I’m a Joe Kelly fan but I’m going to have to pick on him a bit this morning:
“LERTA is the most fiscally responsible tool to redevelop underutilized properties and expand a community’s industrial tax base,” Kelly said.
Actually LERTA is the second most fiscally responsible tool to redevelop underutilized properties. The most fiscally responsible tool is the land value tax.
With LERTA, cities have to wait 10 years before the new higher value of a redeveloped property is fully taxable, since the higher assessment is phased in over 10 years.
With a land value tax, there’s no waiting for money. There’s no 10-year waiting period to collect the higher tax bill on the higher building value, because the building value doesn’t get taxed.
If Bethlehem taxed only the land value portion of parcels, everyone would get the same deal as real estate investors are getting with LERTA, only there’d be no higher tax bill at the end. This would not require Bethlehem to endure a drop in revenue or to wait to collect any revenue, since it would only be a shift in what is taxed.
Land values would rise as more people took advantage of the permanent tax abatement on improvements to improve their properties, and Bethlehem would collect more revenue from the higher land values.
It’s true that LERTA may be the most fiscally responsible development tool immediately available to Bethlehem, since instituting the land value tax would require Northampton County to conduct a reassessment, and then update assessed values every 3-5 years in response to changes in market values.
But the political difficulty of getting from here to there shouldn’t be cause for public officials to pretend that half measures are the best that can be done when there definitely are better tools available to them under state law.