Report: Tax Hike Possible
Real estate taxes in Harrisburg could increase by 105 percent over the next three years, if suggestions in a financial recovery plan submitted to city officials come to pass.
The state Department of Community and Economic Development (DCED) last month released Harrisburg’s Act 47 exit plan, a report intended to guide the city through the next three years in the state financial oversight program.
The plan, which was prepared by Harrisburg’s Act 47 coordinator Marita Kelley, calls for Harrisburg to restructure its revenue sources to align with tax rates set forth in the state code.
Act 47 has granted Harrisburg extraordinary taxing power that generates $11 million in revenue each year. The city doubled its earned income tax (EIT) rate in 2012 and tripled its local services tax (LST) in 2016.
Unless state laws change, Harrisburg would lose that revenue when it exits Act 47 in 2022.
To avoid a fiscal cliff, Kelley suggested that the city gradually surrender its extraordinary taxing authority and replace its EIT and LST revenue with real estate tax revenue over the next three years.
The exit plan calls for a complete reversal of the LST and EIT hikes by 2021. Simultaneously, Harrisburg would levy 20-percent real estate tax hikes for two consecutive years, followed by a 42 percent raise in 2021.
Harrisburg property owners pay taxes to three separate taxing jurisdictions: the city, the school district and Dauphin County. The hikes would only affect the city property tax.
Meanwhile, under the plan, bills for the city’s EIT and LST would decrease. Kelley recommends reducing the EIT by .5 percent in 2019 and 2020, offsetting the 1 percent hike that City Council levied in 2015. The plan also calls for the city to reduce its LST by $52 for the next two years, bringing it down to a $52 annual, flat rate by 2022.
The astronomical real estate tax hikes still wouldn’t bring in as much revenue as the current LST and EIT rates. Budget projections in the exit plan call on the city to spend more than $13 million from its fund balance to mitigate annual deficits.
The plan makes clear that Harrisburg can’t afford any new expenditures. Kelley outlined initiatives the city could make to curb spending, such as paying down debt obligations, renegotiating existing loans, adopting financial management policies to improve the city’s credit rating, and developing a five-year capital improvement plan to prioritize its infrastructure improvement projects.
Harrisburg does have two paths to avoid the real estate tax hikes. It could adopt a Home Rule charter, which would allow it to write its own tax code, though Mayor Eric Papenfuse last month seemed to reject that path.
The city also can ask the legislature to let it levy its current LST and EIT tax rates in perpetuity. City officials have been lobbying lawmakers for months in hopes of securing legislative change.
If the legislature does pass special tax provisions for Harrisburg when it reconvenes in September, the city could exit Act 47 and maintain its current taxing authority.
If the state fails to act, the city would enter its 2019 budget cycle under the assumptions set forth in DCED’s recovery plan.
Papenfuse denounced the report’s findings, calling them “state-assisted suicide.” Local officials vowed to fight any move to significantly raise Harrisburg’s property tax.
For its part, DCED later clarified that it sees real estate hikes as a last resort.
“The recovery coordinator believes the significant property tax proposed in the Act 47 Exit Plan should be considered as a last option,” according to a statement from the department. “As stated in the Exit Plan, the city should first explore reducing costs and renegotiating deals, entering into a home rule charter and negotiating with the state legislature to extend the deadline for collecting the LST and EIT.”
Council Passes Sanitation, Funding Measures
Harrisburg City Council passed new sanitation laws and disbursed more than $2 million in federal grant funds last month before adjourning for summer recess.
Over the course of a four-hour meeting, council made sweeping changes to laws governing trash and recycling collection violations in the city. The city’s new sanitation code establishes harsher fines and new enforcement powers.
Despite the lobbying of the city treasurer, council members rejected a provision that would have inaugurated annual trash billing. The city will continue to send homeowners and businesses monthly bills for trash services.
Under the new ordinance, owners of vacant properties will no longer be billed for trash services at those parcels. Council added an amendment requiring all vacant property owners to apply for a vacant property exemption.
The hallmark of the new sanitation code is a new fine and enforcement structure, aimed at curbing illegal trash disposal across the city.
Under the new ordinance, serious offenses—including illegal dumping, accumulation of trash exceeding 1,000 pounds, improper waste disposal and failure to register as a private trash hauler—are considered category 1 violations, punishable by a $1,000 fine or up to 90 days in jail.
Category 2 violations include failure to bag waste, obstruction of streets and sidewalks or interference with enforcement and will be met with fines starting at $100. Fines will increase up to $500 for each subsequent offense.
The ordinance also permits Public Works to designate enforcement officers to patrol public streets for violations, and it authorizes police officers to issue citations and enforce the ordinance.
Council last month also voted to disburse $2 million in funds from the Community Development Block Grant. More than a dozen local nonprofits and city departments will receive grants ranging from $5,000 to $300,000. These include:
- Christian Recovery Aftercare Ministries (C.R.A.M.): $40,000
- TLC Work Based Training: $45,000
- A Miracle 4 Sure: $50,000
- Latino Hispanic Community Center: $25,000
- Fair Housing Council: $25,000
- PPL/IN HOUSE: $20,000
- Shades of Greatness: $15,000
- Heinz-Menaker Senior Center: $25,000
- Neighborhood Dispute Settlement: $5,000
- TriCounty HDC: $250,000
- Habitat for Humanity: $100,000
- Housing Rehabilitation Programs (city-run): $321,642
In addition, more than $600,000 of the $2 million grant will go to debt service, and $400,000 will reimburse the city for CDBG administration.
Council also approved a new, five-year labor contract with the city’s firefighters, which will lock in 2-percent annual wage increases and establish a new policy to increase retention. Lastly, council passed a resolution reestablishing Harrisburg’s Environmental Advocacy Council, a seven-member body that will be filled by appointments by council and the mayor’s office.
City OKs 2 Buildings for Demo
Another slice of historic Harrisburg seems fated for the wrecking ball, as a long-time property owner has received permission to raze two small downtown buildings.
By a 4-1 count, the Harrisburg Architectural Review Board (HARB) last month voted to allow retired area attorney Gilbert Petrina to demolish 512 and 514 N. 2nd St., buildings that he has owned for at least 35 years.
Petrina’s son, Gilbert Petrina Jr., attended the meeting, saying that his father was too ill to attend.
“My goal is to get these down as quickly as possible,” the younger Petrina said. “They’re a blight. They’re a hazard.”
Several board members pointed out that the properties were blighted only because they had been neglected for so long by the owner.
“I’m disappointed the properties have reached this point,” said member Jeremiah Chamberlin. “Ten years ago, they would have been restorable.”
Petrina said that, someday, he’d like to build a new structure on the site. Until then, he proposed using the lots for parking, hoping that revenue would help offset the cost of the demolition.
However, Assistant City Solicitor Tiffanie Baldock said the city could not allow additional commercial parking because doing so would violate its agreement with Park Harrisburg/SP+, which runs the parking system under a long-term lease with the city.
Petrina, who lives in Virginia, said he still would proceed with the demolition and reiterated that, someday, he hoped to build on the site, though he currently lacked a plan to do so.
Mark Kropilak was named last month as the new chief executive officer of Capital Region Water, which provides water and sewer service to much of the Harrisburg area. Kropilak, who has worked both for private water technology companies and in a regulated utility, replaces Shannon Gority, who resigned the post late last year.
Patricia Whitehead-Myers was appointed to the Harrisburg school board last month. Myers, who served previously on the board, replaced Percel Eiland, who resigned his two-year board seat. In other school district news, Director Tyrell Spradley resigned his seat after just five months on the board.
Penn State Health has announced that it plans to build a new, 108-bed, acute-care hospital on 44 acres in the Wentworth Corporate Center in Hampden Township. Construction of the 300,000-square-foot, three-story building is slated to begin in early 2019, according to Penn State Health. It will be located directly across I-81 from UPMC Pinnacle’s West Shore Hospital.
Rob Lesher resigned last month after more than two years as the executive director of the Dauphin County Library System. Karen Cullings, the library’s director of community relations, will assume the position of interim executive director while a national search is conducted to find a replacement, according to DCLS.
TLC Work-Based Training last month held a groundbreaking for a 20-unit affordable apartment complex, the Harrisburg Uptown Building (HUB) and the HUB Veteran Housing Complex. The project at 5th and Kelker streets is TLC’s first major undertaking as a property developer.
Adrian St., 2425: M. Washington & J. Holmes to S. & V. Heckman, $61,000
Adrian St., 2436: PA Deals LLC to R. Buehner, $63,900
Allison Ct., 7: Flipside Home Renewal LLC to D. Wallace, $92,500
Berryhill St., 1143: FEI Company to Vich Development LLC, $1,250,000
Boas St., 235: Weichert Workforce Mobility Inc. to D. Kergick & A. McHugh, $177,000
Carlisle St., 308 & 318: R. Jackson to Pop’s House Inc., $285,000
Chestnut St., 1621: R. & L. Ravenel to B. & L. Young, $30,000
Delaware St., 263: M. Dupree to Wells Fargo Bank NA, $76,747
Derry St., 1152: J. Vogelsong to M. Pena & T. Edison, $40,000
Derry St., 2712: D. Diehl to A. Lorenzo, $102,000
Emerald Ct., 2447: Z. Akbar to S. Waheed to D. Ritter, $83,000
Emerald St., 311: J. Yeatter to H. Santiago Andino, $73,500
Grand St., 912: Summerhill Partners LP to D. & M. MacIntyre, $65,000
Green St., 1003: E. & J. Ireland to M. & C. Kwolek, $96,500
Green St., 1632: C. Frater & R. Valentine to F. & C. DiPeri, $130,000
Green St., 3216: P. Wong to M. Zeeshan & S. Patel, $67,000
Harris St., 416: T. Woodyard to M. Riegel, $104,500
Herr St., 112: C. Chandler to K. Kundratic, $118,500
Hillside Rd., 301: J. Harget to R. & L. Wood, $199,500
Hoffman St., 3114: W. & D. Kersey to R. Pereira Chakka, $95,000
Kensington St., 2101: HT Properties LLC to R. Ramos, $68,000
Kensington St., 2138: 2014 LIMG Real Estate Fund LLC to T. Pitts, $64,000
Logan St., 1719: C. Leman to D. Hemperly, $126,500
Maclay St., 248: D. Bowermaster to S. Melville, $53,500
Manada St., 1914: W. Fischer to T. Pitts, $55,000
Mercer St., 2442: P. & B. Huepenbecker to Lynn & Ryan Investment Properties LLC, $34,000
North St., 262: TJC East Properties LLC to Spuntina LLC, $235,000
N. Front St., 325 & 327: Pars Real Estate LLC to Askay Properties LLC, $505,000
N. Front St., 1007, 1115: Industries for Pennsylvania to WCI Partners LP, $452,000
N. Front St., 1525, Unit 411: A. Hoffman to J. & E. Badeaux, $195,000
N. Front St., 1525, Unit 507: T. & P. Avant to S. Kolesar, $100,000
N. 2nd St., 815: Bricker Boys Partnership to J. Ehring, $120,000
N. 2nd St., 1208: T. Chang to A. Calvano, $110,000
N. 2nd St., 1301: J. Schlegel to H. Rothrock, $99,800
N. 2nd St., 1915: C. Benkovic to Apple Tree Community Development Co., $110,000
N. 2nd St., 2241: K. Shubert & L. Christopher to E. & S. Lawrence, $179,900
N. 2nd St., 2719: W. & C. Gosnell to J. MacDonald, $212,000
N. 2nd St., 3225: A. Dillon & C. & D. Kenes to M. Letterman, $104,000
N. 4th St., 2545: P. Roebuck to C. Plaines, $56,970
N. 5th St., 3000: J. & E. MacDonald to M. Evans, $120,000
N. 5th St., 3205: D. Schade to J. Rodriguez & I. Ramos, $105,000
Paxton St., 1630: S. Selimovic to C. Bruno, $33,000
Penn St., 1701: J. Allen to J. Chrisemer, $130,400
Penn St., 1927: WCI Partners LP to A. Griffith, $135,000
Pennwood Rd., 3120: J. Mohler & J. Suter to C. Brubaker, $133,000
Pine St., 116: Metro Bank Property Management Inc. to River and Pine LLC, $1,200,000
Pine St., 124 and 111 Barbara St.: Keystone Service Systems to River and Pine LLC, $1,000,000
Reily St., 209: J. Pamula to E. Fry, $137,000
Rudy Rd., 2459: J. Archie to A. Burno, $46,500
Rumson Rd., 2920: W. Quezada & M. Cedeno to W. & D. Illanes, $30,000
S. 13th St., 348: R. Eisner & T. Lippi to M. Ortega, $47,500
S. 16th St., 340: B. & R. Van Wyk to C. Okegue, $94,900
S. 24th St., 608: R. Lawson to D. & A. Hoyt, $145,000
S. Cameron St., 1058: JWM Associates LP to MSJC Inc., $268,000
S. Front St., 711 & Hanna St., L2A, L3A: P. Moore to S. & D. Moffett, $193,000
State St., 1342: M. Lamereaux to R. Miles, $43,000
State St., 1410: R. & A. Sharp to S. Kochis, $78,000
State St., 1626: Deutsche Bank National Trust Co. Trustee to Harrisburg Homes Investment LLC, $34,344
State St., 1800 & 1802: CNC Realty Group LLC to Harrisburg Electricians Joint Apprenticeship & Training Trust Fund, $400,000
Swatara St., 1947: N. Williams to M. & T. Price & J. Seigle, $99,900
Verbeke St., 202: D. Michael to B. Hamilton, $96,000
Verbeke St., 234: J. Dixon to M. & M. Mumper, $178,000
Woodbine St., 226: Bank of New York Mellon Trustee to Axxess Creations LLC, $41,900