THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY SMUCKER, WAUGH, YUDICHAK AND PILEGGI, OCTOBER 2, 2012

REFERRED TO FINANCE, OCTOBER 2, 2012  

AN ACT

Amending the act of April 9, 1929 (P.L.343, No.176), entitled,

as amended, "An act relating to the finances of the State

government; providing for the settlement, assessment,

collection, and lien of taxes, bonus, and all other accounts

due the Commonwealth, the collection and recovery of fees and

other money or property due or belonging to the Commonwealth,

or any agency thereof, including escheated property and the

proceeds of its sale, the custody and disbursement or other

disposition of funds and securities belonging to or in the

possession of the Commonwealth, and the settlement of claims

against the Commonwealth, the resettlement of accounts and

appeals to the courts, refunds of moneys erroneously paid to

the Commonwealth, auditing the accounts of the Commonwealth

and all agencies thereof, of all public officers collecting

moneys payable to the Commonwealth, or any agency thereof,

and all receipts of appropriations from the Commonwealth,

authorizing the Commonwealth to issue tax anticipation notes

to defray current expenses, implementing the provisions of

section 7(a) of Article VIII of the Constitution of

Pennsylvania authorizing and restricting the incurring of

certain debt and imposing penalties; affecting every

department, board, commission, and officer of the State

government, every political subdivision of the State, and

certain officers of such subdivisions, every person,

association, and corporation required to pay, assess, or

collect taxes, or to make returns or reports under the laws

imposing taxes for State purposes, or to pay license fees or

other moneys to the Commonwealth, or any agency thereof,

every State depository and every debtor or creditor of the

Commonwealth," providing for City Revitalization and

Improvement Zones.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The act of April 9, 1929 (P.L.343, No.176), known

as The Fiscal Code, is amended by adding an article to read:

ARTICLE XVI-D.2

CITY REVITALIZATION AND IMPROVEMENT ZONES

Section 1601-D.2.  Scope of article.

This article relates to City Revitalization and Improvement

Zones.

Section 1602-D.2.  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 third class with a population of at

least 40,000 and not more than 70,000 based on the most recent

Federal decennial census.

"City Revitalization and Improvement Zone."  A revitalization

improvement zone designated by the contracting authority for the

purpose of improvement and development within a city.

"Contracting authority."  An authority established under 53

Pa.C.S. Ch. 56 (relating to municipal authorities) for the

purpose of designating revitalization zones and constructing

facilities or other authority established under the laws of this

Commonwealth.

"Department."  The Department of Revenue of the Commonwealth.

"Earned income tax."  A tax or portion of a tax imposed on

earned income within a neighborhood improvement zone under the

act of December 31, 1965 (P.L.1257, No.511), known as The Local

Tax Enabling Act, which a city, or a school district contained

entirely within the boundaries of or coterminous with the city,

is entitled to receive.

"Facility."  A structure to be used for commercial,

exhibition, hospitality, conference, retail, community,

recreational or mixed-use purposes. The term includes a park.

"Fund."  The City Revitalization and Improvement Fund

established under section 1604-D.2.

"Qualified business."  An entity which meets all of the

following:

(1)  Is authorized to conduct business in this

Commonwealth.

(2)  Is located or partially located in a zone.

(3)  Is engaged in the active conduct of a trade or

business for the taxable year. An agent, broker or

representative of a business shall not be considered to be in

the active conduct of trade or business for the business.

"Zone."  A City Revitalization and Improvement Zone.

Section 1603-D.2.  Facility.

The contracting authority may do the following:

(1)  Designate one or more zones of not greater than 100

acres in total in which a facility may be constructed or

redeveloped.

(2)  Provide for or borrow funds for the purpose of:

(i)  improvement and development within the zone;

(ii)  construction or improvement of a facility

within the zone; or

(iii)  redevelopment of a facility in existence prior

to January 1, 2012.

Section 1604-D.2.  Fund.

(a)  Establishment.--There is established in the State

Treasury a special fund known as the City Revitalization and

Improvement Fund. Interest income derived from investment of the

money in the fund shall be credited by the Treasury Department

to the fund.

(b)  Calculation.--

(1)  Within 60 days of the end of each quarter, the

department shall calculate the amounts under this subsection

for improvement, development and revitalization in each zone.

(2)  The contracting authority shall provide good faith

estimates of quarterly amounts to be calculated in a form and

manner prescribed by the department.

(3)  The department shall estimate the quarterly amounts,

subject to an annual reconciliation, and shall certify the

amounts to the Office of the Budget within 90 days of the end

of each fiscal quarter.

(4)  An entity collecting a local tax within the zone

shall, within 30 days of the end of a fiscal quarter, submit

all of the local taxes collected that are to be calculated

under this subsection to the State Treasurer for transfer to

the fund under subsection (d).

(5)  The following shall be the amounts calculated:

(i)  An amount equal to all corporate net income tax,

capital stock and franchise tax, personal income tax,

business privilege tax, business privilege licensing fees

and earned income tax related to the ownership and

operation of a facility or qualified business in the

zone.

(ii)  An amount equal to all of the following:

(A)  All personal income tax, earned income tax

and local services tax withheld from its employees by

a facility or qualified business in the zone.

(B)  All personal income tax, earned income tax

and local services tax withheld from the employees of

any facility or qualified business in the zone.

(iii)  An amount equal to all sales and use tax

related to the operation of a facility in the zone. This

subparagraph shall include sales and use tax paid by any

provider of events or activities at or services to a

facility, including sales and use tax paid by vendors and

concessionaires and contractors at a facility.

(iv)  An amount equal to all tax paid to the

Commonwealth related to the sale of any liquor, wine or

malt or brewed beverage in a facility.

(v)  An amount equal to all personal income tax,

earned income tax and local services tax withheld from

personnel by a contractor or other entity involved in the

construction of a facility.

(vi)  An amount equal to all of the following:

(A)  All corporate net income tax, capital stock

and franchise tax, personal income tax, business

privilege tax, business privilege licensing fees and

earned income tax related to the ownership and

operation of any qualified business within the zone.

(B)  All personal income tax, earned income tax

and local services tax withheld from its employees by

a qualified business within the zone.

(C)  All personal income tax, earned income tax

and local services tax withheld from the employees of

a qualified business that provides events, activities

or services in the zone.

(D)  All personal income tax, earned income tax

and local services tax to which the Commonwealth

would be entitled from performers or other

participants at an event or activity in the zone.

(E)  All sales and use tax related to the

operation of a qualified business within the zone.

This clause shall include sales and use tax paid by a

qualified business that provides events, activities

or services in the zone.

(F)  All tax paid by a qualified business to the

Commonwealth related to the sale of any liquor, wine

or malt or brewed beverage within the zone.

(G)  The amount paid a qualified business within

the zone of any new tax enacted by the Commonwealth

following the effective date of this section.

(H)  All personal income tax, earned income tax

and local services tax withheld from personnel by a

qualified business involved in the improvement,

development or construction of the zone.

(I)  All sales and use tax paid on materials and

other construction costs, directly related to the

improvement, development or construction of a

facility in the zone.

(J)  An amount equal to any amusement tax paid by

a facility or a qualified business operating in the

zone. No political subdivision or other entity

authorized to collect amusement taxes may impose or

increase the rate of any tax on admissions to places

of entertainment, exhibition, amusement or upon

athletic events in the zone which are not in effect

on the date the zone is designated by the contracting

authority.

(vii)  Except for a tax levied against real property,

an amount equal to any tax imposed by the Commonwealth or

any of its political subdivisions on a qualified business

engaged in an activity within the zone.

(c)  Income apportionment.--For the purpose of making the

calculations under subsection (b), the taxable income of a

corporation that is a qualified business shall be apportioned to

the zone by multiplying the Pennsylvania taxable income by a

fraction, the numerator of which is the property factor plus the

payroll factor plus the sales factor and the denominator of

which is three, in accordance with the following:

(1)  The property factor is a fraction, the numerator of

which is the average value of the taxpayer's real and

tangible personal property owned or rented and used in the

zone during the tax period and the denominator of which is

the average value of all the taxpayer's real and tangible

personal property owned or rented and used in this

Commonwealth during the tax period but shall not include the

security interest of any corporation as seller or lessor in

personal property sold or leased under a conditional sale,

bailment lease, chattel mortgage or other contract providing

for the retention of a lien or title as security for the sale

price of the property.

(2)  The following apply:

(i)  The payroll factor is a fraction, the numerator

of which is the total amount paid in the zone during the

tax period by the taxpayer for compensation and the

denominator of which is the total compensation paid in

this Commonwealth during the tax period.

(ii)  Compensation is paid in the zone if:

(A)  the person's service is performed entirely

within the zone;

(B)  the person's service is performed both

within and without the zone, but the service

performed without the zone is incidental to the

person's service within the zone; or

(C)  some of the service is performed in the zone

and the base of operations or, if there is no base of

operations, the place from which the service is

directed or controlled is in the zone, or the base of

operations or the place from which the service is

directed or controlled is not in any location in

which some part of the service is performed, but the

person's residence is in the zone.

(3)  The sales factor is a fraction, the numerator of

which is the total sales of the taxpayer in the zone during

the tax period and the denominator of which is the total

sales of the taxpayer in this Commonwealth during the tax

period.

(i)  Sales of tangible personal property are in the

zone if the property is delivered or shipped to a

purchaser that takes possession within the zone

regardless of the F.O.B. point or other conditions of the

sale.

(ii)  Sales other than sales of tangible personal

property are in the zone if:

(A)  the income-producing activity is performed

in the zone; or

(B)  the income-producing activity is performed

both within and without the zone and a greater

proportion of the income-producing activity is

performed in the zone than in any other location,

based on costs of performance.

(d)  Transfers.--

(1)  Within ten days of receiving notification under

subsection (b), the Secretary of the Budget shall direct the

State Treasurer to, notwithstanding any other law, transfer

the amounts calculated under subsection (b) from the General

Fund to the fund.

(2)  The State Treasurer shall provide quarterly payments

to the contracting authority until the bonds issued or the

other debt incurred to finance the improvement and

development of the zone and the construction of a contracted

facility are retired. The payment in each quarter shall be

equal to the balance of the fund on the date of the last day

of the prior calendar quarter.

(e)  Restriction on use of funds.--Funds transferred under

subsection (d):

(1)  May only be utilized for:

(i)  payment of debt service on bonds issued, or

payment of other debt incurred, for the improvement and

development of all or any part of the zone;

(ii)  construction of a facility; or

(iii)  payment of debt service on bonds issued, or

payment of other debt incurred, for the development of a

facility in existence prior to January 1, 2012.

(2)  May not be utilized for purposes of renovating or

repairing a facility, except for capital maintenance,

improvement projects and furniture, fixtures and equipment

reserve funds.

Section 1605-D.2.  Keystone Opportunity Zone.

Within 30 days of the effective date of this section, the

city shall apply to the department to decertify and remove the

designation of all or part of any Keystone Opportunity Zone that

is coterminous with the City Revitalization and Improvement Zone

in accordance with section 309 of the act of October 6, 1998

(P.L.705, No.92), known as the Keystone Opportunity Zone,

Keystone Opportunity Expansion Zone and Keystone Opportunity

Improvement Zone Act. The department shall act on the

application within 30 days.

Section 1606-D.2.  Duration.

The zone shall be in effect for a period equal to the length

of time for the repayment of debt incurred for the zone,

including the time of bonds initially issued.

Section 2.  This act shall take effect immediately.