act-1992-0-164•Pennsylvania Act 1992-164 — TAX INCREMENT FINANCING ACT - OMNIBUS AMENDMENTS
Pennsylvania Act 1992-164 — TAX INCREMENT FINANCING ACT - OMNIBUS AMENDMENTS
act-1992-0-1641992 Pa. Act 164Law
Act text
TAX INCREMENT FINANCING ACT - OMNIBUS AMENDMENTS
Act of Dec. 16, 1992, P.L. 1240, No. 164 Cl. 64
Session of 1992
No. 1992-164
HB 2439
AN ACT
Amending the act of July 11, 1990 (P.L.465, No.113), entitled
"An act providing for the creation of tax increment
districts; providing for additional powers and duties to be
exercised by redevelopment authorities and by industrial and
commercial development authorities; authorizing the creation
and approval of project plans for tax increment financing;
providing for the establishment of a tax increment base;
allocating the payment of positive tax increments; providing
for the financing of project costs; and providing for the
issuance of tax increment bonds and notes," further providing
for certain definitions, for project plans, for creation of
tax increment districts, for the tax increment base and for
certain regulations.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definitions of "project costs," "tax
increment" and "tax increment base" in section 3 of the act of
July 11, 1990 (P.L.465, No.113), known as the Tax Increment
Financing Act, are amended to read:
Section 3. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Project costs." Any expenditures made or estimated to be
made or monetary obligations incurred or estimated to be
incurred which are listed in a project plan as costs of public
works or improvements or residential, commercial or industrial
development or revitalization within a tax increment district,
plus any costs incidental thereto. Project costs include, but
are not limited to:
(1) Capital costs, including the actual costs of the
construction of public works or improvements or residential,
commercial or industrial development or revitalization, new
buildings, structures and fixtures; the demolition,
alteration, remodeling, repair or reconstruction of existing
buildings, structures and fixtures; the acquisition, upgrade
or rehabilitation of machinery and equipment; and the
acquisition, clearing and grading of land. Capital costs also
include the actual cost of the construction, rehabilitation
or repair of publicly owned infrastructure improvements
located outside the boundaries of a tax increment district
which are of direct benefit to a project.
(2) Financing costs, including all costs of issuance of
tax increment bonds or notes, reserve funds for tax increment
bonds or notes, all interest paid to holders of evidences of
indebtedness issued to pay for project costs, and any premium
paid over the principal amount thereof because of the
redemption of such obligations prior to maturity.
(3) Real property assembly costs, meaning any deficit
incurred resulting from the sale or lease as lessor by the
authority of real property within a tax increment district
for consideration which is less than its cost to the
authority.
(4) Professional service costs, including those costs
incurred for architectural, planning, engineering and legal
advice and services.
(5) Administrative costs, including reasonable charges
for the time spent by employees of a municipality or an
authority in connection with the implementation of a project
plan.
(6) Relocation costs.
(7) Organizational costs, including the costs of
conducting environmental impact and other studies and the
costs of informing the public with respect to the creation of
tax increment districts and the implementation of project
plans.
(8) Costs which are found to be necessary or convenient
to the creation of tax increment districts or the
implementation of project plans, or for the reimbursement of
prior expenditures made for any of the costs under this
definition.
* * *
"Tax increment." Generally, the incremental tax revenues,
determined with reference to the tax increment base, resulting
from the increase in property values or from the increase in
[sales] commercial activity as a result of a project. More
specifically, the term includes the following:
[(1) The tax levied on property situated in, or
otherwise assignable for the purposes of property taxation
to, a tax increment district to the extent that such tax is
attributable to an excess of the aggregate taxable valuation
as of the tax increment base date. The portion of the tax
levy attributable to the increased valuation after the tax
increment base date shall be calculated using the same
factors as were used as of the base date or without these
factors if property was not classified for tax purposes as of
the base date.]
(1) The incremental tax revenues resulting from an
increase in the total market value of taxable real property
situated in a tax increment district and an increase in the
business use and occupancy of such taxable real property.
This paragraph applies only to ad valorem taxes on real
property and tax imposed by the governing body on the use and
occupancy of real property.
(2) The payment in lieu of taxes assigned to or agreed
to be paid by governmental entities or nonprofit
organizations with property situated or otherwise assignable
to a tax increment district. Whether all or only a portion of
this payment is to be considered part of the tax increment
shall be determined at the time the tax increment district is
created.
[(3) The tax paid on the sale or use of tangible
personal property within the tax increment district. Whether
all or only a portion of this tax is to be considered part of
the tax increment shall be determined at the time the tax
increment district is created. This paragraph applies only to
a sales or use tax levied by a governing body.]
(3) The incremental tax revenues resulting from an
increase in total taxable sales and rentals of tangible
personal property and in the rendition of taxable services by
vendors located in a tax increment district. This paragraph
applies only to a sales tax levied by a governing body.
(4) The incremental tax revenues resulting from an
increase in total gross receipts or gross or net profits or
income realized by persons or entities from business
conducted in a tax increment district. This paragraph applies
only to those taxes levied under the authority of the act of
August 5, 1932 (Sp.Sess., P.L.45, No.45), referred to as the
Sterling Act, the act of December 31, 1965 (P.L.1257,
No.511), known as The Local Tax Enabling Act, and the act of
May 30, 1984 (P.L.345, No.69), known as the First Class City
Business Tax Reform Act.
["Tax increment base." The aggregate value of all taxable
property located within a tax increment district on the date the
district is created, as determined in accordance with section
6.]
"Tax increment base." The term means one or more of the
following, as appropriate:
(1) The aggregate market value of all taxable real
property located within a tax increment district on the date
the district is created.
(2) In a district where the governing body has levied a
tax on the business use and occupancy of real estate, the
average aggregate market value of real property located
within the district and used or occupied for business
purposes during the last available 12-month period preceding
the date of creation of the district.
(3) In a district where the governing body has levied a
sales tax, the total amount of taxable sales, rentals and
services subject to the sales tax of the Commonwealth and
occurring within the district during the last calendar year
or the last available 12-month period preceding the date of
creation of the district.
(4) In a district where the governing body has levied a
mercantile license tax, business privilege tax, net profits
tax or similar tax for the privilege of engaging in business
within the district, the total amount of taxable gross
receipts, net income or net profits, as the case may be,
realized by taxpayers at locations within the district during
their last taxable period which ended before the date of
creation of the district.
* * *
Section 2. Sections 5, 6(b) and 7(a) of the act are amended
to read:
Section 5. Creation of tax increment districts and approval of
project plans.
(a) General rule.--A tax increment district shall be created
in the following manner:
(1) The authority shall make a formal presentation to
the governing bodies of all municipalities and school
districts which levy property taxes within the area in which
the proposed tax increment district will be located. The
presentation shall include a description of the proposed
boundaries of the district, the tentative plans for the
development or redevelopment of the district, and an estimate
of the general impact of the proposed district on property
values and tax revenues.
(2) Each affected municipality and school district shall
designate a representative to meet with the authority to
discuss the project plan and the tax increment financing, and
shall notify the authority of its designated representative.
The authority shall meet with the designated representative
to discuss the creation of the district, the boundaries of
the district, development within the district, the tax
increment that the municipality and school district would
contribute to the tax increment fund, the exclusion of
particular parcels of property from the district, tax
collection for the district and any other matter relevant to
the proposed tax increment district.
(3) The authority shall recommend the boundaries of a
tax increment district to be created and shall submit the
recommendation to the governing body of the municipality
which will create the district. The municipality may be a
county.
(4) The authority shall prepare a project plan for each
tax increment district and submit the plan to the governing
body of the municipality which will create the district and
to the governing body of any other municipality or school
district that levies property taxes within the boundaries of
the proposed district. The plan shall include the following:
(i) A statement listing the kind, number and
location of all proposed public works or improvements
[within the district]and/or all residential, commercial
or industrial development and revitalization
improvements.
(ii) An economic feasibility study of the project
and the fiscal effects on the municipal tax base.
(iii) A detailed list of estimated project costs.
(iv) A description of the methods of financing all
estimated project costs and the time when related costs
or monetary obligations are to be incurred.
(v) A map showing existing uses and conditions of
real property in the district.
(vi) A map showing proposed improvements and uses
therein.
(vii) Proposed changes of any zoning ordinance,
master plan, map, building code or ordinance.
(viii) A list of estimated nonproject costs.
(ix) A statement of a proposed method for the
relocation of families, persons and businesses to be
temporarily or permanently displaced from housing or
commercial facilities in the project area by
implementation of the plan.
(5) The governing body of the municipality which will
create the tax increment district shall hold at least one
public hearing at which interested parties are afforded a
reasonable opportunity to express their views on the concept
of tax increment financing, on the proposed creation of a tax
increment district and its proposed boundaries, on the
proposed adoption of a project plan for the district and the
benefits to the municipality. Notice of the hearing shall be
published in accordance with the terms of the act of July 3,
1986 (P.L.388, No.84), known as the Sunshine Act, and said
notice shall be provided by first class mail, postage
prepaid, to the governing body of any municipality or school
district that levies property taxes within the boundaries of
a proposed tax increment district. This notice shall be
provided not less than 30 days before the date of the
hearing.
(6) In order to create a district and adopt a project
plan, the governing body of the municipality which will
create the tax increment district shall adopt, not earlier
than three weeks after the public hearing described in
paragraph (5) has been held, a resolution or ordinance which:
(i) Describes the boundaries of a tax increment
district with sufficient definiteness to identify with
ordinary and reasonable certainty the territory included.
The governing body shall take care that the boundaries
include only those whole units of property assessed for
general property tax purposes.
(ii) Creates the district as of a given date. A tax
increment district may exist for a period not to exceed
20 years, unless an amendment is made to the project plan
under paragraph (8).
(iii) Assigns a name to the district for
identification purposes.
(iv) Contains findings that, among other things:
(A) The district is a contiguous geographic area
within a redevelopment area.
(B) The improvement of the area is likely to
enhance significantly the value of substantially all
of the other real property in the district. It is not
necessary to identify the specific parcels meeting
this criterion.
(C) The aggregate value of equalized taxable
property of the district, plus all existing tax
increment districts, does not exceed 10% of the total
value of equalized taxable property within the
municipality.
(D) The area comprising the district as a whole
has not been subject to adequate growth and
development through investment by private enterprise
[and] or would not reasonably be anticipated to be
adequately developed or further developed without the
adoption of the plan.
(E) A feasible method exists for the
compensation of individuals, families and small
businesses that will be displaced by the project and
for their relocation to decent, safe and sanitary
dwelling accommodations within their means, without
undue hardship to such individuals, families and
businesses.
(F) The project plan conforms to the municipal
or county master plan, if any.
(G) The project plan will afford maximum
opportunity, consistent with the sound needs of the
community as a whole, for the rehabilitation or
redevelopment of the tax increment district by
private enterprise.
(H) The district is a blighted area containing
characteristics of blight as described in the Urban
Redevelopment Law and the project to be undertaken is
necessary to eliminate such conditions of blight.
(7) The governing body of a municipality or school
district that levies property taxes within the boundaries of
a proposed tax increment district shall, by ordinance or
resolution, agree to participate or opt not to participate in
whole or in part in the tax increment district. Such
ordinance or resolution shall be adopted and a copy thereof
delivered to the governing body of the municipality which
will create the district on or before the date on which the
public hearing described in paragraph (5) is held.
(8) The governing body of the municipality creating the
tax increment district may at any time, subject to the
provisions of section 6(c), adopt an amendment to a project
plan which shall be subject to approval in the same manner as
the original project plan.
(b) Cities of the first class.--In cities of the first
class, a tax increment district shall be permitted only in a
certified redevelopment area created pursuant to the Urban
Redevelopment Law.
Section 6. Determination of tax increment and tax increment
base.
* * *
(b) Determination of base.--Upon application in writing by
the finance officer of the municipality which created the
district, the assessor for that municipality shall determine,
according to its best judgment from all sources available to it,
the full aggregate market value of the taxable property in the
district[, which aggregate valuation constitutes the tax
increment base of the district.] as of the date on which the
district was created. The finance officer of the municipality
may determine the sales tax base or any other tax increment base
contemplated hereby in any manner which is reasonable and
prudent and meets sound business practice.
* * *
Section 7. Allocation of positive tax increments.
(a) Allocation of positive tax increments.--Positive tax
increments of a tax increment district shall be allocated to the
issuing authority for each year from the date when the district
is created until that time, after the completion of all [public]
improvements specified in the plan or amendments thereto, when
the issuing authority has received aggregate tax increments of
the district in an amount equal to the aggregate of all
expenditures made or monetary obligations incurred for project
costs for the district, including the payment of tax increment
bonds or notes.
* * *
Section 3. The act is amended by adding a section to read:
Section 9.1. Rules and regulations.
The Secretary of Commerce may, in the manner provided by law,
promulgate the rules and regulations necessary to carry out this
act. Regulations so promulgated shall not apply to districts
created prior to the effective date of such regulations.
Section 4. This act shall take effect immediately.
APPROVED--The 16th day of December, A. D. 1992.
ROBERT P. CASEY
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