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DESCRIPTION OF THE STRATEGY
Local governments could offer a credit on or forgiveness of property taxes to property owners who make expenditures on specified activities such as window replacement, lead hazard control, or correction of other health and safety hazards—just as credits are provided currently in some locales for marginal properties that are substantially improved. A property tax credit could be very narrowly targeted, for example to a single high-risk neighborhood within designated boundaries. While property tax revenue reductions ultimately have the same budgetary impact as expenditure increases, some jurisdictions may find that tax credits are more palatable than increasing local agency budgets. No specific lead paint or health-related property tax credit exists anywhere today, although a bill (HB1039) to create a property tax credit for lead hazard reduction for residential and child care properties was introduced in Maryland in 2004.
BENEFITS
Immediate/Direct
Results:
Improvements related to lead safety and other health considerations are far more likely to be made by owners who can recoup some of their costs. Property tax credits provide more direct and immediate benefits to owners of low-income properties than income tax deductions or credits. Making the credit dependent upon independent verification of the work provides an opportunity to build in quality controls.
Public Health
Benefits:
Lead hazard reduction directly reduces lead exposure to children.
Other
Indirect/Collateral Benefits:
Improvements will generally increase property values and durability of housing, restore vacant buildings, provide employment opportunities, and increase community pride.
Scope of Potential Impact
Statewide City - or - County - Wide Neighborhood/Community Specific (Targeted) Population
PRIMARY ACTOR(S)
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KEY PARTNER(S)
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Property Taxation Agency
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Property Owners
Tenants
Contractors
Homeowners
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CRITICAL ELEMENTS
Staff
requirements:
Approximately 1.0 FTE might be needed to process applications and approve repairs for a program in a major jurisdiction. Other administrative aspects of this program probably could be carried out within the existing staffing and budget of any state or local revenue or property tax agency.
Other resource requirements:
Some new administrative processes and forms would be needed.
Institutional
capacity required:
Changes in state, county, and local tax law may be necessary, depending on the jurisdiction.
Cost
considerations:
Losses in property tax revenue would be the main cost to a jurisdiction. There would be marginal administrative costs in ensuring that required repairs are actually done and auditing claims to avoid fraudulent use of the credit. Long-term enhancement of property value may partially offset the lost tax revenue as lead safety becomes valued in the marketplace. Collateral improvements to property condition (e.g., increased energy efficiency, new windows, plumbing and roof repairs) will increase property value and durability, which in turn should increase future property tax revenues and help arrest blight.
Timing issues:
No seasonal or cyclical considerations other than the fact that policies that reduce tax revenue are more likely to succeed in times of budget surpluses. Timeline to implement depends on the legislative process.
Feasibility of
Implementation:
High. Many jurisdictions provide property tax credits for a wide range of purposes that are deemed socially beneficial (such as credits for low-income, elderly, disabled, or blind occupants; properties used for charitable or educational purposes; historic preservation; substantial property improvements; and even brownfield clean-up). A credit to promote lead hazard control or other health-related housing improvements would seem to have comparable political appeal.
Potential Obstacles/Barriers
Fraudulent use of the credit could occur without proper quality control measures and independent verification of repairs.
Additional Resources
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