, more of a high-end downtown hotel to compete with this. I think there is plenty of demand."

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Reporter Devon Lash contributed to this story.

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