The renewal of a center city Allentown lot into a minor league hockey arena for the Phantoms may well rest in the hands of surrounding property owners, a major development firm and the notorious rock formation that nixed a previous arena and felled a nearby office building.
Though the exact footprint of the arena has yet to be announced, Lehigh County Executive Don Cunningham and another source said this week that it's probably slated for the site of the former Corporate Plaza building on Seventh Street, just north of Hamilton Street.
The Hammes Co. of Brookfield, Wis., a medical facility developer with a well-known sports division, is involved in the venture, according to a source with knowledge of the project who asked to remain anonymous because negotiations on the location and to acquire properties are ongoing.
Company representatives did not return calls Thursday seeking comment on the project. A woman who answered the phone Wednesday said the two people in charge of the Allentown project were not in the office. Mayor Ed Pawlowski declined to comment.
Rob Brooks of the Brooks Group in Pittsburgh, owners of the Philadelphia Flyers' top minor league affiliate slated for Allentown, did not return phone calls.
Signing Hammes would give the project some major cachet considering the firm's role in building venues such as the $1.6 billion New Meadowlands Stadium, home of the New York Giants and New York Jets and host of the 2014 Super Bowl.
The company's portfolio includes the $430 million home of the Detroit Lions, built in 2002, and a $295 million renovation of the home of the Green Bay Packers in 2003. Those projects are not lost on local developers, said Robert Kiel, senior vice president of Liberty Property Trust's Lehigh Valley operation.
"I'm very familiar with Hammes because we have an office in Milwaukee," Kiel said. "They have a very good reputation. They really know what they're doing. This is going to be big for Allentown and they're going to do a good job."
But before Hammes can get its hands dirty, officials will have to win over property owners. Those on the block will probably be propositioned to sell or be served with an eminent domain filing, a process that could spark legal battles and threaten the Phantoms' desire to drop the puck for the 2013-14 season.
"You can have appeals and that could tie it up for some period of time, depending on the facts and circumstances," said David Snyder, an eminent domain attorney for Fox Rothschild in Philadelphia. "Theoretically, it could tie it up for a couple of years."
The state in 2006 amended its eminent domain statute to restrict condemnation for private business, Snyder said. That means that if the city, the redevelopment authority or some other government body were to invoke eminent domain, it would have to justify the project as a public use.
All of that can be avoided if developers are willing to offer the right price, which would probably be well above market value because property owners would know of the city's strong desire to build an arena.
Peter Lewnes, manager of the Main Street program for Seventh Street, said developers are doing their "due diligence" in the area of the proposed arena and he hopes they will do anything they can to buy at least at market rates.
"I think eminent domain would really be a last resort," Lewnes said.
Reputable developers are combing the street, speculating about possible purchases and development, he said, potentially attracting a whole new echelon of investors to an already burgeoning corridor. The day of buying properties for nothing in Allentown are gone, he said.
"Whether this thing happens or not, people that haven't looked at Seventh Street are looking at Seventh Street," Lewnes said. "It's made people look at this street in a different way and I've been waiting for that. So I'm hopeful."
Property values at the intersection of N. Seventh and Linden streets, land that would probably be needed for an arena, range from $53,000 to $143,000, according to Lehigh County assessment records.
Construction crews Wednesday put the finishing touches on remodeled apartments at 38 N. Seventh St., the lot closest to the vacant Corporate Plaza lot. Elmo Gonzalez, the property's owner, said he has not yet been approached, but would be willing to sell for the right price.
"If someone wants to buy it for what I want to sell it, then fine," Gonzalez said. "But nobody's called me about the property. Business is business and I'll see what happens."
At the New Generation Learning Center at 42 N. Seventh Street, children played in a back room during afternoon day care. The owner could not be reached for comment. Next door, the manager of Plaza Service Center said he had not been approached by officials looking to buy or take the property.
"We haven't heard anything about this," Jorge Plaza said.
The manager of All City Self Storage at 721 Linden St. said crews recently demolished a nearby building but she had not heard anything about an arena. Admittedly not a hockey fan, she said, she can't imagine the city building such a huge complex in the middle of everything.
History cautions against unbridled expectations for an arena. About a decade ago, former Mayor William Heydt pursued a $12 million, privately financed arena at Ninth and Hamilton streets, only a few blocks from the Corporate Plaza site now apparently eyed by Pawlowski.
The project was to be the home of the Lehigh Valley Xtreme, a minor league hockey franchise once scheduled to begin United Hockey League play in 2000. But the Xtreme never played because the limestone-laden geology of center city posed significant problems for developers.
Limestone is soluble in water, making any area with underground deposits of the rock highly susceptible to sinkholes, like the two that opened in 1994 and caused the seven-story Corporate Plaza building to buckle and nearly collapse. The building was later demolished.
By fall of 2000, the cost of the Xtreme arena had risen nearly $5 million. The developers began to scout new sites outside of Allentown, and city officials began shifting gears away from an arena. Geologic problems can be overcome, however, as evidenced by PPL Plaza, now on the site.
"There's always an additional cost," said Lee Butz, chairman of Alvin H. Butz Enterprises in Allentown and a prominent local businessman. "When we built our office building here, we had to use mini piles to get down to firm rock. That's not that big of a deal."
Reporter Matt Assad contributed to this story.Copyright © 2014, Los Angeles Times