1Authorizing local taxing authorities to provide for tax
2exemption incentives for certain deteriorated industrial,
3commercial, business and residential property and for new
4construction in deteriorated areas of economically depressed
5communities; providing for an exemption schedule; and
6establishing standards and qualifications.

7The General Assembly of the Commonwealth of Pennsylvania
8hereby enacts as follows:

9Section 1. Short title.

10This act shall be known and may be cited as the Tax Exemption
11and Mixed-Use Incentive Program.

12Section 2. Construction.

13This act shall be construed to authorize local taxing
14authorities to provide for tax exemption incentives for new
15construction in deteriorated areas of economically depressed
16communities and improvements to certain deteriorated industrial,
17commercial, business and residential property. In addition, this
18act shall be constructed to allow for mixed-use housing and
19development in accordance with zoning ordinances within

1designated areas. This act supplements the act of July 9, 1971
2(P.L.206, No.34), known as the Improvement of Deteriorating Real
3Property or Areas Tax Exemption Act, and the act of December 1,
41977 (P.L.237, No.76), known as the Local Economic
5Revitalization Tax Assistance Act, which implement section 2(b)
6(iii) of Article VIII of the Constitution of Pennsylvania.

7Section 3. Definitions.

8The following words and phrases when used in this act shall
9have the meanings given to them in this section unless the
10context clearly indicates otherwise:

11"Adult entertainment." As defined in 68 Pa.C.S. § 5502
12(relating to definitions).

13"Deteriorated property." Any industrial, commercial,
14business or residential property owned by an individual,
15association or corporation and located in a deteriorated area,
16or a single unit of property located within or outside a
17deteriorated area, which has been the subject of an order by a
18government agency requiring the unit to be vacated, condemned or
19demolished by reason of noncompliance with laws, ordinances or
20regulations.

21"Exemption schedule." The tax exemption schedule under
22section 5.

23"Improvement." Repair, construction or reconstruction,
24including alterations and additions, having the effect of
25rehabilitating a deteriorated property so that it becomes
26habitable or attains higher standards of safety, health,
27economic use or amenity, or is brought into compliance with
28laws, ordinances or regulations governing such standards.
29Ordinary upkeep and maintenance shall not be deemed an
30improvement.

1"Local taxing authority." A county, city, borough,
2incorporated town, township, institution district or school
3district having authority to levy real property taxes.

4"Mixed-use housing and development." Any urban, suburban,
5village development or single building that combines
6residential, commercial, cultural, institutional or industrial
7uses to provide more efficiency for the community in terms of
8space, transportation and economic development.

9"Municipal corporation." A city, borough, incorporated town
10or township.

11Section 4. Deteriorated areas.

12(a) Boundaries.--Each local taxing authority may by
13ordinance or resolution exempt from real property taxation the
14assessed valuation of improvements to deteriorated properties
15and the assessed valuation of new construction within the
16respective municipal corporations designated deteriorated areas
17of economically depressed communities in the amounts and in
18accordance with the provisions and limitations set forth in this
19act. If an area is zoned for mixed-use housing and development,
20improvements shall incorporate mixed-use housing and development
21that benefit the efficiency and economy of the community. Prior
22to the adoption of the ordinance or resolution authorizing the
23granting of tax exemptions, the municipal corporation shall
24affix the boundaries of a deteriorated area or areas, wholly or
25partially located within its jurisdiction, if any.

26(b) Public hearing.--At least one public hearing shall be
27held by the municipal corporation for the purpose of determining
28the boundaries. At the public hearing the local taxing
29authorities, planning commission or redevelopment authority and
30other public and private agencies and individuals, knowledgeable

1and interested in the improvement of deteriorated areas, shall
2present their recommendations concerning the location of
3boundaries of a deteriorated area or areas for the guidance of
4the municipal corporation. The recommendations shall take into
5account the following:

6(1) Criteria set forth in the act of May 24, 1945
7(P.L.991, No.385), known as the Urban Redevelopment Law, for
8the determination of "blighted areas."

9(2) Criteria set forth in Article XIX-A of the act of
10March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
111971.

12(3) The following criteria:

13(i) unsafe, unsanitary and overcrowded buildings;

14(ii) vacant, overgrown and unsightly lots of ground;

15(iii) a disproportionate number of tax-delinquent
16properties, excessive land coverage, defective design or
17arrangement of buildings, street or lot layouts; and

18(iv) economically and socially undesirable land
19uses.

20(c) Property inclusions.--Property adjacent to areas meeting
21the criteria of this section, but which would not otherwise
22qualify, and deteriorated property which is comprised of a
23single unit of property outside the designated area may be
24included within the deteriorated area designated. Adjacent
25property shall only be included if the local taxing authority
26determines that new construction on the property would
27encourage, enhance or accelerate improvement of the deteriorated
28properties within economically depressed communities. The
29ordinance or resolution shall specify a description of each such
30property as determined by the municipal corporation, as well as

1the cost of improvements per unit to be exempted and the
2schedule of taxes exempted as provided in this act.

3(d) Municipal cooperation.--Two or more municipal
4corporations may join together for the purpose of determining
5the boundaries of a deteriorated area and to establish the
6uniform maximum cost per unit, and the municipal corporations
7shall cooperate fully with each other for the purposes of
8implementing this act. The local taxing authorities may by
9implementing ordinances or resolutions agree to adopt tax-
10exemption schedules contingent upon the similar adoption by an
11adjacent local taxing authority or by a local taxing authority
12with mutual jurisdiction, within the limitations provided under
13this act.

14Section 5. Exemption schedule.

15(a) General rule.--A local taxing authority granting a tax
16exemption under this act may provide for tax exemption on the
17assessment attributable to the actual cost of new construction
18or improvements or up to any maximum cost uniformly established
19by the municipal corporation. The maximum cost shall uniformly
20apply to all eligible deteriorated property within the local
21taxing authority's jurisdiction.

22(b) Schedule.--Whether or not the assessment eligible for
23exemption is based upon actual cost or a maximum cost, the
24actual amount of taxes exempted shall be in accordance with the
25following:

26(1) For the first, second and third years for which new
27construction or improvements would otherwise be taxable, 100%
28of the eligible assessment shall be exempted.

29(2) For the fourth year for which new construction or
30improvements would otherwise be taxable, 90% of the eligible

1assessment shall be exempted.

2(3) For the fifth year for which new construction or
3improvements would otherwise be taxable, 75% of the eligible
4assessment shall be exempted.

5(4) For the sixth year for which new construction or
6improvements would otherwise be taxable, 60% of the eligible
7assessment shall be exempted.

8(5) For the seventh year for which new construction or
9improvements would otherwise be taxable, 45% of the eligible
10assessment shall be exempted.

11(6) For the eighth year for which new construction or
12improvements would otherwise be taxable, 30% of the eligible
13assessment shall be exempted.

14(7) For the ninth year for which new construction or
15improvements would otherwise be taxable, 15% of the eligible
16assessment shall be exempted.

17(8) For the tenth year for which new construction or
18improvements would otherwise be taxable, 10% of the eligible
19assessment shall be exempted.

20(9) After the tenth year, the exemption shall terminate.

21(c) Limitation.--The exemption from taxes shall be limited
22to the additional assessment valuation attributable to the
23actual costs of new construction or improvements to deteriorated
24property or not in excess of the maximum cost per unit
25established by a municipal corporation.

26(d) Sale or exchange.--The exemption from taxes shall be
27upon the property exempted and shall not terminate upon the sale
28or exchange of the property.

29(e) Estimate.--A local taxing authority shall provide upon
30request an estimate of the amount of assessment exempted for

1each eligible property based on the exemption schedule under
2subsection (b).

3Section 6. Procedure for obtaining exemption incentives.

4(a) Notification.--Any person desiring tax exemption
5pursuant to ordinances or resolutions adopted pursuant to this
6act shall notify each local taxing authority granting the
7exemption in writing on an application form provided by it
8submitted at the time the person secures the building permit, or
9if no building permit or other notification of new construction
10or improvement is required, at the time the person commences
11construction. The application shall include the following
12information:

13(1) Statement of tax obligations, signed by the
14applicant and the local taxing authority and notarized.

15(2) Outline specifications for the new construction or
16improvement, indicating with as much specificity as
17practicable, the materials to be used for exterior and
18interior finishes.

19(3) An itemized cost estimate for the new construction
20or improvement. The itemization must:

21(i) Be on contractor letterhead.

22(ii) Indicate the property address of the project.

23(iii) Be signed by the applicant.

24(4) Preliminary architectural drawings or blueprints for
25the new construction or improvement.

26(5) Any recent appraisals of the property, if available.

27(6) Any applicable building permit application or
28building permit.

29(7) An income and expense report for the property, which
30income and expense report should be submitted directly to the

1county assessment office in order to protect the
2confidentiality of the information.

3(8) The final decision of the zoning authority or other
4regulatory agency granting relief, if applicable.

5(9) Signature of the applicant and the date of signing.

6(b) Estimate.--The estimate of the cost of the new
7construction or improvements under subsection (a)(3) shall be
8available for public inspection and copying so that any
9subsequent purchaser is informed of the amount of taxes to be
10paid after the ten-year exemption period.

11(c) County assessment office.--A copy of the exemption
12request shall be forwarded to the county assessment office. The
13county assessment office shall, after completion of the new
14construction or improvement, assess separately the new
15construction or improvement and calculate the amounts of the
16assessment eligible for tax exemption in accordance with the
17limits established by the local taxing authorities and notify
18the taxpayer and the local taxing authorities of the
19reassessment and amounts of the assessment eligible for
20exemption. Appeals from the reassessment and the amounts
21eligible for the exemption may be taken by the taxpayer or the
22local taxing authorities as provided by law.

23(d) Amendment of ordinance.--The cost of new construction or
24improvements to be exempted and the schedule of taxes exempted
25existing at the time of the initial request for tax exemption
26shall be applicable to that exemption request, and subsequent
27amendment to the ordinance, if any, shall not apply to requests
28initiated prior to adoption of the amendment.

29Section 7. Eligibility requirements.

30(a) Requirements.--The completed new construction or

1improvement must:

2(1) Conform to zoning ordinance requirements. However,
3if mixed-use development is permitted in a designated
4deteriorated area, any improvement must meet any applicable
5mixed-use housing and development standards.

6(2) Increase the value of the property by at least 25%.

7(3) Correct all code violations, if applicable.

8(b) Ineligibility.--A property is not eligible for
9assessment exclusion if:

10(1) The property is receiving other property tax
11abatement or exemption incentives for new construction or
12improvement.

13(2) The property is receiving tax relief through any
14State program, except as provided in subsection (c).

15(3) The property owner or developer is delinquent on any
16property taxes related to the subject property, unless the
17delinquent taxes are paid prior to construction or payment of
18delinquent taxes has been arranged with the local taxing
19authority in accordance with an installment plan.

20(4) The property owner has a legal or equitable interest
21in any other property for which property taxes are
22delinquent, unless the delinquent taxes are paid prior to
23construction or payment of delinquent taxes has been arranged
24with the local taxing authority in accordance with an
25installment plan.

26(5) New construction or improvement has commenced prior
27to filing an application under section 6.

28(6) The property includes an improvement under
29subsection (c) that poses a health or safety risk to
30individuals residing above the first floor.

1(c) Restriction.--For an improvement under this act that
2involves mixed-use housing and development, certain
3establishments may not be sited on the first floor for health
4and safety reasons. The establishments include, but are not
5limited to, the following:

6(1) Gas stations or automobile service stations.

7(2) Drive-through establishments.

8(3) Adult entertainment establishments.

9(4) Storage trailers and outdoor storage of goods
10associated with commercial use unless use of the structure is
11necessary during construction.

12(5) Junkyards.

13(6) Recycling service centers.

14(7) Animal hospitals and animal sales.

15(8) Heavy manufacturing.

16(9) Establishments that utilize biohazards.

17(10) Establishments that sell firearms and other
18weapons, unless the occupant is the owner of the
19establishment.

20(d) Exception.--The amount of assessment eligible for
21exemption under this act shall be offset by the amount of
22property tax rebate received under Chapter 13 of the act of June
2327, 2006 (1st Sp.Sess., P.L.1873, No.1), known as the Taxpayer
24Relief Act.

25Section 8. Effective date.

26This act shall take effect in 60 days.