The decision made in December by the State College Borough Council to increase property taxes could mean rent increases for students and eventual tax breaks for permanent borough residents.

Borough manager Tom Fountaine said the property tax increase would affect students' rent increases, although it is still unclear how.

"It's hard to say how it would affect them directly. Landlords would probably filter [the increase] through to the students," he said.

Kris Holzwarth, property manager for Associated Realty Property Management, said students would not have to absorb an increase this year because the rates were decided last September.

"Our rental rates have been set from the year before," she said.

She said the rental rates generally increase a standard 3 to 5 percent every year.

"All those are up to the individual owner," Holzwarth said. "That's just what the standard market has been."

The increase could affect those living in other types of off-campus housing, such as fraternity houses.

Jared Brown, assistant director of fraternity and sorority life, said the housing corporations that own the fraternity houses will be impacted by the increase.

He added that the housing corporations are usually made up of fraternity alumni.

"It depends how each housing corporation budgets and manages funds house by house," Brown said. "Some have funds that are set aside for taxes; others are rolled in with the rent."

Vince Turiano, the alumnus in charge of the treasury for Theta Delta Chi, 305 E. Prospect Ave., said students will be directly affected by the increase.

"Ultimately the students end up paying the cost of it," he said. "Any increase in any cost in any facility would be absorbed by students."

Council member Cathy Dauler said the increase in the property tax for this year was a necessary step toward possibly enacting homestead exclusion for the 2006 year.

The Homestead Exclusion Act is a statewide act that is being considered for adoption in the borough in 2006. It allows homeowners direct tax relief by excluding a certain amount of money from the property tax.

"We're positioning ourselves to go ahead with the Homestead Exclusion," she said. "If [the borough] opts for the Homestead Exclusion, we can't raise the property tax the same year. It's against the law."

Council President Tom Daubert said the goal is to more evenly distribute the tax load between residents and business owners.

Daubert said typically, borough residents make up most of the tax money, adding that it was a "big formula" based on a property's value. The result is that homeowners would not have to pay a tax on a "certain chunk" of their property.

Dauler said the Homestead Exclusion only applies to people who live in the locations deemed their primary permanent residence. While homeowners in the borough could apply for the tax break if the act is adopted, other property owners would be ineligible, including owners of large apartments and complexes, Dauler said.

The possible plan to implement the Homestead Exclusion after raising property taxes this year is part of an alternative to the current tax plan, Dauler said.