HARRISBURG - Dauphin County commissioners gave its blessing to a plan by the city of Harrisburg to give property owners who improve their lots a tax break.
The program gives substantial tax breaks to those who develop residential and commercial properties under the state's Local Economic Revitalization Tax Assistance law (LERTA) and city officials say getting this approved could spur plenty of new development.
“Anything that can help provide some additional incentives for reinvestment and a better investment into the city of Harrisburg, I think those work well not only for those residents, but for the entire region,” commissioner George Hartwick said.
The city council approved the plan more than a year ago, but it needed approval from the Harrisburg School District and Dauphin County commissioners. The school board approved the plan by a 7-2 vote last month.
A commercial developer can get at least a 50 percent tax break on improving properties for a decade, and that can go up to 100 percent based on how many jobs the project creates. Residential improvement projects are tax-free for 10 years.
“If you look at the city's future health, the key to the future health is having more people moving into the city,” Harrisburg mayor Eric Papenfuse said. “We're not going to get more people moving into the city unless we improve our housing stock.”
Civic leaders say the developers they talked to over the past two years have been waiting for this to go through, saying it made more sense to develop in the suburbs until now.
“When we talk about investments in new properties to how they're assessed and the value in the cost of property it almost puts cities out of the game,” Hartwick said.
“That levels the playing field and makes it possible for people to make investments in areas where otherwise it wouldn't be financially feasible,” Papenfuse added.
City leaders say the tax breaks will make the biggest impact on blighted areas, where hundreds of condemned properties could not sell because of the significant tax burden on fixing the property. It’s a burden now lifted.
For “other areas where you have many dilapidated structures or abandoned buildings, well that's where you're going to see the development gravitate because that's where the opportunities are,” Papenfuse said.
The city says it still needs to hire a program administrator under state law to manage this and will do so in the next few weeks.