2021-2022 Regular Session HB 581 PN 2900 Bill Text (HTM)

SENATE AMENDED

PRIOR PRINTER'S NOS. 544, 1004

PRINTER'S NO. 2900

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

581

Session of

2021

INTRODUCED BY SOLOMON, SANCHEZ, STURLA, D. WILLIAMS, ISAACSON,

HOHENSTEIN, QUINN, SCHMITT, BURGOS, CIRESI, FREEMAN,

SCHLOSSBERG, ZIMMERMAN, HILL-EVANS, STRUZZI, SCHWEYER,

KIRKLAND, WEBSTER, NEILSON, MALAGARI, RIGBY, DOWLING,

INNAMORATO, McCLINTON, HEFFLEY, KINKEAD, C. WILLIAMS,

FITZGERALD, GUZMAN, T. DAVIS, McNEILL, HERRIN, RABB AND

KINSEY, FEBRUARY 22, 2021

SENATOR PITTMAN, URBAN AFFAIRS AND HOUSING, IN SENATE, AS

AMENDED, MARCH 30, 2022

AN ACT

Authorizing local taxing authorities to provide for tax

exemptions for improvements to deteriorated areas and

dwellings to incentivize the creation and improvement of

affordable housing units.

TABLE OF CONTENTS

Chapter 1. General Provisions

Section 101. Short title.

Section 102. Definitions.

SECTION 103. REQUIREMENT.

Chapter 2. Special Tax Provisions for Impoverished

Pennsylvanians

Section 201. Construction.

Section 202. Declaration of policy (Reserved).

Section 203. Special tax provisions and refund or forgiveness

of real estate taxes.

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Section 204. Application and proof of claim.

Section 205. Administration and enforcement.

Chapter 3. Creating and Improving Affordable Housing Units in

Deteriorated Areas

Section 301. Construction.

Section 302. Exemption.

Section 303. Exemption schedule.

Section 304. Procedure for obtaining exemption incentives.

Section 305. Eligibility requirements.

Chapter 4. Creating and Improving Affordable Housing Units

Section 401. Construction.

Section 402. Exemption schedule.

Section 403. Exemption incentives procedure.

Section 404. Eligibility requirements.

Chapter 5. Miscellaneous Provisions

Section 501. Effective date.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

CHAPTER 1

GENERAL PROVISIONS

Section 101. Short title.

This act shall be known and may be cited as the Affordable

Housing Unit Tax Exemption Act.

Section 102. 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:

"Affordable housing unit."

(1) A multiunit residential dwelling where at least 30%

of the residential units meet all of the following:

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(i) Are rent-restricted.

(ii) Are occupied by an individual or family whose

income is not more than 60% of area median income.

(2) The term includes single family residences that are

subject to deed restrictions and occupied by an individual or

family whose income is not more than 60% of the area median

gross income.

"Area median income." The median household income within the

boundaries of a local taxing authority.

"Blighted property." The term shall have the same meaning as

defined in 1 Pa.C.S. § 1991 (relating to definitions).

"Deteriorated area." An area designated by a municipal

corporation which consists of blighted property.

"Dwelling unit." A house, apartment, or group of rooms

intended for occupancy as separate living quarters by family or

other groups or a person living alone, containing a kitchen or

cooking equipment for the exclusive use of the occupants.

"Homestead." As follows:

(1) A dwelling used as a home which is occupied by a

taxpayer as a primary residence.

(2) The term includes:

(i) A mobile home which is assessed as realty for

local property tax purposes and the land on which the

mobile home is situated and other similar living

accommodations, including a part of a multidwelling or

multipurpose building and a part of the land upon which

the multidwelling or multipurpose building is built to

the extent that the eligible taxpayer is chargeable by a

local taxing authority for property taxes.

(ii) A premises occupied by an eligible taxpayer if

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the eligible taxpayer is required by law to pay a

property tax by reason of the taxpayer's ownership or

rental of, include a possessory interest in, the

dwelling, land or both. As used in this subparagraph:

(A) The term "by law" shall not include a

contractual obligation between the eligible taxpayer

and a person who would otherwise be responsible to a

local taxing authority for the payment of the tax.

(B) An owner shall include a person in

possession under a contract of sale, deed of trust,

life estate, joint tenancy or tenancy in common.

"Improvement." Repair, construction or reconstruction,

including alterations and additions, having the effect of

rehabilitating a blighted property so that the blighted property

becomes habitable or attains higher standards of safety, health,

economic use or amenity, or is brought into compliance with

laws, ordinances or regulations governing safety, health,

economic use or amenity standards. The term shall not include

ordinary upkeep and maintenance.

"Local taxing authority." A county, city, borough,

incorporated town, township, institution district or school

district having authority to levy real property taxes.

"Low-income taxpayer." A taxpayer whose income does not

exceed the maximum annual income allowable for an eligible

claimant to participate in the Pharmaceutical Assistance

Contract for the Elderly Needs Enhancement Tier (PACENET).

"Municipal code." A building, housing, property maintenance,

fire, health or other public safety ordinance, related to the

use or maintenance of real property, enacted by a municipality.

The term does not include a subdivision and land development

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ordinance or a zoning ordinance enacted by a municipality.

"Municipal corporation." A city, borough, incorporated town

or township.

"Property maintenance code." A municipal ordinance which

regulates the maintenance or development of real property. The

term includes a building code, housing code and public safety

code.

"Real estate taxes." A tax on a homestead imposed or

authorized to be imposed by a local taxing authority.

"Rent-restricted." The maximum rent an owner may charge for

a unit does not exceed 30% of the adjusted income of a family or

taxpayer whose annual income is less than or equal to 60% of the

area median gross income.

"Serious violation." A violation of a State law or a

municipal code that poses an immediate imminent threat to the

health and safety of a dwelling occupant, an occupant in a

surrounding structure or a passerby.

"Special tax provision." The standards and qualifications

provided under this act to establish the eligibility for and the

refund or forgiveness of a portion of the taxpayer's real estate

tax liability.

"SUBJECT PROPERTY." REAL PROPERTY SUBJECT TO REAL ESTATE

TAXES WITHIN THE BOUNDARIES OF A LOCAL TAXING AUTHORITY.

"Substantial step." An affirmative action as determined by a

property code official or officer of the court on the part of a

property owner or managing agent to remedy a serious violation

of a State law or code, including, but not limited to, physical

improvements or repairs to the property, which affirmative

action is subject to appeal in accordance with applicable law.

"Tax Reform Code of 1971." The act of March 4, 1971 (P.L.6,

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No.2), known as the Tax Reform Code of 1971.

"Taxpayer Relief Act." The act of June 27, 2006 (1st

Sp.Sess., P.L.1873, No.1), known as the Taxpayer Relief Act.

SECTION 103. REQUIREMENT.

A TAX EXEMPTION OR SPECIAL TAX PROVISION PERMITTED UNDER THIS

ACT SHALL NOT BE ENFORCEABLE UNTIL THE GOVERNING BODY OF EACH

LOCAL TAXING AUTHORITY WITH MUTUAL JURISDICTION TO LEVY REAL

ESTATE TAXES ON A SUBJECT PROPERTY HAS APPROVED AN ORDINANCE OR

RESOLUTION ADOPTING THE TAX EXEMPTION OR SPECIAL TAX PROVISION.

UPON ADOPTION OF AN ORDINANCE OR RESOLUTION, EACH LOCAL TAXING

AUTHORITY MUST POST A NOTICE OF THE APPROVAL OF THE TAX

EXEMPTION OR SPECIAL TAX PROVISION ON ITS PUBLICLY ACCESSIBLE

INTERNET WEBSITE. IF A LOCAL TAXING AUTHORITY DOES NOT POSSESS A

PUBLICLY ACCESSIBLE INTERNET WEBSITE, NOTICE OF THE APPROVAL OF

THE TAX EXEMPTION OR SPECIAL TAX PROVISION MUST BE PUBLISHED IN

A NEWSPAPER OF GENERAL CIRCULATION IN THE AREA. UPON ADOPTION OF

AN ORDINANCE OR RESOLUTION BY EACH LOCAL TAXING AUTHORITY WITH

MUTUAL JURISDICTION TO LEVY REAL ESTATE TAXES ON A SUBJECT

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.

CHAPTER 2

SPECIAL TAX PROVISIONS FOR IMPOVERISHED PENNSYLVANIANS

Section 201. Construction.

This chapter shall be construed to authorize a local taxing

authority to provide by ordinance or resolution for the

implementation of the special tax provisions contained in this

act which allow for the refund or forgiveness of real property

tax liability of low-income families attributable to real

property tax rate increases and increases in the assessed value

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of the low-income family's homestead, implementing section 2(b)

(ii) of Article VIII of the Constitution of Pennsylvania.

Section 202. Declaration of policy (Reserved).

Section 203. Special tax provisions and refund or forgiveness

of real estate taxes.

(a) General rule.--A taxpayer residing within the boundaries

of a local taxing authority who meets the standards and

qualifications established by this act shall be deemed a

separate class of subjects of taxation, and, as such, each

governing body of a local taxing authority may by ordinance

provide that the taxpayer shall be entitled to the benefit of

the special tax provisions of this act.

(b) Refund or forgiveness of real estate taxes.--Under an

ordinance or resolution referenced under subsection (a), an

eligible taxpayer shall receive a refund or forgiveness which

has been paid over to or would, except for this act, be payable

to the local taxing authority for real estate taxes authorized

or imposed by a local taxing authority in accordance with the

following:

(1) A low-income taxpayer shall receive a refund or

forgiveness of the part of the low-income taxpayer's real

estate tax liability attributable to a real estate tax rate

increase or an increase in the assessed value of the

taxpayer's homestead occurring after the effective date of an

ordinance implementing this act.

(2) If a taxpayer who had previously been eligible to

receive a refund or forgiveness of real estate taxes under

this act is no longer eligible by reason of failing to meet

the low-income requirement provided under this act, the

taxpayer shall be billed and shall pay real estate taxes at

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the then current real estate tax rate and assessed value. If

for subsequent tax years a taxpayer reestablishes eligibility

for refunds or forgiveness of real estate taxes by again

meeting the low-income requirements provided under this act,

the amount of real estate taxes that the taxpayer is eligible

to have refunded or forgiven shall be the part of the

taxpayer's real estate tax liability attributable to a real

estate tax rate increase or an increase in the assessed value

of the taxpayer's homestead occurring no earlier than the

calendar year prior to the tax year for which the taxpayer

reestablishes eligibility.

(3) The maximum amount of real estate taxes which may be

refunded or forgiven may be limited by ordinance.

(4) If a homestead is owned for only a portion of a year

or is owned in part by a person who is not a low-income

taxpayer, the tax collector shall apportion the real estate

taxes in accordance with the period or portion of ownership

of the eligible taxpayer in determining the amount of refund

or forgiveness for which a taxpayer is eligible.

Section 204. Application and proof of claim.

(a) Application.--A taxpayer desiring to take advantage of

the special tax provisions under an ordinance or resolution

adopted under this act shall notify the local taxing authority

granting the special tax provisions in writing on a form

provided by the local taxing authority submitted at the time

provided in the ordinance or resolution. Only one taxpayer for

each homestead shall receive real estate tax refund or

forgiveness of taxes. If at least two taxpayers are residing at

a homestead meet the qualification for a real estate tax refund

or forgiveness of taxes, the taxpayers may determine who shall

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receive the refund or forgiveness of taxes. If the taxpayers are

unable to agree, each local taxing authority shall determine to

whom the refund or forgiveness of taxes shall apply.

(b) Proof of claim.--Each application shall include

reasonable proof of household income, the location and nature of

the property claimed as a homestead and the tax bill or receipt

for the real estate taxes owed or paid in connection with the

occupancy of the homestead. For the purposes of this subsection,

a taxpayer shall not be required to directly pay the real estate

taxes.

Section 205. Administration and enforcement.

Each local taxing authority shall provide by ordinance or

resolution, rule or regulation for the administration and

enforcement of an ordinance or resolution adopted under this

act.

CHAPTER 3

CREATING AND IMPROVING AFFORDABLE HOUSING

UNITS IN DETERIORATED AREAS

Section 301. Construction.

This chapter shall be construed to authorize a local taxing

authority to provide for tax exemption incentives for new

construction for, and improvements to, deteriorated areas of

this Commonwealth to create and improve affordable housing

units. This chapter shall implement section 2(b)(iii) of Article

VIII of the Constitution of Pennsylvania.

Section 302. Exemption.

(a) Real property tax exemption.--

(1) A local taxing authority may, by ordinance or

resolution, exempt from real property taxation the assessed

valuation of improvements to blighted properties for the

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creation of, or improvements to, affordable housing units,

and the assessed valuation of new construction within a

deteriorated area in the amounts and in accordance with the

provisions and limitations specified in this act.

(2) An ordinance or resolution under paragraph (1) shall

specify a description of each deteriorated area, the cost of

improvements per unit to be exempted and the schedule or

taxes exempted as provided under this act.

(b) Boundaries.--Prior to the adoption of the ordinance or

resolution authorizing the granting of a tax exemption under

this section, a municipal corporation must designate the

boundaries of the deteriorated area, wholly or partially located

within its jurisdiction, if any.

(1) At least one public hearing must be held by the

municipal corporation for the purpose of determining the

boundaries of a deteriorated area.

(2) At a public hearing under paragraph (1), the local

taxing authorities, planning commission or redevelopment

authority and other interested public and private agencies

and individuals, shall present their recommendations

concerning the location of boundaries of a deteriorated area

for the guidance of the municipal corporation.

(3) The public hearing shall be held in accordance with

65 Pa.C.S. Ch. 7 (relating to open meetings).

(d) Adjacent property inclusions.--Property adjacent to a

deteriorated area may be included within the deteriorated area

if the local taxing authority determines that new construction

on the property would encourage, enhance or accelerate the

development of affordable housing units.

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(e) Municipal cooperation.--

(1) Two or more municipal corporations may join together

for the purpose of determining the boundaries of a

deteriorated area and establishing the uniform maximum cost

per unit. Each municipal corporation joining together under

this paragraph shall cooperate fully with each other for the

purpose of implementing this act.

(2) A local taxing authority may, by implementing an

ordinance or resolution, agree to adopt a tax-exemption

schedule contingent upon the similar adoption by an adjacent

local taxing authority or by a local taxing authority with

mutual jurisdiction, within the limitations provided under

this act.

(f) Rescinding deteriorated area designation.--A local

taxing authority may rescind an ordinance or resolution adopted

under subsection (a) if the local taxing authority determines

that the tax exemption in the deteriorated area within the

boundaries established under subsection (b) has accomplished the

goal of creating and improving affordable housing units in the

deteriorated area. Property granted tax exemption within the

boundaries of the deteriorated area prior to the ordinance or

resolution being rescinded shall continue to receive the tax

exemption granted until the tax exemption is terminated in

accordance with the exemption schedule.

Section 303. Exemption schedule.

(a) Provision.--A local taxing authority granting a tax

exemption under this chapter may provide for a tax exemption on

the assessment attributable to the actual cost of new

construction or improvements for affordable housing units or up

to any maximum cost uniformly established by the local taxing

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authority. The maximum cost shall uniformly apply to each

eligible blighted property within the deteriorated area within

the local taxing authority's jurisdiction.

(b) Schedule.--Notwithstanding if the assessment eligible

for exemption is based on actual cost or a maximum cost, the

actual amount of real estate taxes exempted shall be in

accordance with one of the following schedules, as determined by

the local taxing authority:

(1) For the following years for which improvements would

otherwise be taxable:

(i) for the first year, 100% of the eligible

assessment shall be exempted;

(ii) for the second year, 90% of the eligible

assessment shall be exempted;

(iii) for the third through tenth years, 80%, 70%,

60%, 50%, 40%, 30%, 20% and 10%, respectively; and

(iv) after the tenth year, the exemption shall

terminate.

(2) For the following years for which improvements would

otherwise be taxable:

(i) for the first year, 100% of the eligible

assessment shall be exempted;

(ii) for the second year, 80% of the eligible

assessment shall be exempted;

(iii) for the third through fifth years, 60%, 40%

and 20%, respectively, of the eligible assessment shall

be exempted; and

(iv) after the fifth year, the exemption shall

terminate.

(3) For the following years for which improvements would

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otherwise be taxable:

(i) for the first through third years, 100% of the

eligible assessment shall be exempted; and

(ii) after the third year, the exemption shall

terminate.

(4) For the first through tenth years for which

improvements would otherwise be taxable, 100% of the eligible

assessment shall be exempted and after the tenth year the

exemption shall terminate.

(5) A local taxing authority may provide for tax

exemption on the assessment attributable to the actual cost

of construction of the dwelling unit in accordance with a

schedule established by the taxing authority, if the

exemption schedule does not exceed a period of 10 years.

to the additional assessment valuation attributable to the

actual costs of new construction or improvements to blighted

property or not in excess of the maximum cost per unit

established by a local taxing authority.

(d) Sale or exchange.--The exemption from taxes shall be

upon the property exempted and shall not terminate upon the sale

or exchange of the property.

(e) Estimate.--A local taxing authority shall provide upon

request an estimate of the amount of assessment exempted for

each eligible property based on the exemption schedule under

subsection (b).

(f) Repayment.--

(1) A local taxing authority shall be entitled to a

return of its proportional share of real estate taxes

exempted under the provisions of this act if, within five

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years following completion of the new construction or

improvements:

(i) there exists on the property a serious violation

of State law or a municipal code and the owner has taken

no substantial steps to correct the serious violation

within six months following notification of the serious

violation and for which fines or other penalties or a

judgment to abate or correct were imposed by a

magisterial district judge or municipal court, and a

final judgment at law or in equity, not subject to

appellate review, was imposed by a court of common pleas;

(ii) the taxpayer is subject to a municipal permit

denial under 53 Pa.C.S. Ch. 61 (relating to neighborhood

blight reclamation and revitalization).

(2) At the time the agreement is entered into between a

local taxing authority and the taxpayer who desires tax

exemption, if the taxpayer has completed all requirements

under section 305, the local taxing authorities shall file a

lien against the tax-exempt properties at the rate of the

estimated amount of assessment under subsection (b). The lien

shall be forgiven by the local taxing authority at the end of

the fifth year following the completion of the new

construction or improvements, if there have been no serious

violations against the property that have not been corrected.

The lien on the property shall transfer under subsection (d)

in cases of sale or exchange of the property.

Section 304. Procedure for obtaining exemption incentives.

(a) Notification.--A taxpayer desiring tax exemption

authorized by an ordinance or resolution adopted under this

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chapter shall notify the local taxing authority granting the

exemption in writing on an application form provided by the

local taxing authority, submitted at the time the taxpayer

secures the building permit or, if no building permit or other

notification of new construction or improvement is required, at

the time the taxpayer commences construction. The application

shall include the following information:

(1) Statement of tax obligations, signed by the

applicant and the local taxing authority and notarized.

(2) Outline of specifications for the new construction

or improvement, indicating with as much specificity as

practicable, the materials to be used for exterior and

interior finishes.

(3) An itemized cost estimate for the new construction

or improvement. The itemization must:

(i) Be on contractor letterhead.

(ii) Indicate the property address of the project.

(iii) Be signed by the applicant.

(4) Preliminary architectural drawings or blueprints for

the new construction or improvement.

(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 property, 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.

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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 is

informed of the amount of taxes to be paid after the 10-year

exemption period.

(1) A copy of the exemption request shall be forwarded

to the county assessment office. The county assessment office

shall, after completion of the new construction or

improvement, assess separately the new construction or

improvement and calculate the amounts of the assessment

eligible for tax exemption in accordance with the limits

established by the local taxing authorities and notify the

taxpayer and the local taxing authorities of the reassessment

and amounts of the assessment eligible for exemption.

(2) Appeals from the reassessment and the amounts

eligible for the exemption may be taken by the taxpayer or

the local taxing authorities.

(d) Amendment of ordinance or resolution.--The cost of new

construction or improvements to be exempted and the schedule of

taxes exempted which 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 305. Eligibility requirements.

(a) General rule.--The completed new construction or

improvement must:

(1) Conform to zoning ordinance requirements.

(2) Increase the value of the property by at least 25%.

(3) Correct each municipal code violation.

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(b) Ineligibility.--A property shall be ineligible for tax

exemption under section 304(a) if:

(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, except as provided under subsection (d).

(3) The property owner or developer is delinquent on

property taxes related to the subject property, except if the

delinquent taxes are paid prior to construction 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 property taxes are delinquent,

except if the delinquent taxes are paid prior to construction

or payment of delinquent taxes has been arranged with the

local taxing authority in accordance with an installment

plan.

(5) New construction or improvement has commenced prior

to filing an application under section 305.

(6) The property includes an improvement under

subsection (c) that poses a health or safety risk to an

individual residing above the first floor. 304.

exemption under this act shall be offset by the amount of

property tax rebate received under Chapter 13 of the Taxpayer

Relief Act.

(d) Limitations.--The property qualifying and receiving a

tax exemption under this chapter shall be ineligible for or

receive additional tax exemptions under the act of July 9, 1971

(P.L.206, No.34), known as the Improvement of Deteriorating Real

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Property or Areas Tax Exemption Act, and the act of December 1,

1977 (P.L.237, No.76), known as the Local Economic

Revitalization Tax Assistance Act, for a minimum of 15 years

from the date the property received a tax exemption under this

chapter.

(e) Prohibitions.--For the period of time that a property

receives a tax exemption under this chapter, a purchase or sale

of the property or any portion of the property may not be

structured to exclude or 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 Tax Reform Code of 1971.

CHAPTER 4

CREATING AND IMPROVING AFFORDABLE HOUSING UNITS

Section 401. Construction.

This chapter shall be construed to authorize local taxing

authorities to provide for special tax provisions on an increase

in value of real estate resulting from construction of

affordable housing units or improvements to an existing

affordable housing unit within the boundaries of the local

taxing authority, implementing section 2(b)(iv) of Article VIII

of the Constitution of Pennsylvania.

Section 402. Exemption schedule.

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(a) General rule.--A local taxing authority granting a tax

exemption under this chapter may provide for a tax exemption on

the assessment attributable to the actual cost of new

construction or improvements for affordable housing units or up

to a maximum cost uniformly established by the municipal

corporation. The maximum cost shall uniformly apply to each

eligible affordable housing unit constructed or improved 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, the

actual amount of taxes exempted shall be in accordance with one

of the following schedules, as determined by the local taxing

authority:

(1) For the following years for which new construction

or improvements would otherwise be taxable:

(i) for the first year, 100% of the eligible

assessment shall be exempted;

(ii) for the second year, 100% of the eligible

assessment shall be exempted; and

(iii) after the second year, the exemption shall

terminate.

(2) For the following years for which new construction

or improvements would otherwise be taxable:

(i) for the first year, 100% of the eligible

assessment shall be exempted;

(ii) for the second year, 50% of the eligible

assessment shall be exempted; and

(iii) after the second year, the exemption shall

terminate.

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shall be limited to the additional assessment valuation:

(1) attributable to the actual costs of new construction

or improvements to affordable housing units; or

(2) not in excess of the maximum cost per unit

established by a local taxing authority.

(d) Sale or exchange.--An exemption from a tax under this

chapter shall be on the property exempted and shall not

terminate upon the sale or exchange of the property.

(e) Estimate.--A local taxing authority shall provide upon

request an estimate of the amount of assessment exempted for

each eligible property based on the exemption schedule under

subsection (b).

(f) Repayment.--

(1) A local taxing authority shall receive a return of

the local taxing authority's proportional share of taxes

exempted under this act if, within five years following

completion of the new construction or improvements:

(i) a serious violation of State law or a municipal

code exists on the property and the owner has 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 or

municipal court and a final judgment at law or in equity,

not subject to appellate review, was imposed by a court

of common pleas; or

(ii) the taxpayer is subject to a municipal permit

denial under 53 Pa.C.S. Ch. 61 (relating to neighborhood

blight reclamation and revitalization).

(2) At the time the agreement is entered into between a

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local taxing authority and the taxpayer who desires tax

exemption, if the taxpayer has completed each requirement

under section 404, the local taxing authority shall file a

lien against the tax-exempt properties at the rate of the

estimated amount of assessment under subsection (b). The lien

shall be forgiven by the local taxing authority at the end of

the fifth year following the completion of the new

construction or improvements, if there have been no serious

violations against the property that have not been corrected.

The lien on the property shall transfer under subsection (d)

for a sale or exchange of the property.

Section 403. Exemption incentives procedure.

(a) Notification.--A taxpayer desiring tax exemption

authorized by an ordinance or resolution adopted under this

chapter shall notify the local taxing authority granting the

exemption in writing on an application form provided by the

local taxing authority, submitted at the time the taxpayer

secures the building permit or, if no building permit or other

notification of new construction or improvement is required, at

the time the taxpayer commences construction. The application

shall include the following information:

(1) A statement of tax obligations, signed by the

applicant and the local taxing authority and notarized.

(2) An outline of specifications for the new

construction or improvement, indicating with as much

specificity as practicable, the materials to be used for

exterior and interior finishes.

(3) An itemized cost estimate for the new construction

or improvement. The itemization must:

(i) Be on contractor letterhead.

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(ii) Indicate the property address of the project.

(iii) Be signed by the applicant.

(4) A preliminary architectural drawing or blueprint for

the new construction or improvement.

(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 property, 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.

(b) Estimate.--The amount of assessment deemed eligible for

tax exemption under subsection (c) shall be available for public

inspection and copying so a subsequent purchaser is informed of

the amount of taxes to be paid after the 10-year exemption

period.

(1) A copy of the exemption request shall be forwarded

to the county assessment office. After completion of the new

construction or improvement, the county assessment office

shall:

(i) Separately assess the new construction or

improvement and calculate the amounts of the assessment

eligible for tax exemption in accordance with the limits

established by the local taxing authorities.

(ii) Notify the taxpayer and the local taxing

authorities of the reassessment and amounts of the

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assessment eligible for exemption.

(2) Appeals from a reassessment and the amounts eligible

for the exemption may be taken by the taxpayer or the local

taxing authorities.

(d) Amendment of ordinance or resolution.--The cost of new

construction or improvements to be exempted and the schedule of

taxes exempted which 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 404. Eligibility requirements.

(a) General rule.--The completed new construction or

improvement must:

(1) Conform to zoning ordinance requirements.

(2) Increase the value of the property by at least 25%.

(3) Correct each municipal code violation.

(b) Ineligibility.--A property shall be ineligible for tax

exemption under section 304(a) 403(A) if:

(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, except as provided under subsection (d).

(3) The property owner or developer is delinquent on

property taxes related to the subject property, except if the

delinquent taxes are paid prior to construction 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 property taxes are delinquent,

except if the delinquent taxes are paid prior to construction

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<--

or payment of delinquent taxes has been arranged with the

local taxing authority in accordance with an installment

plan.

(5) New construction or improvement has commenced prior

to filing an application under section 305.

(6) The property includes an improvement under

subsection (c) that poses a health or safety risk to an

individual residing above the first floor. 403.

exemption under this act shall be offset by the amount of

property tax rebate received under Chapter 13 of the Taxpayer

Relief Act.

(d) Limitations.--The property qualifying and receiving a

tax exemption under this chapter shall be ineligible for or

receive additional tax exemption under the act of July 9, 1971

(P.L.206, No.34), known as the Improvement of Deteriorating Real

Property or Areas Tax Exemption Act, and the act of December 1,

1977 (P.L.237, No.76), known as the Local Economic

Revitalization Tax Assistance Act, for a minimum of 15 years

from the date the property received a tax exemption under this

chapter.

(e) Prohibitions.--For the period of time that a property

receives a tax exemption under this chapter, a purchase or sale

of the property or a portion of the property may not be

structured to exclude or 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

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<--

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 Tax Reform Code of 1971.

CHAPTER 5

MISCELLANEOUS PROVISIONS

Section 501. Effective date.

This act shall take effect in 60 days.

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