Program could lead to tax breaks in Chambersburg

September 15, 2006|by DON AINES

CHAMBERSBURG, Pa. - Tax breaks for property owners who improve their homes and businesses in the downtown over the next four years are being proposed by Downtown Chambersburg Inc. President Paul Cullinane.

This week, Cullinane asked the Chambersburg Borough Council to consider a Local Economic Revitalization Tax Assistance zone, which the borough has authorized three times in the past - in 1981, 1997 and 2000.

In his presentation to the borough council Monday, Cullinane said the previous LERTA zone designations, including two that ran consecutively from 1997 to 2005, resulted in more than $11 million in improvements downtown. From 2000 to 2005, projects included expanding F&M Trust's offices on Memorial Square, the Capitol Theatre Center on South Main Street and the Chambersburg Heritage Center on Lincoln Way East, according to the presentation.

Borough Manager Eric Oyer said Thursday the council is interested in establishing a new LERTA zone that would incorporate the Elm Street area and some other "deteriorating neighborhoods." He said that could include the area around Broad Street in the borough's North End and some West End neighborhoods, but those have yet to be defined, he said.

The previous LERTA zones were within the borough's downtown Historic District, Oyer said. If approved, the LERTA designation would run from Jan. 1, 2007, to Dec. 31, 2010, he said.

Elm Street is a state program aimed at providing grants and other incentives for revitalizing neighborhoods. In Chambersburg, the area designated for that program is roughly defined around the downtown, extending to the Falling Spring Creek in the north, Derbyshire Street in the south, the High Line railroad on the east and the Franklin County Housing Authority in the west.

"Municipalities have very few incentives they can offer in terms of improving older properties," Oyer said. Within a LERTA zone, property owners can make improvements during the four-year period and not have to pay higher real estate taxes for a three-year period after the improvements are completed.

Oyer said the program does not result in a loss of real estate tax revenue because property owners would continue to pay taxes on a property's assessed value prior to it being improved. The three-year deferment is on the higher assessed value after the project is completed.

Deferring only borough taxes, however, will realize little benefit for a property owner, Oyer said. Borough taxes constitute 15 1/2 percent of the real estate taxes on a property in Chambersburg. The remainder of taxes are paid to the Chambersburg Area School District and Franklin County.

The county and the school district have approved previous LERTA zones in Chambersburg, Oyer said. Cullinane told the council that Downtown Chambersburg intends to seek approval from the school district and county.

If all three approve the zone, Oyer said a joint public hearing, which is required by the LERTA Act, could be held prior to it being enacted.

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