A developer long has had plans to build apartment buildings on these empty lots on Reily Street, one of many unrealized residential projects in Harrisburg.
When it comes to housing, Harrisburg is in a strange place. Demand is strong, but little new supply has come onto the market.
Enter the city’s Local Economic Revitalization Tax Abatement (LERTA) program. Narrowly passed in 2015, the program was supposed to incentivize residential construction by offering developers a 10-year property tax abatement.
Only it hasn’t worked well at all.
Recently, Jason Graves, director of economic development for the city, told City Council that, in the past three years, only about 10%—43 out of 426 eligible projects—applied for the program.
Meanwhile, city-approved building proposals line Harrisburg’s streets—single-family, duplexes, apartment buildings—but almost nothing has been built (with the notable exception of several affordable buildings, which, often subsidized, have different economics than market-rate projects).
So then what’s the problem?
In general, it’s two-fold.
First, the recent building environment has been brutal. With rising construction costs and interest rates, slim-margin projects that may have been viable pre-pandemic no longer are.
But, secondly, even before COVID, the city’s LERTA program was not functioning as intended—as an incentive for builders, especially for new construction, which has tougher qualification requirements than renovation projects.
This problem was already obvious back in 2017, when TheBurg published a feature story about the program. Even in that lower-cost environment, potential builders were bypassing Harrisburg’s LERTA due to conditions it placed on new construction, such as mandating the prevailing wage (government project) rate, which, they said, raised costs so much that any potential benefit was limited or even nullified.
I applaud both the administration and City Council for recently extending the current LERTA program for an additional year as they conduct an assessment. Yes, this review should have already occurred, as the program was due to sunset at the end of 2024, but a late response is better than none at all.
As the city conducts its assessment, it should focus on what works, as opposed to trying to appease interest groups, which resulted in the strictures that doomed the 2015 effort. After all, if no one is using LERTA, what’s the point of having it at all?
In the end, LERTA is no guarantee that Harrisburg will get the new housing it so badly needs, but it is one tool in the toolbox, along with possible reforms to zoning, density, parking minimums, etc.
In 2025, the administration and council have a golden opportunity to build a better LERTA. For the sake of the city’s future, I hope they take it.
Lawrance Binda is publisher and editor of TheBurg.
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