City of Harrisburg, PA Chapter 5-503 Tax Abatement and Exemptions

[HISTORY: Adopted by the City Council of the City of Harrisburg 5-12-2015 by Ord. No. 4-2015.[1] Amendments noted where applicable.]

CROSS-REFERENCES

Improvement of Deteriorating Real Property or Areas Tax Exemption Act, Act of July 9, 1971, P.L. 206, added by Act of August 5, 1977, P.L. 167 (72 P.S. §§ 4711-101 to 4711-305).

Local Economic Revitalization Tax Assistance Act, Act of December 1, 1977, P.L. 237, as amended (72 P.S. §§ 4722 to 4727).

[1] Editor’s Note: This ordinance also provided for the repeal of former Ch. 5-503, Tax Abatement and Exemptions, adopted 11-9-1999 by Ord. No. 44-1999, as amended.

§ 5-503.1 Definitions.

As used in this chapter, unless otherwise expressly stated or clearly indicated by the context, the following terms shall have the meanings indicated:

BUSINESS IMPROVEMENT

Repair, new construction or reconstruction of any business property, including alterations and additions, having the effect of rehabilitating a deteriorated business property so that it becomes habitable or attains higher standards of health, economic use or amenity, or is being brought into compliance with laws, ordinances or regulations governing such standards; however, ordinary upkeep and maintenance shall not be deemed a business improvement. New construction or erection of a structure as business property upon vacant land or land prepared to receive such structure within a designated deteriorated area shall be deemed a business improvement. In the event of a dispute, the term "business improvement" shall have the same meaning as the term "deteriorated property" as defined in the Local Economic Revitalization Tax Assistance Act.[1]

BUSINESS PROPERTY

Any industrial, commercial or other business property owned by an individual, association, corporation, or other entity, and includes, but is not limited to, any portion of a property utilized for industrial, commercial or other business use, and shall include any property which has both residential and business uses. It shall not include vacant land or land principally utilized as surface parking facilities.

DETERIORATED BUSINESS PROPERTY

Any business property located in a deteriorated neighborhood or deteriorated area, or any business property which has been the subject of an order by a government agency requiring the unit to be vacated, condemned or demolished by reason of noncompliance with laws, ordinances or regulations. "Deteriorated business property" may also include any business property owned by the Harrisburg Redevelopment Authority.

DETERIORATED RESIDENTIAL PROPERTY

A dwelling unit located in a deteriorated neighborhood or a deteriorated area or a dwelling unit which has been, or upon request is, certified by the Bureau of Codes Enforcement as unfit for human habitation for rent withholding or other health or welfare purposes or has been the subject of an order by the Bureau of Codes Enforcement requiring the unit to be vacated, condemned or demolished by reason of noncompliance with laws, ordinances or regulations. "Deteriorated residential property" may also include any residential property owned by the Harrisburg Redevelopment Authority. In the event of a dispute, the term "deteriorated residential property" shall have the same meaning as the term "deteriorated property" as defined in the Improvement of Deteriorating Real Property or Areas Tax Exemption Act.[2]

DETERIORATING AREA

An area within the corporate limits of the City which the City, pursuant to public hearing(s), determines to meet one or more criteria for the designation of such areas as set forth in the Local Economic Revitalization Tax Assistance Act and the Improvement of Deteriorating Real Property or Areas Tax Exemption Act; such an area may be a deteriorated neighborhood as defined in the Improvement of Deteriorating Real Property or Areas Tax Exemption Act, and the two terms shall be interpreted as one and the same and may be used interchangeably in each such instance. For purposes of this chapter, all those lands, areas and neighborhoods bounded by and located within the corporate limits of the City shall be designated a deteriorating area or deteriorating neighborhood.

DWELLING UNIT

See glossary, Chapter 1-302.

QUALIFIED AFFORDABLE HOUSING DEVELOPMENT

Any new construction of housing that qualifies as an affordable housing development pursuant to Chapter 12-101 of Title 12, Affordable Housing Certification of the Codified Ordinances of the City of Harrisburg, and which has received a certificate of qualification pursuant to that chapter.

[Added 4-13-2021 by Ord. No. 8-2021]

RESIDENTIAL CONSTRUCTION

The building or erection of dwelling unit(s) upon vacant land or land specifically prepared to receive such structures.

RESIDENTIAL IMPROVEMENT

Repair, construction or reconstruction, including alterations and additions, having the effect of rehabilitating a dwelling unit so that it becomes habitable or attains higher standards of housing safety, health or amenity, or is brought into compliance with laws, ordinances or regulations governing housing standards. Ordinary upkeep and maintenance shall not be deemed a residential improvement.

[1] Editor's Note: See 72 P.S. § 4722 et seq.

[2] Editor's Note: See 72 P.S. § 4711.101 et seq.

§ 5-503.2 Exemption schedules.

A. In each deteriorated area or neighborhood so designated as provided herein, the assessed valuation of residential improvements, residential construction, and business improvements shall be exempted from City real property taxes in accordance with the following schedule and related conditions:

(1) For new residential construction, 100% of the eligible assessment based on actual construction costs that otherwise would be taxable shall be exempt for 10 years from completion of construction.

(2) For residential improvements, 100% of the eligible increased assessment based on actual construction costs that otherwise would be taxable shall be exempt for 10 years from completion of construction.

(3) For new commercial, industrial or business construction, 50% of the eligible increased assessment based on actual construction costs that otherwise would be taxable shall be exempt for 10 years from completion of construction.

(4) For commercial, industrial or business improvements, 50% of the eligible increased assessment based on actual construction costs that otherwise would be taxable shall be exempt for 10 years from completion of construction.

B. The exemption from real property taxes granted pursuant to this chapter shall be upon the real property exempted and shall not terminate upon the sale or exchange of the real property.

C. If an eligible property is granted a tax exemption pursuant to this chapter, during the applicable exemption period, those improvements shall not be considered as a factor in assessing other properties.

D. In the event of reassessment by the county, City or school district, tax abatement shall be proportionally applied to any new assessment so long as the tax abatement period for the property in question has not extinguished or altered. This application is to ensure that each property affected by tax abatement receives the same percentage of tax benefits before and after any City-wide reassessment.

E. For purposes of determining what exemption applies to a qualifying property that will be subject to a mix of both residential and commercial use, any property that will have a residential use of 70% or higher will qualify for the 100% residential exemption.

§ 5-503.3 Qualifying conditions.

A. In order to secure an exemption under this chapter, an authorized person must submit a request for exemption with the City as part of the initial permitting process and fully complete the application for tax abatement and exemption application provided by the City.

B. For any qualifying new construction project under this chapter, the applicant shall certify and provide documented proof that the following conditions shall be or have been satisfied:

(1) That minority business participation in the project shall be measured and accounted for and shall constitute 15% of the total project costs, at a minimum.

(2) That, at a minimum, 15% of the labor force on any qualifying new construction or improvement project shall be made up of residents of the City. For purposes of this requirement, to qualify, the person identified as a resident must have a then-current residential street address with City boundaries and have resided continuously in the City for a minimum of 12 months.

(3) That the project shall be performed on the basis of written construction, management and service contracts that include a requirement that the labor force shall be at the prevailing-wage rates in use at the time of construction on a public construction project.

C.

[Amended 4-13-2021 by Ord. No. 8-2021]

(1) Section 503-3A and B shall not apply to improvement projects.

(2) Section 503-3B(1) and (2) shall not apply to qualified affordable housing developments.

D. Applications issued under this chapter shall be subject to review and approval by a tax abatement and exemption administrator designated by the Mayor, who shall have the authority to ensure compliance with any provision of this chapter, the Improvement of Deteriorating Real Property or Areas Tax Exemption Act and the Local Economic Revitalization Act, or any amendments thereto, and applicable City regulations and guidelines and who shall be designated as the "LERTA administrator."

E. The LERTA administrator shall be authorized to deny exemption application on any project found in noncompliance.

F. The City hereby authorizes the formation of a three-member LERTA Appeals Board, with one appointee, each being subject to the consent and approval of the City Council of Harrisburg, for the City, Dauphin County and the Harrisburg School District. Upon formation, the Board shall adopt rules and regulations as it deems appropriate to ensure the due process of any aggrieved applicant is afforded.

G. The LERTA administrator shall be responsible for creating application forms and an application process to implement these tax abatement programs, which shall be reviewed and approved by the Law Bureau prior to implementation.

H. The mandatory terms of this chapter shall be incorporated by reference into the application and also be part of each contract entered into by or on behalf of the applicant for the project throughout the entire course of the project.

I. The LERTA administrator shall be authorized to propose regulations for the implementation and monitoring of these tax abatement programs, including regulations for the submission and treatment of community concerns regarding businesses and property owners benefiting from these tax abatement programs. The regulations should assist the City, program applicants and any owner of a property benefiting from the City's abatement programs to obtain and remain in compliance with the applicable local, state and federal laws.

J. Any guidelines for the City's tax abatement and exemption programs proposed by the LERTA administrator shall provide for the use of responsible contractors, subcontractors, and developers, as otherwise provided in the Codified Ordinances of the City.

K. The LERTA administrator, directly or through a designee, shall be authorized to monitor any new construction or improvement project and take such steps as are necessary to ensure compliance with the requirements and intent of this chapter, as well as any applicable City policy.

L. The LERTA administrator shall provide the City Council with a written status report summarizing each pending new construction and improvement application submitted to the City under these tax abatement programs. The report should state the progress of each project.

M. In the course of reviewing or monitoring any application for exemption under a tax exemption or abatement program, the LERTA administrator shall consider a third-party complaint for any applicant's failure to comply with program requirements. Any determination made by the administrator shall be reviewable by the LERTA Appeals Board.

§ 5-503.4 Job creation incentives.

A. Any applicant who qualifies and secures the 50% exemption may also receive an additional exemption for permanent job creation as follows:

Permanent Jobs	Total Exemption
10-24	70%
25-47	80%
48-80	90%
Over 80	100%

B. The LERTA administrator shall require annual filings by the applicant or any successor thereto certifying permanent job creation at the qualifying property.

C. The incentives for job creation shall be reviewed annually and may be renewed, increased or decreased, depending on the actual number of permanent jobs located at the qualifying site.

D. Any decision of the LERTA administrator shall be appealable to the Appeals Board within 20 days of receipt of the decision. Proof of mailing of any decision of the LERTA administrator to the last address provided by the applicant, any successor thereto or any legal representative thereof will be considered sufficient proof of receipt of the decision.

§ 5-503.5 Exemption amounts.

A. In the case of residential improvements or business improvements, exemption from City real property taxes shall be limited to the additional assessment valuation attributable to the actual cost of improvement to deteriorated properties. In the case of residential construction, exemption from City real property taxes shall be limited to a maximum cost as determined by the Mayor or designee pursuant to regulations established by the appropriate City bureau.

B. For the purposes hereof, the exemption shall commence in the tax year immediately following the year in which the building permit is issued.

C. In no case shall any tax exemption be granted pursuant to the provisions hereof if the property owner has not secured or does not secure the necessary and proper zoning, building, health, housing, electrical, plumbing or other required permits prior to initiating the residential or business improvement or residential construction.

D. To be eligible for tax abatement in accordance with this chapter, the property owner must have remitted payment for the full amount of all property taxes levied by all taxing districts for all years prior to the year in which the tax abatement application is being submitted, or the property owner must remit payment for the full amount of all prior years' taxes at the time of making the application for tax abatement.

§ 5-503.6 Notification procedures.

A. There shall be placed on the application form for building and alteration permits the following:

NOTICE TO TAXPAYERS

Under the provisions of Chapter 5-503 of the Codified Ordinances of the City of Harrisburg, you may be entitled to property tax abatement on your contemplated alteration or new construction. An application for exemption may be secured from the City's Department of Community and Economic Development or the designated LERTA administrator. The application must be fully completed and filed with the City at the time a building or alteration permit is secured. In an effort to stimulate the local economy and provide jobs and financial opportunities for City residents and businesses, it is strongly recommended and encouraged that those businesses and property owners who will benefit from this tax abatement program use every effort to employ City residents and businesses, including underrepresented minority, women, LGBT and disadvantaged labor force participants and business enterprises, not only through participation in new construction and improvement projects for which the tax abatement will apply but in all future endeavors.

§ 5-503.7 Eligibility.

A. All properties within the City shall be eligible for improvement under this chapter, provided the applicant satisfies all conditions of this chapter.

§ 5-503.8 Affordable housing incentive and obligations.

[Added 4-13-2021 by Ord. No. 8-2021[1]]

A. For a qualified affordable housing development project to also qualify for an exemption under this chapter the owner of the property also must comply with the requirements of Chapter 12-101, Affordable Housing Certification, including the terms of the related affordable housing development agreement. Failure to maintain certification as a qualified affordable housing development under Chapter 12-101 will forfeit any remaining period of tax exemption authorized by this chapter.

B. Upon written notification from the City that a certificate of qualification for a qualified affordable housing development has been revoked or suspended pursuant to Chapter 12-101, Affordable Housing Certification, the LERTA Administrator shall cause the exemption authorized by this chapter to be suspended for failing to maintain a qualifying condition.

C. The LERTA Administrator shall notify the owner of record of any qualified affordable housing development of a suspension authorized by this section by First Class Mail at least 30 days prior to any such suspension taking effect.

D. After the LERTA Administrator suspends an abatement pursuant to this section the owner of record of the qualified affordable housing development shall have the opportunity, within 90 days of notice of the suspension, to present competent evidence to the LERTA Administrator that the conditions causing the suspension have been cured. Only a certificate of qualification issued pursuant to Chapter 12-101, Affordable Housing Certification, shall constitute competent evidence to the LERTA Administrator when determining whether to lift or continue a suspension.

E. Nothing in this section shall prevent the LERTA Administrator from exercising any authority granted pursuant to Chapter 5-503 or any other authority granted to the LERTA Administrator to review, monitor, and enforce the provisions of this Part.

[1] Editor's Note: This ordinance also renumbered former § 5-503.8 as § 5-503.9.

§ 5-503.9 Termination and contingency.

A. This chapter shall be subject to the public review of the City Council after five years. In the course of that review, the tax abatement programs implemented by the City under this chapter shall be subject to legislative modification. Nothing in this subpart shall be deemed to alter any vested right to a tax exemption existing at the time of any such modification.

B. This chapter shall terminate on December 31, 2024. Any property tax exemption granted under the provisions of this chapter shall be permitted to continue according to the exemption schedule established pursuant to the provisions hereof, even if this chapter expires or is repealed or amended.