The Local Economic Revitalization Tax Assistance (LERTA) Act, Act 76 of 1977, P.L. 237; 72 P.S. § 4722, is a creative way to implement strategic financial opportunities for older communities that desire property owner driven revitalization. Many Pennsylvania municipalities have developed a LERTA program for their communities to encourage this beneficial reinvestment. Municipalities that have LERTA grant property owners a tax incentive to improve their properties within an area designated for revitalization.
While the specific terms of the tax abatement is decided at the local level, the state enabling legislation allows municipalities to exempt the value of all improvements made to a property from local taxes for a certain period of time not to exceed ten years. Unlike other tax abatement programs, properties still pay a local tax but do not see any increase in local taxes based upon the value of renovations made to the property within the LERTA boundary.
By not immediately taxing the property owner on improvements made, the municipality is giving the property owner the opportunity to recuperate money used for revitalization and to invest more money into further renovations and improvements. LERTA is particularly helpful to communities that may not have funding for an entire TOD project, as this is a small step to help incentivize property owners to begin the process of preparing an area for TOD through revitalization.