HARRISBURG – A new tax credit for Pennsylvania was signed in on July 13 by Gov. Tom Wolf to encourage investment and development of various waterfront properties.
The Waterfront Development Tax Credit, a section of Act 84, is part of a larger project to change some of the current coastal scenes. In the past, many Pennsylvanian waterfronts were home to industrial and manufacturing sites.
The tax credit has been approved in order to create an incentive to develop these locations from dump sites into people-friendly, public locations for locals and visitors to enjoy.
“Look at Pittsburgh and Harrisburg — many historical cities’ relationships with their waterfronts have traditionally been to use it as manufacturing and industrial sites. More recently, people have been recognizing the value of redeveloping these places,” Michael Kostiew, an associate at Pittsburgh law firm Reed Smith, told the Pennsylvania Record.
Revamping these areas is currently only open to creating public space, but that is seen as just the tip of the iceberg for what these sites may become. By changing industrial spaces into beautiful and popular public spaces, other private investors could become more interested in investing in the waterfront on their own.
“The tax credit is for public amenity spaces, things like parks, trails, boat launches, which in turn will spurn private development,” Kostiew said. “Like in Pittsburgh, if a riverfront amenity goes in, then private amenities will come in.”
The application process, which has two stages, will soon be open for nonprofit entities to apply as a waterfront development organization to the Pennsylvania Department of Community and Economic Development.
“A nonprofit entity or public authority can apply to become a waterfront development organization, and after they are approved they can submit their project for approval, like a waterfront park,” Kostiew said. “Once it has approval, they can get private companies’ investments, who in return receive a tax credit for their investment.”
The tax credit is available for up to 75 percent for those whose waterfront development projects are approved. Those that invest in the nonprofit waterfront development projects can then apply their tax credits toward corporate net income tax, taxes on insurance premiums, personal tax, capital stock or franchise taxes.
While the tax credit might rise in future years, under current legislation, it cannot exceed $1.5 million and cannot be more than the cost of the waterfront project. While some say the low number may be a bit of a setback in regard to the speed with which these properties are developed and in acquiring the interest of private investors, it is believed they will ultimately begin the shift of the waterfront scenes.
“It [the tax credit] has the potential to have an impact, but the immediate future is limited because it is only $1.5 million,” Kostiew said. “The positive impact of $1.5 million will show the Legislature it is worth it.”