HOUSE AMENDED
PRIOR PRINTER'S NOS. 2065, 2141, 2266 PRINTER'S NO. 2285
No. 1412 Session of 2008
INTRODUCED BY PIPPY, A. WILLIAMS, PUNT, PILEGGI, O'PAKE, HUGHES,
RAFFERTY, KITCHEN, GORDNER, ORIE, COSTA, D. WHITE, ERICKSON,
ROBBINS, C. WILLIAMS AND REGOLA, MAY 14, 2008
AS RE-REPORTED FROM COMMITTEE ON APPROPRIATIONS, HOUSE OF
REPRESENTATIVES, AS AMENDED, JUNE 30, 2008
AN ACT
1 Amending the act of October 6, 1998 (P.L.705, No.92), entitled,
2 as amended, "An act providing for the creation of keystone
3 opportunity zones and keystone opportunity expansion zones to
4 foster economic opportunities in this Commonwealth, to
5 facilitate economic development, stimulate industrial,
6 commercial and residential improvements and prevent physical
7 and infrastructure deterioration of geographic areas within
8 this Commonwealth; authorizing expenditures; providing tax
9 exemptions, tax deductions, tax abatements and tax credits;
10 creating additional obligations of the Commonwealth and local
11 governmental units; and prescribing powers and duties of
12 certain State and local departments, agencies and officials,"
13 defining "unoccupied parcel"; providing for extensions for
14 unoccupied parcels, for additional keystone opportunity
15 expansion zones, for substitution of parcels outside a
16 subzone and for payments; prohibiting illegal alien labor in
17 zones; and further providing for sales and use tax, for
18 corporate net income tax and for local earned income net
19 profits taxes, local sales and use tax and business privilege
20 taxes.
21 The General Assembly of the Commonwealth of Pennsylvania
22 hereby enacts as follows:
23 Section 1. Section 103 of the act of October 6, 1998
24 (P.L.705, No.92), known as the Keystone Opportunity Zone,
25 Keystone Opportunity Expansion Zone and Keystone Opportunity
1 Improvement Zone Act, is amended by adding a definition to read:
2 Section 103. Definitions.
3 The following words and phrases when used in this act shall
4 have the meanings given to them in this section unless the
5 context clearly indicates otherwise:
6 * * *
7 "Unoccupied parcel." A parcel that is not occupied on the
8 effective date of this definition. Construction activity on a
9 parcel shall not constitute occupation of the parcel.
10 Section 2. The act is amended by adding sections to read:
11 Section 301.3. Extension for unoccupied parcels.
12 (a) Extension.--The department may approve an application to
13 extend the exemptions, deductions, abatements and credits under
14 this act as follows:
15 (1) One of the following:
16 (i) For a parcel in a keystone opportunity zone,
17 keystone opportunity expansion zone or keystone
18 opportunity improvement zone that is an unoccupied parcel
19 on the effective date of this section, for a period of
20 seven years from the expiration date of the zone.
21 (ii) For a parcel in a keystone opportunity zone or
22 keystone opportunity expansion zone that is an unoccupied
23 parcel on the effective date of this section, for a
24 period of ten years from the date of occupancy, provided
25 that the parcel is occupied on or before December 31,
26 2015.
27 (2) The extension of exemptions, deductions, abatements
28 or credits authorized under this section, except exemptions
29 for sales and use tax under section 511(a) or 705(a), shall
30 take effect only upon occupancy.
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1 (b) Real estate tax abatement.--The owner of an unoccupied
2 parcel in a keystone opportunity zone, keystone opportunity
3 expansion zone or keystone opportunity improvement zone that has
4 expired but that receives an extension of tax abatement
5 eligibility following the original expiration date of the
6 keystone opportunity zone, keystone opportunity expansion zone
7 or keystone opportunity improvement zone under subsection (a)
8 shall not receive an abatement of real property tax until the
9 parcel becomes occupied or developed.
10 (c) Application.--Except as provided in subsection (d), in
11 order to extend the tax benefits for unoccupied parcels under
12 subsection (a), the department must receive an application from
13 a political subdivision or its designee no later than June 30,
14 2009. The application must contain the information required
15 under section 302(a)(1), (2), (3), (5) and (6). The application
16 must include all ordinances, resolutions or other required
17 action adopted by all political subdivisions in which the
18 unoccupied parcel is located adopting the extension of all tax
19 exemptions, deductions, abatements and credits authorized under
20 Chapter 7. The department, in consultation with the Department
21 of Revenue, shall review the application and, if approved, issue
22 a certification of all tax exemptions, deductions, abatements or
23 credits under this part for the unoccupied parcel within three
24 months of receipt of the application. The certification shall be
25 effective on the day following the expiration date of the
26 existing subzone.
27 (c.1) Application for licensed facilities within cities of <--
28 first class.--No person shall be eligible to apply for any tax
29 exemption, deduction, abatement, credit or other tax benefit
30 under this act or the act of December 1, 1977 (P.L.237, No.76),
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1 known as the Local Economic Revitalization Tax Assistance Act,
2 for any parcel within a city of the first class that is
3 contiguous with a navigable waterway, if the parcel is to be
4 used in whole or in part for a licensed facility as defined in 4
5 Pa.C.S. § 1103 (relating to definitions) unless the following
6 conditions have been satisfied:
7 (1) the applicant has obtained an easement, right-of-
8 way, license or lease pursuant to an act of the General
9 Assembly, enacted following the effective date of this
10 subsection, for the use, occupancy or development of the
11 contiguous submerged lands; and
12 (2) the applicant has made payment to the Commonwealth
13 for the use, occupancy or development of the contiguous
14 submerged lands in an amount established by the General
15 Assembly.
16 (d) Applications for certain zones.--For a keystone
17 opportunity zone that expires December 31, 2008, an application
18 may be submitted to the department to temporarily delay the
19 expiration of the exemptions, deductions, abatements and credits
20 for the zone until June 30, 2009. The application must be
21 submitted by November 30, 2008, and include all ordinances,
22 resolutions or other required action from all affected political
23 subdivisions approving the requested delay in the expiration of
24 the keystone opportunity zone. The department shall certify the
25 delay in the expiration by December 31, 2008. If the expiration
26 of a keystone opportunity zone is delayed under this subsection,
27 a political subdivision or its designee may apply for an
28 extension pursuant to subsection (c), provided that the
29 application shall be submitted by May 1, 2009, and approved by
30 the department no later than June 30, 2009. If an extension is
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1 granted under subsection (c), the extension shall be deemed to
2 be effective January 1, 2009.
3 (e) Expiration.--All extensions of an unoccupied parcel
4 certified under subsection (a)(1)(i) shall expire no later than
5 seven years following the expiration date of the existing
6 keystone opportunity zone, keystone opportunity expansion zone
7 or keystone opportunity improvement zone. All extensions of an
8 unoccupied parcel certified under subsection (a)(1)(ii) shall
9 expire no later than ten years following the date of occupancy
10 of the unoccupied parcel.
11 Section 301.4. Additional keystone opportunity expansion zones.
12 (a) Establishment.--
13 (1) In addition to any designations under section 301.1,
14 the department may designate up to 15 additional keystone
15 opportunity expansion zones in accordance with this section.
16 Each additional keystone opportunity expansion zone shall:
17 (i) Not be less than ten acres in size, unless
18 contiguous to an existing zone.
19 (ii) Not exceed, in the aggregate, a total of 350
20 acres.
21 (iii) Be comprised of parcels that meet any of the
22 following criteria:
23 (A) Are deteriorated, underutilized or
24 unoccupied on the effective date of this clause.
25 (B) Are occupied by a business that:
26 (I) Creates or retains at least 1,400 full-
27 time jobs in this Commonwealth within three years
28 of the designation of the keystone opportunity
29 expansion zone; and
30 (II) Makes a capital investment of at least
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1 $750,000,000 in the additional keystone
2 opportunity enhancement zone within three years
3 of the designation of the keystone opportunity
4 expansion zone.
5 (2) The department shall immediately notify political
6 subdivisions located within the area designated.
7 (b) Authorization.--Persons and businesses within an
8 additional keystone opportunity expansion zone authorized under
9 subsection (a) shall be entitled to all tax exemptions,
10 deductions, abatements or credits set forth under this act,
11 except exemptions for sales and use tax under section 511(a) or
12 705(a), for a period of ten years beginning January 1, 2010 and
13 ending on December 31, 2020. Exemptions for sales and use taxes
14 under sections 511 and 705 shall commence upon designation of
15 the zone by the department.
16 (c) Application.--In order to receive a designation under
17 subsection (a), the department must receive an application from
18 a political subdivision or its designee no later than May 1,
19 2009. The application must contain the information required
20 under section 302(a)(1), (2)(i) and (ix) and (6). The
21 application must include all ordinances, resolutions or other
22 required action adopted by all political subdivisions in which
23 the keystone opportunity expansion zone is located providing the
24 tax exemptions, deductions, abatements and credits authorized
25 under Chapter 7. The department, in consultation with the
26 Department of Revenue, shall review the application and, if
27 approved, issue a certification of all tax exemptions,
28 deductions, abatements or credits under this part for the
29 additional keystone opportunity expansion zone within three
30 months of receipt of the application. The department shall act
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1 on an application under this subsection by June 30, 2009.
2 (d) Prohibition.--The department shall be prohibited from <--
3 designating any parcel of land within a city of the first class
4 as a keystone opportunity zone, keystone opportunity expansion
5 zone, keystone opportunity improvement zone or a keystone
6 opportunity innovation zone if any project involving a parcel,
7 within a 1,001-foot radius as measured from the center of the
8 proposed parcel to be designated, has received or has been
9 designated to receive in excess of $20,000,000 in funding from
10 the Commonwealth within the last four years. The department
11 shall be prohibited from providing any State financial
12 assistance, including loans, grants or any tax abatements,
13 credits, deductions or exemptions provided under this act or any
14 other State law to a parcel located within the area described in
15 this subsection nor shall the department or the governing body
16 of the city of the first class provide any tax exemption,
17 deduction, abatement, credit or other tax benefit under the act
18 of December 1, 1977 (P.L.237, No.76), known as the Local
19 Economic Revitalization Tax Assistance Act, for any project
20 involving a parcel located within the area described in this
21 subsection.
22 Section 301.5. Expansion for new parcels.
23 (a) Expansion.--A political subdivision or its designee may
24 apply for an expansion to add up to 15 acres of deteriorated
25 property to an existing keystone opportunity expansion zone,
26 keystone opportunity improvement zone or a subzone of a keystone
27 opportunity zone for parcels that are contiguous to the existing
28 zone or subzone.
29 (b) Application.--In order to receive a designation under
30 this section, the department must receive an application from a
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1 political subdivision or its designee no later than December 31,
2 2008. The application must contain the information required
3 under section 302(a)(1), (2)(i) and (ix), (5) and (6). The
4 application must include all ordinances, resolutions or other
5 required action adopted by all political subdivisions in which
6 the keystone opportunity expansion zone, keystone opportunity
7 improvement zone or a subzone of a keystone opportunity zone is
8 located adopting all tax exemptions, deductions, abatements and
9 credits authorized under Chapter 7 to the expanded area. The
10 department, in consultation with the Department of Revenue,
11 shall review the application and, if approved, issue a
12 certification of all tax exemptions, deductions, abatements or
13 credits under this act for the expansion authorized under
14 subsection (a) within two months of the receipt of the
15 application.
16 (c) Applications for certain zones.--For a keystone
17 opportunity zone that expires December 31, 2008, but is seeking
18 an extension under section 301.3, the application shall include
19 the request for an expansion under subsection (a). The
20 application must be submitted by December 31, 2008, and include
21 all ordinances, resolutions or other required action from all
22 affected political subdivisions approving the addition of the
23 acreage. If the expiration of a keystone opportunity zone is
24 delayed under this subsection, a political subdivision or its
25 designee may apply for an extension under 301.3 and an expansion
26 under this section. If an extension is granted under section
27 301.3, the extension and the expansion shall be deemed to be
28 effective January 1, 2009.
29 (d) Authorization.--Persons or businesses within the
30 expanded area shall be entitled to all tax exemptions,
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1 deductions, abatements or credits set forth under this part,
2 except for sales and use taxes under section 511(a) or 705(a),
3 for the period set forth in subsection (e). Exemptions for sales
4 and use taxes under sections 511 and 705 shall commence upon
5 approval of the expansion by the department.
6 (e) Expiration.--All expansions under this section shall
7 expire on the same date as the keystone opportunity expansion
8 zone, keystone opportunity improvement zone or subzone of a
9 keystone opportunity zone.
10 Section 301.6. Substitution of parcels outside a subzone.
11 (a) Approval.--If a portion of an existing subzone is
12 affected by a governmental prohibition of an environmental
13 nature which has a substantial adverse effect on development,
14 the department may approve a substitution of other parcels for
15 those affected acres in the existing subzone, creating a new
16 subzone if the new subzone is substantially similar in acreage
17 size and is within five miles and in the same county as the
18 original subzone.
19 (b) Application and approval.--Applications to substitute
20 parcels under this section shall be made to the department no
21 later than May 31, 2009. Applications under this section shall
22 be made to the department in accordance with section 302(a)(1),
23 (2), (3), (5) and (6). The department shall certify the
24 substitutions by June 30, 2009.
25 Section 310. Payments.
26 The following shall apply to an agreement between a business
27 and a political subdivision entered into after the effective
28 date of this section in exchange for the approval of, or
29 otherwise relating to, the establishment of a keystone
30 opportunity zone, keystone opportunity expansion zone or
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1 keystone opportunity improvement zone under this act, to include
2 an extension under section 301.2:
3 (1) Except as otherwise required or authorized by law, a
4 business may not provide payments to a political subdivision
5 in exchange for the approval of, or otherwise relating to,
6 the designation or extension of a keystone opportunity zone,
7 keystone opportunity expansion zone or keystone opportunity
8 improvement zone in excess of 110% of the amount of real
9 property taxes payable to the political subdivision for the
10 tax year immediately prior to the year in which the
11 designation or extension is granted. The limitation on
12 payments set forth under this paragraph may increase by the
13 percentage increase in the payments that would occur if the
14 property was not exempt from local real property taxes.
15 (2) Except as provided under paragraph (3), payments
16 made under paragraph (1) may be increased based on a taxpayer
17 assessment appeal or as necessary to correct any errors or
18 omissions in the county's assessment records. Payments may be
19 increased following a county-wide reassessment based on
20 improvements to the property made prior to the approval of
21 the designation or expansion.
22 (3) Payments may not be increased for the duration of
23 the designation or expansion based on an increase in the
24 assessed value of property due to improvements to the
25 property made subsequent to designation.
26 (4) Any agreement to make payments under this section
27 shall be in writing and approved by a majority vote of the
28 governing body of the political subdivision at a meeting that
29 is subject to 65 Pa.C.S. Ch. 7 (relating to open meetings).
30 Section 311. Prohibition on illegal alien labor.
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1 (a) General rule.--No person or business that receives a tax
2 exemption, deduction, abatement or credit under this act shall
3 knowingly permit the labor services of an illegal alien under a
4 contract to which the person or business is a party in the
5 applicable keystone opportunity zone, keystone opportunity
6 expansion zone or keystone opportunity improvement zone. A
7 person shall be deemed to have knowingly employed or knowingly
8 permitted the prohibited services if he shall have active
9 knowledge of or have reason to know that such services have been
10 provided under the contract in the applicable keystone
11 opportunity zone, keystone opportunity expansion zone or
12 keystone opportunity improvement zone.
13 (b) Reimbursement.--As a condition of the receipt of a tax
14 exemption, deduction, abatement or credit under this act, the
15 department or political subdivision that awards the tax
16 exemption, deduction, abatement of credit under this act shall
17 require full repayment of the value or amount of the tax
18 exemption, deduction, abatement or credit if subsection (c)
19 applies.
20 (c) Violations.--
21 (1) Repayment under subsection (b) is required if any of
22 the following apply:
23 (i) The person or business that received the tax
24 exemption, deduction, abatement or credit under this act
25 is sentenced under Federal law for an offense involving
26 knowing use of labor by an illegal alien under the
27 contract in the applicable keystone opportunity zone,
28 keystone opportunity expansion zone or keystone
29 improvement zone.
30 (ii) All of the following apply:
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1 (A) A contractor to a person or business that
2 received the tax exemption, deduction, abatement or
3 credit under this act is sentenced under Federal law
4 for an offense involving knowing use of labor by an
5 illegal alien on the contract.
6 (B) The person knew or had reason to know of the
7 contractor's knowing use of labor by an illegal alien
8 on the contract.
9 (2) Any person who is required to repay the department
10 or political subdivision under this section shall be
11 ineligible to apply for any tax exemption, deduction,
12 abatement or credit under this act for a period of two years.
13 (3) It shall be an affirmative defense to a violation of
14 this section, if the person or business contracts with a
15 contractor to provide labor under the contract in the
16 applicable keystone opportunity zone, keystone opportunity
17 expansion zone or keystone opportunity improvement zone and
18 establishes that the person has required the contractor to
19 certify compliance with the requirements of section 274A of
20 the Immigration Reform and Control Act of 1986 (Public Law
21 99-603, 8 U.S.C. § 1324A) with respect to the hiring,
22 recruiting or referral for employment of an alien in the
23 United States and has notified the appropriate Federal
24 authority, if the person knew that the contractor used labor
25 by an illegal alien.
26 (d) Definition.--As used in this section, "illegal alien"
27 means a noncitizen of the United States who is violating Federal
28 immigration laws and is providing compensated labor within this
29 Commonwealth.
30 Section 3. Section 511 of the act, amended December 9, 2002
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1 (P.L.1727, No.217), is amended to read:
2 Section 511. Sales and use tax.
3 (a) Exemption.--Sales at retail of services or tangible
4 personal property, other than motor vehicles, to a qualified
5 business or a construction contractor pursuant to a construction
6 contract with a qualified business, landowner or lessee for the
7 exclusive use, consumption and utilization of the tangible
8 personal property or service by the qualified business at [its]
9 the qualified business's, landowner's or lessee's facility
10 located within a subzone, improvement subzone or expansion
11 subzone are exempt from the sales and use tax imposed under
12 Article II of the Tax Reform Code of 1971. No person shall be
13 allowed an exemption for sales conducted prior to designation of
14 the real property as part of a subzone or expansion subzone.
15 [(b) Construction contracts.--For any construction contract
16 performed in a subzone, improvement subzone or expansion
17 subzone, the exemption provided in subsection (a) shall only
18 apply to the sale at retail or use of building machinery and
19 equipment to a qualified business, or to a construction
20 contractor pursuant to a construction contract with a qualified
21 business, for the exclusive use, consumption and utilization by
22 the qualified business at its facility in a subzone, improvement
23 subzone or expansion subzone. For the purposes of the subzone,
24 improvement subzone or expansion subzone exemption, building
25 machinery and equipment shall include distribution equipment
26 purchased for the exclusive use, consumption and utilization in
27 a subzone, improvement subzone or expansion subzone facility.]
28 Section 4. Section 515(d) introductory paragraph and (3) of
29 the act, amended December 23, 2003 (P.L.360, No.51), are amended
30 to read:
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1 Section 515. Corporate net income tax.
2 * * *
3 (d) Income apportionment.--The taxable income of a
4 corporation that is a qualified business shall be apportioned to
5 the subzone, improvement subzone or expansion subzone by
6 multiplying the Pennsylvania taxable income by a fraction, the
7 numerator of which is the property factor plus the payroll
8 factor [plus the sales factor] and the denominator of which is
9 [three] two, in accordance with the following:
10 * * *
11 [(3) The sales factor is a fraction, the numerator of
12 which is the total sales of the taxpayer in the subzone,
13 improvement subzone or expansion subzone during the tax
14 period and the denominator of which is the total sales of the
15 taxpayer in this Commonwealth during the tax period.
16 (i) Sales of tangible personal property are in the
17 subzone, improvement subzone or expansion subzone if the
18 property is delivered or shipped to a purchaser that
19 takes possession within the subzone, improvement subzone
20 or expansion subzone regardless of the F.O.B. point or
21 other conditions of the sale.
22 (ii) Sales other than sales of tangible personal
23 property are in the subzone, improvement subzone or
24 expansion subzone if:
25 (A) the income-producing activity is performed
26 in the subzone, improvement subzone or expansion
27 subzone; or
28 (B) the income-producing activity is performed
29 both within and without the subzone, improvement
30 subzone or expansion subzone and a greater proportion
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1 of the income-producing activity is performed in the
2 subzone, improvement subzone or expansion subzone
3 than in any other location, based on costs of
4 performance.]
5 * * *
6 Section 5. Section 703 of the act is amended by adding a
7 subsection to read:
8 Section 703. Local earned income and net profits taxes;
9 business privilege taxes.
10 * * *
11 (g) Determination of exemption.--For the purposes of
12 determining an exemption under this section, a tax on or
13 measured by any of the following shall be attributed to business
14 activity conducted within a subzone, improvement zone or
15 expansion zone by applying the apportionment factors under
16 section 515(d):
17 (1) Business gross receipts.
18 (2) Gross or net income.
19 (3) Gross or net profits.
20 Section 6. Section 705 of the act, amended December 9, 2002
21 (P.L.1727, No.217), is amended to read:
22 Section 705. Local sales and use tax.
23 (a) General rule.--The political subdivision shall exempt
24 sales at retail of services or tangible personal property,
25 except motor vehicles, to a qualified business or a construction
26 contractor pursuant to a construction contract with a qualified
27 business, landowner or lessee for the exclusive use, consumption
28 and utilization of the tangible personal property or service by
29 the qualified business at [its] the qualified business's,
30 landowner's or lessee's facility located within a subzone,
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1 improvement subzone or expansion subzone from a city or county
2 tax on purchase price authorized under Article XXXI-B of the act
3 of July 28, 1953 (P.L.723, No.230), known as the Second Class
4 County Code, as amended, and the act of June 5, 1991 (P.L.9,
5 No.6), known as the Pennsylvania Intergovernmental Cooperation
6 Authority Act for Cities of the First Class, as amended. No
7 exemption may be granted for sales occurring prior to
8 designation of the real property as part of a subzone or
9 expansion subzone.
10 (b) [Construction contracts.--For any construction contract
11 performed in a subzone, improvement subzone or expansion
12 subzone, the exemption provided in subsection (a) shall only
13 apply to the sale at retail or use of building machinery and
14 equipment to a qualified business, or to a construction
15 contractor pursuant to a construction contract with a qualified
16 business, for the exclusive use, consumption and utilization by
17 the qualified business at its facility in a subzone, improvement
18 subzone or expansion subzone. For the purposes of the subzone,
19 improvement subzone or expansion subzone exemption, building
20 machinery and equipment shall include distribution equipment
21 purchased for the exclusive use, consumption and utilization in
22 a subzone, improvement subzone or expansion subzone facility.]
23 (Reserved).
24 (c) Definition.--Sales at retail of tangible personal
25 property and services shall be defined in accordance with
26 Article II of the Tax Reform Code of 1971.
27 Section 7. The amendment of sections 515 and 703 of the act
28 shall apply to taxable years beginning after December 31, 2008.
29 Section 8. This act shall take effect in 60 days.
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