Norristown Area School Board approves tax abatement for Sandy Street development

NORRISTOWN >> The Norristown Area school board Thursday approved exempting Westrum Development Co. from approximately $1,544,000 in school property taxes over a 10-year period from a proposed 157-unit apartment building at 990 Sandy St. in Norristown.

In granting the exemption, the school board recognized the Local Economic Revitalization Tax Assistance Act (LERTA) zone, which Norristown Council granted during an October meeting.

The tax abatement is designed to make the project economically viable and follows a diminishing schedule. Starting at 100 percent in year 1 and ending at 0 percent in year 11, the abatement exempts Westrum from $418,000 in taxes in the first year, which would have been paid out approximately as follows: $280,000 to the school district, $110,000 to the municipality, and $28,000 to the county.

Currently, the vacant lot at 900 Sandy St. generates approximately $12,000 in taxes for the district annually, according to district Solicitor Michael Clarke, addressing comments made by a resident at last week’s work session that Clarke said implied the district was giving away taxes.

Clarke said that if the board approved the abatement, the district would “not be giving up any tax dollars we are already receiving.” The district will still receive the baseline $12,000 it receives now in year 1 of the abatement, and an additional $28,000 a year until the abatement period is over, when the district will be receiving the full $280,000.

“The only way that this could harm the district is if someone were to develop it without the LERTA zone,” Clarke said, adding that, given the history of development in the area and the history of the project itself, is not likely to happen.

The exemption excuses Westrum from paying a little more than $2 million in taxes to the three different taxing authorities over the 10-year period, with approximately $1.5 million coming from the district. However, during the total 10-year period, the district will see $1.26 million in new revenue.

Now that the municipality and school district have agreed to the abatement, the county will have to vote to honor the exemption.

In related action items, the board approved an agreement with Westrum that stipulates the development company will foot the cost of any legal bills the district incurs related to the 900 Sandy St. project.

Source: Montgomery News