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City of Harrisburg: Two-Tier Tax Rate
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Harrisburg's use of the two-rate property tax approach is credited
by Mayor Stephen R. Reed and other City administrators as a key
initiative in promoting the revitalization of their City. The
two-tier tax system encourages the highest and best use of land and
rewards those who properly maintain or invest in buildings. One of
the effects of the split-rate tax is to benefit the lower-income
homeowner and small business owner who struggle more than any other
to make ends meet to keep and maintain their homes and businesses.
It also has the residual effect of keeping rents lower than they
would otherwise be for persons in lower income homes and apartments.
It rewards productivity and investment, in contrast to the single
tax rate system which penalizes both.
Following are some of the positive effects of the two-tier tax rate
experienced in the City of Harrisburg, as mentioned in Mayor Stephen
R. Reed's 2003 State of the City Address, which was delivered on
Wednesday, March 26, 2003, at the Harrisburg Hilton and Towers
before the Harrisburg Region Chamber of Commerce.
- Once considered the second most distressed cities in the
nation, Harrisburg, since 1982, has sustained economic
resurgence that has garnered national acclaim. Harrisburg has
twice won the top United States community honor as "All-American
City" along with the top state recognition from the state
Chamber of Business and Industry as Outstanding Community in
Pennsylvania.
- In 2002 the City issued 1,567 building permits. They
represent a total of $269.7 million in new investment, the
highest total for any year in City history, and eclipses the
record set several years ago.
- In the current era, Harrisburg has issued a grand total of
28,666 building permits reflective of $3.2 billion in new
investment -- new investment in a city which, when today's
efforts began, was listed by the United States as the second
most distressed city in the nation.
- By the end of 2002, the number of businesses on the City's
taxrolls had risen to 5,976 -- the highest number ever recorded.
This is in sharp contrast to the number which existed not so
long ago -- 1,908.
- Construction of an 18-story office tower with interior
parking will be underway at 17 North 2nd Street, next to the
Hilton. Its 321,000 square feet of new space includes 8 floors
of Class A office space in a city where the Class A occupancy
rate is now averaging 97%.
- Groundbreaking was held in 2002 at 211 North Front Street
for the new 187,000 square foot Class A office complex, with 8
aboveground floors. It opens this year.
- In April 2003, a new 34,000 square foot office center is
opening in the 1500 block of North 6th Street. Plans for an
additional new office center of 136,000 square feet in the next
block have been approved.
- A $5 million structure will be placed in the 1400 block of
North Cameron Street, where a major computer server operation
will subsequently be based.
- The Homeland Center is undertaking $2.4 million in
renovations. They are a premier example of a longstanding
enterprise that has accommodated its growth within the City,
employing neighborhood residents, and providing a major benefit
to the area around them.
- The Belco Community Credit Union plans a major expansion of
their Second Street headquarters.
- Waypoint Bank dedicated over $400,000 in improvements to
their downtown headquarters this year.
- Commerce Bank completed their $4 million project last year,
opening their largest branch bank to date.
- M&T Bank will be moving their district headquarters to
Harrisburg.
- Arcus -- one of the fastest growing information technology
firms in the nation -- expanded their headquarters here and
renovated additional space.
- In South Allison Hill, where restoration of homes continues
year-round, the Mount Pleasant Plaza -- a new retail center --
is nearing completion at 13th and Derry Streets. The site
represents $2 million in neighborhood retail investment and over
a dozen new full-time jobs.
- The downtown continues its exciting resurgence and is today
one of the top two restaurant and entertainment sites in the
Mid-state. In the central business district and citywide, twelve
new restaurants have opened or announced their plans to open
this year alone.
- Plans have been approved for a new 40,000 square foot office
center at 1100 South Cameron Street - and two more new
structures on Industrial Road -- and a 14,500 square foot office
and warehouse in the 1100 block of Cumberland Street.
- Reuse of existing buildings and renovation is happening
Citywide - and examples include the NF String Co is adding
production and machinery space, H&R Block is establishing a
financial services complex in Allison Hill, the vacant complex
in the 1100 block of Market Street is being redone into an
antique, art gallery and residential project.
- On a vacant tract of land at 24th and Swatara Streets, new
homes have been built and all have been sold to new
owner-occupants.
- At Capitol Heights -- where an entire neighborhood is being
built on cleared lots, phase one has been highly successful.
Phases two and three are now being advanced for at least another
58 new homes, all for home ownership.
- Another 60 new homes will be added to Market Place
Townhomes.
- In the 200 block of Hanover Street, a 12-unit building is
being converted into three single family homes.
- In a four square block area near Sixth and Maclay Streets,
the Maclay Street Apartment complex is slated for a massive
overhaul and upgrade, from which 104 new homes and 183 restored
units will occur.
- Extensive streetscape improvements -- involving
antique-styled streetlights, new sidewalks, trees, and other
upgrades -- have now been completed along dozens of blocks along
major neighborhood streets known as Capitol Corridors.
- Combined, the number of newly built and restored residential
units in the current era by City programs exceeds 5,000 --
making Harrisburg the single largest residential developer in
the mid-state.
Other positive effects related to the two-tier tax rate include:
- In 1982 the total assessed value of taxable real estate in
Harrisburg was $212 million. In January 2003, it was over $1.6
billion, which is reflective of the additions to the taxrolls
from new investment.
- The number of vacant structures has been reduced by 85%.
- The overall multi-year cumulative drop in the City crime rate
now stands at 54%.
- Cumulatively, the Harrisburg fire rate has now dropped
76.3%, the lowest rate ever recorded.
- Harrisburg continues to own and operate the largest
municipal parks system and has the most extensive recreational
and special events programs of any municipality in the
mid-state. The City sponsors or co-sponsors over 200 special
events each year.
- The first two of what will be as many as 50 murals placed in
public areas citywide, were dedicated. Several more are slated
for this year.
- The Whitaker Center completed it third anniversary. More
than one million people have visited it since it opened.
- The following facilities were also opened in the past
several years: the National Civil War Museum, the Danzante
Cultural Center, the Olewine Nature Center, the Susquehanna Arts
Museum, the Midtown Cinema, and the Pennsylvania National Fire
Museum.
- In the next twelve months design work will be completed on
the National Sports Hall of Fame and for the National Museum of
African-American History -- two new national-scale facilities to
be created in Harrisburg.
- The City retains National Police Accreditation, the highest
recognition in the nation for law enforcement operations. Of
over 21,000 police agencies country-wide, only 484 have achieved
or retained accreditation.
- Harrisburg is the only community in the state to have been
thrice upgraded in its flood insurance rating, producing an
overall 15% reduction in base flood insurance premiums for all
city-based property owners.
- Harrisburg has been designated as a "Tree City USA"
by the National Arbor Day Foundation for the fifteenth
consecutive year.
- Harrisburg is the only local municipality in Central
Pennsylvania to subsidize the area's mass transit system.
- Harrisburg received the "Distinguished Budget
Presentation Award" from the Government Finance Officers'
Association of the United States and Canada for the twelfth
consecutive year, and was awarded the "Certificate of
Achievement for Excellence in Financial Reporting" by the
Government Finance Officers' Association of the United States
and Canada for the fifteenth consecutive year. These are the two
highest financial awards in the nation.
- Harrisburg co-founded and is the principal contributor to
the metro area's first ever Capital Region Economic Development
Corporation.
- Harrisburg owns and operates the Resource Recovery Facility,
the region's only alternative to landfills, where waste is
burned and steam and electricity are generated to provide energy
and electricity to the region.
- Harrisburg finances and operates the Advanced Wastewater
Treatment Plant which serves seven local municipalities, and the
Harrisburg Water System, which serves three local
municipalities.
- Harrisburg has the only paid fire department in the
mid-state, which is on-call for emergencies outside the City
too.
- Harrisburg Community College - a commuter school with its
main campus in Uptown Harrisburg on land donated by the City -
last year opened its Community Center for Technology and Art on
North 4th Street. Its new master plan involves expansion into
another full square block area, where new facilities, open plaza
areas, and laboratories will exist.
- The planned new university in Harrisburg - The Harrisburg
Polytechnic Institute - has achieved major progress. The
Commonwealth has committed the first $12 million toward capital
costs with more expected later. The $7 million renovations will
soon begin in the 200 block of Market Street where the
Institute's Preparatory School and Technology Business Incubator
will be placed. The facilities will be open by late spring next
year.
These results are especially noteworthy when one considers the fact
that 45% of the land in Harrisburg cannot be taxed because it is
state, county, or non-profit real estate.
Administrative costs to implement the two-tiered tax system were
minimal. The only expenses the City of Harrisburg incurred were
those involved in programming/software changes to our billing system
to allow the two rates to be separated. The programming changeover
took approximately one week. The appearance of the bills and an
explanation of the change to a two-tiered tax system were the only
administrative changes that took place.
The current ratio of land to buildings is 6:1. The two-tiered tax
system was implemented by City ordinance, a copy of which is
attached.
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