By Peter Becker
Chairman Brian Stuart, Lackawaxen Township Board of Supervisors, expressed eagerness Feb. 18th, for the opportunity to stimulate business and job growth through a tax abatement program.
Following a presentation by Michael Sullivan Executive Director of the Pike County Economic Development Authority (EDA), Stuart and Supervisors Richard Krochta and Bob Cocchi agreed that they should go ahead.
The tax relief program, however, will require an ordinance to be passed, and their solicitor, Anthony Waldron, advised getting input from the Township Planning Commission.
Citing a decline in business activity in Pike County and lack of suitable land ready to go for prospective companies, Sullivan said that inducements are necessary to persuade them to make a deal.
The program, authorized by the Pennsylvania legislature, is the Local Economic Revitalization Tax Assistance Act (LERTA). Local taxing authorities have the option to participate or decline. The program offers a partial and gradual abatement of taxes on improvements done to a business property or a new business, over a limited time- five years in this case.
The first year, 90% of taxes on improvements would be abated; 80% in the second year; 60% in the third; 40% in the fourth and 20% in the fifth. In the sixth year, LERTA would no longer apply and the business would pay full taxes.
Sullivan stated that the Pike County Commissioners were supportive of the plan and he has spoken to the Wallenpaupack Area School District board and felt they were open to it. The program, however, is driven by the municipality, which must first enact it for a designated area. County and school boards can choose to participate once the municipality decides to offer the tax relief.
Shohola Township is also seriously considering it, and have a draft ordinance. Sullivan said that Shohola Supervisors plan to take the matter to a vote at their next meeting.
The nice thing for local government, Sullivan said, is that they only stand to gain revenue and not lose it. Offering LERTA, Lackawaxen Township could influence a new business to come and build on land that is now vacant. Although the taxes would be partially deferred, that is money the township did not have before.
In an example, if a vacant lot brought $2,112 a year to taxing authorities, they would still get that each year of the program. If a company builds a structure and parking lot, adding $16,898 in total taxes, in year #1, $1,689.80 would be paid (10% of the total with 90% abated). The next year, $3,379.80 would be paid (20%, with 80% abated), and so on.
The Township will need to decide the boundaries of the area where LERTA would apply. The designated area needs to meet certain criteria for a deteriorated area- in need of business development. A public hearing is required for the purpose of determining those boundaries.
The ordinance also would need to specify the assessment value to be exempted from taxation and a tax exempt schedule.
"The end result," Sullivan said, "LERTA is absolutely necessary to attract business." New York State, he added, offers even more generous terms.
He said that EDA would target "small, nice industries" for Pike County.
A man in the audience asked about the chances that a company might start a business here to take advantage of the five year tax abatement and at the end of five years, close and open again somewhere else.
Sullivan said that this was unlikely, since part of the reason they would come is to make use of the labor force in place here. Chairman Stuart added that even if they left, the township would still have gained revenue and now they would have a building and infrastructure in place for another firm to move in.
Stuart commented about LERTA, "I think this is a fantastic idea." He added that Lackawaxen Township has been concerned about being attractive to business development, and could see no down side to this program.
"I think it's something we should do right away," he stated. He said it may be a way to allow local citizens to find jobs closer to home.