The Herald, Sharon, Pa.

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January 17, 2014

Realty transfer tax hike eyed

But voters get the final say

SHARON — After passing budgets without property tax increases for a couple of years, Sharon council members are talking about a hike in the realty transfer tax to raise new revenue for the city.

The tax used across the state is levied on real estate when it is sold to a new owner. The revenue is split with the state and sometimes shared between local governments and local school districts.

In Sharon, the tax is 2 percent. The state gets half the revenue and the city and school district equally split the other half.

It is projected to raise about $70,000 this year for Sharon, City Manager Scott Andrejchak said.

Raising the rate was suggested a few years ago for a future council by the commission that drew up Sharon’s home rule charter.

Andrejchak  is recommending that lawmakers do so but Council President Ed Palanski said they’re only at the  information gathering stage of a lengthy  process.

Sharon’s charter requires council to ask city voters in a referendum for approval to change the tax rate. That would require passage of an ordinance and a public hearing. It’s possible the city could put the rate change issue before voters on the May 20 primary ballot, Palanski said.

Last summer’s announcement that Sharon Regional Health System is working on a sales agreement with Tennessee-based Community Health Systems Inc. stirred speculation about how much the transfer in ownership to a for-profit corporation could be worth to Sharon.

That’s a coincidence, Andrejchak said, but the likely sale of the local hospital shouldn’t be seen as the driving force behind his recommendation to council to raise the transfer tax.

“I don’t want anyone to think that this idea is moving forward because of what one land owner may or may not be doing. It’s not good to make city policy that way,” he said. “The better policy is to look at our rate, compare it to surrounding communities and consider how much real estate is being transferred throughout the city. We’re not trying to single anyone out. It’s something we ought to be doing anyway.”

Andrejchak said neither Sharon Regional nor Ellwood Group Inc. executives have contacted him about the tax increase proposal.

Ellwood Group subsidiary Ellwood Crankshaft and Machine Co., Hermitage, is proposing a $52 million investment in a section of the former Westinghouse Electric Corp. plant on Sharpsville Avenue.

Asked if it would support or oppose a transfer tax, Sharon Regional punted.

“Sharon Regional Health System recognizes the need for ... Sharon to pursue additional avenues to secure the necessary funding for maintaining and improving the infrastructure within the city,” Ed Newmeyer, director of marketing and community relations said in a statement. “We have not had an opportunity to review what the city is proposing ...  and will reserve comment until we receive more information.”

Local businessman Mike Lisac took a similar approach. Lisac owns six buildings he has been renovating and has rented to several of the new businesses that have opened downtown in the last couple of years.

“One question is whether it’s better or worse than raising the real estate tax. I don’t know,” the owner of Warehouse Sales hardware store said. “I’m in favor of the city working to become solvent but I haven’t looked at it closely yet.”

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