Leechburg Area OKs Gilpin temporary property tax break

The Leechburg Area School District is on board with Gilpin’s bid to implement a temporary property tax break for anyone who buys property in the area.

The school board voted 9-0 Wednesday to approve a LERTA (Local Economic Revitalization Tax Assistance Act) tax abatement, on both a five-year and 10-year program.

LERTA allows commercial or industrial newcomers to be taxed on the assessed value of the property, not the building, after it’s purchased.

The property tax on the building is gradually phased in over either five or 10 years.

To implement LERTA, all three taxing bodies must approve it — Armstrong County, Leechburg Area School District and Gilpin.

Gilpin approved the program last August, but the Armstrong County commissioners Sept. 6 voted to put Gilpin’s approval on hold until the school district acted.

How LERTA works

Here’s how a LERTA five-year program works: in the first year that the property is bought or improved, it is taxed on only the value of the land. In the second year, the property is taxed at 20 percent of the actual valuation of the property and building. That goes up to 40 percent in the third year, 60 percent in the fourth year and 80 percent in the fifth year.

In the sixth year, the property owned pays on the full assessed value of the property, including the building.

The 10-year program is similar, but the taxation increases by 10 percent of the valuation every year.

“We hope that somebody who wasn’t going to build will build,” school Director Anthony Shea said regarding his support for the program. “The incentive might push them over the hump.”

“We hope some (existing) businesses at least do some remodeling,” board President Neill Brady said. “We did it for the (Leechburg) borough and the Twisted Thistle restaurant took advantage of it.”