PRIOR PRINTER'S NOS. 342, 1021
PRINTER'S NO. 1192
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
352
Session of
2019
INTRODUCED BY J. WARD, ARGALL, KILLION, K. WARD, YUDICHAK,
STEFANO AND BROWNE, MARCH 4, 2019
AS AMENDED ON SECOND CONSIDERATION, SEPTEMBER 24, 2019
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
act supplements the act of July 9, 1971 (P.L.206, No.34), known
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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).
"Blighted property." The term includes:
(1) A premises:
(i) ascertained to be a public nuisance due to
physical condition or use, regarded as a public nuisance
at common law and deemed to be a danger to public health,
safety and welfare or public nuisance as regulated by a
locally adopted property maintenance code or, if no such
code exists, any compatible code enacted by the act of
November 10, 1999 (P.L.491, No.45), known as the
Pennsylvania Construction Code Act; or
(ii) the condition of which contains an attractive
nuisance created by physical condition, use or occupancy,
including abandoned water wells, shafts, basements,
excavations and unsafe fences or other structures, or
which contains an unauthorized entry, unsafe equipment or
other safety risk.
(2) A dwelling that has been condemned or otherwise
deemed unfit for occupancy or use by the local authority
having jurisdiction due to dilapidated, unsanitary, unsafe or
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vermin-infested condition or that is lacking in the
facilities and equipment as required by the Pennsylvania
Construction Code Act.
(3) A structure determined by the local authority having
jurisdiction to be a fire hazard or otherwise that could
easily catch fire or cause a fire and endanger public health,
safety and welfare.
(4) A vacant or unimproved lot or parcel of ground
located in a predominantly developed neighborhood that has
become a place for the accumulation of trash and debris or
haven for rodents and other vermin by reason of neglect or
lack of maintenance.
(5) A property that is vacant and has not been
rehabilitated within one year from receipt of notice for
corrective action as issued by the local authority having
jurisdiction, except a property where a valid construction
permit is in place.
(6) A vacant or unimproved lot or parcel of ground that
is subject to a municipal lien for the cost of demolition of
a structure previously located on the property and for which
no payments on the lien have been made for a period of 12
months.
(7) A vacant or unimproved lot or parcel of ground on
which the total municipal liens for delinquent real estate
and property tax or any other type of municipal claim are
greater than 150% of the fair market value of the property as
established by the board of assessment appeals or other body
with legal authority to determine the taxable value of the
property.
(8) A property that has been declared abandoned in
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writing by the owner, including an estate that is in
possession of the property.
"Deteriorated area." An area designated by a municipal
corporation to consist of blighted property. The term includes
an impoverished area.
"Exemption schedule." The tax exemption schedule under
section 5.
"Impoverished area." Any area in this Commonwealth which is
certified as an impoverished area by the Department of Community
and Economic Development and the certification of which is
approved by the Governor. Certification shall be made on the
basis of Federal census studies and current indices of social
and economic conditions.
"Improvement." Repair, construction or reconstruction,
including alterations and additions, having the effect of
rehabilitating a blighted 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.
"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.
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"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) Real property tax exemption.--
(1) A local taxing authority may by ordinance or
resolution exempt from real property taxation the assessed
valuation of improvements to blighted properties and the
assessed valuation of new construction within a deteriorated
area in the amounts and in accordance with the provisions and
limitations specified in this act.
(2) If a deteriorated 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.
(3) The ordinance or resolution shall specify a
description of each deteriorated area, as well as the cost of
improvements per unit to be exempted, and the schedule or
taxes exempted as provided in this act.
(b) Boundaries.--Prior to the adoption of the ordinance or
resolution authorizing the granting of tax exemptions, the
municipal corporation must affix the boundaries of the
deteriorated area, wholly or partially located within its
jurisdiction, if any.
(c) Public hearing.--
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(1) At least one public hearing shall be held by the
municipal corporation for the purpose of determining the
boundaries of a deteriorated area.
(2) 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 for the guidance of the
municipal corporation. The recommendations shall take into
account the criteria required to establish an impoverished
area or blighted property.
(d) Adjacent property inclusions.--Property adjacent to a
deteriorated area may be included within the deteriorated area
if the local taxing authority determines that new construction
on the property would encourage, enhance or accelerate
improvement of the blighted properties within the deteriorated
area.
(e) 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
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this act.
(F) RESCINDING BLIGHTED AREA DESIGNATION.--A LOCAL TAXING
AUTHORITY MAY RESCIND AN ORDINANCE OR RESOLUTION ADOPTED UNDER
SUBSECTION (A) IF THE LOCAL TAXING AUTHORITY DETERMINES THAT THE
TAX EXEMPTION IN THE DETERIORATED AREA WITHIN THE BOUNDARIES
ESTABLISHED UNDER SUBSECTION (B) HAS ACCOMPLISHED THE GOAL OF
REVITALIZING THE DETERIORATED AREA. PROPERTY GRANTED TAX
EXEMPTION WITHIN THE BOUNDARIES OF THE DETERIORATED AREA PRIOR
TO THE ORDINANCE OR RESOLUTION BEING RESCINDED SHALL CONTINUE TO
RECEIVE THE TAX EXEMPTION GRANTED UNTIL THE TAX EXEMPTION IS
TERMINATED UNDER SECTION 5(B).
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
by the municipal corporation. The maximum cost shall uniformly
apply to all eligible blighted property in the deteriorated area
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
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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
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 blighted
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).
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(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
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.--A person desiring tax exemption
authorized by an ordinance or resolution adopted under this act
shall notify the local taxing authority granting the exemption
in writing on an application form provided by the local taxing
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authority, 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 of 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.
(4) Preliminary architectural drawings or blueprints for
the new construction or improvement.
(5) A recent appraisal of the property, if available.
(6) An 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) The signature of the applicant and the date of
signing.
(b) Estimate.--The amount of assessment deemed eligible for
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tax exemption under subsection (c) 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.
(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) General rule.--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.
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(2) Increase the value of the property by at least 25%.
(3) Correct all code violations, if applicable.
(b) Ineligibility.--A property is ineligible for tax
exemption under section 5(a) if:
(1) The property receives other property tax abatement
or exemption incentives for new construction or improvement.
(2) The property receives tax relief through a State
program, except as provided in subsection (d).
(3) The property owner or developer is delinquent on
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 other property for which property taxes are delinquent,
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.
(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 an
individual 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.
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(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
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 be ineligible 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.
(f) Prohibitions.--For the period of time that a property
receives a tax exemption under the program, no purchase or sale
of the property or any portion thereof shall be structured in a
manner that excludes or exempts the transaction from a realty
transfer tax due to a taxing authority that would otherwise not
be excluded or exempt, except in the following cases:
(1) a sheriff sale or tax claim bureau sale;
(2) a corrective deed;
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(3) a transfer by the mortgagor to the holder of a bona
fide mortgage in default in lieu of a foreclosure;
(4) a transfer to a judicial sale in which the
successful bidder is the bona fide holder of a mortgage; or
(5) any other transaction excluded from the realty
transfer tax under Article XI-C of the act of March 4, 1971
(P.L.6, No.2), known as the Tax Reform Code of 1971.
Section 8. Effective date.
This act shall take effect in 60 days.
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