A collapsing building on a blighted block of N. 6th St., formerly the site of the Riviera Bar and Hotel.
A presentation by the mayor’s office on tax abatement this month was not, in fact, a proposal, but rather was given to the city’s school board for “informational purposes,” school board and administration officials said Friday.
The presentation, which was first reported by the Patriot-News, bears the title “Full Tax Abatement To Grow the City’s Housing, Residents and School District Revenues,” and contains 11 pages of slides and figures about the potential financial impact of a tax abatement program on the city.
It was given to school board members at their former Front Street office on June 3.
Jackie Parker, the city’s director of community and economic development, said Friday that she prepared the presentation in collaboration with Brian Hudson, the executive director of the Pennsylvania Housing Finance Agency.
Mayor Eric Papenfuse, who expressed support for tax abatement programs during his campaign last year, also attended the June 3 meeting.
Tax abatement programs, also known as LERTAs, for Local Economic Revitalization Tax Assistance, were authorized by the Pennsylvania legislature in 1977. They aim to spur development in struggling areas by providing tax breaks on certain forms of development, under terms to be specified by the local governments that adopt them.
Lancaster, for instance, has a tax-abatement program that it has consistently renewed since 1978, providing for exemptions on either new housing in under-developed areas or improvements on existing deteriorated properties.
The Lancaster program follows a “phase-in” model, whereby the new development is fully exempt in the first year, and then pays an increasing share of taxes each year until arriving at the full assessment in year 11.
Lancaster’s program also includes incentives for “green” construction, under which environmentally-friendly construction can receive full abatement for as many as five years.
Harrisburg previously had a phase-in abatement program, but it expired in 2010 and was not renewed.
The June 3 presentation includes numerous unsourced charts and graphs, which assume new development under full tax abatement—meaning 100-percent real-estate tax exemption for new developments or improvements—at a rate of 200 houses per year. If those numbers were realized, according to the presentation, the school district could see nearly $8 million in income and real-estate tax revenues over the next 11 years.
But, Hudson said Friday, these figures were purely hypothetical, and had been provided to give a sense of the potential financial impact of an abatement program.
“This was in no way, shape or form a proposal,” Hudson said. “It was just an example of what could happen.”
Asked about one of the graphs in his presentation, which identified Harrisburg’s former phase-in program as “ineffective policy,” Hudson said he wasn’t certain where the slide had come from. But, he said, he supported full abatement as a better method of jump-starting the city’s growth.
“Full abatement sends a message,” he said. “Yes, we want you to live here, we want you to build here.”
On Friday, Hudson, Parker and school board officials all emphasized that the abatement presentation was meant to be a means for starting discussion. “You look around the city, and you see how many properties are vacant, and how many could be new homes,” Parker said. The purpose of the school board meeting was to discuss one of many “tools in the tool box” for spurring economic growth, she said.
Jennifer Smallwood, the school board president, said the meeting had been called to answer members’ questions about whether a LERTA program “could be a good tool” for Harrisburg. Following the presentation, the school board scheduled a public meeting for Aug. 11, to discuss possible tax-abatement programs.
Smallwood is also a program manager at PHFA, where she has worked since 1990, according to her LinkedIn profile. The agency was created by the state legislature in 1972 and provides affordable housing options for low-income families, seniors and people with special needs across the commonwealth.
Hudson, who has worked at PHFA for the past 39 years, became its executive director in 2003.
James Thompson, a school board member, said Friday that he met with Parker individually before the June 3 meeting.
“The mayor hasn’t been shy about his support of a tax abatement program,” he said.
Thompson previously researched and recommended tax abatement for Harrisburg as a member of a business advisory committee under former Mayor Linda Thompson. In 2010, when the city’s existing abatement program was expiring, he advised Mayor Thompson to renew it.
But, he said, both the mayor and City Council seemed to view abatement with suspicion. “They felt that, if people were loyal to this city, they would develop here without it,” he said.
Mayor Thompson’s position may have evolved somewhat in the years that followed. In the summer of 2012, according to a report in the Patriot-News, she publicly supported abatement, submitting a proposal for a five-year program to council. Council President Wanda Williams, however, opposed the plan, and it never went forward.
On Friday, following the initial story on PennLive, J. Alex Hartzler, a local developer and the publisher of TheBurg, took to Twitter to critique the report on the presentation as “inaccurate and irresponsible.”
Abatement “is not a ‘tax break,'” he wrote to Matt Zencey, the paper’s deputy opinions editor. “LERTA holds assessment value constant and no increased taxes for rehab and new. I know you know this.”
Several commenters on PennLive Friday suggested that Hartzler’s campaign contributions had influenced the mayor’s support of an abatement program. Harrisburg Capital City PAC, a political action committee headed by Hartzler, paid for television ads and mailers for the campaign of the school board’s Jim Thompson, and also made contributions totaling $60,000 to Papenfuse’s mayoral campaign.
Hartzler’s company, WCI Partners, is a “real estate development company focused on urban revitalization,” according to its website. A photo of an Uptown block of Green Street, where WCI has invested heavily in recent years, appears on the front page of the abatement presentation.
Hudson said Friday that he picked the photo himself, because it represented an area where PHFA had made significant investments.
“It’s a perfect shot of what could happen with investment,” he said.
This story has been updated with information about Smallwood’s and Hudson’s employment at PHFA.
