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ASK SKIP: LERTA Schmerta
Barry Cassidy says in his video that “LERTA is messed up beyond recognition.” I really don’t know what LERTA looks like, so I sure don’t know what it looks like MUBAR. What’s LERTA?
Cassidy’s comment was made in his last report to Borough Council, as presented in a videocast here on July 21.
LERTA is an acronym for the Local Economic Revitalization Tax Assistance Act, a Commonwealth attempt, as far back as 1974, to give local governing bodies an extra arrow in their quivers to attract new businesses.
Under the terms of the Act, municipal authorities can set a schedule of property tax exemption for improved properties in an identified “deteriorating area.” The exemption is for portions of increased taxes attributable to selected improvements to a property, and can be applied over a limited term of years.
The justification is pretty clear: property improvements lead to higher property assessments, which lead to higher property taxes, which can discourage interest in investment.
The Borough’s LERTA program, the terms of which were established in 2003, exempts such property tax increases on businesses in full for one year, then requires 20% of increases to be paid in the second year, 40% in the third, and so on. After five years, then, the businesses would be paying full freight.
The puzzle has been that new commercial property owners in town have been getting billed full freight right away. And it’s been a lingering puzzle: Cassidy reported to Council back in November, 2007, that it was unclear “where the LERTA applications are in the process and if they have been submitted to the school district and county [additional local property taxing authorities]. People qualified for the incentive, and should not have received tax bills as many did.”
We thought then that the paperwork was just stuck on somebody’s desk.
Turns out, Cassidy has discovered and told Ask Skip Friday, that the root problem may lie further back in the mists of, perhaps, the ‘80s, in action or inaction not even of Borough origin. But he was quick to add that he was still researching the matter, and could not yet come to final conclusions about it.
So, watch this space.
Posted by
G.E. “Skip” Lawrence
posted by The Phoenix Files at
8:21 AM
2 Comments:
This post has been removed by the author.
Whatever the problem is, it does not originate in the 1980.
The Borough enacted a LERTA ordinance in 1991. That ordinance expired after five years. My recollection is that no one took advantage of it.
The Borough enacted a new LERTA in 2003 (I guess because the 1991 version had been so successful).
I think you will find that the 2003 LERTA, like its 1991 predecessor, provides that it goes into effect only upon the adoption of identical exemptions by the County and School District. Has anyone bothered to see whether the County and School District adopted such resolutions?
Just an educated guess on my part, but I think it's more likely than not to put you on the track of the answer.
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