Pennsylvania stands at a crossroads: Our state has a rich history of industrial, commercial and business prowess, but to remain economically competitive, we must continually compete and adapt for the future. The Local Economic Revitalization Tax Assistance (LERTA) program, established in 1977, has served us well, but it’s time to make enhancements that take Pennsylvania into the next generation of growth.
LERTA breathed new life into communities across Pennsylvania by empowering municipalities to offer tax abatements for property owners revitalizing and rehabilitating properties. While Pennsylvania still has a cap at the 1977 level of 10 years, neighboring states entice investment through longer and more flexible incentives.
Senate Bill 1158, introduced by Sen. Wayne Fontana, D-Brookline, who represents parts of the City of Pittsburgh and Allegheny County, responds to the competitive challenge by offering municipalities the flexibility to extend and enhance the incentives for up to 20 years.
Let’s face it: Businesses seek stability and predictability. When they compare our tax abatement tools and other complementary incentives to those of neighboring states, they notice a stark difference. Ohio and Virginia offer up to 15 years, New York between eight and 25 years, and New Jersey up to 35 years. These states provide fertile ground for long-term investments, enticing corporations, developers and entrepreneurs alike.
A 20-year cap offers businesses confidence in their investment, encouraging them to plant or deepen roots in our growing neighborhoods. Our neighbors — Ohio, Virginia, New York and New Jersey — have adapted their economic policies to attract businesses and create family-sustaining jobs. It’s time we did the same.
With more tools like an extended cap on the LERTA program, and other incentives and resources, those looking to reinvent the future of Pennsylvania, not just in downtowns, but in counties and municipalities of all sizes will be more willing to take on ambitious projects like transforming abandoned factories into vibrant mixed-use spaces, revitalizing main streets and preserving historic landmarks.
There are downtown Pittsburgh revitalization efforts underway, as dozens of organizations — including the developer community — have come together to reimagine and rebuild downtown for the future. Senate Bill 1158 would complement these initiatives by extending incentives for those involved, ultimately encouraging developers to invest in downtown.
From the Lower Hill District to Etna, LERTA has helped municipalities secure investment to support revitalization. Earlier this year, to support development in downtown Pittsburgh, three taxing bodies (the City of Pittsburgh, Allegheny County, and Pittsburgh Public Schools) agreed to enact a LERTA to expedite the redevelopment and conversion of properties. Additionally, an enhanced LERTA bill, proposed by Pittsburgh City Councilman Bobby Wilson that encourages adaptive reuse and conversion of downtown office buildings, received unanimous support from the Council.
Senate Bill 1158 would give municipalities from Pittsburgh to Pottstown and others across the commonwealth the flexibility to extend the term of the tax incentive if they so choose.
Critics may argue that longer incentives strain local budgets. We can mitigate this concern by gradually phasing in the extended periods.
By aligning our incentives with neighboring states and enhancing LERTA, we level the playing field and signal our commitment to fostering job growth. Longer incentives can mean more opportunities for skilled workers in a variety of sectors from manufacturing to energy and robotics.
Investors will choose us because there is a solid value proposition — this tool adds to that mix. As the economic and geographic heart of southwestern Pennsylvania, downtown Pittsburgh and our surrounding main streets would benefit from the passage of Senate Bill 1158 for decades to come.
Pennsylvania’s economic future hinges on our ability to adapt. We position ourselves as a formidable competitor by amending LERTA to allow municipalities to offer longer incentive periods. We ask that the Pennsylvania Legislature support this legislation and continue to communicate the message that Pennsylvania is open for business and serious about attracting new businesses and expanding existing ones.
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The introduction of this legislation is a step in the right direction for Pennsylvania, and we thank our Legislature for their attention to the matter and proposed resolution. Let’s give employers even more reasons to invest in communities across the commonwealth to secure a prosperous tomorrow.
Matt Smith is chief growth officer for the Allegheny Conference on Community Development. Tom Frank is executive director of NAIOP Pittsburgh, the Commercial Real Estate Development Association.