From the Patriot News, comes a story that Mayor Eric Papenfuse will be introducing a new 10-year tax abatement program for new residential and commercial construction throughout the City:
Under the proposal, owners of existing residential properties would not pay additional property taxes on any improvements for 10 years, no strings attached. …
The proposal also provides incentives for new construction, but those property owners must jump through three hoops to get a tax break. They must hire 15 percent local workers, prove they have 15-percent minority participation and pay prevailing wage for construction management and service contracts.
Even then, commercial developers will only be guaranteed a 50-percent abatement for 10 years for new construction and improvements. To earn a bigger tax break, they must create permanent jobs, according to a graded scale that provides a 70-percent abatement for the creation of at least 10 jobs.
To achieve a 100-percent abatement, a commercial developer would need to create 80 or more permanent jobs that are new to Harrisburg, under Papenfuse’s proposal.
We’ve written about the state’s LERTA program before. The most interesting aspect of Papenfuse’s proposal consists of the various “strings” that would be attached to the tax abatement for commercial development. Under the LERTA statute, this is permissible- as local municipalities are afforded great flexibility in crafting the requirements for obtaining the abatement.
Papenfuse’s proposal is expected to be formally introduced to City Council this evening. Of course, getting the City on board is only the first step – under LERTA, each taxing authority must separately approve the proposal. Papenfuse must therefore get the blessing of both Dauphin County and the Harrisburg City School District to achieve maximum benefit for the proposal.
In particular, the support of the School District will be necessary, as school taxes generally make up the largest portion of the taxes to be abated in any LERTA program. It remains to be seen whether the School District, which has also dealt with financial distress in the last few years and continues to operate under a recovery officer, will support the plan.