Residents benefit from property tax program
LERTA helping businesses, homeowners alike
A property tax abatement program centered on downtown Altoona has not only benefited businesses, but also a surprising number of residential properties, Greater Altoona Economic Development Corp. President Pat Miller said.
Miller has seen dividends paying off within an area of the city where all three taxing bodies — city, school district and county — agreed to ease up on taxing added property value after major renovation projects.
GAEDC is a committee of Altoona Blair County Development Corp.
Miller, who has been coordinating the effort among the taxing bodies, said that in the last 18 months, 104 building permits were pulled with values in excess of $4 million. A lot of them are downtown. Personal residential property accounts for 38 of those 104 permits.
Miller anticipates businesses with more resources to enter the program, which gives property owners full forgiveness of property taxes based on the value of new projects for a year, with that forgiveness declining 20 percent annually until they pay the full amount after six years.
The program does not take away the existing tax before renovations are made, but it does incentivize property owners to build additions and make renovations knowing they won’t be taxed immediately for value added, Miller said. A major deterrent to improving deteriorating business property has been that improvements result in higher property value and therefore, result in higher property taxes.
“What’s shocking is the permits taken by individual homeowners. They are taking more pride in their properties and making improvements,” Miller said.
With that information, Miller suggested the three taxing bodies might consider establishing another tax-abatement area to incentivize renovations of blighted residential properties.
The state Local Economic Revitalization Tax Assistance Act of 1977 wasn’t focused on residential improvement, but it does not exclude it, Miller said.
“LERTA was created to allow a tax exemption for improvements to businesses located within a deteriorated area. It was not set up originally as a residential blight removal program, but since dwelling units are included in the definition of ‘property,’ residential property owners can take advantage of the program since it would be almost impossible to create a defined boundary eliminating the mix of residential property within the geographic boundary,” he said.
The Altoona LERTA area encompasses an irregularly shaped area designed by the three taxing bodies. The longest eastern boundary is Sixth Avenue, while the farthest northern boundary is Broadway, the farthest western boundary is 20th Avenue and the farthest southern boundary is 25th Street.
There are limits to how long an area can participate in the program. Altoona’s LERTA area was established Jan. 1, 2015, and the program is due to expire Dec. 31.
The taxing bodies are considering extending the LERTA designation.
“It’s a no-brainer,” Altoona Area School Board member Rick Hoover said Monday.
Whether another LERTA area could be designated to tackle residential blight is an interesting thought to Altoona Director of Community Development Lee Slusser.
“That is a policy decision for City Council. But at the very least, it would be a nice gesture,” he said. “Businesses tend to be ones taking the most advantage of it because they have the most resources to take on added property value.”
Applicants fill out a form at City Hall along with taking out a building permit.
“It isn’t all that much money for smaller projects,” Slusser said. “But if it is a significant project — a new garage, major renovation or addition — it gets flagged in our system, and I will contact them.”
Sixty percent of residents in Altoona are homeowners versus renters, Slusser said. The percentage of homeowners in most other third-class Pennsylvania cities is lower. Slusser said the current rate of homeownership in Altoona likely has roots running back to the 1800s when the Pennsylvania Railroad wanted a stable workforce in Altoona, so no company housing was provided. Instead, workers owned homes, Slusser said.
Mirror Staff Writer Russ O’Reilly is at 946-7435.