Luzerne County Council may establish eligibility requirements for developers seeking county real estate tax breaks

Luzerne County Council may establish eligibility requirements for developers seeking county real estate tax breaks.

Council Chairman Jimmy Sabatino drafted an ordinance that is up for discussion at Tuesday’s work session.

“Clear, consistent, and transparent procedures are necessary to evaluate the fiscal, economic, and community impacts” of proposed breaks, the ordinance said.

For starters, County Council would not entertain a tax break request unless the applicable municipality and school district already formally voted to grant breaks for their portions of real estate taxes, it said.

The ordinance also cites a series of documents that must be submitted in full by tax break applicants before their request will be placed on County Council’s agenda, including:

• Confirmation that the proposed project is consistent with all zoning regulations

• Identification of the number of permanent jobs to be created, the median annual and hourly wages for those jobs, and the anticipated timeline for job creation

• A detailed project description, including scope, anticipated timeline, and total capital investment

• A fiscal impact analysis estimating county revenue that would be exempted and the projected economic return

• A description of the project’s infrastructure demands and public service impacts

• A summary of any public incentives, grants, or abatements beyond the tax break

Applicants also must detail the tax break packages approved by school districts and municipalities, including any additional considerations the developer is providing to these entities.

The county GIS, Planning, and Zoning Department would be required to prepare a written impact analysis of the submission to County Council.

Ongoing reporting

Annual reporting requirements are also imposed throughout the awarded tax break period and the following two years, according to the proposed ordinance.

Ongoing performance reporting is necessary to evaluate whether projects “continue to provide meaningful public benefit throughout the duration of the tax exemption,” it said.

The annual reports must include the total number of permanent jobs associated with the project, the median annual and hourly wages by job category, the number and percentage of jobs held by county residents, and a breakdown of which jobs are full-time, part-time, temporary, or seasonal.

In addition, recipients must disclose the number of jobs offering employer-sponsored health insurance and retirement benefits.

Any significant changes in employment levels, project scope, or use of the property occurring since a prior report must be disclosed.

Failure to submit a required annual report may be considered by County Council if it must evaluate future tax break requests from that property owner or affiliated entities, it said.

Breaks are provided under the Local Economic Revitalization Tax Assistance (LERTA) program, which is only for “deteriorated areas,” including coal mine-scarred sites in the county.

This program requires continued payment of taxes on the land throughout the break. Taxing bodies have to provide up to 100% tax forgiveness on the new construction portion for a maximum of 10 years.

To take effect, Sabatino’s proposed tax break ordinance would require introduction at a future meeting and then a subsequent public hearing and majority council approval.

As always, the ordinance makes it clear County Council preserves its right to approve, amend, or deny any tax break request in whole or in part.

Significance

Sabatino said the requirements will force all applicants to be comprehensive about their plans, noting some developers have been more detailed and forthcoming than others in past presentations.

The county administration’s involvement in preparing an impact analysis will also help County Council make a “better informed decision,” he said.

“We want everybody to be on a level playing field when they get to council,” he said.

The addition of post-award reporting is equally important because it holds developers accountable as they progress through the break and after project completion, he said. This tracking helps both council and property owners gauge whether the developers fulfilled promises made when their projects were first pitched, he said.

“We owe it to our taxpayers to do our homework and do our due diligence on all tax breaks,” Sabatino said.

Before presenting the proposed ordinance to the county law office for review, Sabatino said he obtained feedback from Penn’s Northeast President and CEO, John Augustine. In turn, Augustine worked with major developers to obtain input on the proposal, he said.

“So there’s some buy-in from our stakeholders and community partners,” Sabatino said.

Sabatino said he has invited Augustine to speak at Tuesday’s council work session, which follows a 6 p.m. voting meeting at the county courthouse on River Street in Wilkes-Barre.