A proposed ordinance setting eligibility requirements for developers seeking Luzerne County real estate tax breaks received supportive feedback from several County Council members during a recent work session.
For requests to be considered by County Council, developers would first have to submit a series of documents and obtain tax break approval from the applicable municipality and school district. The ordinance also imposes annual reporting requirements on job creation, employee health insurance, and other benchmarks throughout the break and for two years after it expires.
Council Chairman Jimmy Sabatino told his colleagues the ordinance evolved after a prior proposal stalled last summer due to concerns it would deter development. That proposal would have standardized tax break discounts by project type, such as warehousing and logistics, manufacturing, and tech-based development.
“The thing that was going down the wrong path in my last proposal was trying to typecast certain developments. We need the county to be flexible to negotiate on a case-by-case basis,” Sabatino said.
Sabatino said he worked with economic development stakeholders on the new ordinance to ensure there would be no objections or concerns.
Describing the revised proposal as “concrete, but welcoming,” Sabatino said it would create a “level playing field” and provide County Council with “as much information as possible to make an informed decision going forward.”
Council Vice Chairwoman Brittany Stephenson said the plan would provide a “fair shot” to all developers.
“Most importantly, this really puts the power back on the county, so that way we can be strategic about who’s coming in,” Stephenson said.
Councilman Chris Belles had suggested the additional reporting requirement on job creation and other factors.
Belles said he wanted to provide a tangible way for people to gauge whether a tax break provided economic benefits. For many years, critics have argued tax breaks are “garbage” and “do nothing,” and the ordinance would provide defined metrics for evaluation, he said.
Citizens may end up supporting breaks if the reports prove the “good that’s happening with them,” he 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. Taxing bodies have the option to provide up to 100% tax forgiveness on the new construction portion for a maximum of 10 years, while tax payments on the land must continue throughout the break.
The reporting mandate will address a lack of “good data” to judge whether LERTAs “are working,” Sabatino said.
Councilman John Lombardo said he likes the proposal to make the county the last taxing body to approve LERTAs. While the county has generally followed this model, there have been exceptions. County rejection of a tax break does not bar the applicant from receiving school district- and municipal-approved discounts.
Lombardo asked about the requirement to disclose job-creation figures and other specifics during the application phase, noting that speculative developers may not know which company will occupy the space. He questioned how the developer would “give us a truthful answer.”
In speaking with stakeholders about the proposed ordinance, Sabatino said he was informed that developers usually have a general idea of the planned project and can provide an overview of the estimated jobs and median compensation.
Belles said developers also can be honest about the unknowns so County Council knows that “going in” to its consideration process.
Councilman Harry Haas said a standard vetting process is “long overdue” and suggested creating an online application to streamline applications.
A frequent critic of tax breaks, Haas also recommended adding language prohibiting developers from challenging their property tax assessment after the break expires, saying reductions lower the tax revenue amounts the county was promised when breaks were granted.
Sabatino said he has repeatedly asked the county law office about that idea and was informed every time the county cannot legally compel property owners to waive their right to contest assessments they deem too high.
School districts and municipalities always have the authority to challenge an assessment they believe is too low, which is known as a “reverse appeal,” officials have noted in the past.
Sabatino said Monday he plans to seek further discussion on the proposed ordinance at a work session in March.
To take effect, the ordinance would require introduction at a future meeting, followed by a subsequent public hearing and majority council approval.