Monroe Council starts LERTA process and asks solicitor to draft tax-forgiveness ordinance

Monroe Borough Council on July 15 began the formal process to consider tax incentives for redevelopment and asked the solicitor to prepare a draft tax-forgiveness ordinance.

The council voted to instruct the Planning Commission to identify “deteriorated” areas that could be eligible for a Local Economic Revitalization Tax Assistance program, commonly called LERTA, and voted to authorize the solicitor to finalize drafting of a tax-forgiveness ordinance for council review. The council also heard staff explanations of how each program would operate and which taxing bodies must participate.

Why it matters: LERTA and a tax-forgiveness program are tools towns use to encourage private investment in blighted properties; if adopted, they could change property tax bills for redeveloped parcels and affect revenues received by the borough, the county and local school districts.

The solicitor summarized the LERTA process for the council and said it must begin with the Planning Commission reviewing and recommending the geographic limits of any deteriorated area. He said the statutory maximum for the abatement portion is 10 years and that abatement applies only to the assessed increase in value attributable to improvements, not to the property's preexisting assessed value. The solicitor told the council the Planning Commission must recommend the areas, the council must hold statutory hearings and then adopt an ordinance, a process he estimated could take about four months.

Council members pressed staff on practical details of the tax-forgiveness program. The solicitor emphasized that the program is designed to help a third-party purchaser who intends to redevelop a property, not to relieve current owners of outstanding taxes. "You have to be a purchaser," the solicitor said when a council member asked whether an owner behind on taxes could apply for the program.

David, a borough staff member who will help administer the programs, told council members that the school district's participation is important. He reported that borough staff learned the school district plans to participate, which staff said makes the tax-forgiveness program more viable. Amanda, described in the meeting as the manager from Olmstead (a municipality that uses the program), offered to meet with Monroe staff to share the documentation and procedures her municipality uses.

Council members asked who would do the preliminary intake and eligibility checks. The solicitor said administrative staff would perform initial verification and that final approval of individual tax-forgiveness agreements would rest with the council.

Next steps: The Planning Commission will examine and recommend the geographic boundaries of any deteriorated areas for LERTA; the solicitor will draft a tax-forgiveness ordinance and present it to the council; and staff will schedule statutory hearings before any adoption. The council directed staff to proceed and to coordinate with the county and school district, both of which must participate for some proposals to fully take effect.

Background details discussed during the meeting: under LERTA, abatement applies only to the cost of improvements and not to the preexisting assessed value of a property; municipalities commonly use sliding scales over a multi-year term (up to 10 years) but may adopt shorter or different percentage schedules; tax-forgiveness typically requires the redeveloper to complete improvements and receive an occupancy permit before forgiveness applies; the borough's solicitor recommended written policy and administrative procedures to prevent abuse and to verify bona fide purchasers.

Council actions taken: vote to instruct the Planning Commission to determine LERTA area boundaries; vote authorizing the solicitor to prepare the tax-forgiveness ordinance and related materials. Staff said they will return to the council with draft ordinance language and recommended administrative steps.