Norristown Council OKs tax abatement for apartment building

NORRISTOWN >> Municipal council designated a 3.5-acre parcel on Sandy Street a “deteriorated area” Tuesday, exempting the developer of an approved, 157-unit apartment building from first-year taxes of $418,000 and a total of $2.16 million in taxes over the 10-year tax-abatement period.

Council voted 4-to-1 for the tax abatement and deteriorated area designation after a brief public hearing. Councilman Sonya Sanders voted against the designation. Council members Marlon Millner and Linda Christian were absent for the vote.

The Local Economic Revitalization Tax Assistance Act (LERTA) zone designation will allow Westrum Development Company (WDC) of Fort Washington not to pay real estate taxes on a diminishing yearly schedule. The tax exemption contains a 100 percent tax abatement in the first year and a 10 percent abatement in the 10th year with 10 percent changes each year.

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If the “Luxor at Sandy Street” project were developed without the LERTA public subsidy, annual tax revenue would be $280,000 for the Norristown Area School District, $110,000 for the Norristown municipality and $28,000 for Montgomery County. If the 10-year, LERTA tax abatement for 900 Sandy St. is adopted by all three taxing authorities, full tax revenue would be postponed to the 11th year.

The resolution adopted by council said the “property abuts a property (770 Sandy St.) that contains an unsafe building built with a defective design, is vacant, and has been condemned as unsafe for human habitation by the municipality of Norristown and thus is considered a ‘deteriorated area’ pursuant to Section 4725(a) of LERTA.”

However, the building at 770 Sandy St. was vacant after Norristown condemned it in May 2010 under a court order. Nine condo owners and 15 renters were forced to vacate. The municipality repaired it for more than $3.4 million at taxpayer expense. Four condo owners resided in the repaired building after the first condemnation was lifted on Aug. 17, 2012, and until it was condemned for a second time in August, said Ryan Schofield, a 770 Sandy St. condominium owner who lived there before the first condemnation.

The 26-unit condo building at 770 Sandy St. has been vacant since the August condemnation, Schofield said.

In February, Norristown officials announced they would no longer pay the $40,000 annual cost for maintenance, electricity and repairs at the building after winning that right in Montgomery County Common Pleas Court.

John Westrum, chairman of WDC, said the mix of 113 one-bedroom units, eight studio apartments and 36 two-bedroom apartments at 900 Sandy St. would discourage rentals from families who children that would attend the Norristown Area School District.

“The Lofts at Valley Forge in West Norriton has 388 units and six school-age children attending the district,” Westrum said at an earlier council workshop meeting.

The proposed four-story building will be built over one story of underground parking for 123 parking spaces. An additional 89 parking spaces will be built in a surface parking lot. The $25 million project would include $8 million from investors and $17 to $18 million in bank financing. The vacant parcel was purchased in June 2012 for $115,500 and assessed at $365,870, according to Montgomery County property records.

Final site plans for the project were granted by council in late 2012 but the project has been slightly expanded to accommodate a relocation of the outdoor pool to a lower level on the 3.5-acre parcel off Sandy Street. Eight additional units were added, bringing the total to 157 units.

“When we sought site plan approvals we were not asking for this (economic subsidy),” Westrum said. “In order to make the project financially viable we need this.”

The raw land would generate $17,414 in tax revenue over 10 years without construction of the project, Westrum said.

Sanders questioned the process of Norristown Council approving the deteriorated-area designation first, before the school board and Montgomery County commissioners take a vote on their separate tax abatements. The municipality is required to act first on a LERTA designation to define the boundaries of the tax abatement.

Sanders said she voted against the tax abatement because some of her constituents told her they did not like more apartments coming to Norristown.”

“They remember when Norristown had more single-family homes several decades ago,” Sanders said.

The Norristown Area school board will discuss the potential adoption of the LERTA tax abatement at its Oct. 20 meeting, Anne Rohricht, chief financial officer of NASD, said in an e-mail.

In other business Tuesday, council adopted a resolution supporting Pennsylvania House Bill 177, which expands the definition of “ethnic intimidation” to include malicious acts involving sexual orientation and gender identity. The definition already included “malicious acts toward the actual or perceived race, color, religion, national origin, ancestry, mental or physical disability, sexual orientation, gender or gender identity of another individual or group of individuals.” The House bill is aimed at the increasing frequency of hate crimes against the lesbian, gay, bisexual and transgender communities in Pennsylvania.

Brendan Wills contributed to this story.

Source: Times Herald