State of Construction

MSNBC.com recently posted an article titled "Construction picks up, but pace remains slow", indicating that, although home construction rose 3.5% since April 2011, the pace of construction is far below the 1.2 million homes per year that must be built to sustain a healthy housing market according to economists.  Although the number of housing permits increased, condominium and apartment construction was the main reason.  Unfortunately, according to this article,the construction pace of single-family homes, which accounts for about 80 percent of all residential construction, is well below the 2010 rate. 

Permit Extension Act - Did You Forget About It?

 Last week marked the one year anniversary of the permit suspension legislation signed by Governor Rendell on July 6, 2010.  In case anyone out there forgot the significance of this legislation, now seems like a good time for a refresher. 

The legislation, known as Act 46, provides for the automatic suspension, during the “extension period” (which begins after December 31, 2008 and ends before July 2, 2013), of certain permits and approvals granted by a government agency for or in effect during the extension period, whether obtained before or after the beginning of the extension period.  That means that certain permits and approvals that were thought to have expired since December 31, 2008, have actually been suspended or extended , thereby buying a developer or landowner significant additional time. 

 

I underline the words "suspended or extended" because, although the legislation calls for an "automatic suspension", there is dispute out there as to whether the life of a permit or approval is simply extended through July 1, 2013 such that all permits and approvals so extended would expire on July 1, 2013, or whether the permit or approval life existing on January 1, 2009 gets added after July 1, 2013 thereby creating an actual suspension. 

 

In the case of In Re: Appeal of Keystone Custom Homes, Inc., brought before the Lancaster County Court of Common Pleas, the Court considered the issue as to whether Act 46 results in an extension through July 1, 2013 or a suspension, with approval life to be tacked on after July 1, 2013. In its decision, the Court held that the legislature’s use of the phrase “suspended during the Extension Period” suggests the General Assembly intended Act 46 to toll the running of the expiration dates, rather than merely postpone all expiration dates until July 1, 2013.  Additionally, the Court also noted that Act 46 incorporates a formal process for approval holders to verify their approval’s expiration date, which the Court construed as meaning that the Act contemplated varying expiration dates, rather than just one mass expiration date of July 1, 2013 for all approvals. 

While the Lancaster County Court of Common Pleas decision offers precedential value only within Lancaster County, the ruling does lend persuasive authority in other parts of the Commonwealth for approval holders confronted with municipalities or agencies arguing for a uniform July 1, 2013 expiration date.

 

BEDI Grant Funding Available!

Hockwold Fens

© Copyright Bob Jones and licensed for reuse under this Creative Commons Licence

The U.S. Department of Housing and Urban Development (HUD) just announced a round of funding for its Brownfields Economic Development Initiative (BEDI) program.  These grant funds, however, must be used in conjunction with a new HUD Section 108 guaranteed loan commitment. 

BEDI grants are meant to encourage brownfields economic development projects that will result in new business or job creation, increase the local tax base or create other economic benefits.  For more information on brownfields and the grant requirements for the BEDI program, see HUD's Notice of Funding Availability

If you think your brownfields redevelopment project might be eligible, hurry, because the deadline for submission of a BEDI grant application is July 14, 2011.

Local Economic Revitalization Tax Assistance Law

Did you know that if your redevelopment project is located on a "deteriorated property" there may be an opportunity for special tax provisions to encourage its development?

The Local Economic Revitalization Tax Assistance Law, 72 P.S. § 4722 et seq. (“LERTA”), allows local taxing authorities to exempt new construction in deteriorated areas of economically depressed communities and improvements to certain deteriorated property, including industrial, commercial and other business property. 

In order for LERTA to apply to a property, each local taxing authority must, by ordinance or resolution, exempt from real property taxation the assessed valuation of improvements to deteriorated properties and the assessed valuation of new construction within the designated deteriorated areas of economically depressed communities.  However, the municipal governing body must first identify the boundaries of the deteriorated area or areas during at least one public hearing where interested parties will have the opportunity to comment and provide recommendations concerning the boundaries.  Of course, the boundaries may not be arbitrary and must take into consideration certain criteria set forth in the LERTA regulations. 

The actual amount of taxes exempted shall be in accordance with the schedule of taxes exempted established by a local taxing authority, subject to the following:

  • The length of the schedule of taxes exempted shall not exceed ten (10) years.
  • The schedule of taxes exempted shall stipulate the portion of new construction or improvements to be exempted each year.
  • The exemption from taxes shall be limited to the additional assessment valuation attributable to the actual costs of new construction or improvements to deteriorated property or not in excess of the maximum cost per unit established by a municipal governing body.

LERTA provides local governing bodies and developers with an effective tool to increase the opportunity for revitalization and improvement of deteriorating properties.