Legislative Update in Pennsylvania

April 2014Articles In the Zone

House Bill No. 2045 proposes to create an act known as the “Tax Exemption and Mixed-Use Incentive Program,” which, in part, could provide tax abatement for refurbished properties.

In short, the act would authorize local taxing authorities – a “local taxing authority” is defined as a “county, city, borough, incorporated town, township, institution district or school district having authority to levy real property taxes” – (i) to provide for tax exemption incentives for certain deteriorated industrial, commercial, business and residential property and for new construction in deteriorated areas of economically depressed communities, (ii) to provide for an exemption schedule, and (iii) to establish standards and qualifications

One of the members of the House who introduced House Bill No. 2045 was Representative Jerry Stern, who represents a portion of Blair County, PA and has been a member of the House since 1993. In a memorandum summarizing the proposed legislation, Stern provides that the “legislation allows developers and property owners to receive a tax abatement incentive once they apply and are approved to rebuild upon an abandoned or blighted property or in a deteriorated area.”

This proposed legislation would allow developers and property owners to receive a tax abatement incentive if certain requirements are met. As Stern points out, pursuant to his proposed legislation, “properties must fulfill specific requirements, such as being a ‘deteriorated property,’ correct all code violations, conform to zoning requirements and increase the property value by at least 25 percent.”

House Bill No. 2045 provides that for the first, second and third years for which new construction or improvements would otherwise be taxable, 100 percent of the eligible assessment would be exempted.

A breakdown of exemptions per year, for which new construction or improvements would otherwise be taxable, follows:

  • For the fourth year- 90 percent of the eligible assessment would be exempted
  • For the fifth year - 75 percent of the eligible assessment would be exempted
  • For the sixth year - 60 percent of the eligible assessment would be exempted
  • For the seventh year - 45 percent of the eligible assessment would be exempted
  • For the eighth year - 30 percent of the eligible assessment would be exempted
  • For the ninth year - 15 percent of the eligible assessment would be exempted
  • For the tenth year - 10 percent of the eligible assessment would be exempted
  • After the tenth year the exemption would terminate

As for the status of House Bill No. 2045, it has not yet been passed. After House Bill No. 2045 was introduced, it was referred on February 26, 2014 to the House Committee on Urban Affairs, where it remains.

View the entire issue of In the Zone (pdf)