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Tax
Abatement Incentives
(The following outline
is from a presentation given by Timothy M. Anstine to the Lawrence County Chamber
of Commerce on September 8, 2000)
Summary of Various
Programs
Local
Economic Revitalization Tax Assistance Act (LERTA), 72 P.S. ¤4722 et seq.
- Enacted in 1977
- Authorizes local
taxing bodies to exempt new construction in deteriorated areas of economically
depressed communities, and improvements to certain deteriorated industrial,
commercial and other business property.
- Exemption is limited
to the additional assessment valuation attributable to the actual costs of new
construction or improvements, and can be capped by the municipal governing body.
- Deteriorated property
is 1) any such property located in a deteriorated area, or 2) any specific property
which has been ordered vacated, condemned or demolished.
- The municipal governing
body (the city, borough, town or township) fixes the boundaries of the "deteriorated
area" using criteria for blight found in the Urban Redevelopment Law and
related statutes.
- Public hearing is
required.
- Counties and school
districts may not fix the boundaries of deteriorated areas.
- Once the boundaries
of the "deteriorated area" are fixed, the local taxing authorities may
exempt from real property taxation the assessed valuation of improvements to deteriorated
properties.
- The local taxing
authority may exempt either the actual cost of new construction or improvements
or up to a maximum cost of improvements per unit uniformly established by the
municipal governing body.
- The local taxing
authority sets an exemption schedule, specifying the portion of the new construction
or improvements to be exempted each year, and the maximum length of the schedule,
up to 10 years.
- Some have suggested
that continuation of the exemption could be made contingent on the attainment
of performance criteriaöincrease in number of employees, for example.
- Exemption is not
automaticöproperty owner must apply to taxing authorities
- Exemptions carry
over to subsequent owner.
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Improvement
of Deteriorating Real Property or Areas Tax Exemption Act, 72 P.S. ¤4711-101
et seq.
- Similar to LERTA
- Enacted in 1971
- Authorizes local
taxing bodies to exempt improvements to certain deteriorated residential
property and areas.
- Exemption is limited
to the additional assessment valuation attributable to the actual costs of new
construction or improvements, and can be capped by the municipal governing body.
- Deteriorated property
is 1) any dwelling unit located in a deteriorated neighborhood or 2) any specific
dwelling unit which has been declared unfit for human habitation or has been ordered
vacated, condemned or demolished.
- The local taxing
body (the county, city, borough, town, township or school district) fixes the
boundaries of the "deteriorated neighborhood" using criteria for blight
found in the Urban Redevelopment Law and related statutes.
- Unlike LERTA, counties
and school districts may fix the boundaries of deteriorated neighborhoods.
- Public hearing is
required.
- Once the boundaries
of the "deteriorated neighborhood" are fixed, the local taxing authorities
may exempt from real property taxation the assessed valuation of improvements
to deteriorated dwellings
- The local taxing
authority may exempt either the actual cost of new construction up to a maximum
cost of improvements per dwelling unit. In 1971 the maximum was $10,000 per unit,
and increases every year after that based Housing Price Index of the Census Bureau.
- The local taxing
authority sets either a 10 year, 5 year, or 3 year exemption schedule.
- Exemption is not
automaticöproperty owner must apply to taxing authorities
- Exemptions carry
over to subsequent owners
- Act also allows
municipal governing bodies (city, borough, township) to designate "deteriorating
areas" based on the state of residential housing in the area.
- The municipal governing
body sets the maximum assessment per dwelling unit that may be exempted.
- Allows local taxing
authorities to exempt the assessed valuation of any residential construction built
in a deteriorating area. The allowed exemption is 100% of the eligible assessment
for three years commencing in the tax year immediately following the year the
building permit is issued.
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New
Home Construction Local Tax Abatement Act, 72 P.S. ¤4754-1 et seq.
- Enacted in 1986.
- Authorizes local
taxing authorities to exempt construction of residential buildings on unimproved
land zoned for residential use.
- The local taxing
body (the county, city, borough, town, township or school district) fixes the
boundaries of the exemption area using fairly loose criteria.
- Unlike LERTA, counties
and school districts may fix the boundaries of deteriorated neighborhoods.
- Public hearing is
required.
- The local taxing
authority may grant an exemption on the assessment attributable to the actual
cost of improvements, or up to any maximum cost uniformly established.
- The maximum exemption
period is two years.
- Exemption is not
automatic - property owner must apply to taxing authorities before an occupancy
permit is issued.
- Exemptions carry
over to subsequent owners.
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Business
Improvement District Act, 53 Pa.C.S.A. ¤5401 et seq.
- Enacted in 1996.
- Applies only to
cities, boroughs and incorporated towns.
- Allows the designation
of business improvement districts in commercial areas.
- First a determination
is made of "needed improvements" in the district, and recommended improvements
to specific properties and basic design criteria.
- Ordinance must specify
the improvements with related costs.
- Public hearing required.
Property owners owning more than 50% of the assessed valuation in the proposed
district can protest the creation of the district.
- Allows improvements
to acquired property for sidewalks, retaining walls, street paving, street lighting,
parking lots, parking garages, trees and shrubbery, pedestrian walks, sewers,
water lines, and rest areas, and removal of blight.
- Costs can be paid
for by bonds
- Benefitted properties
are assessed to pay for improvements.
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Municipality
Authorities Act of 1945, 53 P.S. ¤301 et seq
- Authorizes municipal
authorities to be created for the purpose of making business improvements.
- In addition authorities
may provide administrative services, which are services which improve the ability
of the commercial establishments to serve the consumer, such as free or reduced
fee parking, transportation repayments, public relations programs, group advertizing,
security services and maintenance.
- Financing options
are more flexible under this act as wellöin addition to assessments against
benefitted properties, the authority may fix, alter, charge and collect rates,
levy a charge based on actual benefits measured by, among other things, gross
sales or gross or net profits.
- Allows the incurrence
of debt to finance these improvements without implicating the Local Government
Debt Unit Act .
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Transportation
Partnership Act, 53 P.S. ¤1621 et seq.
- Enacted in 1985.
- Enables municipalities
to cooperate with one another and with the private sector to provide funding for
transportation projects in areas where economic growth and development has made
the transportation facilities and services inadequate.
- Municipalities and
municipal authorities may create transportation development districts for the
purpose of planning, financing, acquiring, developing, constructing and operating
transportation facilities or transportation services.
- Transportation facilities
Includes any system of public highway or passenger transportationöroads,
sidewalks, railroads, buses and trolleys, subways, airports, etc.
- Transportation services
include "any system of public passenger transportation" and the costs
associated therewith.
- Financing of transportation
development can be done through "fair and reasonable" assessments upon
business property located within the district, assessments on each benefitted
property, and general taxes.
- All properties having
"a substantial relationship" to the proposed facility or service are
considered benefitted and can be assessed for the improvements.
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