Rebuilding Harrisburg

On Tuesday, April 20, 2010, the Community and Economic Development Committee chaired by Patty Kim had a meeting to discuss the City’s ten year tax abatement program. This is a program to give real estate developers a tax break for developing property within the City of Harrisburg. Tax breaks are important for the City to give and for real estate developers to get.

The Harrisburg neighborhoods have lost population since Hurricane Agnes. With a declining population, the City also had to deal with a declining tax base. At the same time, the City has to maintain the streets, garbage collection, and deal with a rising crime rate. Parts of the sewer system date back to the Civil War and are in need of serious repair. Many homes in Harrisburg are over 100 years old. Even more are in serious disrepair. Some have fallen down due to neglect. The City has pockets of blight due to abandoned and neglected homes. The City and School District debt situation does not help the “City Population Flight” situation either. Between the City and the School District, taxpayers owe over $1 Billion.

Here lies the reason for the April 20th meeting. This is one of several meetings that Chairperson Patty Kim promise to have with the public.

The City Government and Private Developers

City Council realized that they need private development in the City of Harrisburg. However, they are divided on how much development to have versus how much help to give long time home owners who have stayed in the City in good times and in bad time.

One faction led by President Gloria Martin Roberts wants to give homeowners tax breaks if they repair their homes. She sights that over 48% of property in Harrisburg is not taxable because of the State, County, and City Governments. She also noted that churches in Harrisburg and other non-profit organization cannot be taxed. Here lies her reasoning for lowering tax abatements for outside developers. The City needs tax money.

Other views brought forth at the meeting were more pro-developer. A Philadelphia council person spoke to the committee. He thought that Harrisburg should give up to 15 years of tax abatement to developers. The councilmen also is in favor of building apartment buildings with shops on the first floor to give residents a place to shop, have dry cleaning done, and give the residents places to eat. He said that Philadelphia, over the years, has been successful in raising their City population and reducing their blighted areas. Philadelphia targeted the “empty nesters.”

But investment takes money and comes with risk. Ten years ago Mayor Reed decided to take the risk of retrofitting the City Incinerator with Dauphin County’s help. It was supposed to be the answer to the City’s decreasing tax base with money to spear. Over $350 Million later, doubling the City’s debt, Harrisburg has an up to date incinerator that does not make the money that it was supposed to make for the City. Because of this failure, Harrisburg is faced with a bond payment in 2010 alone that is more than the total City budget.

Gloria Martin Roberts asked where this money is going to come from to give this tax abatement. The City is already is a bad debt situation. Ms. Roberts asked the young audience if they would stay in the City and use the services of the Harrisburg School District. Most of the audience said that they would stay in the City but send their children to private school.

My View Point!

Both the man from Philadelphia and Gloria Martin Roberts have good points. The Philadelphia councilmen talked about bringing in “empty nesters” into the City. “Empty Nesters” are people who want to move out of their large houses because their children are now grown and have moved away. Gloria wants to help out the property taxpayers already living in the city. We can do both if the City and its people are willing to do so.

The City employee “Grant Writers” can help with Ms. Roberts’s side of the program. These grant writers can find Dauphin County, Pennsylvania State, and Federal grants that can be used for home improvements such as energy saving appliances, window and other home improvements. Most residents in the City fall into the low income classifications. This could give these residents incentives to get needed work done.

Pennsylvania is second in senior citizen population behind Florida. The City can market itself targeting senior citizens just as Philadelphia has done. Many “empty nesters” don’t want to handle home maintenance and have no need for a school district. They would be ideal for condos or apartment living. Tax abatements can be used for this purpose.

As an investor, I know that any investment comes with risk. Here are the risks! It takes time to bring in shop owners and tenants. Do you know that the empire state building was finished in 1929 but was not fully occupied until 1956? So investor money would be at risk and we already seen one big building on Cameron Street that went bust recently. I don’t have to tell you about the Incinerator disaster. These are the things that Mayor Thompson and City Council must decide to do knowing all the risk to the City and its people.