Regular Session 2023-2024 Senate Bill 1014 P.N. 1356

PRIOR PRINTER'S NO. 1295

PRINTER'S NO. 1356

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

1014

Session of

2023

INTRODUCED BY LAUGHLIN, PENNYCUICK AND ARGALL, DECEMBER 18, 2023

SENATOR GEBHARD, COMMUNITY, ECONOMIC AND RECREATIONAL

DEVELOPMENT, AS AMENDED, FEBRUARY 5, 2024

AN ACT

Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

act relating to tax reform and State taxation by codifying

and enumerating certain subjects of taxation and imposing

taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

for tax credits in certain cases; conferring powers and

imposing duties upon the Department of Revenue, certain

employers, fiduciaries, individuals, persons, corporations

and other entities; prescribing crimes, offenses and

penalties," in city revitalization and improvement zones,

further providing for definitions, for establishment or

designation of contracting authority, for approval, for

transfers, for restrictions, for transfer of property and for

review.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. The definitions of "city," "city revitalization

and improvement zone," "eligible tax," "municipality" and "pilot

zone" in section 1802-C of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971, are amended to

read:

Section 1802-C. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"City." A city of the second class A or third class or a

home rule municipality with a population of at least 20,000

based on the most recent Federal decennial census. The term does

not include a city that is determined to be distressed under the

act of July 10, 1987 (P.L.246, No.47), known as the

Municipalities Financial Recovery Act .

"City revitalization and improvement zone." An area of not

more than 130 acres, in a city, municipality, or that may

include an area in one or more contiguous municipalities,

comprised of parcels designated by the contracting authority,

which will provide economic development and job creation within

a city or one or more municipalities.

* * *

"Eligible tax." Any of the following taxes:

(1) Corporate net income tax, capital stock and

franchise tax, bank shares tax, insurance premiums tax,

personal income tax paid by shareholders, members or partners

of Subchapter S corporations, limited liability companies,

partnerships or sole proprietors on income other than passive

activity income as defined under section 469 of the Internal

Revenue Code of 1986 (Public Law 99-516, 26 U.S.C. § 1 et

seq.) or business privilege tax, calculated and apportioned

as to amount attributable to the location within the zone and

calculated under section 1904-B(b) and (c).

(2) Amusement tax, only to the extent the tax is related

to the activity of a qualified business within the zone.

(3) Sales and use tax, only to the extent the tax is

related to the activity of a qualified business within the

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zone. The term includes sales and use taxes on material used

for construction in the zone and business personal property

to be used by the qualified business in the zone.

(3.1) The hotel occupancy tax imposed under Part V of

Article II.

(4) Personal income tax withheld from its employees by a

qualified business for work performed in the zone.

(5) Local services tax withheld from its employees by a

qualified business for work performed in the zone.

(6) Earned income tax withheld from its employees by a

qualified business for work performed in the zone.

(7) All taxes paid to the Commonwealth, or an amount

equal to all of the taxes paid to the Commonwealth, related

to the purchase or sale of liquor, wine or malt or brewed

beverages by a licensee located in the zone for purchases

that occurred outside the zone.

The term does not include cigarette tax.

* * *

"Municipality." An incorporated town, township or borough.

The term does not include an incorporated town, township or

borough that is determined to be distressed under the

Municipalities Financial Recovery Act.

* * *

"Pilot zone." An area of not more than 100 acres designated

by the contracting authority prior to July 1, 2023, following

application and approval by the Department of Community and

Economic Development, the office and the department which will

provide economic development and job creation within one or more

municipalities, with a total population of at least 7,000 based

on the most recent Federal decennial census.

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* * *

Section 2. Section 1803-C of the act is amended to read:

Section 1803-C. Establishment or designation of contracting

authority.

[(a) Authorization.--[Except as set forth in subsection (b),

a] A city, municipality or [home rule county] municipalities may

establish or designate a contracting authority to designate a

zone under this article. For the purposes of appointing a

qualified operating board with diverse skill sets in the areas

of government, law, finance, banking, economic development,

community development, planning, project management, project

engineering, real estate development and environmental

remediation, the operating board of the contracting authority

shall include residents of the zone, business owners located in

the zone and residents, business owners and business

representatives from the city, municipality or municipalities

that created the zone.

(a.1) Membership.--

(1) The operating board shall consist of an odd number

of members with an equal number being appointed by each of

the following:

(i) The mayor of the city, incorporated town or

borough or the board of commissioners of a township.

(ii) Any member of the Senate representing the city,

municipality or municipalities.

(iii) Any member of the House of Representatives

representing the city, municipality or municipalities.

(2) If there is an even number of members, the final

member shall be chosen by majority vote of the appointed

board members.

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[(b) Distressed cities.--A city that is a distressed city

under the act of July 10, 1987 (P.L.246, No.47), known as the

Municipalities Financial Recovery Act, and is located in a home

rule county may not establish a contracting authority under this

article.

under the Municipalities Financial Recovery Act is located may

establish a contracting authority to designate a zone under this

article within the distressed city.]

Section 3. Section 1804-C(c) and (d) of the act are amended

to read:

SECTION 3. SECTION 1804-C(D) OF THE ACT IS AMENDED AND THE

SECTION IS AMENDED BY ADDING A SUBSECTION TO READ:

Section 1804-C. Approval.

* * *

Economic Development shall develop a schedule for the approval

of applications under this section as follows:

(1) Following the effective date of this paragraph,

applications for two initial city revitalization and

improvement zones and one pilot zone may be approved.

(2) Beginning in 2016, applications for two additional

zones may be approved each calendar year.] Approval.--

Applications for up to three zones may be approved in any

given calendar year, which may comprise:

(1) Up to two zones for one or more cities or

municipalities with a population between 7,000 and 19,999

based on the most recent Federal decennial census.

(2) Up to two zones for one or more cities or

municipalities with a population of 20,000 or more based on

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the most recent Federal decennial census.

* * *

(C.2) SINGLE A PPROVAL.--AN APPLICATION FOR ONE ZONE LOCATED

IN A CITY OF THE THIRD CLASS WITH A POPULATION BETWEEN 94,000

AND 95,000 BASED ON THE MOST RECENT DECENNIAL CENSUS AND THAT IS

LOCATED IN A HOME RULE COUNTY OF THE THIRD CLASS SHALL BE

APPROVED IN THE FIRST YEAR AFTER THE EFFECTIVE DATE OF THIS

SUBSECTION . THE FOLLOWING SHALL APPLY:

(1) A BOARD OF DIRECTORS FOR THE ZONE APPROVED UNDER

THIS SUBSECTION SHALL CONSIST OF NINE MEMBERS WITH THREE

MEMBERS BEING APPOINTED BY EACH OF THE FOLLOWING:

(I) THE MAYOR OF THE CITY, INCORPORATED TOWN OR

BOROUGH OR THE BOARD OF COMMISSIONERS OF A TOWNSHIP.

(II) ANY MEMBERS OF THE SENATE REPRESENTING THE

CITY, MUNICIPALITY OR MUNICIPALITIES.

(III) ANY MEMBERS OF THE HOUSE OF REPRESENTATIVES

REPRESENTING THE CITY, MUNICIPALITY OR MUNICIPALITIES.

(2) FOR THE PURPOSES OF APPOINTING A QUALIFIED BOARD OF

DIRECTORS WITH DIVERSE SKILL SETS IN THE AREAS OF GOVERNMENT,

LAW, FINANCE, BANKING, ECONOMIC DEVELOPMENT, COMMUNITY

DEVELOPMENT, PLANNING, PROJECT MANAGEMENT, PROJECT

ENGINEERING, REAL ESTATE DEVELOPMENT AND ENVIRONMENTAL

REMEDIATION, THE BOARD OF DIRECTORS OF THE CONTRACTING

AUTHORITY SHALL INCLUDE RESIDENTS OF THE ZONE, BUSINESS

OWNERS LOCATED IN THE ZONE AND RESIDENTS, BUSINESS OWNERS AND

BUSINESS REPRESENTATIVES FROM THE CITY, MUNICIPALITY OR

MUNICIPALITIES THAT CREATED THE ZONE.

(d) [Time] Schedule.--The Department of Community and

Economic Development shall establish [and publish] application

deadlines [in the Pennsylvania Bulletin and] and publish the

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deadlines on its publicly accessible Internet website.

* * *

Section 4. Section 1812-C(c) of the act is amended to read:

Section 1812-C. Transfers.

* * *

[(c) Notification.--The following shall apply:

(1) If the transfers under subsection (a) and section

1811-C(c) are insufficient to make payments on the bonds

issued under section 1813-C(a)(1) for the calendar year when

the transfers are made, the contracting authority shall

notify the Department of Community and Economic Development,

the office and the department of the amount of the deficiency

and may request the additional money necessary to make

payments on the bonds.

(2) The notification under paragraph (1) must be

accompanied by a detailed account of the contracting

authority's expenditures and the calculation which resulted

in the request for additional money. The Department of

Community and Economic Development, the office or the

department may request additional information from the

contracting authority and shall jointly verify the proper

amount of money necessary to make the payments on the bonds.

(3) Notwithstanding 53 Pa.C.S. § 5607(e) (relating to

purposes and powers), within 90 days of the date of the

notification request, the office shall direct the State

Treasurer to establish a restricted account within the

General Fund. The office shall direct the State Treasurer to

transfer the amount verified under paragraph (2) from the

General Fund to the restricted account for the use of the

contracting authority to make payments on the bonds issued

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under section 1813-C(a)(1).

(4) Money transferred under paragraph (3):

(i) shall be limited to 50% of the State tax

baseline amount for the calendar year prior to the date

the amount is verified under paragraph (2), not to exceed

$7,500,000; and

(ii) must occur in the first seven calendar years

following the baseline year.

(4.1) Under extraordinary circumstances, a contracting

authority may request money in excess of the limitations in

paragraph (4)(i). The Department of Community and Economic

Development, the office and the department shall determine

whether the circumstances merit additional money and the

amount to be transferred. The money shall be transferred

under the procedure under this section.

(5) Money transferred under paragraph (3) shall be

repaid to the General Fund by the contracting authority. If

money transferred under paragraph (3) is not repaid to the

General Fund by the contracting authority within 12 calendar

years following the baseline year, the city, municipality or

home rule county which established or designated the

contracting authority shall pay the money not repaid to the

General Fund plus an additional penalty of 10% of the amount

outstanding on the date of the final payment on the bonds

originally issued under section 1813-C(a)(1).]

Section 5. Section 1813-C(a)(3) and (c)(1) of the act are

amended and the subsections are amended by adding paragraphs to

read:

Section 1813-C. Restrictions.

(a) Utilization.--Money transferred under section 1812-C may

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only be utilized for the following:

* * *

(3) Replenishment of amounts in debt service reserve

funds established to pay debt service on bonds or on

privately obtained financing through a lending institution

for a project in a zone.

* * *

(8) Payment of debt service on loans secured privately

by a qualified business, property owner or developer for the

acquisition, development, construction, including related

infrastructure and site preparation, reconstruction,

renovation or refinancing of a facility in the zone.

* * *

(1) Except as set forth in [paragraph (4),] paragraph

(4) or (5), for the first five calendar years of the zone

designated after July 1, 2023, if the amount of money

transferred to the fund under sections 1811-C(c) and 1812-C

in any one calendar year exceeds the money utilized, budgeted

or appropriated by official resolution of the contracting

authority under this section in that calendar year, the

contracting authority may carry forward any excess up to a

total sum of $3,000,000 for the five-year calendar period.

For the sixth calendar year and each calendar year

thereafter, if the amount of money transferred to the fund

under sections 1811-C(c) and 1812-C in any one calendar year

exceeds the money utilized, budgeted or appropriated by

official resolution of the contracting authority under this

section in that calendar year, the contracting authority

shall submit by April 15 following the end of the calendar

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year any money not utilized, budgeted or appropriated by

official resolution of the contracting authority to the State

Treasurer for deposit into the General Fund.

* * *

(5) Other than a zone described in paragraph (1) or (4),

for a zone designation prior to July 1, 2023, if the amount

of money transferred to the fund under section 1811-C(c), in

any one calendar year exceeds the money utilized, budgeted or

appropriated by official resolution of the contracting

authority under this section in that calendar year, the

contracting authority shall submit any money not utilized,

budgeted or appropriated by official resolution to the State

Treasurer for deposit into the General Fund by April 15 of

the following calendar year.

* * *

Section 6. Section 1814-C(a) and (b) of the act are amended

and the section is amended by adding a subsection to read:

Section 1814-C. Transfer of property.

(a) Property.--[Parcels in a zone where] A parcel or parcels

in a zone where no zone fund dollars were expended upon the

parcel or parcels or where a facility has not been constructed,

reconstructed or renovated using money under this article may be

transferred out of the zone, if the contracting authority

provides a notarized certification, confirmed in the annual

audit required under section 1807-C(c), that no fund dollars

were used on the [property] parcel or parcels. Additional

acreage, not to exceed the acreage transferred out of the zone,

may be added to the zone.

* * *

(a.3) Returned property.--A parcel or parcels in a zone

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where zone fund dollars were expended upon the parcel or parcels

or where a facility has been constructed, reconstructed or

renovated using money under this article may be transferred out

of the zone for the purpose of returning a parcel or parcels to

State and local tax rolls prior to the duration established

under section 1815-C. Additional acreage, not to exceed the

acreage transferred out of the zone, may be added to the zone.

Each local taxing authority shall pass a resolution or ordinance

in support of the transfer of the parcel or parcels.

(b) [Approval.--A transfer under subsections (a) and (a.2)

must be] Review and approval.--A transfer must be reviewed and

approved by the Department of Community and Economic Development

in consultation with the office and the department. The

contracting authority shall submit a written request to the

Department of Community and Economic Development to approve the

transfer of a parcel or parcels. In addition to the written

request, the contracting authority shall submit the following to

the Department of Community and Economic Development:

(1) The certification under subsection (a).

(2) A resolution of the contracting authority board

approving the transfer of the parcel or parcels.

(3) Any additional information as required by the

Department of Community and Economic Development, the office

or the department.

Section 7. Section 1819-C(a) introductory paragraph of the

act is amended to read:

Section 1819-C. Review.

(a) Department of Community and Economic Development.--By

December 31, 2021, and annually each March 31 thereafter, the

Department of Community and Economic Development shall, in

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cooperation with the office and the department, complete a

review and analysis of all active zones. The review shall

include an analysis of:

* * *

Section 8. This act shall take effect in 60 days.

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