Bethlehem Township commissioners have rejected the city of Allentown's latest offer to settle a lawsuit over construction of a downtown hockey arena.
The Morning Call says commissioners said Monday night that a 2009 state law that uses some municipal taxes to fund the arena must be rewritten or overturned.
The decision is a blow to Allentown's hopes of completing the $220 million complex in time for the Phantoms of the American Hockey League to take the ice in September 2013.
The arena and surrounding development was to be funded by a 130-acre special downtown tax zone using state and local taxes, but the township and other municipalities object to including earned income taxes collected from people who work in the zone but live elsewhere.
Allentown Mayor Ed Pawlowski talked to NBC10 about his frustration.
"I don't want to have to go through a long drawn out legal battle," said Pawlowski. "I want to be able to work together with these municipalities to figure out a solution. There is no reason why we can't do that."