The Altoona Planning Commission on Tuesday endorsed a proposal by a pair of local development agencies to designate downtown and surrounding areas as a tax abatement zone, in keeping with a recommendation of the city's Act 47 financial distress recovery plan.
The Local Economic Revitalization Tax Assistance program could encourage development by closing the gap between the cost of renovating old buildings and the income potential that would make those projects feasible - a gap identified by a downtown housing development study funded through the Act 47 program, according to Patrick Miller, president of the Greater Altoona Economic Development Corp. and its parent organization.
If the governments of the three property-taxing bodies - the city, the Altoona Area School District and Blair County - eventually approve the LERTA, owners would obtain abatements over five years on additional taxes otherwise due because of building improvements, according to Miller, who introduced the LERTA idea to the commission.
For the first year of the abatement period, the discount would be 100 percent.
The discount would decline by 20 percent every year until the owner would pay full tax in the sixth year, according to Miller.
Historically, taxing bodies here have been amicable to LERTA proposals, according to Miller - although some officials questioned whether projects in Pleasant Valley under the area's initial LERTA in 1977 would have happened anyway, Miller said.
"That's a 50-50 call," he said.
The situation, however, is different for downtown, which was included in that first LERTA and which local powers have been trying to revitalize for about four decades.
The taxing bodies don't lose much with LERTA, because the abatement only applies to would-be new tax obligations, according to senior planner Nic Ardizzone.
But the program may have real potential to help, because projects often need all the help they can get in the vulnerable initial years, said city Planning Director Lee Slusser.
Developers who have invested in downtown recently might ask why the taxing bodies didn't start LERTA a year ago - and that's a valid question, Miller said.
"We probably should have," he admitted.
But they didn't, and it's best to look forward, he said.
The development agencies recently met with representatives of the taxing bodies "to get the ball rolling," he said.
One indication of the size of the funding gap is the difference between the approximately $1,250 a month charged at a high-end apartment in the Altoona area and the $2,000 a month that might be needed to pay debt service after a high-end renovation project downtown, Miller said.
Tenants wouldn't pay that $2,000, he said.
How big a share of the funding gap LERTA would close is impossible to say, however, because of the variability among projects, Miller said.
There is no particular proposed project that is driving the push for LERTA, Miller said.
The proposed boundaries of the LERTA area include the traditional downtown, Station Medical Center and the Railroaders Memorial Museum area, the complex of office buildings at 17th Street and 12th Avenue, the UPMC Altoona campus and the corridor between Ninth and 11th streets between the hospital and the former Wright School.