By Kelly Waters GateHouse News Service Posted Jul 23, 2012 @ 05:05 PM
Pike County, Pa. — Five year tax break on expansions
During the July 18 meeting of the Pike County Commissioners, Michael Sullivan, Executive Director of Pike County Economic Development Authority, proposed a plan for an incentive program for Pike County. The proposal is meant to develop an incentive program that would encourage new economic development activity in the county. It applies to existing as well as new business activity. Called a ‘modest proposal,’ the program involves tax abatements and is designed to keep Pike County competitive with neighboring states and counties in the region, in attracting new business activity. Commissioners Osterberg and Wagner went out to Tioga County with Sullivan. They also contacted several other counties in Pa., most notably Butler and Erie counties. Sullivan says they are proposing a mimic of what is offered by Tioga County.
Five year tax break
“We also wanted to give some idea to how it compares to other states,” says Sullivan. “For example, in New York State, you can go to the IDA [Industrial Development Agnecy] and get a 20 year tax abatement. The one we are proposing is a five year. You can also provide sales tax relief on both building materials and also equipment purchased for that particular project. In this case we are asking for none of that. New York gives property transfer taxes, and we are not asking for that either. New York freezes tax assessments and again we aren’t asking for that. There are no payments being made to any company and there is no money given to anyone. The incentive is for prospective improvements on the property and a tax abatement that will last five years. This relates not to the land; it will always be taxed as it is today. A municipality will never be in position to lose money; they will always gain money from taxable improvements on property that is new or sufficient to increase the tax abatement.” The recollection plan will be 90% for the first year, 80% for the second, 60% for the third, 40% for the fourth, and 20% for the fifth. Sullivan explains that each year municipalities and school districts will receive an increased volume of money that’s introduced to them. Even though year one and two are quite generous still making additional monies, existing taxes on buildings and land that are in existence will not be abated. “If somebody does something with an existing building that increase taxes, the difference between the old and new taxes will be abated at these rates,” he says. “Municipalities and school districts can opt out of the program. It’s their choice.” According to the proposal that Sullivan passed around, the program is designed to work with Pennsylvania’s competitive situation as a desirable place to do business. It provides for no current loss of revenue for any municipality, provides no local monitory funding for new business activities, but does provide for substantial prospective real property tax abatements on improvements for a period of five years after a new enterprise expands or builds new. The five year abatement program was developed to assist industries and businesses locating or expanding in Pike County and is structured to reduce the real estate taxes based on the following conditions: 1. on new building construction and/or 2. major restoration to existing real estate, which will result in an increased real estate assessment; and 3. municipalities must designate the area where tax abatement applies.
Applications must be made before the Pike County Commissioners and the participating municipality and school district for each individual development project. The Pike County Economic Development Authority encourages companies to utilize the Pike County Preferential Tax Assessment Plan and is available to assist in securing the benefits of the program. The Pike County Economic Development Authority administers the tax abatement program and initial contact should be with the authority. The program extends to municipality and school districts in which the project is located. Approval of each of the following tax bodies is required: 1. a request in writing to the Pike County Commissioners, 2. a request in writing to the municipality in which the project is located and 3. request in writing to the school district in which the project is located. The same information submitted to the Pike County Commissioners is to be used for municipality and school district approval, as well as a copy of the letter to the Commissioners and Municipality/School District is available.
Keep youth in area
“I think it’s important we move forward with this,” says Commissioner Osterberg. “When you read this and see that Pike County is second in state of unemployment, we need to do something to help offset that. We need some way to keep our youth here, because once they graduate from college, they’re gone. There’s nothing here for them to come back to at this moment. We need to at least investigate all of this and let Michael take it out to the other townships. The county passes this, but the municipalities have to buy into this. We don’t force them to do it. They must pass an ordinance on their own to take part in this.” “We’re just giving them the opportunity to take part,” says Commissioner Harry Wagner. “I think it’s something we have to do, but mainly with the school districts. The big tax you pay is the school district tax. If the school districts don’t opt into this then the business moving in isn’t going to save any taxes. Remember it’s just on the improvements, not the land or building that’s there. If an entity moves in and expands a building, they have an abatement on the expansion. Hopefully the school districts will opt into this because in the long run they’ll be getting more taxes. Once the entity moves in there, the improvement will, eventually after five years, be on the tax rolls. And it’s going to produce jobs, which is the main thing. If it’s utilized by the municipalities and school districts, I know the county will, I think it will attract businesses without a doubt.” Chairman Rich Caridi was absent.