PRINTER'S NO. 3578
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2541
Session of
2024
INTRODUCED BY MADSEN, KINKEAD, SIEGEL, PIELLI, RABB, HILL-EVANS,
FREEMAN, T. DAVIS, CEPEDA-FREYTIZ, BURGOS, SANCHEZ, DONAHUE,
GALLAGHER, KENYATTA, PROKOPIAK AND GIRAL, AUGUST 21, 2024
REFERRED TO COMMITTEE ON LOCAL GOVERNMENT, AUGUST 21, 2024
AN ACT
Authorizing local taxing authorities to provide for tax
exemptions for improvements and redevelopment of churches,
hospitals and schools; establishing the Economic Development
and Mixed-Use Redevelopment Advisory Committee within the
State Planning Board; and conferring powers and imposing
duties on the Department of Community and Economic
Development.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Economic
Development and Mixed-Use Redevelopment of Churches, Hospitals
and Schools Act.
Section 2. Findings and declarations.
The General Assembly finds and declares as follows:
(1) There exists in this Commonwealth a number of
underutilized and deteriorating churches, hospitals and
schools that present an economic liability to the communities
in which they are located.
(2) It is in the public interest to promote the
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redevelopment of these properties and return them to a
functional purpose in accordance with sound and approved
plans to promote public convenience and welfare.
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:
"Attainable housing." Any of the following:
(1) A single-family residence that is subject to home
attainable deed restrictions and occupied by an individual or
family whose income is not more than 60% of the area median
gross income.
(2) A multiunit residential dwelling where at least a
percentage, as determined by the municipality, of the
residential units are:
(i) rent-restricted; and
(ii) occupied by an individual or family whose
income is not more than 60% of the area median income.
"Board." The State Planning Board established by the act of
April 9, 1929 (P.L.117, No.175), known as The Administrative
Code of 1929.
"Church." A building used for religious worship or other
religious purposes.
"Committee." The Economic Development and Mixed-Use
Redevelopment Advisory Committee established by the board under
section 4(a).
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Developer." A taxpayer redeveloping an eligible building
for economic development and mixed-use redevelopment purposes.
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"Economic development." Creating the conditions for economic
growth and improved quality of life by expanding the capacity of
individuals, businesses and communities to maximize the use of
their talents and skills to support innovation, job creation and
private investment.
"Economic development and mixed-use redevelopment." An
urban, suburban, village development or single building that
combines residential, commercial, cultural, institutional or
industrial uses to provide efficiency for the community in terms
of space, transportation and economic development.
"Eligible building." A building that was formerly used as a
church, hospital or school.
"Exemption." An exemption authorized under section 5(a).
"Hospital." A building, having an organized medical staff,
used for the purpose of providing the following to inpatients,
by or under the supervision of physicians, who are injured,
disabled, pregnant, diseased, sick or mentally ill:
(1) Diagnostic and therapeutic services.
(2) Rehabilitation services.
"Local taxing authority." A county, municipal corporation,
institution district or school district having authority to levy
real estate taxes.
"Municipal corporation." A city, borough, incorporated town
or township.
"Project agreement." An agreement between a developer and a
local taxing authority stating the terms and conditions of the
redevelopment of an eligible building authorized by the local
taxing authority for a tax exemption or special tax provision
under section 5.
"Property maintenance code." A municipal ordinance that
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regulates the maintenance or development of real property. The
term includes a building code, zoning code, housing code and
public safety code.
"Real estate tax." A tax on a homestead imposed or
authorized to be imposed by a local taxing authority.
"Redevelopment."
(1) Repair, construction or reconstruction, including
alternations and additions, having the effect of
rehabilitating an eligible building so that the eligible
building:
(i) attains higher standards of safety, health,
economic use or amenity; or
(ii) is brought into compliance with laws,
ordinances or regulations governing safety, health,
economic use or amenity standards.
(2) The term shall not include ordinary upkeep and
maintenance.
"School." A building under the control of any of the
following where classes are taught or extracurricular activities
are conducted on a regular basis:
(1) School district.
(2) Intermediate unit.
(3) Area career and technical school.
(4) Charter school or regional charter school.
(5) Nonpublic school entity used for educational
purposes.
"Serious violation." A violation of a State law or a
property maintenance code that poses an immediate imminent
threat to the health and safety of a dwelling occupant,
occupants in surrounding structures or passersby.
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"Special tax provision." The refund or forgiveness of a
portion of a taxpayer's real estate tax liability as provided by
this act.
Section 4. Economic Development and Mixed-Use Redevelopment
Advisory Committee.
(a) Establishment.--The board shall establish the Economic
Development and Mixed-Use Redevelopment Advisory Committee for
the purpose of providing municipal corporations with guidance
and best practices for the redevelopment of an eligible building
into attainable housing and other mixed-use spaces for the
benefit of the community.
(b) Composition.--
(1) The committee shall be composed of members, as
determined by the board, with expertise in area planning and
development, including:
(i) Real estate development.
(ii) Municipal planning.
(iii) Economic development.
(iv) Land use planning.
(2) The committee shall include a member of a Statewide
trade association of real estate professionals involved in
all aspects of the residential and commercial real estate
industry.
(c) Guidelines.--The committee shall draft best practices
guidelines for the redevelopment of an eligible building based
on national standards and models. The guidelines shall be posted
on the department's publicly accessible Internet website within
six months of the effective date of this subsection.
Section 5. Authority to provide special tax provisions.
(a) Authorization.--A local taxing authority, in accordance
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with this act, may provide tax exemptions and special tax
provisions related to an increase in the value of real estate
resulting from the redevelopment of an eligible building within
the boundaries of the local taxing authority, implementing
section 2(b)(iii) of Article VIII of the Constitution of
Pennsylvania.
(b) Approval required.--A tax exemption or special tax
provision authorized under this act is not enforceable until the
governing body of any one local taxing authority with
jurisdiction to levy real estate taxes on a property has
approved an ordinance or resolution adopting the tax exemption
or special tax provision. Other local taxing authorities may
approve a tax exemption or special tax provision subsequently.
(c) Notice.--
(1) Upon adoption of an ordinance or resolution adopting
the tax exemption or special tax provision under subsection
(a), each local taxing authority must post a notice of the
approval in a newspaper of general circulation in the area. A
local taxing authority shall post the notice on its publicly
accessible Internet website, if available.
(2) If multiple local taxing authorities have mutual
jurisdiction to levy real estate taxes on a property, a joint
notice of implementation of the tax exemption or special tax
provision must be published in a newspaper of general
circulation in the area upon adoption by each local taxing
authority with mutual jurisdiction to levy real estate taxes
on the property and each local taxing authority must post a
notice of the adoption on its publicly accessible Internet
website, if available.
Section 6. Exemption.
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(a) Exemption amount.--A local taxing authority may provide
for a tax exemption on the assessment attributable to the actual
cost of the redevelopment of an eligible building or up to a
maximum cost uniformly established by the municipal corporation.
The maximum cost must uniformly apply within the local taxing
authority's jurisdiction.
(b) Schedule.--Notwithstanding if an assessment eligible for
exemption is based upon actual cost or a maximum cost as
provided under subsection (a), the actual amount of taxes exempt
must be in accordance with at least one of the following
schedules, as determined by the local taxing authority:
(1) For the first 10 years, 100% of the eligible
assessment is exempt for economic development and mixed-use
redevelopment.
(2) In addition to the exemption under paragraph (1):
(i) for any economic development and mixed-use
redevelopment that is approved by the municipal
corporation in which the eligible building is located,
100% of the eligible assessment shall be exempt for an
additional two years if at least one of the following
criteria is met to the satisfaction of, and by a date
established by, the local taxing authority.
(ii) 100% of the eligible assessment shall be exempt
for an additional five years if at least two of the
following criteria are met to the satisfaction of, and by
a date established by, the local taxing authority:
(A) A minimum amount of attainable housing as
defined and determined by the local taxing authority
granting the exemption in consultation with the local
planning authority.
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(B) Improved energy efficiency.
(C) Installation of a renewable energy system
that provides electricity for 50% of the average
electricity needs for the economic development and
mixed-use redevelopment.
(D) Creation of greener or open space.
(E) Creation of lifestyle improvement projects,
including outdoor recreation space, walking paths,
bicycle paths or farmers markets.
(F) Installation of charging stations for
electric vehicles.
(G) Access to public transit.
(H) The redevelopment of the eligible building
is subject to a project labor agreement.
(c) Sale or exchange.--A tax exemption authorized by an
ordinance or resolution adopted under this act is specific to
real property of the eligible building and shall not terminate
upon the sale or exchange of the property.
(d) Estimate.--A local taxing authority must provide upon
request, and within 30 days of an estimate of, the amount of
assessment exempted for each eligible property based on the
exemption schedule under subsection (b).
(e) Repayment.--
(1) A local taxing authority shall receive a return of
the local taxing authority's proportional share of taxes
exempt under this act if either of the following occur within
five years following the redevelopment of the eligible
building:
(i) A serious violation of State law or a property
maintenance code exists on the property and the owner has
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taken no substantial steps to correct the violation
within six months following notification of the violation
and for which fines or other penalties or a judgment to
abate or correct were imposed by a magisterial district
judge at law or in equity, not subject to appellate
review, or imposed by a court of common pleas.
(ii) The developer is subject to a municipal permit
denial under 53 Pa.C.S. Ch. 61 (relating to neighborhood
blight reclamation and revitalization) in connection with
the redevelopment of the eligible building.
(2) At the time a project agreement is executed, if the
developer has not completed each requirement for exemption
under section 8(a) or is ineligible under section 8(b) or
(c), the local taxing authority shall file a lien against the
tax-exempt property at the rate of the estimated amount of
assessment under subsection (d). The lien shall be satisfied
by the local taxing authority at the end of the fifth year
following the completion of the redevelopment if there have
been no serious violations against the property that have not
been corrected to the satisfaction of the local taxing
authority. The lien on the property under subsection (c)
shall remain upon the sale or exchange of the eligible
building.
Section 7. Exemption incentives procedure.
(a) Notification and application.--A developer desiring tax
exemption for the redeveloped property as authorized by an
ordinance or resolution adopted under this act must notify the
local taxing authority granting the exemption in writing on an
application form provided by the local taxing authority, which
must be submitted at the time the developer secures the building
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permit or, if no building permit or other notification is
required for the redevelopment of the property, at the time the
developer commences construction. The application must include
the following information:
(1) A notarized statement of tax obligations, signed by
the applicant and the local taxing authority.
(2) An outline of specifications for the redevelopment
of the eligible building indicating, with as much specificity
as practicable, the materials to be used for exterior and
interior finishes.
(3) An itemized cost estimate for the redevelopment of
the eligible building, which must:
(i) be on contractor letterhead; and
(ii) indicate the property address of the
redevelopment project.
(4) A preliminary architectural drawing or blueprint for
the redevelopment.
(5) A recent appraisal of the property, if available.
(6) An applicable building permit application or
building permit.
(7) An income and expense report for the eligible
building, which may be submitted directly to the county
assessment office in order to protect the confidentiality of
the information.
(8) The final decision of the zoning authority or other
regulatory agency granting relief, if applicable.
(9) The signature of the applicant and the date of
signing.
(10) Proof of a project labor agreement for the
redevelopment, if applicable.
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(b) Estimate.--The amount of assessment deemed eligible for
tax exemption under subsection (c) shall be available for public
inspection and copying so that a subsequent purchaser may be
informed of the amount of taxes to be paid after the exemption
expires.
(c) County assessment office.--
(1) A copy of the application submitted under subsection
(a) shall be forwarded to the county assessment office. After
completion of the redevelopment of the eligible building, the
county assessment office shall:
(i) separately assess the redevelopment and
calculate the amounts of the assessment eligible for tax
exemption in accordance with the limits established by
the local taxing authorities; and
(ii) notify the developer and the local taxing
authorities of the reassessment and amounts of the
assessment eligible for exemption.
(2) Appeals from a reassessment and the amounts eligible
for the exemption may be made by the developer or the local
taxing authorities.
(d) Amendment of ordinance or resolution.--The cost of
redevelopment to be exempt and the schedule of taxes exempt that
exist at the time of the initial request for tax exemption shall
apply to the exemption request. A subsequent amendment to the
ordinance or resolution shall not apply to a request initiated
prior to adoption of the amendment.
Section 8. Eligibility requirements.
(a) General rule.--The completed redevelopment must:
(1) Conform to zoning ordinance requirements.
(2) Correct any municipal code violation.
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(b) Ineligibility.--A property shall be deemed ineligible
for a tax exemption if any of the following apply:
(1) The property receives other property tax abatement
or exemption incentives for new construction or improvement.
(2) The property receives tax relief through a State
program.
(3) The property owner or developer is delinquent on
property taxes related to the subject property, unless the
delinquent taxes are paid prior to redevelopment, or payment
of delinquent taxes has been arranged with the local taxing
authority in accordance with an installment plan.
(4) The property owner has a legal or equitable interest
in other property for which taxes are delinquent, unless:
(i) the delinquent taxes are paid prior to
redevelopment; or
(ii) payment of delinquent taxes has been arranged
with the local taxing authority in accordance with an
installment plan.
(5) The property owner has a legal or equitable interest
in other property within the boundaries of the municipal
corporation for which there exists a serious violation that
has not been remedied prior to filing the application under
section 7(a).
(6) Construction or other improvements for the
redevelopment of the eligible building has commenced prior to
filing an application under section 7(a).
(7) The property is owned by a nonprofit entity.
(c) Prohibitions.--For the period of time that a property
receives a tax exemption, a purchase or sale of the property or
a portion of the property may not be structured to exclude or
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exempt the transaction from a realty transfer tax due to a
taxing authority that would not be excluded or exempt, except
for the following:
(1) A sheriff sale or tax claim bureau sale.
(2) A corrective deed.
(3) A transfer by a mortgagor to the holder of a bona
fide mortgage in default in lieu of a foreclosure.
(4) A transfer to a judicial sale in which the
successful bidder is the bona fide holder of a mortgage.
(5) A transaction excluded from the realty transfer tax
under Article XI-C of the act of March 4, 1971 (P.L.6, No.2),
known as the Tax Reform Code of 1971.
Section 9. Effective date.
This act shall take effect in 60 days.
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