Norristown’s New Real Estate Tax Abatement Zone Could Provide A Significant Financial Incentive To Your Business

July 24, 2015

By William F. Kerr, Jr., Esq.

This week, the Municipality of Norristown moved an important step closer to revitalizing the municipality’s economy when its Municipal Council approved a tax abatement program. The LERTA program now moves on for approval by Montgomery County and the Norristown Area School District, which approvals many expect will be a formality. For businesses looking to expand within the designated LERTA zone, or businesses thinking of moving to Norristown, the LERTA program offers the potential to help reduce costs, and thereby fuel their growth.

Local Economic Revitalization Tax Assistance (LERTA)
Local Economic Revitalization Tax Assistance (LERTA)

Here’s how LERTA works: Businesses which physically expand/add to their existing facilities, or which construct new buildings within the LERTA designated zone, will  receive a 10-year real estate tax abatement on the value of new construction.  This means that during that ten year period, taxes on the improvements are gradually phased in, with full taxes not being owed until 10 years  after completion. The abatements will range from 100% of the added value in the first year, down to 10% in year ten.

Due to the size and duration of the abatement, this program has the potential to reduce real estate property taxes by as much as 50 percent over the 10 years. As such, the program can clearly provide significant benefits to owners of commercial, multi-family residential, office, industrial or other business properties. For those  businesses, Norristown’s  LERTA zone can offer an opportunity to create a significant cash flow advantage. Revenues  that would otherwise be designated for real estate tax payments for ten years, can be used instead to support and grow the business in other areas, including hiring additional employees (which is what Norristown is looking for). Additionally, any successful use of this economic development initiative  could help  attract other businesses, which can make for a more vibrant commercial district that helps all businesses within the area.

The LERTA zone covers a significant chunk of the municipality, including significant portions of the Schuylkill riverfront, the former Logan Square Shopping Center, and a portion of Johnson Highway;  each of which have  history as significant commercial and business districts in the Norristown’s past, and which Norristown leaders hope may soon rise again.

Because the LERTA program, while streamlined, will require coordination and approvals by Norristown, Montgomery County, and the Norristown School District, business owners would be wise to have legal advisors with experience with the LERTA process to they correctly pursue and maximize this opportunity. Anyone interested in this new program should contact High Swartz partner William Kerr, who  has extensive experience with the LERTA program in many areas of the state of Pennsylvania, is well versed in the development process, and is familiar with elected officials and the Municipality staff in Norristown.

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