LERTA & KOZ: Tax Incentives for Lebanon City Investors

Looking to grow your Lebanon City portfolio while keeping taxes in check? Property taxes can make or break your numbers, especially on new construction or major rehab. The good news is that Lebanon City offers two programs that can help: LERTA and KOZ. In this guide, you’ll learn what they are, how they work locally, where the limits are, and the steps to use them with confidence. Let’s dive in.

LERTA at a glance in Lebanon City

LERTA is a locally adopted real estate tax abatement on the value of improvements, not on the existing land or building value. In Lebanon City, the published schedule is 100% exemption on the increased assessment for years 1–3, and 50% for years 4–5. City guidance notes eligibility within designated areas, including the limits north of Cumberland Street and properties on both sides of Cumberland Street. You can review the City’s program details on the economic development page for business incentives at Lebanon City.

How KOZ works in Lebanon County

KOZ is a Pennsylvania program that can eliminate or reduce many state and local taxes for specific parcels over a set period, often up to 10 years. The City references two KOZ sites within Lebanon City and directs you to confirm details parcel by parcel. DCED manages the program and provides parcel listings, coordinators, and rules on the Keystone Opportunity Zones page. Applicants must follow DCED and Department of Revenue procedures, including annual filings outlined in the KOZ Quick Reference Application Guide.

LERTA vs. KOZ: key differences

• Scope
  • LERTA targets local real estate taxes on the improvement value only.
  • KOZ can provide broader relief across multiple state and local taxes for eligible businesses and, in some cases, residents within KOZ parcels.
• Duration
  • LERTA in Lebanon City runs 5 years on a phased schedule.
  • KOZ periods vary by parcel and often run up to 10 years.
• Approval and administration
  • LERTA requires action by local taxing bodies. City, county, and school district participation can differ.
  • KOZ is designated and administered through DCED with parcel-specific rules and coordinators.
• Paperwork and timing
  • LERTA applications are typically filed with local permits before completion of improvements.
  • KOZ benefits require DCED application and annual Department of Revenue filings, with year-end timing referenced in the state’s quick guide.

Real-world limits to plan for

LERTA abates only the tax on the increase in assessed value. You still pay taxes on the pre-improvement value. Participation by school districts and counties can vary, and local boards sometimes decline longer abatements, as reported in Lebanon County coverage of school board decisions and project debates. For example, recent reporting on a Palmyra project highlights how school district positions can shape outcomes and timing for LERTA approvals. See context from ABC27 News and LebTown’s Palmyra coverage.

KOZ benefits are parcel-specific, have expiration dates, and require ongoing compliance. DCED emphasizes verifying a parcel’s current KOZ status and noting any local conditions, including possible PILOTs. You can confirm rules and parcel details on DCED’s KOZ program page.

Step-by-step due diligence

1. Confirm the parcel’s eligibility. For KOZ, check DCED’s KOZ page for parcel listings and expiration dates. For LERTA, confirm with the City of Lebanon whether the parcel sits inside the designated LERTA area and the qualifying project types. Review the City’s business incentives page.
2. Contact the local coordinator early. In Lebanon City, reach the Community & Economic Development Office for LERTA and KOZ parcel guidance and local steps. Find contacts on the City’s CEDO page.
3. Verify taxing-body participation. Ask whether the county and school district are participating for your parcel and term. Local reporting shows boards may negotiate or opt out.
4. Mind the filing calendar. LERTA applications are commonly tied to permitting and must be filed before completion of the improvements. For KOZ, follow the state’s quick reference guide for annual filings and year-end deadlines, and ensure there are no outstanding tax liabilities.
5. Loop in tax counsel and your accountant. KOZ can affect multiple tax types and requires correct filings. Coordinate early to plan withholding, reporting, and compliance.
6. Model the exit. Record the abatement period, any PILOT terms, and the post-abatement tax load so you understand operating costs when benefits sunset.

Local projects to watch

• Lebanon Rails Business Park. Reporting notes active development and use of LERTA in the park, with occasional discussions about LERTA boundaries and amendments. See LebTown’s coverage.
• Hershey distribution center near Annville. County approvals tied to a large logistics project show how LERTA can support industrial-scale investment in the region. Read LebTown’s report.

What this means for your underwriting

• Estimate savings using the City’s LERTA schedule on the improvement value and test alternate scenarios in case a taxing body does not participate.
• For KOZ parcels, verify the exact expiration year and any local conditions, then model cash flow with and without the benefits.
• Include filing, compliance, and professional advisory costs in your pro forma.
• Document the step-up in operating expenses when benefits end so debt coverage and yield remain in range.

Your next steps in Lebanon City

If you are targeting new construction or a major rehab, start by confirming LERTA boundaries and any KOZ parcel opportunities, then align your filing timeline with permits or year-end deadlines. Coordinate with the City’s CEDO and DCED, and bring your tax team in early. When you are ready to source sites or time a listing around incentives, connect with Denise Bollard for local guidance, introductions, and a clear plan to move from concept to closing.

FAQs

What is LERTA in Lebanon City and who qualifies?

• LERTA is a local abatement on the improvement portion of property taxes within designated areas; Lebanon City’s schedule is 100% for years 1–3 and 50% for years 4–5, subject to local eligibility and participation noted on the City’s business incentives page.

Which taxes can a KOZ reduce for Lebanon parcels?

• KOZ can eliminate or reduce many state and local taxes for eligible occupants of KOZ parcels during the KOZ term, as described by DCED.

How do school districts affect my LERTA savings in Lebanon County?

• Each taxing body decides whether to participate, and school boards sometimes withhold or limit participation, which can change your total abatement.

When should I file LERTA and KOZ applications?

• LERTA filings are usually tied to local permits before project completion, while KOZ filings follow DCED and Department of Revenue annual procedures with year-end deadlines.

Do KOZ benefits apply to residents or only businesses?

• KOZ rules can apply to businesses and, in some cases, residents within KOZ parcels, with eligibility and filings governed by DCED.

What happens when a LERTA or KOZ period ends?

• The property transitions to standard tax treatment for that parcel and use, so plan for the full post-benefit tax load in your long-term operating budget.