HARRISBURG—The city of Harrisburg will have to pay property taxes on its public works building after school board members declined to waive the $105,000 tax bill.
The city failed to pay taxes on the building at 1820 Paxton Street that it has rented for the past two years, believing the property was exempt because it’s used as a city facility.
But city officials never submitted a written agreement to the county codifying it as exempt, so the property fell delinquent and landed on this year’s tax sale list.
The city’s lease for the building spells out that the tenant is responsible for property taxes.
City officials last week asked school board members to consider waiving the taxes, claiming that all taxing entities were in agreement for exemption— at least verbally— when the city signed the lease in 2014. City Solicitor Neil Grover argued that the state allows tax exemptions for property the city owns or uses.
But School Board Solicitor Samuel Cooper’s legal interpretation was that the city must own the property to be exempt, and this property is owned by Brenner Family of Dealerships.
Because of that, the question wasn’t placed on the agenda for Monday night’s school board meeting.
“There is no provision for us to release the property owner from the obligation of paying taxes,” said school board Vice President Jim Thompson.
With the tax sale looming on Thursday, city officials will have to immediately pay the $105,000 owed for school taxes from 2014 and 2015. Because the expenditure was not originally budgeted by the city this year, city council members in late August took action to appropriate money for the expense, just in case.
Some school board members had considered exploring the idea of reimbursing the city at a later date since the money would come from the exact same taxpayers, but the level of support was unclear.
“There appeared to be mixed feelings about reimbursement,” Thompson said. “That’s a question for another day.”
Although the city’s payment of $105,000 will free the building from the tax sale, it won’t completely satisfy the taxes owed by the city for the building.
In all, the city was $206,000 in arrears from 2014 and 2015, an amount that includes city and county taxes.
The city also will face a tax bill of more than $50,000 in school taxes for the building for 2016, the final year of the lease. The city’s lease expires in March, but city officials have said they likely would have to negotiate an extension.
Brenner is charging the city $189,000 in annual rent under the current lease.
Mayor Eric Papenfuse has said the city may need to construct a new public works facility because city officials have been unable to find an existing building with enough square footage outside of a flood plain.