PRIOR PRINTER'S NO. 1286 PRINTER'S NO. 2669
No. 1138 Session of 1999
INTRODUCED BY REINARD, PETRONE, RAMOS, YOUNGBLOOD, CORRIGAN,
SCHRODER, ROSS, LEH, ARGALL, L. I. COHEN, COSTA, J. TAYLOR,
BUNT, WRIGHT, FICHTER, READSHAW, FREEMAN, McILHINNEY,
SEYFERT, STEELMAN, E. Z. TAYLOR, WILLIAMS, BROWNE AND STURLA,
MARCH 29, 1999
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
NOVEMBER 15, 1999
AN ACT
1 Amending the act of July 11, 1990 (P.L.465, No.113), entitled
2 "An act providing for the creation of tax increment
3 districts; providing for additional powers and duties to be
4 exercised by redevelopment authorities and by industrial and
5 commercial development authorities; authorizing the creation
6 and approval of project plans for tax increment financing;
7 providing for the establishment of a tax increment base;
8 allocating the payment of positive tax increments; providing
9 for the financing of project costs; and providing for the
10 issuance of tax increment bonds and notes," further providing
11 for tax increment districts DEFINITIONS and tax exemptions. <--
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. The definition of DEFINITIONS OF "TAX INCREMENT," <--
15 "TAX INCREMENT BASE" AND "tax increment district" or "district"
16 in section 3 of the act of July 11, 1990 (P.L.465, No.113),
17 known as the Tax Increment Financing Act, is AMENDED DECEMBER <--
18 16, 1992 (P.L.1240, NO.164), ARE amended to read:
19 Section 3. Definitions.
20 The following words and phrases when used in this act shall
1 have the meanings given to them in this section unless the
2 context clearly indicates otherwise:
3 * * *
4 "TAX INCREMENT." GENERALLY, THE INCREMENTAL TAX REVENUES, <--
5 DETERMINED WITH REFERENCE TO THE TAX INCREMENT BASE, RESULTING
6 FROM THE INCREASE IN PROPERTY VALUES OR FROM THE INCREASE IN
7 COMMERCIAL ACTIVITY AS A RESULT OF A PROJECT. MORE SPECIFICALLY,
8 THE TERM INCLUDES THE FOLLOWING:
9 (1) THE INCREMENTAL TAX REVENUES RESULTING FROM AN
10 INCREASE IN THE TOTAL MARKET VALUE OF TAXABLE REAL PROPERTY
11 SITUATED IN A TAX INCREMENT DISTRICT AND AN INCREASE IN THE
12 BUSINESS USE AND OCCUPANCY OF SUCH TAXABLE REAL PROPERTY.
13 THIS PARAGRAPH APPLIES ONLY TO AD VALOREM TAXES ON REAL
14 PROPERTY AND TAX IMPOSED BY THE GOVERNING BODY ON THE USE AND
15 OCCUPANCY OF REAL PROPERTY.
16 (2) THE PAYMENT IN LIEU OF TAXES ASSIGNED TO OR AGREED
17 TO BE PAID BY GOVERNMENTAL ENTITIES OR NONPROFIT
18 ORGANIZATIONS WITH PROPERTY SITUATED OR OTHERWISE ASSIGNABLE
19 TO A TAX INCREMENT DISTRICT. WHETHER ALL OR ONLY A PORTION OF
20 THIS PAYMENT IS TO BE CONSIDERED PART OF THE TAX INCREMENT
21 SHALL BE DETERMINED AT THE TIME THE TAX INCREMENT DISTRICT IS
22 CREATED.
23 (3) THE INCREMENTAL TAX REVENUES RESULTING FROM AN
24 INCREASE IN TOTAL TAXABLE SALES AND RENTALS OF TANGIBLE
25 PERSONAL PROPERTY AND IN THE RENDITION OF TAXABLE SERVICES BY
26 VENDORS LOCATED IN A TAX INCREMENT DISTRICT. THIS PARAGRAPH
27 APPLIES ONLY TO A SALES TAX LEVIED BY A GOVERNING BODY.
28 (4) THE INCREMENTAL TAX REVENUES RESULTING FROM AN
29 INCREASE IN TOTAL GROSS RECEIPTS OR GROSS OR NET PROFITS OR
30 INCOME REALIZED BY PERSONS OR ENTITIES FROM BUSINESS
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1 CONDUCTED IN A TAX INCREMENT DISTRICT. THIS PARAGRAPH APPLIES
2 ONLY TO THOSE TAXES LEVIED UNDER THE AUTHORITY OF THE ACT OF
3 AUGUST 5, 1932 (SP.SESS., P.L.45, NO.45), REFERRED TO AS THE
4 STERLING ACT, THE ACT OF DECEMBER 31, 1965 (P.L.1257,
5 NO.511), KNOWN AS THE LOCAL TAX ENABLING ACT, AND THE ACT OF
6 MAY 30, 1984 (P.L.345, NO.69), KNOWN AS THE FIRST CLASS CITY
7 BUSINESS TAX REFORM ACT.
8 (5) THE INCREMENTAL TAX REVENUES RESULTING FROM AN
9 INCREASE IN THE TOTAL TAXABLE EARNINGS REALIZED BY:
10 (I) UNINCORPORATED BUSINESSES OPERATING IN THE TAX
11 INCREMENT DISTRICT; AND
12 (II) EMPLOYEES WORKING FOR PERSONS OR GOVERNMENTAL
13 ENTITIES, THAT ARE CONDUCTING BUSINESS IN THE TAX
14 INCREMENT DISTRICT.
15 THIS PARAGRAPH APPLIES ONLY TO REVENUES FROM TAXES LEVIED
16 UNDER THE STERLING ACT; THE ACT OF MARCH 10, 1949 (P.L.30,
17 NO.14), KNOWN AS THE PUBLIC SCHOOL CODE OF 1949; AND THE
18 LOCAL TAX ENABLING ACT.
19 "TAX INCREMENT BASE." THE TERM MEANS ONE OR MORE OF THE
20 FOLLOWING, AS APPROPRIATE:
21 (1) THE AGGREGATE MARKET VALUE OF ALL TAXABLE REAL
22 PROPERTY LOCATED WITHIN A TAX INCREMENT DISTRICT ON THE DATE
23 THE DISTRICT IS CREATED.
24 (2) IN A DISTRICT WHERE THE GOVERNING BODY HAS LEVIED A
25 TAX ON THE BUSINESS USE AND OCCUPANCY OF REAL ESTATE, THE
26 AVERAGE AGGREGATE MARKET VALUE OF REAL PROPERTY LOCATED
27 WITHIN THE DISTRICT AND USED OR OCCUPIED FOR BUSINESS
28 PURPOSES DURING THE LAST AVAILABLE 12-MONTH PERIOD PRECEDING
29 THE DATE OF CREATION OF THE DISTRICT.
30 (3) IN A DISTRICT WHERE THE GOVERNING BODY HAS LEVIED A
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1 SALES TAX, THE TOTAL AMOUNT OF TAXABLE SALES, RENTALS AND
2 SERVICES SUBJECT TO THE SALES TAX OF THE COMMONWEALTH AND
3 OCCURRING WITHIN THE DISTRICT DURING THE LAST CALENDAR YEAR
4 OR THE LAST AVAILABLE 12-MONTH PERIOD PRECEDING THE DATE OF
5 CREATION OF THE DISTRICT.
6 (4) IN A DISTRICT WHERE THE GOVERNING BODY HAS LEVIED A
7 MERCANTILE LICENSE TAX, BUSINESS PRIVILEGE TAX, NET PROFITS
8 TAX OR SIMILAR TAX FOR THE PRIVILEGE OF ENGAGING IN BUSINESS
9 WITHIN THE DISTRICT, THE TOTAL AMOUNT OF TAXABLE GROSS
10 RECEIPTS, NET INCOME OR NET PROFITS, AS THE CASE MAY BE,
11 REALIZED BY TAXPAYERS AT LOCATIONS WITHIN THE DISTRICT DURING
12 THEIR LAST TAXABLE PERIOD WHICH ENDED BEFORE THE DATE OF
13 CREATION OF THE DISTRICT.
14 (5) IN A DISTRICT WHERE THE GOVERNING BODY HAS LEVIED AN
15 EARNED INCOME TAX, THE TOTAL AMOUNT OF TAXABLE NET EARNINGS
16 REALIZED BY TAXPAYERS AT LOCATIONS WITHIN THE DISTRICT DURING
17 THEIR LAST TAXABLE PERIOD WHICH ENDED BEFORE THE DATE OF THE
18 CREATION OF THE DISTRICT.
19 "Tax increment district" or "district." A contiguous
20 geographic area [within a redevelopment area] defined and
21 created by resolution or ordinance of the governing body of the
22 municipality creating the district in accordance with section 5.
23 * * *
24 Section 2. Section 5 of the act, amended December 16, 1995
25 (P.L.1240, No.164), is amended to read:
26 Section 5. Creation of tax increment districts and approval of
27 project plans.
28 (a) General rule.--A tax increment district shall be created
29 in the following manner:
30 (1) The authority shall make a formal presentation to
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1 the governing bodies of all municipalities and school
2 districts which levy property taxes within the area in which
3 the proposed tax increment district will be located. The
4 presentation shall include a description of the proposed
5 boundaries of the district, the tentative plans for the
6 development or redevelopment of the district, and an estimate
7 of the general impact of the proposed district on property
8 values and tax revenues.
9 (2) Each affected municipality and school district shall
10 designate a representative to meet with the authority to
11 discuss the project plan and the tax increment financing, and
12 shall notify the authority of its designated representative.
13 The authority shall meet with the designated representative
14 to discuss the creation of the district, the boundaries of
15 the district, development within the district, the tax
16 increment that the municipality and school district would
17 contribute to the tax increment fund, the exclusion of
18 particular parcels of property from the district, tax
19 collection for the district and any other matter relevant to
20 the proposed tax increment district.
21 (3) The authority shall recommend the boundaries of a
22 tax increment district to be created and shall submit the
23 recommendation to the governing body of the municipality
24 which will create the district. The municipality may be a
25 county.
26 (4) The authority shall prepare a project plan for each
27 tax increment district and submit the plan to the governing
28 body of the municipality which will create the district and
29 to the governing body of any other municipality or school
30 district that levies property taxes within the boundaries of
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1 the proposed district. The plan shall include the following:
2 (i) A statement listing the kind, number and
3 location of all proposed public works or improvements
4 and/or all residential, commercial or industrial
5 development and revitalization improvements.
6 (ii) An economic feasibility study of the project
7 and the fiscal effects on the municipal tax base.
8 (iii) A detailed list of estimated project costs.
9 (iv) A description of the methods of financing all
10 estimated project costs and the time when related costs
11 or monetary obligations are to be incurred.
12 (v) A map showing existing uses and conditions of
13 real property in the district.
14 (vi) A map showing proposed improvements and uses
15 therein.
16 (vii) Proposed changes of any zoning ordinance,
17 master plan, map, building code or ordinance.
18 (viii) A list of estimated nonproject costs.
19 (ix) A statement of a proposed method for the
20 relocation of families, persons and businesses to be
21 temporarily or permanently displaced from housing or
22 commercial facilities in the project area by
23 implementation of the plan.
24 (5) The governing body of the municipality which will
25 create the tax increment district shall hold at least one
26 public hearing at which interested parties are afforded a
27 reasonable opportunity to express their views on the concept
28 of tax increment financing, on the proposed creation of a tax
29 increment district and its proposed boundaries, on the
30 proposed adoption of a project plan for the district and the
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1 benefits to the municipality. Notice of the hearing shall be
2 published in accordance with the terms of the act of July 3,
3 1986 (P.L.388, No.84), known as the Sunshine Act, and said
4 notice shall be provided by first class mail, postage
5 prepaid, to the governing body of any municipality or school
6 district that levies property taxes within the boundaries of
7 a proposed tax increment district. This notice shall be
8 provided not less than 30 days before the date of the
9 hearing.
10 (6) In order to create a district and adopt a project
11 plan, the governing body of the municipality which will
12 create the tax increment district shall adopt, not earlier
13 than three weeks after the public hearing described in
14 paragraph (5) has been held, a resolution or ordinance which:
15 (i) Describes the boundaries of a tax increment
16 district with sufficient definiteness to identify with
17 ordinary and reasonable certainty the territory included.
18 The governing body shall take care that the boundaries
19 include only those whole units of property assessed for
20 general property tax purposes.
21 (ii) Creates the district as of a given date. A tax
22 increment district may exist for a period not to exceed
23 [20] the greater of 30 years or the period during which
24 tax increment bonds or notes for the district are
25 outstanding, unless an amendment is made to the project
26 plan under paragraph (8). The issuance of tax increment
27 bonds or notes, including refunding bonds or notes, shall
28 not require an amendment to the project plan, unless the
29 aggregate project costs have increased.
30 (iii) Assigns a name to the district for
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1 identification purposes.
2 (iv) Contains findings that, among other things:
3 (A) The district is a contiguous geographic area
4 [within a redevelopment area].
5 (B) The improvement of the area is likely to
6 enhance significantly the value of substantially all
7 of the other real property in the district. It is not
8 necessary to identify the specific parcels meeting
9 this criterion.
10 (C) The aggregate value of equalized taxable
11 property of the district, plus all existing tax
12 increment districts, does not exceed 10% of the total
13 value of equalized taxable property within the
14 municipality.
15 (D) The area comprising the district as a whole
16 has not been subject to adequate growth and
17 development through investment by private enterprise
18 or would not reasonably be anticipated to be
19 adequately developed or further developed without the
20 adoption of the plan.
21 (E) A feasible method exists for the
22 compensation of individuals, families and small
23 businesses that will be displaced by the project and
24 for their relocation to decent, safe and sanitary
25 dwelling accommodations within their means, without
26 undue hardship to such individuals, families and
27 businesses.
28 (F) The project plan conforms to the municipal
29 or county master plan, if any.
30 (G) The project plan will afford [maximum]
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1 reasonable opportunity, consistent with the sound
2 needs of the community as a whole, for the
3 rehabilitation or redevelopment of the tax increment
4 district by private enterprise.
5 [(H) The district is a blighted area containing
6 characteristics of blight as described in the Urban
7 Redevelopment Law and the project to be undertaken is
8 necessary to eliminate such conditions of blight.]
9 (7) The governing body of a municipality or school
10 district that levies property taxes within the boundaries of
11 a proposed tax increment district shall, by ordinance or
12 resolution, agree to participate or opt not to participate in
13 whole or in part in the tax increment district. Such
14 ordinance or resolution shall be adopted and a copy thereof
15 delivered to the governing body of the municipality which
16 will create the district on or before the date on which the
17 public hearing described in paragraph (5) is held.
18 (8) The governing body of the municipality creating the
19 tax increment district may at any time, subject to the
20 provisions of section 6(c), adopt an amendment to a project
21 plan which shall be subject to approval in the same manner as
22 the original project plan.
23 (b) Cities of the first class.--In cities of the first
24 class, a tax increment district shall be permitted only in a
25 certified redevelopment area created pursuant to the Urban
26 Redevelopment Law.
27 Section 3. Section 9(d) and (k) of the act are amended to
28 read:
29 Section 9. Financing of project costs.
30 * * *
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1 (d) Amount and term.--Tax increment bonds or notes may not
2 be issued in an amount exceeding the aggregate project costs.
3 The bonds or notes shall mature over a period not exceeding [20]
4 30 years from the date of issue. The principal and interest on
5 the bonds and notes may be payable at any time and at any place.
6 The bonds or notes may be payable to bearer or may be registered
7 as to the principal or principal and interest. The bonds or
8 notes may be in any denominations. The bonds or notes may be
9 sold at public or private sale.
10 * * *
11 (k) Applicability of other laws.--
12 (1) Tax increment bonds and notes issued under this act
13 shall be subject to the provisions of the act of December 20,
14 1985 (P.L.483, No.113), known as the Tax-Exempt Bond
15 Allocation Act, to the extent required by Federal law.
16 (2) Except for guarantees of tax increment bonds and
17 notes as provided in subsection (h), tax increment bonds and
18 notes issued under this act shall not be subject to the
19 provisions of the Local Government Unit Debt Act.
20 (3) With respect to property located within a tax
21 increment district, a governing body may not grant, prior to
22 the dissolution of the district, any tax exemptions pursuant
23 to the provisions of the act of December 1, 1977 (P.L.237,
24 No.76), known as the Local Economic Revitalization Tax
25 Assistance Act, or the act of July 9, 1971 (P.L.206, No.34),
26 known as the Improvement of Deteriorating Real Property or
27 Areas Tax Exemption Act.
28 Section 4. This act shall take effect in 60 days.
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