PRINTER'S NO. 685
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
613
Session of
2015
INTRODUCED BY WARD, MILLARD, KINSEY, PICKETT, FREEMAN, SAINATO,
SIMMONS, METZGAR, SCHLOSSBERG, McGINNIS, HARHAI, SANKEY,
CAUSER, O'BRIEN, SCHEMEL, KIRKLAND, MOUL, D. COSTA, MURT AND
MASSER, FEBRUARY 24, 2015
REFERRED TO COMMITTEE ON URBAN AFFAIRS, FEBRUARY 24, 2015
AN ACT
Authorizing local taxing authorities to provide for tax
exemption incentives for certain deteriorated industrial,
commercial, business and residential property and for new
construction in deteriorated areas of communities; providing
for an exemption schedule; and establishing standards and
qualifications.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Tax Exemption
and Mixed-Use Incentive Program Act.
Section 2. Construction.
This act shall be construed to authorize local taxing
authorities to provide for tax exemption incentives for new
construction in deteriorated areas of communities and
improvements to certain deteriorated industrial, commercial,
business and residential property. In addition, this act shall
be construed to allow for mixed-use housing and development in
accordance with zoning ordinances within designated areas. This
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act supplements the act of July 9, 1971 (P.L.206, No.34), known
as the Improvement of Deteriorating Real Property or Areas Tax
Exemption Act, and the act of December 1, 1977 (P.L.237, No.76),
known as the Local Economic Revitalization Tax Assistance Act,
which implement section 2(b)(iii) of Article VIII of the
Constitution of Pennsylvania.
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:
"Adult entertainment." As defined in 68 Pa.C.S. § 5502
(relating to definitions).
"Deteriorated property." Any industrial, commercial,
business or residential property owned by an individual,
association or corporation and located in a deteriorated area,
or a single unit of property located within or outside a
deteriorated area, 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.
"Exemption schedule." The tax exemption schedule under
section 5.
"Improvement." Repair, construction or reconstruction,
including alterations and additions, having the effect of
rehabilitating a deteriorated property so that it becomes
habitable or attains higher standards of safety, health,
economic use or amenity, or is brought into compliance with
laws, ordinances or regulations governing such standards.
Ordinary upkeep and maintenance shall not be deemed an
improvement.
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"Local taxing authority." A county, city, borough,
incorporated town, township, institution district or school
district having authority to levy real property taxes.
"Mixed-use housing and development." Any urban, suburban,
village development or single building that combines
residential, commercial, cultural, institutional or industrial
uses to provide more efficiency for the community in terms of
space, transportation and economic development.
"Municipal corporation." A city, borough, incorporated town
or township.
"Property maintenance code." A municipal ordinance which
regulates the maintenance or development of real property. The
term includes a building code, housing code and public safety
code.
"Serious violation." A violation of a State law or a
property maintenance code that poses an immediate imminent
threat to the health and safety of a dwelling occupant,
occupants in surrounding structures or passersby.
Section 4. Deteriorated areas.
(a) Boundaries.--Each local taxing authority may by
ordinance or resolution exempt from real property taxation the
assessed valuation of improvements to deteriorated properties
and the assessed valuation of new construction within the
respective municipal corporation's designated deteriorated areas
of communities in the amounts and in accordance with the
provisions and limitations set forth in this act. If an area is
zoned for mixed-use housing and development, improvements shall
incorporate mixed-use housing and development that benefit the
efficiency and economy of the community. Prior to the adoption
of the ordinance or resolution authorizing the granting of tax
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exemptions, the municipal corporation shall affix the boundaries
of a deteriorated area or areas, wholly or partially located
within its jurisdiction, if any.
(b) Public hearing.--At least one public hearing shall be
held by the municipal corporation for the purpose of determining
the boundaries. At the public hearing the local taxing
authorities, planning commission or redevelopment authority and
other public and private agencies and individuals, knowledgeable
and interested in the improvement of deteriorated areas, shall
present their recommendations concerning the location of
boundaries of a deteriorated area or areas for the guidance of
the municipal corporation. The recommendations shall take into
account the following:
(1) Criteria set forth in the act of May 24, 1945
(P.L.991, No.385), known as the Urban Redevelopment Law, for
the determination of "blighted areas."
(2) Criteria set forth in Article XIX-A of the act of
March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
1971.
(3) The following criteria:
(i) unsafe, unsanitary and overcrowded buildings;
(ii) vacant, overgrown and unsightly lots of ground;
(iii) a disproportionate number of tax-delinquent
properties, excessive land coverage, defective design or
arrangement of buildings, street or lot layouts; and
(iv) economically and socially undesirable land
uses.
(c) Property inclusions.--
(1) Property adjacent to areas meeting the criteria of
this section, but which would not otherwise qualify, and
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deteriorated property which is comprised of a single unit of
property outside the designated area may be included within
the deteriorated area designated.
(2) Adjacent property may only be included if the local
taxing authority determines that new construction on the
property would encourage, enhance or accelerate improvement
of the deteriorated properties within communities.
(3) The ordinance or resolution shall specify a
description of each such property as determined by the
municipal corporation, as well as the cost of improvements
per unit to be exempted and the schedule of taxes exempted as
provided in this act.
(d) Municipal cooperation.--
(1) Two or more municipal corporations may join together
for the purpose of determining the boundaries of a
deteriorated area and establishing the uniform maximum cost
per unit, and the municipal corporations shall cooperate
fully with each other for the purpose of implementing this
act.
(2) The local taxing authorities may, by implementing
ordinances or resolutions, agree to adopt tax-exemption
schedules contingent upon the similar adoption by an adjacent
local taxing authority or by a local taxing authority with
mutual jurisdiction, within the limitations provided under
this act.
Section 5. Exemption schedule.
(a) General rule.--A local taxing authority granting a tax
exemption under this act may provide for tax exemption on the
assessment attributable to the actual cost of new construction
or improvements or up to any maximum cost uniformly established
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by the municipal corporation. The maximum cost shall uniformly
apply to all eligible deteriorated property within the local
taxing authority's jurisdiction.
(b) Schedule.--Whether or not the assessment eligible for
exemption is based upon actual cost or a maximum cost, the
actual amount of taxes exempted shall be in accordance with the
following:
(1) For the first, second and third years for which new
construction or improvements would otherwise be taxable, 100%
of the eligible assessment shall be exempted.
(2) For the fourth year for which new construction or
improvements would otherwise be taxable, 90% of the eligible
assessment shall be exempted.
(3) For the fifth year for which new construction or
improvements would otherwise be taxable, 75% of the eligible
assessment shall be exempted.
(4) For the sixth year for which new construction or
improvements would otherwise be taxable, 60% of the eligible
assessment shall be exempted.
(5) For the seventh year for which new construction or
improvements would otherwise be taxable, 45% of the eligible
assessment shall be exempted.
(6) For the eighth year for which new construction or
improvements would otherwise be taxable, 30% of the eligible
assessment shall be exempted.
(7) For the ninth year for which new construction or
improvements would otherwise be taxable, 15% of the eligible
assessment shall be exempted.
(8) For the tenth year for which new construction or
improvements would otherwise be taxable, 10% of the eligible
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assessment shall be exempted.
(9) After the tenth year, the exemption shall terminate.
(c) Limitation.--The exemption from taxes shall be limited
to the additional assessment valuation attributable to the
actual costs of new construction or improvements to deteriorated
property or not in excess of the maximum cost per unit
established by a municipal corporation.
(d) Sale or exchange.--The exemption from taxes shall be
upon the property exempted and shall not terminate upon the sale
or exchange of the property.
(e) Estimate.--A local taxing authority shall provide upon
request an estimate of the amount of assessment exempted for
each eligible property based on the exemption schedule under
subsection (b).
(f) Repayment.--
(1) A local taxing authority shall be entitled to a
return of its proportional share of taxes exempted under the
provisions of this act if, within five years following
completion of the new construction or improvements, there
exists on the property a serious violation of a State law or
a property maintenance code and the owner has taken no
substantial steps to correct the violation within six months
following notification of the violation and for which fines
or other penalties or a judgment to abate or correct were
imposed by a magisterial district judge or municipal court,
or a judgment at law or in equity was imposed by a court of
common pleas.
(2) At the time the agreement is entered into between a
local taxing authority and the person who desires tax
exemption, if the person has completed all requirements under
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section 6, the local taxing authorities shall file a lien
against the tax-exempt properties at the rate of the
estimated amount of assessment under subsection (b). The lien
shall be forgiven by the local taxing authority at the end of
the fifth year following the completion of the new
construction or improvements, if there have been no serious
violations against the property that have not been corrected.
The lien on the property shall transfer under subsection (d)
in cases of sale or exchange of the property.
Section 6. Procedure for obtaining exemption incentives.
(a) Notification.--Any person desiring tax exemption
pursuant to ordinances or resolutions adopted under this act
shall notify each local taxing authority granting the exemption
in writing on an application form provided by it submitted at
the time the person secures the building permit or, if no
building permit or other notification of new construction or
improvement is required, at the time the person commences
construction. The application shall include the following
information:
(1) Statement of tax obligations, signed by the
applicant and the local taxing authority and notarized.
(2) Outline specifications for the new construction or
improvement, indicating with as much specificity as
practicable, the materials to be used for exterior and
interior finishes.
(3) An itemized cost estimate for the new construction
or improvement. The itemization must:
(i) Be on contractor letterhead.
(ii) Indicate the property address of the project.
(iii) Be signed by the applicant.
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(4) Preliminary architectural drawings or blueprints for
the new construction or improvement.
(5) Any recent appraisals of the property, if available.
(6) Any applicable building permit application or
building permit.
(7) An income and expense report for the property, which
income and expense report should be submitted directly to the
county assessment office in order to protect the
confidentiality of the information.
(8) The final decision of the zoning authority or other
regulatory agency granting relief, if applicable.
(9) Signature of the applicant and the date of signing.
(b) Estimate.--The estimate of the cost of the new
construction or improvements under subsection (a)(3) shall be
available for public inspection and copying so that any
subsequent purchaser is informed of the amount of taxes to be
paid after the 10-year exemption period.
(c) County assessment office.--
(1) A copy of the exemption request shall be forwarded
to the county assessment office. The county assessment office
shall, after completion of the new construction or
improvement, assess separately the new construction or
improvement and calculate the amounts of the assessment
eligible for tax exemption in accordance with the limits
established by the local taxing authorities and notify the
taxpayer and the local taxing authorities of the reassessment
and amounts of the assessment eligible for exemption.
(2) Appeals from the reassessment and the amounts
eligible for the exemption may be taken by the taxpayer or
the local taxing authorities as provided by law.
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(d) Amendment of ordinance.--The cost of new construction or
improvements to be exempted and the schedule of taxes exempted
existing at the time of the initial request for tax exemption
shall be applicable to that exemption request, and subsequent
amendment to the ordinance, if any, shall not apply to requests
initiated prior to adoption of the amendment.
Section 7. Eligibility requirements.
(a) Requirements.--The completed new construction or
improvement must:
(1) Conform to zoning ordinance requirements. However,
if mixed-use development is permitted in a designated
deteriorated area, any improvement must meet any applicable
mixed-use housing and development standards.
(2) Increase the value of the property by at least 25%.
(3) Correct all code violations, if applicable.
(b) Ineligibility.--A property is not eligible for tax
exemption under section 5(a) if:
(1) The property is receiving other property tax
abatement or exemption incentives for new construction or
improvement.
(2) The property is receiving tax relief through any
State program, except as provided in subsection (d).
(3) The property owner or developer is delinquent on any
property taxes related to the subject property, unless the
delinquent taxes are paid prior to construction or payment of
delinquent taxes has been arranged with the local taxing
authority in accordance with an installment plan.
(4) The property owner has a legal or equitable interest
in any other property for which property taxes are
delinquent, unless the delinquent taxes are paid prior to
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construction or payment of delinquent taxes has been arranged
with the local taxing authority in accordance with an
installment plan.
(5) New construction or improvement has commenced prior
to filing an application under section 6.
(6) The property includes an improvement under
subsection (c) that poses a health or safety risk to
individuals residing above the first floor.
(c) Restriction.--For an improvement under this act that
involves mixed-use housing and development, certain
establishments may not be sited on the first floor for health
and safety reasons. The establishments include, but are not
limited to, the following:
(1) Gas stations or automobile service stations.
(2) Drive-through establishments.
(3) Adult entertainment establishments.
(4) Storage trailers and outdoor storage of goods
associated with commercial use unless use of the structure is
necessary during construction.
(5) Junkyards.
(6) Recycling service centers.
(7) Animal hospitals and animal sales.
(8) Heavy manufacturing.
(9) Establishments that utilize biohazards.
(10) Establishments that sell firearms and other
weapons, unless the occupant is the owner of the
establishment.
(d) Exception.--The amount of assessment eligible for
exemption under this act shall be offset by the amount of
property tax rebate received under Chapter 13 of the act of June
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27, 2006 (1st Sp.Sess., P.L.1873, No.1), known as the Taxpayer
Relief Act.
(e) Limitations.--The property qualifying and receiving a
tax exemption under the program shall not be eligible for or
receive an additional tax exemption under this program for a
minimum of 15 years from the date the property received a tax
exemption under the program.
Section 8. Effective date.
This act shall take effect in 60 days.
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