Construction is underway on a two-story expansion to the Alex Grass Building on the PinnacleHealth Harrisburg Campus on 2nd St. The project will expand the hospital’s maternity ward.
Revenue from building permits in Harrisburg has far exceeded projections for the 2017 fiscal year, a trend that city officials attribute to a stabilizing business climate and a few large projects.
Harrisburg met nearly 300 percent of its projected building permit revenue for the 2017 fiscal year by the end of August. The city budgeted $290,000 in revenue from building permits for the entire year, said City Finance Director Bruce Weber, but so far has collected $856,723 from 671 permits.
According to city codes administrator David Patton, the city netted $423,566 from 881 permits in all of 2016.
Weber conceded that permit revenue accounts for a very small percent of the city’s annual budget. Almost 90 percent of the city’s revenue comes from taxes, including those on local services, earned income and real estate. However, he said that the building permit revenues raised eyebrows during the city’s mid-year budget assessment.
“Generally, building permit revenue doesn’t vary much, but that changed this year,” Weber said.
He reported that the city had met 200 percent of its expected building permit revenue by June 30, the mid-point of the fiscal year.
Patton said that the cost of a building permit depends on the value of the building project. For example, a $2.5 million parking lot project at Harrisburg Area Community College carried a permitting fee of $23,023, and the permit for a $28-million expansion at PinnacleHealth brought in $214,273.
Though permit revenue contributes to the city’s bottom line, building projects do not necessarily indicate a growing real estate tax base in the long term. Some projects, such as the PinnacleHealth facility, operate as non-profits and do not pay real estate taxes to the city. In addition, many building and renovation projects can qualify for a LERTA tax abatement, which holds property taxes steady for a period of up to 10 years.
Weber said that while the city’s real estate tax base hasn’t grown for the last 10 years, building projects still contribute to the positive economic momentum in the city.
“It’s good to have building,” Weber said. “It feels like entities want to reinvest in the city, and that had not happened here for a really long time. It shows that there is stability and confidence that I hope will continue to grow.”
Patton, whose office processes all building permit applications, agreed.
“The development that is occurring is at a phenomenal level, and one that is beyond my recollection in my 22-plus years as an administrator,” he said.
Encouraging as this year’s surge may be, Weber said that the city cannot count on matching the same revenue next year. He said that the city might increase its revenue projections for 2018, but only slightly – perhaps up to $350,000 from this year’s $290,000.
“I think they’ll be higher but not like this,” Weber said. “You don’t really know what’s really going to happen.”
