Thursday, December 16, 2010

Fifth Essay: Ten To Tee Up The “T”: Pumping In Oxygen Of Development, Job Creation: Part II.

Picking up where the last column ended, this column proposes two further policy proposals – aggressive, performance-based tax incentives and state catalysts – to pump in tons of private investment and job retention and creation needed to rebuild our core communities.

(4) New state historic tax credits for historic commercial and residential properties to preserve our rich heritage, to foster homeownership, to create jobs, and to make downtowns walkable attractions. 

Thirty-one states have adopted incentive programs to foster historic rehabilitation, and twenty-five states offer credits for rehabilitating owner-occupied residences, while the Keystone state, despite two tries to get such legislation passed, does not.  Once again, despite their historic charm, remarkable architecture, and potential, our historic community cores are neglected. 

Pennsylvania’s program would have the following two features to preserve the heritage of commercial and residential sectors and offer true economic value through private investment reusing historic buildings.  First, the residential program would provide grants, with a maximum of at least $15,000 per project for homeowner-rehabbers who live there for at least five years.  Second, the commercial component is a 25% tax credit for qualified commercial properties, with a maximum of $500,000 per project per year.  Despite being supported by Preservation Pennsylvania, Penn Future and 10,000 Friends of Pennsylvania, two bills to accomplish as much never got out of committee for an up-or-down vote.   

(5) Community Core Keystone Zones.  This program would have two components, neither of which would cost the state or local governments a dime in tax revenue.  First, core communities would have the ability to adopt an automatic, rolling trigger of ten year tax exemptions starting whenever properties are acquired by redevelopment, industrial, and general authorities to make these parcels attractive for development and job creation. 

Redevelopment and other authorities often are the patron saints of unwanted parcels and blighted buildings acquired through tax sale, donation, condemnation, fire damage, or by default.  Since such properties already are off the tax rolls and are difficult to redevelop, core communities should have the ability to pass an ordinance making all of them – over 100 in York with new parcels added each year – automatically become exempt from local, school district, and county property taxes for ten years, with income taxes of any jobs created therein also exempted.

Otherwise, these parcels will continue to be virtually unmarketable and continue to lay fallow, generating no tax revenues and jobs, while costing taxpayers for maintenance. 
This would be a rolling admissions program, based upon the year of the authority’s acquisition of a given property.  The program, then, would give a sense of urgency to private developers who want to take advantage of the ten-year tax exemption, while making sure that, as these properties are privately purchased and developed, they will trickle back onto the tax rolls in a predictable manner. 
As a companion component, core communities would have the option of adopting an automatic trigger of ten year tax exemptions for when a tax exempt owner sells to private party in cities and boroughs to make such parcels attractive for development and job creation.  To help mitigate the creeping expansion of tax exempt properties, this companion exemption would be triggered upon a property, previously owned by a tax exempt owner (e.g., non-profit, church, college, hospital, county or federal government), being purchased by a private owner.  Former churches, government buildings, and many tax exempt properties are notoriously difficult to develop.  An aggressive exemption schedule for such over-looked or difficult-to-tackle parcels would make them more conducive for private development and job creation.  
Currently, such a bill has not even been introduced for discussion in the legislature.
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In this and the previous column, the five economic development proposals, many of them new for Pennsylvania, would work well in a belt tightening economy, especially because two of the proposals do not require any significant state investment – just enabling legislation.
Obviously, the Redevelopment Assistance Capital Program (“RACP”), PennVest, Elm Street, Hometown Streets, and other grants and programs have a proven track record of success and are important, but some may not be feasible or adequately funded in 2011 and beyond given the state’s tough fiscal situation. 
The point is this: even in tough economic times, with wise and careful investments from the state, a comprehensive complement of well-designed carrots and catalysts can bring our community cores back to life. 

An urban development, strategic planning, and public relations consultant, Matthew Jackson is the author of The Crisis: A Plea From York Town To Save Our Cities And Towns. 

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