The City of Hazleton has new criteria on the books for developers who seek tax breaks under the state’s Local Economic Revitalization Tax Assistance program.
Council recently approved amendments to the city code that would give developers the choice to either opt for tax exemptions on a declining scale over a 10-year period or make a one-time payment to the city based on the land value and estimated project costs.
The latter of the options would be revisited after five years and possibly adjusted.
Council approved the amended LERTA regulations as multiple industrial projects are underway in Greater Hazleton. They passed unanimously on Dec. 6.
Under one of the scenarios, developers could opt to pay taxes on an “escalating scale.” The city would exempt 100% of taxes on improvements for the first year following the date upon which improvements can be assessed. The exemption would drop by each year by 10% until it terminates after a decade.
A second option would allow developers to make a one-time payment to the city that would be due 30 days from when a plan is submitted. The payment would be equivalent to “three years at 100% of the current land value plus the estimate of total construction cost,” the ordinance reads.
After five years, the payment would be recalculated with construction costs taken into account. The owner would then make whole on the original payment.
A project must result in the creation of at least 100 jobs and invest at least $2 million in improvements to be eligible for either scenario, according to the revised regulations.
Previous criteria
In Hazleton, LERTA exemptions varied from project to project over the years.
In years past, the city typically exempted 90% of taxes on improvements over the first five years of the LERTA program and granted relief of 80%, 60%, 40% and 20% per year in years six through nine. Full taxes would be paid in year 10.
The latter of the arrangements applies to Blue Creek Investments, which built a 1.2 million square foot warehouse south of the Birch Knoll community.
Council, however, abated 100% of taxes on improvements for a 5.5 million square foot industrial center that Hazleton Creek Commerce Center Holdings is developing on mineland near Buttonwood and Church streets. When granting that abatement, officials gave consideration to millions of dollars the firm spent to remediate that property as well as the old city dump, Mayor Jeff Cusat said recently.
NorthPoint Development, which is building six warehouses along Arthur Gardner Parkway in Hazleton and Hazle Twp., made a pitch for LERTA tax breaks a few months ago. No action has been taken on NorthPoint’s request.
Cusat said Saturday that the amendments are intended to make the city attractive to developers by giving them the ability to choose which option works best.
They also ensure the city doesn’t have to amend its LERTA regulations to comply with exemption requests that could vary among developers, he said.
“Different systems work for different developers,” Cusat said. “Over the past few years, we’ve been asked by several developers for different systems they wanted us to approve. We can’t be changing an ordinance every time someone wants something and we agree with it. (The amended ordinance) gives two options from which they can choose. It comes from two of the more popular (options).”
Council voted 5-0 to approve the LERTA revisions on final reading.
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