Tax abatement ordinance resurfaces in Harrisburg
Discussions on a new tax abatement ordinance might soon be taking place in Harrisburg.
A seven-year abatement proposal has been drafted by Mayor Linda Thompson and sent to City Council. The draft ordinance has been referred to the Community and Economic Development Committee, but a meeting to discuss the plan has not been set, City Clerk Kirk Petroski said.
The city's last tax abatement ordinance expired at the end of 2010. It phased in property taxes at increments of 10 percent annually for 10 years.
The proposal calls for 100 percent abatement for three years, followed by 80 percent in the fourth year. Each year thereafter would decrease by 20 percent until the exemption terminates after the seventh year, according to the draft.
The incentive is sanctioned under the state's Local Economic Revitalization Tax Assistance Act, also known as Lerta.
A seven-year forgiveness period was approved by City Council in December 2010, but that was found to be unworkable by Dauphin County. Revisions have long been in the works between city and county officials.
Each taxing authority, including the school district, must sign off on a Lerta. Like the city, the district is dealing with its own debt issues, which could prove challenging for a new ordinance.
A tax-abatement strategy is part of Harrisburg's court-approved debt recovery plan.
Tax abatement levels the playing field in cities like Harrisburg, where taxes, parking and utilities generally are higher, developers have said. The cost of buying and redeveloping vacant and blighted properties also exceeds market value, they said.
Advocates argue that tax incentives would expand the city's tax base and keep tax rates down. They also help focus redevelopment efforts on the vacant and blighted properties, they said.
Critics have said local governments give up valuable tax dollars for an extended period of time.