Potential business tax concerns merchants

A proposed Main Street initiative to create a downtown business district could mean a new tax on businesses there.

By:Carl Reader
   NEW HOPE — Death and taxes are supposedly the only certain things in life, but when a potential new tax appears on the horizon it brings shock and surprise.
   Those were the sentiments expressed by some commercial property owners when they recently realized the proposed Main Street initiative to create a downtown business district could mean a new tax on businesses there.
   "Suddenly, people thought commercial property owners would be taxed," said Herb Millman, president of the New Hope Area Chamber of Commerce.
   The feasibility of creating a commercial business district in New Hope has been under study by the chamber for two years, according to Mr. Millman, but an article in a local paper ignited a firestorm of concern by local businesses and property owners that someone would be reaching into their pockets again. Many business and property owners showed up at the last Borough Council meeting, April 9, when that red flag went up, Mr. Millman said.
   The money to fund a commercial business district in New Hope would come from several sources, according to Mr. Millman.
   There could be a tax that would be passed on from property owners to business owners, who usually rent, according to Mr. Millman. The chamber is looking into corporate funding and has engaged in private fund raising, like the recent highly successful Queen for a Day, which raised $20,000. The state has chipped in with a $35,000 grant.
   "We had to persuade the state with evidence we had the ability to fund the project for a three- to five-year period," Mr. Millman said.
   So far, three meetings with various groups and experts have formed an outline of what the project could be and how it would be funded. Mr. Millman said the chamber met with Larry Houston and Pat Henry, consultants for the Atlantic Group, to discuss the downtown business district.
   "They are experts in the field," Mr. Millman said.
   That first meeting focused on where the town might want to go with the project, including discussions of hiring a Main Street manager and how to pay for the project and the possibility of assessing a tax.
   There then was a meeting with business owners, followed by a third meeting with residents and property owners.
   "That’s why at the last Borough Council meeting (April 9) there were business owners there," Mr. Millman said.
   With the news of a new tax looming, those who would have to pay certainly would show concern, but the possibility of a new tax really shouldn’t have been a surprise, according to Borough Manager John Tegley.
   "There’s not a growth or recovering area of the country that doesn’t use this sort of special district to finance improvement," Mr. Tegley said.
   The eastern part of the country is far behind the western part of the country in this, Mr. Tegley said. As an example, he said in California there are special districts layered on top of one another, as many as 13 to 17 separate ones, all their own taxing district. Should the special district be put into place in New Hope, taxing would come about in the usual manner, according to Mr. Tegley.
   "There would be a percentage paid of the market value of taxable real property," Mr. Tegley said.
   It would be on business property, not residential, he added. The specific tax rate wouldn’t be known until the initiative was fleshed out and the amount of cash needed was determined.
   Initially Pennsylvania, which passed the law for special districts in December of 2000, had them only in Pittsburgh and Philadelphia, Mr. Tegley said. He said the state did something novel and useful with the implementation of the districts by passing the costs on to those who get the most out of them.
   Asked if there was a downside to special districts, Mr. Tegley said, "I haven’t seen one. They isolate the costs to those who benefit the most from them."
   Mr. Millman said the next step for the Main Street initiative is the formation of a fund-raising committee to be chaired by developer George Michael.
   "My position is, until I know what a business district will do for the community, I need to know more about it," Mr. Millman said.