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News Eagle - Hawley, PA
  •  Council: Silk Mill request too late

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    By Peter Becker
    Managing Editor
    Hawley Council shared consensus Feb. 13 that the tax relief asked by the Hawley Silk Mill would not apply since the request was made after-the-fact.
    No vote was taken, but Council members shared their views one by one around the table. No action was taken on pursuing the tax abatement provision known as the Local Economic Revitalization Tax Assistance (LERTA) for new projects, pending more input.
    Council would need to schedule a hearing to decide what area of the borough it could apply, but wanted to know first if there was any interest from other business owners in the tax incentive that LERTA offers.
    The issue stressed regarding the Silk Mill at Wednesday's Council meeting was the timing of the request. While some construction continues to this day, the bulk of the project is completed, with the mill being open since 2010.
    In the fall of 2012, the Silk Mill partners requested that LERTA be enacted in the borough, so that they could apply for the tax relief. The LERTA law allows a tax abatement on the improvements made to a property, over a graduated and limited period of time. The idea is to encourage new business development and creation of jobs.
    LERTA requires the local governing body to set criteria for who would apply, including the dollar investment in the improvements and number of jobs brought to the area. An area needs to be designated which meets certain definitions of properties in need of improvement.
    The sticking point concerning the Silk Mill application is the section in LERTA which requires that the request be made at the time the taxpayer secures a building permit for new construction or improvement.
    Attorney Anthony Waldron, who is one of the Silk Mill investing partners, stated that the law does not prohibit applicability to a project that was already started. He presented documentation on the Silk Mill's applicability.
    He stated the intent of linking LERTA with the building permit is to provide an incentive for a developer to begin work, knowing that they had the tax abatement to make it feasible. Without that tax break the work might not even begin. The way LERTA is worded was not to protect the borough, but to promote business development.
    In this case, the Silk Mill project was already established. The investors asked for the tax relief because of an unexpectedly large increase in their real estate assessment that they received in 2012.
    Council President Donald Kyzer asked for another workshop before they consider a hearing, and invite local business people. Sanders advised instead, to invite business people in town to contact Council if they would be interested in LERTA, as a tax incentive to develop business.
    Page 2 of 2 - Councilman John Roberston went so far as suggesting to delay a decision until after the November elections, to see what changes to Council make occur and how the new board would feel. Sanders opposed such a delay, saying the opinions could swing either way depending on who is elected.
    She said she was opposed to accepting a "three year prior period" for LERTA.
    Councilwoman Michele Rojas agreed, saying that they need to follow the law.
    Elaine Herzog, of Council, said she was "not comfortable going back at this point."
    Councilman Joseph Faubel stated that a bad precedent would be set.
    Attorney Waldron reminded that the Silk Mill's reassessment went up by $4 million. "The idea that this [the tax abatement] erodes the tax base is ludicrous," he said.
    Sanders expressed concern that setting the criteria at creation of at least 10 jobs in order to qualify, would only make LERTA available to a couple businesses. Waldron reminded that "10 jobs" was only a suggested level, and the job criteria could be eliminated.
    Concerns continue over finding an area of town that would be considered "deteriorated" and qualify for LERTA. Sanders stated that the commercial area that makes up the B-2 zone does not come close to qualifying in her view.
    Local barber Ron Finan questioned why Council would not just say "no" to the request. "This should be quick and easy," he said.
    Michael Rizzi, who operates an auto body shop in Hawley, said he does not see areas needing to be rebuilt or large enough to bring industry to town.
    Sanders added that she was not comfortable with government "picking the winners and losers" by setting criteria to how much a business persons needs to invest in order to benefit.
    Councilwoman Barbara Corrigan said she did not see how the business expansion part would work, since this would apply to so few businesses.
    Robertson advised contacting the Small Business Development Center at the University of Scranton to see what help could be found to encourage business growth.
    There was discussion of placing an advertisement or sending letters out to Hawley property owners to ask their views and interest in LERTA.
    Councilman Faubel asked his fellow Council members to be open to exploring possibilities. Chairman of the Finance Committee, Faubel reminded that some way- whether with LERTA or another method- needs to be tried to expand the tax base. The alternative, he warned, would be to keep increasing tax millage.
    "We need a vision for the future," he said.
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