THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY BROWNE, ERICKSON, EARLL, ALLOWAY, MENSCH, FONTANA, STACK, BOSCOLA, YUDICHAK AND WOZNIAK, FEBRUARY 4, 2011

REFERRED TO FINANCE, FEBRUARY 4, 2011  

AN ACT

Amending the act of July 11, 1990 (P.L.465, No.113), entitled

"An act providing for the creation of tax increment

districts; providing for additional powers and duties to be

exercised by redevelopment authorities and by industrial and

commercial development authorities; authorizing the creation

and approval of project plans for tax increment financing;

providing for the establishment of a tax increment base;

allocating the payment of positive tax increments; providing

for the financing of project costs; and providing for the

issuance of tax increment bonds and notes," further defining

"tax increment" and "tax increment base"; and further

providing for determination of tax increment and tax

increment base and for allocation of positive tax increments.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The definitions of "tax increment" and "tax

increment base" in section 3 of the act of July 11, 1990 (P.L.

465, No.113), known as the Tax Increment Financing Act, amended

December 16, 1992 (P.L.1240, No.164), are amended to read:

Section 3.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Tax increment."  Generally, the incremental tax revenues,

determined with reference to the tax increment base, resulting

from the increase in property values or from the increase in

commercial activity as a result of a project. More specifically,

the term includes the following:

(1)  The incremental tax revenues resulting from an

increase in the total market value of taxable real property

situated in a tax increment district and an increase in the

business use and occupancy of such taxable real property.

This paragraph applies only to ad valorem taxes on real

property and tax imposed by the governing body on the use and

occupancy of real property.

(2)  The payment in lieu of taxes assigned to or agreed

to be paid by governmental entities or nonprofit

organizations with property situated or otherwise assignable

to a tax increment district. Whether all or only a portion of

this payment is to be considered part of the tax increment

shall be determined at the time the tax increment district is

created.

(3)  The incremental tax revenues resulting from an

increase in total taxable sales and rentals of tangible

personal property and in the rendition of taxable services by

vendors located in a tax increment district. [This paragraph

applies only to a sales tax levied by a governing body.]

(4)  The incremental tax revenues resulting from an

increase in total gross receipts or gross or net profits or

income realized by persons or entities from business

conducted in a tax increment district. This paragraph applies

only to those taxes levied under the authority of the act of

August 5, 1932 (Sp.Sess., P.L.45, No.45), referred to as the

Sterling Act, the act of December 31, 1965 (P.L.1257, No.

511), known as The Local Tax Enabling Act, and the act of May

30, 1984 (P.L.345, No.69), known as the First Class City

Business Tax Reform Act.

"Tax increment base."  The term means one or more of the

following, as appropriate:

(1)  The aggregate market value of all taxable real

property located within a tax increment district on the date

the district is created.

(2)  In a district where the governing body has levied a

tax on the business use and occupancy of real estate, the

average aggregate market value of real property located

within the district and used or occupied for business

purposes during the last available 12-month period preceding

the date of creation of the district.

(3)  [In a district where the governing body has levied a

sales tax, the] The total amount of taxable sales, rentals

and services subject to the sales tax of the Commonwealth

under Article II of the act of March 4, 1971 (P.L.6, No.2),

known as the Tax Reform Code of 1971, and occurring within

the district during the last calendar year or the last

available 12-month period preceding the date of creation of

the district.

(4)  In a district where the governing body has levied a

mercantile license tax, business privilege tax, net profits

tax or similar tax for the privilege of engaging in business

within the district, the total amount of taxable gross

receipts, net income or net profits, as the case may be,

realized by taxpayers at locations within the district during

their last taxable period which ended before the date of

creation of the district.

* * *

Section 2.  Section 6(b) of the act, amended December 16,

1992 (P.L.1240, No.164), is amended and the section is amended

by adding a subsection to read:

Section 6.  Determination of tax increment and tax increment

base.

* * *

(b)  Determination of base.--Upon application in writing by

the finance officer of the municipality which created the

district, the assessor for that municipality shall determine,

according to its best judgment from all sources available to it,

the full aggregate market value of the taxable property in the

district as of the date on which the district was created. The

finance officer of the municipality may determine the sales tax

base of a sales tax levied by a governing body or any other tax

increment base contemplated hereby, except for the State sales

tax base, in any manner which is reasonable and prudent and

meets sound business practice.

(b.1)  Determination of sales tax base.--Upon application in

writing by the finance officer of the municipality which created

the district, the Department of Revenue shall calculate the

State sales tax base under Article II of the act of March 4,

1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, with

respect to vendors located within the tax incentive district.

* * *

Section 3.  Section 7 of the act is amended by adding a

subsection to read:

Section 7.  Allocation of positive tax increments.

* * *

(b.1)  Determination and transfer of State sales tax

increments.--Within 30 days of the end of each quarter, the

Department of Revenue shall calculate and notify the Secretary

of the Budget of the amount of the positive State sales tax

increment allocable to each tax increment district. Within ten

days of receiving the notification, the Secretary of the Budget

shall direct the State Treasurer to transfer an amount equal to

the State sales tax increment from the General Fund to the

appropriate issuing authority.

* * *

Section 4.  This act shall apply to tax increment districts

created after the effective date of this section.

Section 5.  This act shall take effect in 60 days.