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        PRIOR PRINTER'S NOS. 3138, 3382               PRINTER'S NO. 3525

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 2328 Session of 1998


        INTRODUCED BY GLADECK, REINARD, GRUITZA, PERZEL, FICHTER,
           THOMAS, HENNESSEY, BISHOP, McILHINNEY, YOUNGBLOOD, DEMPSEY,
           PRESTON, FEESE, KREBS, L. I. COHEN, McGILL, RUBLEY, BARD,
           PETRONE, GRUPPO, BARLEY, STAIRS, J. TAYLOR, LEH, ROHRER,
           C. WILLIAMS, KIRKLAND, MANDERINO, HASAY, LEDERER, KELLER,
           DONATUCCI, D. W. SNYDER, MARSICO, MASLAND, SAYLOR, BIRMELIN,
           LYNCH, GEIST, TULLI, ROSS, MAJOR, FAIRCHILD, GODSHALL,
           SERAFINI, CIVERA, HUTCHINSON, STEIL, PIPPY, HERMAN,
           STEVENSON, CLARK, SCHULER, BAKER, ORIE, NAILOR, S. H. SMITH,
           MILLER, SATHER, VANCE, E. Z. TAYLOR, EGOLF, DRUCE,
           DiGIROLAMO, ZUG, SEYFERT, HESS, BROWNE, DENT, TRELLO,
           READSHAW, COWELL, PESCI, CORNELL AND HABAY, MARCH 12, 1998

        AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
           MAY 4, 1998

                                     AN ACT

     1  Providing for the creation of keystone opportunity zones to
     2     foster economic opportunities in this Commonwealth, to
     3     facilitate economic development, stimulate industrial,
     4     commercial and residential improvements and prevent physical
     5     and infrastructure deterioration of geographic areas within
     6     this Commonwealth; authorizing expenditures; providing tax
     7     exemptions, tax deductions, tax abatements and tax credits;
     8     creating additional obligations of the Commonwealth and local
     9     governmental units; prescribing powers and duties of certain
    10     State and local departments, agencies and officials;
    11     PROVIDING FOR ECONOMIC DEVELOPMENT ZONES AND GRANTS;           <--
    12     ESTABLISHING THE ECONOMIC DEVELOPMENT ZONE ASSISTANCE FUND;
    13     and making appropriations.

    14                         TABLE OF CONTENTS
    15  Chapter 1.  Preliminary Provisions
    16  Section 101.  Short title.
    17  Section 102.  Legislative findings.
    18  Section 103.  Definitions.

     1  Chapter 3.  Keystone Opportunity Zones
     2  Section 301.  Keystone opportunity zones.
     3  Section 302.  Application.
     4  Section 303.  Review.
     5  Section 304.  Criteria for designation of keystone opportunity
     6                 zone.
     7  Section 305.  Zone limitation.
     8  Section 306.  Residency.
     9  Section 307.  Qualified businesses.
    10  Section 308.  Forms.
    11  SECTION 309.  REDUCTION OF EXEMPTIONS, DEDUCTIONS,                <--
    12                 ABATEMENTS OR CREDITS.
    13  Chapter 5.  State Taxes
    14  Subchapter A.  General Provisions
    15  Section 501.  State taxes.
    16  Subchapter B.  Particular State Taxes
    17  Section 511.  Sales and use tax.
    18  Section 512.  Personal income tax.
    19  Section 513.  Residency considerations.
    20  Section 514.  Information for employer.
    21  Section 515.  Corporate net income tax.
    22  Section 516.  Capital stock franchise tax.
    23  Chapter 7.  Local Taxes
    24  Section 701.  Local taxes.
    25  Section 702.  Real property tax.
    26  Section 703.  Local earned income and net profits taxes;
    27                 business privilege taxes.
    28  Section 704.  Mercantile license tax.
    29  Section 705.  Local sales and use tax.
    30  Chapter 9.  Administration of Tax Provisions
    19980H2328B3525                  - 2 -

     1  Section 901.  Transferability.
     2  Section 902.  Recapture.
     3  Section 903.  Delinquent or deficient State or local taxes.
     4  Section 904.  Code compliance.
     5  Section 905.  Appeals.
     6  Chapter 11.  Procedures for Zones
     7  Section 1101.  Community benefits.
     8  Section 1102.  Reporting.
     9  Section 1103.  Other Commonwealth tax credits.
    10  Section 1104.  Illegal activity.                                  <--
    11  Section 1105.  Rules and regulations.
    12  Section 1106.  Compliance.
    13  Section 1107.  Penalties.
    14  Section 1108.  Construction.
    15  Section 1109.  Applicability.
    16  Section 1110.  Severability.
    17  Section 1111.  Repeals.
    18  Section 1112.  Expiration.
    19  Section 1113.  Effective date.
    20  CHAPTER 13.  ECONOMIC DEVELOPMENT ZONES                           <--
    21  SECTION 1301.  SHORT TITLE OF CHAPTER.
    22  SECTION 1302.  LEGISLATIVE FINDINGS.
    23  SECTION 1303.  DEFINITIONS.
    24  SECTION 1304.  POWERS AND DUTIES.
    25  SECTION 1305.  STUDY ON FISCAL IMPACT OF DEVELOPMENT ZONES;
    26                 CONTENTS; RECOMMENDATIONS; SUBMISSION TO GOVERNOR
    27                 AND GENERAL ASSEMBLY; FUNDING FOR COST OF STUDY.
    28  SECTION 1306.  ECONOMIC DEVELOPMENT ZONES; DESIGNATION;
    29                 DURATION.
    30  SECTION 1307.  ZONE DEVELOPMENT CORPORATION.
    19980H2328B3525                  - 3 -

     1  SECTION 1308.  PRELIMINARY ZONE DEVELOPMENT PLAN.
     2  SECTION 1309.  ELIGIBILITY FOR DESIGNATION.
     3  SECTION 1310.  PRIORITY DEVELOPMENT ZONES.
     4  SECTION 1311.  DESIGNATION OF ELIGIBLE AREAS AS DEVELOPMENT
     5                 ZONES.
     6  SECTION 1312.  APPLICATION FOR DESIGNATION; GRANT OR DENIAL;
     7                 ADOPTION OF ORDINANCE OF ACCEPTANCE.
     8  SECTION 1313.  BENEFITS AVAILABLE TO QUALIFIED BUSINESS.
     9  SECTION 1314.  AWARD; ELIGIBILITY OF QUALIFIED BUSINESS;
    10                 SCHEDULE.
    11  SECTION 1315.  BUSINESS TAX EXEMPTION.
    12  SECTION 1316.  DEVELOPMENT ZONE EMPLOYEE OR INVESTMENT TAX
    13                 CREDITS; LIMITATIONS AND CARRYOVERS.
    14  SECTION 1317.  DEVELOPMENT ZONE EMPLOYEE TAX CREDIT;
    15                 QUALIFICATIONS; AMOUNT.
    16  SECTION 1318.  SALES AND USE TAX.
    17  SECTION 1319.  PARTIAL EXEMPTION; CERTIFICATION; DISPOSITION OF
    18                 REVENUE.
    19  SECTION 1320.  REGULATIONS.
    20  SECTION 1321.  STATE FINANCING ASSISTANCE; PRIORITY TO PROJECT
    21                 IN MUNICIPALITY WITH DEVELOPMENT ZONE.
    22  SECTION 1322.  SKILL TRAINING PROGRAMS; DELIVERY.
    23  SECTION 1323.  REGULATIONS; EXEMPTION OF DEVELOPMENT ZONES.
    24  SECTION 1324.  REVIEW OF STATE REGULATIONS BY DEPARTMENT.
    25  SECTION 1325.  ELIGIBILITY FOR INCENTIVES BY QUALIFIED BUSINESS.
    26  SECTION 1326.  QUALIFIED BUSINESS RECIPIENT OF BENEFITS; ANNUAL
    27                 CERTIFICATION.
    28  SECTION 1327.  FUND.
    29  SECTION 1328.  CONSTITUTIONALITY.
    30  CHAPTER 21.  MISCELLANEOUS PROVISIONS
    19980H2328B3525                  - 4 -

     1  SECTION 2101.  ILLEGAL ACTIVITY.
     2  SECTION 2102.  RULES AND REGULATIONS.
     3  SECTION 2103.  COMPLIANCE.
     4  SECTION 2104.  PENALTIES.
     5  SECTION 2105.  CONSTRUCTION.
     6  SECTION 2106.  APPLICABILITY.
     7  SECTION 2107.  SEVERABILITY.
     8  SECTION 2108.  REPEALS.
     9  SECTION 2109.  EXPIRATION.
    10  SECTION 2110.  EFFECTIVE DATE.
    11     The General Assembly of the Commonwealth of Pennsylvania
    12  hereby enacts as follows:
    13                             CHAPTER 1
    14                       PRELIMINARY PROVISIONS
    15  Section 101.  Short title.
    16     This act shall be known and may be cited as the Pennsylvania
    17  Keystone Opportunity Zone Act.
    18  Section 102.  Legislative findings.
    19         (1)  There exists in this Commonwealth areas of economic
    20     distress characterized by high unemployment, low investment
    21     of new capital, inadequate dwelling conditions, blighted
    22     conditions, underutilized, obsolete or abandoned industrial,
    23     commercial and residential structures and deteriorating tax
    24     bases.
    25         (2)  These areas require coordinated efforts by private
    26     and public entities to restore prosperity and enable the
    27     areas to make significant contributions to the economic and
    28     social life of this Commonwealth.
    29         (3)  Long-term economic viability of these areas requires
    30     the cooperative involvement of residents, businesses, State
    19980H2328B3525                  - 5 -

     1     and local elected officials and community organizations. It
     2     is in the best interest of the Commonwealth to assist and
     3     encourage the creation of keystone opportunity zones and to
     4     provide temporary relief from certain taxes within the
     5     keystone opportunity zones to accomplish the purposes of this
     6     act.
     7  Section 103.  Definitions.
     8     The following words and phrases when used in this act shall
     9  have the meanings given to them in this section unless the
    10  context clearly indicates otherwise:
    11     "Business."  An association, partnership, corporation, sole
    12  proprietorship, limited liability corporation or employer.
    13     "Department."  The Department of Community and Economic
    14  Development of the Commonwealth.
    15     "Deteriorated property."  Any blighted, impoverished area
    16  containing residential, industrial, commercial or other real
    17  property that is abandoned, unsafe, vacant, undervalued,
    18  underutilized, overgrown, defective, condemned, demolished or
    19  which contains economically undesirable land use. The term
    20  includes property adjacent to deteriorated property that is
    21  significantly undervalued and underutilized due to the proximity
    22  of the deteriorated property.
    23     "Domicile."  The place where a person has a true and fixed
    24  home and principal establishment for an indefinite time and to
    25  which, whenever absent, that person intends to return. Domicile
    26  continues until another place of domicile is established.
    27     "Keystone opportunity zone."  A defined geographic area
    28  comprised of one or more political subdivisions or portions of
    29  political subdivisions designated by the Department of Community
    30  and Economic Development under Chapter 3. A keystone opportunity
    19980H2328B3525                  - 6 -

     1  zone may be comprised of not more than 12 subzones.
     2     "Opportunity plan."  A written plan that addresses the
     3  criteria and meets the requirements in section 302(a).
     4     "Person."  Any natural person.
     5     "Political subdivision."  A county, city, borough, township,
     6  town or school district with taxing jurisdiction in a defined
     7  geographic area within this Commonwealth.
     8     "Qualified business."  Any business authorized to do business
     9  in this Commonwealth that is located within a keystone
    10  opportunity zone and is engaged in the active conduct of a trade
    11  or business in accordance with the requirements of section 307.
    12     "Qualified political subdivision."  A political subdivision
    13  that has been designated as a keystone opportunity zone.
    14     "Resident."  A person who is domiciled and resides in an area
    15  that is designated a keystone opportunity zone who meets the
    16  requirements of section 306.
    17     "Subzone."  A clearly defined geographic area containing a
    18  minimum of 20 contiguous acres.
    19     "Tax Reform Code of 1971."  The act of March 4, 1971 (P.L.6,
    20  No.2), known as the Tax Reform Code of 1971, and any subsequent
    21  amendments thereto.
    22                             CHAPTER 3
    23                     KEYSTONE OPPORTUNITY ZONES
    24  Section 301.  Keystone opportunity zones.
    25     (a)  Establishment.--There is hereby established within the
    26  department a program providing for the designation of portions
    27  of this Commonwealth as keystone opportunity zones. A keystone
    28  opportunity zone shall be comprised of deteriorated property and
    29  shall not exceed a total of 5,000 acres.
    30     (b)  Designation.--The department shall designate not more
    19980H2328B3525                  - 7 -

     1  than 12 keystone opportunity zones in this Commonwealth. Persons
     2  and businesses within the designated keystone opportunity zone
     3  that are qualified under this act shall be entitled to all tax
     4  exemptions, deductions, abatements and credits set forth in this
     5  act for a period not to exceed 12 years beginning January 1,
     6  1999, and ending on or before December 31, 2010.
     7     (c)  Subzones.--A keystone opportunity zone may be comprised
     8  of up to 12 clearly defined subzones containing a minimum of 20
     9  contiguous acres each. The subzones may or may not be contiguous
    10  to each other. The total number of subzones shall not exceed
    11  5,000 acres in the aggregate.
    12     (d)  Authorization for local tax exemption.--Every political
    13  subdivision in which a proposed keystone opportunity zone is
    14  located is hereby authorized to provide tax exemptions,
    15  deductions, abatements or credits to persons and businesses
    16  qualified under this act. The political subdivision shall agree
    17  to provide exemptions, deductions, abatements or credits from
    18  all local taxes set forth in this act in order to qualify to be
    19  designated a keystone opportunity zone within that political
    20  subdivision. Except as provided in section 303(e), the
    21  exemptions, deductions, abatements or credits shall be effective
    22  January 1, 1999, if designation of a keystone opportunity zone
    23  within the political subdivisions is granted by the department.
    24  The exemptions, deductions, abatements or credits shall be
    25  binding upon the political subdivision for the duration of the
    26  keystone opportunity zone designation.
    27  Section 302.  Application.
    28     (a)  Initial application.--One or more political
    29  subdivisions, or a designee of one or more political
    30  subdivisions, may apply to the department to designate a
    19980H2328B3525                  - 8 -

     1  keystone opportunity zone within the political subdivision or
     2  portions thereof. The application shall contain the following:
     3         (1)  The geographic area of the proposed keystone
     4     opportunity zone. The geographic area shall be located within
     5     the boundaries of the political subdivision and shall not
     6     contain more than 5,000 acres.
     7         (2)  An opportunity plan that shall include the
     8     following:
     9             (i)  A detailed map of the proposed keystone
    10         opportunity zone, including all subzones, to include
    11         geographic boundaries, total area and present use and
    12         conditions of the land and structures.
    13             (ii)  Evidence of support from and participation of
    14         local government, school districts and other educational
    15         institutions, business groups, community organizations
    16         and the public.
    17             (iii)  A proposal to increase economic opportunity,
    18         reduce crime, improve education, facilitate
    19         infrastructure improvement, reduce the local regulating
    20         burden and identify potential jobs and job training
    21         opportunities, whether or not the zone is located in an
    22         area which has tax revenue dedicated to the payment of
    23         debt.
    24             (iv)  A description of the current social, economic
    25         and demographic characteristics of the proposed keystone
    26         opportunity zone and anticipated improvements in
    27         education, health, human services, public safety and
    28         employment.
    29             (v)  A description of anticipated activity in the
    30         keystone opportunity zone and each subzone, including,
    19980H2328B3525                  - 9 -

     1         but not limited to, industrial use, industrial site re-
     2         use, commercial or retail use and residential use.
     3             (vi)  Evidence of potential private and public
     4         investment in the keystone opportunity zone.
     5             (vii)  The role of the proposed keystone opportunity
     6         zone in regional economic and community development.
     7             (viii)  Plans for the administration of the proposed
     8         keystone opportunity zone utilizing existing resources.
     9             (ix)  Any other information deemed appropriate by the
    10         department.
    11         (3)  A report on youth at risk to include issues relating
    12     to health, welfare and education.
    13         (4)  The proposed duration of the keystone opportunity
    14     zone and all subzones, not to exceed 12 years.
    15         (5)  A formal, binding ordinance or resolution passed by
    16     every political subdivision in which the proposed keystone
    17     opportunity zone is located that specifically provides for
    18     all local tax exemptions, deductions, abatements or credits
    19     for persons and businesses set forth in this act if
    20     designation is received by the department, to be effective
    21     January 1, 1999.
    22         (6)  Evidence that the keystone opportunity zone meets
    23     the required criteria under section 304.
    24     (b)  Participation limitation.--A qualified political
    25  subdivision shall not be a part of more than one keystone
    26  opportunity zone.
    27     (c)  Application limitation.--A qualified political
    28  subdivision may submit only one application to the department
    29  for designation as a keystone opportunity zone.
    30  Section 303.  Review.
    19980H2328B3525                 - 10 -

     1     (a)  Action of department.--The department in consultation
     2  with the Department of Revenue shall review all completed
     3  applications submitted under this act. An application for
     4  designation as a keystone opportunity zone shall be received by
     5  the department on or before September 30, 1998, in order to be
     6  considered by the department.
     7     (b)  Process.--The department shall do all of the following:
     8         (1)  Designate up to 12 keystone opportunity zones from
     9     applications meeting the criteria in section 304 based upon
    10     need and likelihood of success.
    11         (2)  The department shall not alter the geographic
    12     boundaries of the keystone opportunity zone or the duration
    13     of the keystone opportunity zone described in the
    14     application.
    15     (c)  Award of designations.--The department shall designate
    16  all keystone opportunity zones by November 30, 1998.
    17     (d)  Effective date of designation.--The designation of a
    18  keystone opportunity zone under this act shall take effect on
    19  January 1, 1999.
    20     (e)  Extension.--The department may extend the deadline for
    21  the receipt of applications under subsection (a) until December
    22  31, 1998, if all 12 zones have not been designated and the
    23  extension is necessary to allow eligible political subdivisions
    24  to apply. The department shall designate additional keystone
    25  opportunity zones under this subsection by February 28, 1999.
    26  The designation shall take effect January 1, 1999, or if the
    27  designation occurs after January 1, 1999, that subsequent
    28  designation shall for all purposes be retroactive to January 1,
    29  1999. The designation shall end as provided in section 301(b).
    30  Section 304.  Criteria for designation of keystone opportunity
    19980H2328B3525                 - 11 -

     1                 zone.
     2     (a)  Specific criteria.--In order to qualify for designation
     3  under this act, the proposed keystone opportunity zone shall
     4  meet at least two of the following criteria:
     5         (1)  At least 20% of the population is below the poverty
     6     level.
     7         (2)  The unemployment rate is 1.25 times the Statewide
     8     average.
     9         (3)  At least 20% of all real property within a five-mile
    10     radius of the proposed keystone opportunity zone or subzone
    11     in a nonurban area is deteriorated or underutilized.
    12         (4)  At least 20% of all real property within a one-mile
    13     radius of the proposed keystone opportunity zone or subzone
    14     in an urban area is deteriorated or underutilized.
    15         (5)  At least 20% of all occupied housing within a two-
    16     mile radius of the proposed keystone opportunity zone or
    17     subzone in a nonurban area is deteriorated.
    18         (6)  At least 20% of all occupied housing within a one-
    19     mile radius of the proposed keystone opportunity zone or
    20     subzone in an urban area is deteriorated.
    21         (7)  In an urban area, the median family income is 80% or
    22     less of the Statewide urban median family income.
    23         (8)  In an area other than an urban area, the median
    24     family income is 80% or less of the Statewide nonurban median
    25     family income.
    26         (9)  The population loss exceeds 10% in an area that
    27     includes the proposed keystone opportunity zone and its
    28     surrounding area, but is not larger than the county or
    29     counties in which the keystone opportunity zone is located,
    30     based on census data for the period between 1980 and 1990 or
    19980H2328B3525                 - 12 -

     1     census estimates since 1990 establishing a pattern of
     2     population loss.
     3         (10)  The political subdivision in which the proposed
     4     keystone opportunity zone is located has experienced a sudden
     5     and/or severe job loss.
     6         (11)  At least 33% of the real property in a proposed
     7     keystone opportunity zone in a nonurban area would otherwise
     8     remain underdeveloped or nonperforming due to physical
     9     characteristics of the real property.
    10         (12)  The area has substantial real property with
    11     adequate infrastructure and energy to support new or expanded
    12     development.
    13         (13)  BE IN AN AREA DESIGNATED AS AN ENTERPRISE ZONE BY    <--
    14     THE DEPARTMENT UNDER THE ACT OF JULY 9, 1986 (P.L.1216,
    15     NO.108), KNOWN AS THE ENTERPRISE ZONE MUNICIPAL TAX EXEMPTION
    16     REIMBURSEMENT ACT.
    17     (b)  Additional criteria.--In addition to the required
    18  criteria under subsection (a), the department shall consider the
    19  following criteria:
    20         (1)  Evidence of distress, including, but not limited to,
    21     unemployment, percentage of population below 80% of the State
    22     median income, poverty rate, deteriorated property and
    23     adverse economic and socioeconomic conditions in the proposed
    24     keystone opportunity zone.
    25         (2)  The strength and viability of the proposed goals,
    26     objectives and strategies in the opportunity plan.
    27         (3)  Whether the opportunity plan is creative and
    28     innovative in comparison to other applications.
    29         (4)  Local public and private commitment to the
    30     development of the keystone opportunity zone and the
    19980H2328B3525                 - 13 -

     1     potential cooperation of surrounding communities.
     2         (5)  Existing resources available to the proposed
     3     keystone opportunity zone.
     4         (6)  How keystone opportunity zone designation or
     5     economic redevelopment relate to other current economic and
     6     community development projects and to regional initiatives or
     7     programs.
     8         (7)  How the local regulatory burden will be eased for
     9     businesses operating in the proposed keystone opportunity
    10     zone.
    11         (8)  Proposals to implement educational opportunities and
    12     improvements.
    13         (9)  Crime statistics and proposals to implement local
    14     crime reduction measures.
    15         (10)  Proposals to establish and link job creation and
    16     job training.
    17     (c)  Tax exemption ordinances.--An area shall not be
    18  designated as a keystone opportunity zone unless, as a part of
    19  the application, each political subdivision in which the
    20  proposed keystone opportunity zone is to be located adopts and
    21  provides a copy of an ordinance, resolution or other required
    22  action from the governing body of each political subdivision
    23  that exempts or provides deductions, abatements or credits to
    24  qualified persons and qualified businesses from local taxes upon
    25  designation of the area as a keystone opportunity zone. All
    26  appropriate ordinances and resolutions shall be effective on or
    27  before January 1, 1999, if designation as a keystone opportunity
    28  is granted. The resolution, ordinance or other required action
    29  shall be binding and nonrevocable on the qualified political
    30  subdivisions for the duration of the opportunity plan.
    19980H2328B3525                 - 14 -

     1     (d)  Urban areas.--The department shall promulgate guidelines
     2  which include the definition of "urban area" for the purposes of
     3  receiving applications for designation as a keystone opportunity
     4  zone.
     5  Section 305.  Zone limitation.
     6     The department shall not designate more than 12 keystone
     7  opportunity zones within this Commonwealth.
     8  Section 306.  Residency.
     9     In order to qualify each year for a tax exemption, deduction,
    10  abatement or credit under this act, a person shall be domiciled
    11  and shall reside in the keystone opportunity zone for a period
    12  of 183 consecutive days. The 183-day ONE YEAR. THE ONE-YEAR       <--
    13  period may begin on the date of designation by the department or
    14  on the date the person first resides within the zone. RESIDENCY   <--
    15  REQUIREMENTS MUST BE MET FOR EACH YEAR THAT THE KEYSTONE
    16  OPPORTUNITY ZONE IS IN EXISTENCE.
    17  Section 307.  Qualified businesses.
    18     (a)  Qualifications.--In order to qualify each year for a tax
    19  exemption, deduction, abatement or credit under this act, a
    20  business shall own or lease real property in the keystone
    21  opportunity zone from which the business actively conducts a
    22  trade, profession or business. The qualified business shall
    23  receive certification from the department that the business is
    24  located, and is in the active conduct of a trade, profession or
    25  business, within the keystone opportunity zone. The business
    26  shall obtain annual renewal of the certification from the
    27  department to continue to qualify under this section.
    28     (b)  Relocation.--Any business that relocates from outside a
    29  keystone opportunity zone into a keystone opportunity zone shall
    30  not receive any of the exemptions, deductions, abatements or
    19980H2328B3525                 - 15 -

     1  credits set forth in this act unless that business either:
     2         (1)  increases full-time employment by at least 20% in
     3     the first full year of operation within the keystone
     4     opportunity zone; or
     5         (2)  makes a capital investment equivalent to 10% of the
     6     gross revenues of that business in the immediately preceding
     7     calendar or fiscal year.
     8  The department, in consultation with the Department of Revenue,
     9  may waive or modify the requirements of this subsection, as
    10  appropriate.
    11  Section 308.  Forms.
    12     (A)  APPLICATION FORMS.--Applications for designation as a     <--
    13  keystone opportunity zone shall be on forms prescribed by the
    14  department.
    15     (B)  DEPARTMENT ASSISTANCE.--THE DEPARTMENT SHALL ASSIST       <--
    16  POLITICAL SUBDIVISIONS IN USING THE INTERNET AS A TOOL FOR
    17  ENCOURAGING NEW BUSINESS, INCLUDING ASSISTING POLITICAL
    18  SUBDIVISIONS IN MAKING AVAILABLE VIA THE INTERNET INFORMATION,
    19  APPLICATIONS AND OTHER FORMS NECESSARY UNDER THIS ACT.
    20  SECTION 309.  REDUCTION OF EXEMPTIONS, DEDUCTIONS, ABATEMENTS OR
    21                 CREDITS.
    22     DURING THE LAST THREE YEARS THAT THE TAXPAYER IS ELIGIBLE FOR
    23  AN EXEMPTION, DEDUCTION, ABATEMENT OR CREDIT, THE EXEMPTION,
    24  DEDUCTION, ABATEMENT OR CREDIT SHALL BE REDUCED BY THE FOLLOWING
    25  PERCENTAGES:
    26         (1)  FOR THE TAX YEAR THAT IS TWO YEARS BEFORE THE FINAL
    27     YEAR OF DESIGNATION AS A KEYSTONE OPPORTUNITY ZONE, THE
    28     PERCENTAGE SHALL BE 25%.
    29         (2)  FOR THE TAX YEAR IMMEDIATELY PRECEDING THE FINAL
    30     YEAR OF DESIGNATION AS A KEYSTONE OPPORTUNITY ZONE, THE
    19980H2328B3525                 - 16 -

     1     PERCENTAGE SHALL BE 50%.
     2         (3)  FOR THE TAX YEAR THAT IS THE FINAL YEAR OF
     3     DESIGNATION AS A KEYSTONE OPPORTUNITY ZONE, THE PERCENTAGE
     4     SHALL BE 75%.
     5                             CHAPTER 5
     6                            STATE TAXES
     7                            SUBCHAPTER A
     8                         GENERAL PROVISIONS
     9  Section 501.  State taxes.
    10     (a)  General rule.--A person who is a resident of a keystone
    11  opportunity zone, a qualified business or a nonresident under
    12  section 514 shall receive the exemptions, deductions, abatements
    13  or credits as provided in this chapter and Chapter 7 for the
    14  duration of the keystone opportunity zone designation.
    15  Exemptions, deductions, abatements or credits shall expire on
    16  the date of expiration of the keystone opportunity zone
    17  designation.
    18     (b)  Construction.--The Department of Revenue shall
    19  administer, construe and enforce the provisions of this chapter
    20  in conjunction with Articles II, III, IV and VI of the Tax
    21  Reform Code of 1971.
    22                            SUBCHAPTER B
    23                       PARTICULAR STATE TAXES
    24  Section 511.  Sales and use tax.
    25     (a)  Exemption.--Sales at retail of services or tangible
    26  personal property, other than motor vehicles, to a qualified
    27  business for the exclusive use, consumption and utilization of
    28  the tangible personal property or service by the qualified
    29  business at its facility located within a keystone opportunity
    30  zone are exempt from the sales and use tax imposed under Article
    19980H2328B3525                 - 17 -

     1  II of the Tax Reform Code of 1971.
     2     (b)  Limitation.--Sales at retail or use of tangible personal
     3  property or services to the tangible personal property that will
     4  become a permanent part of real property in accordance with
     5  Department of Revenue regulations shall not be eligible for
     6  sales or use tax exemption under this section.
     7  Section 512.  Personal income tax.
     8     (a)  General rule.--For the 1999 taxable year and each tax
     9  year after 1999 and to the extent and for the duration provided
    10  in this act a person shall be allowed an exemption for:
    11         (1)  Compensation received during the time period when
    12     the person was a resident of a keystone opportunity zone.
    13         (2)  Net income from the operation of a qualified
    14     business received by a resident or nonresident of a keystone
    15     opportunity zone attributable to business activity conducted
    16     within a keystone opportunity zone after provision for all
    17     costs and expenses incurred in the conduct thereof,
    18     determined either on a cash or accrual basis in accordance
    19     with accepted accounting principles and practices but without
    20     deduction of taxes based on income.
    21         (3)  (i)  Net gains or income, less net losses, derived
    22         by a resident or nonresident of a keystone opportunity
    23         zone from the sale, exchange or disposition of real or
    24         tangible personal property located in a keystone
    25         opportunity zone as determined in accordance with
    26         accepted accounting principles and practices.
    27             (ii)  Net gains, less net losses, realized by a
    28         resident of a keystone opportunity zone from the sale,
    29         exchange or disposition of intangible personal property
    30         or obligations issued on or after February 1, 1994, by
    19980H2328B3525                 - 18 -

     1         the Commonwealth, a public authority, commission, board
     2         or other Commonwealth agency, political subdivision or
     3         authority created by a political subdivision or by the
     4         Federal Government as determined in accordance with
     5         accepted accounting principles and practices.
     6             (iii)  The exemption from income for gain or loss
     7         provided for in this subparagraph shall be prorated based
     8         on either:
     9                 (A)  the percentage of time, based on calendar
    10             days, the property was held by the taxpayer while a
    11             resident of a keystone opportunity zone in relation
    12             to the total time held by the taxpayer; or
    13                 (B)  the percentage of time, based on calendar
    14             days, the real or tangible personal property located
    15             in the keystone opportunity zone was held by a
    16             nonresident of a keystone opportunity zone during the
    17             time period the keystone opportunity zone was in
    18             effect in relation to the total time held.
    19         (4)  Net gains or income derived from or in the form of
    20     rents received by a person, whether a resident or nonresident
    21     of a keystone opportunity zone, to the extent that income or
    22     loss from the rental of real or tangible personal property is
    23     allocable to a keystone opportunity zone. For purposes of
    24     calculating this exemption:
    25             (i)  Net rents derived from real or tangible personal
    26         property located in a keystone opportunity zone are
    27         allocable to a keystone opportunity zone.
    28             (ii)  If the tangible personal property was used both
    29         within and without the keystone opportunity zone during
    30         the taxable year, only the net income attributable to use
    19980H2328B3525                 - 19 -

     1         in the keystone opportunity zone is exempt. The net
     2         rental income shall be multiplied by a fraction, the
     3         numerator of which is the number of days the property was
     4         used in the keystone opportunity zone and the denominator
     5         which is the total days of use.
     6         (5)  Dividends received during the time the person was a
     7     resident of a keystone opportunity zone.
     8         (6)  Interest received during the time period the person
     9     was a resident of a keystone opportunity zone.
    10         (7)  Net gains or income derived through estates or
    11     trusts received by a resident of a keystone opportunity zone
    12     at the time of such receipt.
    13     (b)  Limitation.--A resident or nonresident may not apply an
    14  exemption from income under this act for any class of income
    15  against any other classes of income or gain. A resident or
    16  nonresident may not carry back or carry forward any exemption
    17  under this act from year to year.
    18  Section 513.  Residency considerations.
    19     If a person completes the residency requirements under
    20  section 306 or if a nonresident realizes income attributable to
    21  business activity or property within a keystone opportunity zone
    22  on or before the end of the tax year, the person may claim the
    23  exemptions from income for the items set forth in section 512
    24  for that portion of the tax year that the person was a resident
    25  or for that portion of the tax year during which the area is
    26  designated as a keystone opportunity zone. If the person
    27  completes the residency requirements under section 306 in a tax
    28  year subsequent to the tax year in which the person first
    29  resided in the keystone opportunity zone, the person may file an
    30  amended tax return within the applicable statute of limitations
    19980H2328B3525                 - 20 -

     1  to claim an exemption from income for the period of residency
     2  within the keystone opportunity zone.
     3  Section 514.  Information for employer.
     4     (a)  Duty of employee.--Every person who is an employee that
     5  qualifies as a resident of a keystone opportunity zone shall
     6  furnish to his or her employer information, as prescribed by the
     7  Department of Revenue, necessary for the employer to withhold
     8  the correct amount of tax. An employee shall furnish
     9  notification to his or her employer of any changes to the
    10  information within 20 days after the change. An employee shall
    11  notify his or her employer that the employee has completed the
    12  residency requirements under section 306.
    13     (b)  Duty of employer.--Within 20 days after an employer
    14  receives information from an employee pursuant to subsection
    15  (a), the employer shall forward a copy of that information to
    16  the Department of Revenue. The information shall not be given
    17  retroactive effect for withholding purposes. The employer shall
    18  not be required to withhold tax from the compensation paid to a
    19  resident of a keystone opportunity zone, if reasonable under the
    20  circumstances, unless directed by the Department of Revenue to
    21  withhold tax from the compensation on some other basis. If an
    22  employee fails or refuses to furnish the information, or
    23  furnishes information that the employer reasonably and in good
    24  faith believes to be inaccurate, the employer shall withhold the
    25  full rate of tax from the employee's total compensation.
    26  Section 515.  Corporate net income tax.
    27     (a)  Credits.--For the tax years that begin on or after
    28  January 1, 1999, a corporation that qualifies as a qualified
    29  business under this act may claim a credit against the tax
    30  imposed by Article IV of the Tax Reform Code of 1971 for the
    19980H2328B3525                 - 21 -

     1  taxable year to the extent of the tax liability attributable to
     2  business activity conducted within a keystone opportunity zone
     3  in the taxable year. THE BUSINESS ACTIVITY MUST BE CONDUCTED      <--
     4  DIRECTLY BY A CORPORATION IN THE KEYSTONE OPPORTUNITY ZONE IN
     5  ORDER FOR THE CORPORATION TO CLAIM THE TAX CREDIT.
     6     (b)  Tax liability determinations.--The corporate tax
     7  liability attributable to business activity conducted within a
     8  keystone opportunity zone shall be determined by multiplying the
     9  corporation's taxable income that is attributable to business
    10  activity conducted within the keystone opportunity zone by the
    11  rate of tax imposed under Article IV of the Tax Reform Code of
    12  1971 for the taxable year.
    13     (c)  Determinations of attributable tax liability.--Tax
    14  liability attributable to business activity conducted within a
    15  keystone opportunity zone shall be computed, construed,
    16  administered and enforced in conformity with Article IV of the
    17  Tax Reform Code of 1971 and with specific reference to the
    18  following:
    19         (1)  If the entire business of the corporation in this
    20     Commonwealth is transacted wholly within the keystone
    21     opportunity zone, the taxable income attributable to business
    22     activity within a keystone opportunity zone shall consist of
    23     the Pennsylvania taxable income as determined under Article
    24     IV of the Tax Reform Code of 1971.
    25         (2)  If the entire business of the corporation in this
    26     Commonwealth is not transacted wholly within the keystone
    27     opportunity zone, the taxable income of a corporation in a
    28     keystone opportunity zone shall be determined upon such
    29     portion of the Pennsylvania taxable income of such
    30     corporation attributable to business activity conducted
    19980H2328B3525                 - 22 -

     1     within the keystone opportunity zone and apportioned in
     2     accordance with subsection (d).
     3     (d)  Income apportionment.--All taxable income of a qualified
     4  business shall be apportioned to the keystone opportunity zone
     5  by multiplying the Pennsylvania taxable income by a fraction,
     6  the numerator of which is the property factor plus the payroll
     7  factor plus the sales factor and the denominator of which is
     8  three.
     9         (1)  The property factor is a fraction, the numerator of
    10     which is the average value of the taxpayer's real and
    11     tangible personal property owned or rented and used in the
    12     keystone opportunity zone during the tax period and the
    13     denominator of which is the average value of all the
    14     taxpayer's real and tangible personal property owned or
    15     rented and used in this Commonwealth during the tax period
    16     but shall not include the security interest of any
    17     corporation as seller or lessor in personal property sold or
    18     leased under a conditional sale, bailment lease, chattel
    19     mortgage or other contract providing for the retention of a
    20     lien or title as security for the sales price of the
    21     property.
    22         (2)  (i)  The payroll factor is a fraction, the numerator
    23         of which is the total amount paid in the keystone
    24         opportunity zone during the tax period by the taxpayer
    25         for compensation and the denominator of which is the
    26         total compensation paid in this Commonwealth during the
    27         tax period.
    28             (ii)  Compensation is paid in the keystone
    29         opportunity zone if:
    30                 (A)  the person's service is performed entirely
    19980H2328B3525                 - 23 -

     1             within the keystone opportunity zone;
     2                 (B)  the person's service is performed both
     3             within and without the keystone opportunity zone, but
     4             the service performed without the keystone
     5             opportunity zone is incidental to the person's
     6             service within the keystone opportunity zone; or
     7                 (C)  some of the service is performed in the
     8             keystone opportunity zone and the base of operations
     9             or, if there is no base of operations, the place from
    10             which the service is directed or controlled is in the
    11             keystone opportunity zone, or the base of operations
    12             or the place from which the service is directed or
    13             controlled is not in any location in which some part
    14             of the service is performed, but the person's
    15             residence is in the keystone opportunity zone.
    16         (3)  The sales factor is a fraction, the numerator of
    17     which is the total sales of the taxpayer in the keystone
    18     opportunity zone during the tax period, and the denominator
    19     of which is the total sales of the taxpayer in this
    20     Commonwealth during the tax period.
    21             (i)  Sales of tangible personal property are in the
    22         keystone opportunity zone if the property is delivered or
    23         shipped to a purchaser within the keystone opportunity
    24         zone regardless of the F.O.B. point or other conditions
    25         of the sale.
    26             (ii)  Sales, other than sales of tangible personal
    27         property, are in the keystone opportunity zone if:
    28                 (A)  the income-producing activity is performed
    29             in the keystone opportunity zone; or
    30                 (B)  the income-producing activity is performed
    19980H2328B3525                 - 24 -

     1             both within and without the keystone opportunity zone
     2             and a greater proportion of the income-producing
     3             activity is performed in the keystone opportunity
     4             zone than in any other location, based on costs of
     5             performance.
     6     (e)  Computation.--A corporation shall compute its
     7  Commonwealth taxable income in conformity with Article IV of the
     8  Tax Reform Code of 1971 with no adjustments or subtractions for
     9  keystone opportunity zone taxable income.
    10     (f)  Credit.--The credit allowed under this section shall not
    11  exceed the corporate net income tax liability of the taxpayer
    12  for the tax year.
    13     (g)  Section not applicable to certain businesses.--Any
    14  portion of the taxpayer's taxable income that is attributable to
    15  the operation of a railroad, truck, bus or airline company,
    16  pipeline or natural gas company, MUNICIPAL WASTE LANDFILL, water  <--
    17  transportation company, a corporation that qualifies as a
    18  regulated investment company under Article IV of the Tax Reform
    19  Code of 1971, or holding company as defined in Article VI of the
    20  Tax Reform Code of 1971 and any business activity that is
    21  associated or affiliated with the operation of these business
    22  activities shall not be used to calculate a credit under this
    23  section.
    24  Section 516.  Capital stock franchise tax.
    25     (a)  Credits.--For tax years that begin on or after January
    26  1, 1999, a corporation that is a qualified business under
    27  section 501(c) 307(A) may claim a credit against the tax imposed  <--
    28  by Article VI of the Tax Reform Code of 1971 for the taxable
    29  year to the extent of the tax liability attributable to the
    30  capital employed within a keystone opportunity zone in the
    19980H2328B3525                 - 25 -

     1  taxable year.
     2     (b)  Tax liability.--The corporation's tax liability
     3  attributable to capital employed within a keystone opportunity
     4  zone shall be determined by multiplying the corporation's
     5  taxable value attributable to capital employed within the
     6  keystone opportunity zone by the rate of tax imposed under
     7  Article VI of the Tax Reform Code of 1971 for the taxable year.
     8  The corporation shall compute its Pennsylvania taxable value in
     9  conformity with Article VI of the Tax Reform Code of 1971 with
    10  no adjustments or subtractions for the capital employed in the
    11  keystone opportunity zone.
    12     (c)  Determination of attributable tax liability.--The
    13  determination of the corporation's taxable value attributable to
    14  the capital employed within a keystone opportunity zone shall be
    15  determined with specific reference to the following:
    16         (1)  If the entire business of the corporation in this
    17     Commonwealth is transacted wholly within a keystone
    18     opportunity zone, the taxable value attributable to the
    19     capital employed within a keystone opportunity zone shall
    20     consist of the Pennsylvania taxable value as determined under
    21     Article VI of the Tax Reform Code of 1971.
    22         (2)  If the entire business of the corporation in this
    23     Commonwealth is not wholly transacted within a keystone
    24     opportunity zone, the taxable value of a corporation in a
    25     keystone opportunity zone shall be determined upon such
    26     portion of the Pennsylvania taxable value attributable to the
    27     capital employed within the keystone opportunity zone by
    28     employing the apportionment factors set forth in subsection
    29     (d).
    30     (d)  Capital stock and franchise tax apportionment.--For
    19980H2328B3525                 - 26 -

     1  purposes of apportionment of the capital stock and franchise
     2  tax, the apportionment fraction shall be the property factor
     3  plus the payroll factor plus the sales factor as the numerator
     4  and the denominator shall be three. In determining the relevant
     5  apportionment factors, the numerator of the property, payroll
     6  and sales factors shall not include any property, payroll and
     7  sales attributable to manufacturing, processing, research and
     8  development activities conducted within a keystone opportunity
     9  zone and the denominator of the property, payroll and sales
    10  factors shall not include any property, payroll and sales
    11  attributable to manufacturing, processing and research and
    12  development activities conducted within this Commonwealth but
    13  without a keystone opportunity zone.
    14     (e)  Limitation on amount of credit.--The credit allowed
    15  under this section shall not exceed the capital stock franchise
    16  tax liability of the taxpayer for the tax year.
    17     (f)  Credit not available.--Any portion of the taxpayer's tax
    18  liability that is attributable to the capital employed in the
    19  operation of a railroad, truck, bus or airline company, pipeline
    20  or natural gas company, water transportation company, a
    21  corporation that qualifies, regulated investment company under
    22  Article IV of the Tax Reform Code of 1971, or holding company as
    23  defined in Article VI of the Tax Reform Code of 1971 and any
    24  capital employed in a business activity that is associated or
    25  affiliated with the operation of these business activities shall
    26  not be used to calculate a credit under this section.
    27                             CHAPTER 7
    28                            LOCAL TAXES
    29  Section 701.  Local taxes.
    30     Every political subdivision in which a designated keystone
    19980H2328B3525                 - 27 -

     1  opportunity zone is located shall exempt, deduct, abate or
     2  credit local taxes in accordance with ordinances and resolutions
     3  adopted under section 301(d). Failure to exempt, deduct, abate
     4  or credit local taxes shall result in the revocation of the
     5  keystone opportunity zone designation.
     6  Section 702.  Real property tax.
     7     (a)  General rule.--Notwithstanding the act of May 22, 1933
     8  (P.L.853, No.155), known as The General County Assessment Law,
     9  and the act of May 21, 1943 (P.L.571, No.254), known as The
    10  Fourth to Eighth Class County Assessment Law, each qualified
    11  political subdivision for taxable years beginning on or after
    12  January 1, 1999, shall by ordinance or resolution abate 100% of
    13  the real property taxation on the assessed valuation of
    14  deteriorated property in an area designated as a keystone
    15  opportunity zone within this Commonwealth.
    16     (b)  Investment in lieu of tax payment.--A qualified           <--
    17     (B)  INVESTMENT IN LIEU OF TAX PAYMENT.--                      <--
    18         (1)  A QUALIFIED political subdivision may require a
    19     resident of deteriorated real property to invest up to 25% of
    20     all real property taxes, which would have been due if the
    21     real property was not located in a keystone opportunity zone,
    22     in improvements to the real property, in order for the
    23     residents to be qualified for exemptions, credits and
    24     abatements under this act.
    25         (2)  A NONRESIDENT OWNER OF DETERIORATED REAL PROPERTY     <--
    26     WHO LEASES THE REAL PROPERTY TO A PERSON FOR RESIDENTIAL USE
    27     SHALL INVEST 50% OF ALL REAL PROPERTY TAXES, WHICH WOULD HAVE
    28     BEEN DUE IF THE REAL PROPERTY WAS NOT LOCATED IN A KEYSTONE
    29     OPPORTUNITY ZONE, IN IMPROVEMENTS TO THE REAL PROPERTY.
    30     (c)  Application for tax abatement.--Any person requesting
    19980H2328B3525                 - 28 -

     1  real property tax abatement pursuant to ordinances or
     2  resolutions adopted pursuant to this act shall notify each
     3  political subdivision granting such abatement in writing on a
     4  form provided by that political subdivision within 30 days of
     5  the designation as a keystone opportunity zone or within 30 days
     6  of the transfer of ownership of the real property subject to
     7  abatement. A copy of the abatement request shall be forwarded by
     8  the political subdivision to the board of assessment or other
     9  appropriate assessment agency.
    10     (d)  Annual real property report.--Every qualified political
    11  subdivision shall submit to the department an annual report by
    12  December 31 of each calendar year of all real property and the
    13  owners and addresses of that real property at any time during
    14  the year which is located in a designated keystone opportunity
    15  zone.
    16     (e)  Interest and penalties.--If the department or a
    17  political subdivision finds that a person claimed an abatement
    18  of real property tax to which the person was not entitled under
    19  this act, the person shall be liable for the abated taxes and
    20  subject to the applicable interest and penalty provisions
    21  provided by law.
    22     (f)  Calculations for education subsidy for school
    23  districts.--In determining the market value of real property in
    24  each school district, the State Tax Equalization Board shall
    25  exclude any increase in value above the base value prior to the
    26  effect of the abatement of local taxes to the extent and during
    27  the period of time that real estate tax revenues attributable to
    28  such increased value are not available to the school district
    29  for general school district purposes.
    30  Section 703.  Local earned income and net profits taxes;
    19980H2328B3525                 - 29 -

     1                 business privilege taxes.
     2     (a)  General exemption.--To the extent that a qualified
     3  political subdivision has enacted any tax on the privilege of
     4  engaging in any business or profession, measured by gross
     5  receipts or on a flat rate basis, earned income or net profits,
     6  as defined in the act of December 31, 1965 (P.L.1257, No.511),
     7  known as The Local Tax Enabling Act, imposed within the
     8  boundaries of a keystone opportunity zone, such qualified
     9  political subdivision shall exempt from the imposition or
    10  operation of such local tax ordinances, statutes, regulations or
    11  otherwise:
    12         (1)  The business gross receipts for operations conducted
    13     by a qualified business within a keystone opportunity zone.
    14         (2)  The earned income received by a resident of a
    15     keystone opportunity zone.
    16         (3)  The net profits of a qualified business received by
    17     a resident or nonresident of a keystone opportunity zone
    18     attributable to business activity conducted within a keystone
    19     opportunity zone.
    20     (b)  Additional exemptions.--To the extent that a qualified
    21  political subdivision has:
    22         (1)  pursuant to the act of August 5, 1932, (Sp.Sess.
    23     P.L.45, No.45), referred to as the Sterling Act, the act of
    24     March 10, 1949 (P.L.30, No.14), known as the Public School
    25     Code of 1949, the act of August 24, 1961 (P.L.1135, No.508),
    26     referred to as the First Class A School District Earned
    27     Income Tax Act, the act of August 9, 1963 (P.L.640, No.338)
    28     entitled, "An act empowering cities of the first class,
    29     coterminous with school districts of the first class, to
    30     authorize the boards of public education of such school
    19980H2328B3525                 - 30 -

     1     districts to impose certain additional taxes for school
     2     district purposes, and providing for the levy, assessment and
     3     collection of such taxes," the act of May 30, 1984 (P.L.345,
     4     No.69), known as the First Class City Business Tax Reform
     5     Act, or the act of June 5, 1991 (P.L.9, No.6), known as the
     6     Pennsylvania Intergovernmental Cooperation Authority Act for
     7     Cities of the First Class, enacted a tax on:
     8             (i)  the privilege of engaging in a profession or
     9         business;
    10             (ii)  wages or compensation;
    11             (iii)  net profits from the operation of a business,
    12         profession or other activity; or
    13             (iv)  the occupancy or use of real property.
    14         (2)  The qualified political subdivision shall provide an
    15     exemption, deduction, abatement or credit from the imposition
    16     and operation of such local tax ordinance or resolution any
    17     of the following:
    18             (i)  a person or qualified business, whether a
    19         resident or a nonresident of a keystone opportunity zone,
    20         for the privilege of engaging in a business or profession
    21         within a keystone opportunity zone;
    22             (ii)  salaries, wages, commissions, compensation or
    23         other income received for services rendered or work
    24         performed by a resident of a keystone opportunity zone;
    25             (iii)  the gross or net income or gross or net
    26         profits realized from the operation of a qualified
    27         business to the extent attributable to business activity
    28         conducted within a keystone opportunity zone; or
    29             (iv)  the occupancy or use of real property located
    30         within the keystone opportunity zone.
    19980H2328B3525                 - 31 -

     1     (c)  Limitation on withholding.--Every employer required to
     2  withhold any local tax on the earned income, wages or
     3  compensation of one or more persons within the particular
     4  political subdivision shall not withhold such tax on earned
     5  income, wages or compensation paid to any person or his personal
     6  representative during any period when the qualified political
     7  subdivision has by ordinance or resolution provided for the
     8  exemption from tax as provided in section 701 and the person is
     9  a resident of a keystone opportunity zone.
    10     (d)  Information for employer.--Every person who is an
    11  employee that qualifies as a resident of a keystone opportunity
    12  zone shall furnish to his or her employer information, as
    13  prescribed by the political subdivision, necessary for the
    14  employer to withhold the correct amount of tax. An employee
    15  shall furnish notification to his or her employer of any changes
    16  to the information within 20 days after the change. An employee
    17  shall notify his or her employer that the employee has completed
    18  the residency requirements under section 306.
    19     (e)  Duty of employer.--Within 20 days after an employer
    20  receives information from an employee pursuant to subsection
    21  (a), the employer shall forward a copy of that information to
    22  the political subdivision. The information shall not be given
    23  retroactive effect for withholding purposes. The employer shall
    24  not be required to withhold tax from the wages, earned income or
    25  compensation paid to a resident of a keystone opportunity zone,
    26  if reasonable under the circumstances, unless directed by the
    27  political subdivision to withhold tax from the wages, earned
    28  income or compensation on some other basis. If an employee fails
    29  or refuses to furnish the information, or furnishes information
    30  that the employer reasonably and in good faith believes to be
    19980H2328B3525                 - 32 -

     1  inaccurate, the employer shall withhold the full rate of tax
     2  from the employee's total wages, earned income or compensation.
     3     (f)  Calculation for education subsidy for school district.--
     4  In determining the personal income valuation of a school
     5  district, the Secretary of Revenue shall exclude any increase in
     6  the valuation as defined in section 2501(9.1) of the act of
     7  March 10, 1949 (P.L.30, No.14), known as the Public School Code
     8  of 1949, above the base value prior to the abatement of local
     9  taxes in a keystone opportunity zone located within the school
    10  district to the extent and during the period of time that
    11  personal income revenues attributable to the increase in the
    12  personal income valuation are not available to the school
    13  district for general school district purposes.
    14  Section 704.  Mercantile license tax.
    15     No person or qualified business in a keystone opportunity
    16  zone shall be required to pay any fee authorized pursuant to a
    17  mercantile license tax imposed under the act of June 20, 1947
    18  (P.L.745, No.320), entitled, as amended, "An act to provide
    19  revenue for school districts of the first class A by imposing a
    20  temporary mercantile license tax on persons engaging in certain
    21  occupations and businesses therein; providing for its levy and
    22  collection; for the issuance of mercantile licenses upon the
    23  payment of fees therefor; conferring and imposing powers and
    24  duties on boards of public education, receivers of school taxes
    25  and school treasurers in such districts; saving certain
    26  ordinances of council of certain cities, and providing
    27  compensation for certain officers, and employes and imposing
    28  penalties."
    29  Section 705.  Local sales and use tax.
    30     (a)  General rule.--The political subdivision shall exempt
    19980H2328B3525                 - 33 -

     1  sales at retail of services or tangible personal property,
     2  except motor vehicles, to a qualified business for the exclusive
     3  use, consumption and utilization of the tangible personal
     4  property or service, by the qualified business at its facility
     5  located within a keystone opportunity zone from a city or county
     6  tax on purchase price authorized under Article XXXI-B of the act
     7  of July 28, 1953 (P.L.723, No.230), known as the Second Class
     8  County Code, as amended, and the act of June 5, 1991 (P.L.9,
     9  No.6), known as the Pennsylvania Intergovernmental Cooperation
    10  Authority Act for Cities of the First Class, as amended.
    11     (b)  Exclusion.--Sales at retail or use of tangible personal
    12  property or services to that tangible personal property that
    13  will become a permanent part of the real property in accordance
    14  with Department of Revenue regulations shall not be eligible for
    15  the exclusion provided for under this subsection.
    16     (c)  Definition.--Sales at retail of tangible personal
    17  property and services shall be defined in accordance with
    18  Article II of the Tax Reform Code of 1971.
    19                             CHAPTER 9
    20                  ADMINISTRATION OF TAX PROVISIONS
    21  Section 901.  Transferability.
    22     Any exemption, deduction, abatement or credit provided to any
    23  person under Chapter 5 or 7 is nontransferable and cannot be
    24  applied, used or assigned to any other person or tax account.
    25  Section 902.  Recapture.
    26     (a)  General rule.--If any qualified business located within
    27  a keystone opportunity zone has received an exemption,
    28  deduction, abatement or credit under this act and subsequently
    29  relocates outside of the zone, that business shall refund to the
    30  State and political subdivision which granted the exemption,
    19980H2328B3525                 - 34 -

     1  deduction, abatement or credit received in accordance with the
     2  following:
     3         (1)  If a qualified business relocates within three years
     4     from the date of any claim, 66% of all the exemptions,
     5     deductions, abatements or credits previously received due to
     6     that qualified business's participation in the keystone
     7     opportunity zone shall be refunded.
     8         (2)  If a qualified business relocates within three to
     9     five years from the date of any claim, 33% of all exemptions,
    10     deductions, abatements or credits previously received from
    11     participation in the keystone opportunity zone shall be
    12     refunded.
    13         (3)  If the qualified business was located within a
    14     facility operated by a nonprofit organization to assist in
    15     the creation and development of a start-up business, no
    16     refund, exemption, deduction, abatement or credit shall be
    17     required.
    18     (b)  Waiver.--
    19         (1)  The department, in consultation with the Department   <--
    20     of Revenue, may waive or modify recapture requirements under
    21     this section if the department determines that the business
    22     relocation was due to circumstances beyond the control of the
    23     business including, but not limited to:
    24             (1) (I)  natural disaster;                             <--
    25             (2) (II)  unforeseen industry trends; or               <--
    26             (3) (III)  loss of a major supplier or market.         <--
    27         (2)  IF THE DEPARTMENT WAIVES OR MODIFIES THE RECAPTURE    <--
    28     REQUIREMENTS, THE DEPARTMENT SHALL REFUND TO THE POLITICAL
    29     SUBDIVISION WHICH GRANTED THE EXEMPTION, DEDUCTION, ABATEMENT
    30     OR CREDIT THE AMOUNT OTHERWISE DUE THE POLITICAL SUBDIVISION
    19980H2328B3525                 - 35 -

     1     UNDER SUBSECTION (A) ABSENT THE WAIVER OR MODIFICATION. THIS
     2     PARAGRAPH SHALL NOT APPLY TO BUSINESS RELOCATIONS DUE TO
     3     NATURAL DISASTER.
     4     (c)  Determination of claim date.--For purposes of this
     5  section, an exemption, deduction, abatement or credit is deemed
     6  to be claimed on the later of:
     7         (1)  the date the return or other report for the tax or
     8     fee is due;
     9         (2)  the date the return is filed; or
    10         (3)  the date the tax or fee would be paid.
    11  Section 903.  Delinquent or deficient State or local taxes.
    12     (a)  Persons.--No person may claim or receive an exemption,
    13  deduction, abatement or credit under this act unless that person
    14  is in full compliance with all State and local tax laws, and
    15  related ordinances and resolutions.
    16     (b)  Qualified business.--
    17         (1)  No qualified business may claim or receive an
    18     exemption, deduction, abatement or credit under this act
    19     unless that qualified business is in full compliance with all
    20     State and local tax laws, ordinances and resolutions.
    21         (2)  No qualified business may claim or receive an
    22     exemption, deduction, abatement or credit under this act if
    23     any person or business with a 20% or greater interest in that
    24     qualified business is not in full compliance with all State
    25     and local tax laws, ordinances and resolutions.
    26     (c)  Later compliance and eligibility.--Any person or
    27  qualified business that is not eligible to claim an exemption,
    28  deduction, abatement or credit due to noncompliance with any
    29  State or local tax law may become eligible if that person
    30  subsequently comes into full compliance with all State and local
    19980H2328B3525                 - 36 -

     1  tax laws to the satisfaction of the Department of Revenue or the
     2  political subdivision within the calendar year in which the
     3  noncompliance first occurred. If full compliance is not attained
     4  by December 31 of the calendar year in which noncompliance first
     5  occurred, then that person or qualified business is precluded
     6  from claiming any exemption, deduction, abatement or credit for
     7  that calendar year, whether or not full compliance is achieved
     8  in subsequent calendar years.
     9  Section 904.  Code compliance.
    10     (a)  General rule.--A person or qualified business shall be
    11  precluded from claiming any exemption, deduction, abatement or
    12  credit provided for in this act if that person or qualified
    13  business owns real property in a keystone opportunity zone and
    14  the real property is not in compliance with all applicable State
    15  and local zoning, building and housing laws, ordinances or codes
    16  and the real property owner has not filed an affidavit with the
    17  political subdivision attesting to compliance for that calendar
    18  year before December 31 with the political subdivision in which
    19  the real property is located.
    20     (b)  Opportunity to achieve compliance.--The person or
    21  qualified business who is not in compliance under subsection (a)
    22  shall have until December 31 of the calendar year following
    23  designation of the real property as part of a keystone
    24  opportunity zone to be in compliance in order to claim any State
    25  exemptions, deductions, abatements or credits for that year. If
    26  full compliance is not attained by December 31 of that calendar
    27  year, the person is precluded from claiming any exemption,
    28  deduction or credit for that calendar year, whether or not
    29  compliance is achieved in a subsequent calendar year. The
    30  political subdivision may extend the time period in which a
    19980H2328B3525                 - 37 -

     1  person or qualified business must come into compliance with a
     2  local ordinance or building code for a period not to exceed one
     3  year if the political subdivision determines that the person or
     4  qualified business has made and shall continue to make a good
     5  faith effort to come into compliance and that an extension will
     6  enable the person to achieve full compliance. Qualified
     7  political subdivisions are required to notify the Department of
     8  Revenue in writing of all persons or qualified businesses not in
     9  compliance with this subsection within 30 days following the end
    10  of each calendar year.
    11  Section 905.  Appeals.
    12     A person shall be deemed to be in compliance with any State
    13  or local tax for purposes of this section if that person had
    14  made a timely administrative or judicial appeal for that
    15  particular tax or has entered into and is in compliance with a
    16  duly authorized deferred payment plan with the Department of
    17  Revenue or political subdivision for that particular tax.
    18                             CHAPTER 11
    19                        PROCEDURES FOR ZONES
    20  Section 1101.  Community benefits.
    21     (a)  Implementation grant.--The department may provide a one-
    22  time $250,000 grant to the keystone opportunity zone to
    23  implement the opportunity plan and to provide an annual update
    24  of real property ownership and other information to the
    25  Department of Revenue. The annual update shall describe progress
    26  on all proposals required as part of the opportunity plan and
    27  other information as required by the department. A separate
    28  application must be submitted to the department outlining a
    29  budget and implementation narrative. The grant shall be drawn
    30  down as needed over a period not to exceed the first five years
    19980H2328B3525                 - 38 -

     1  of designation as a keystone opportunity zone. Grant funds shall
     2  be provided from the housing and redevelopment appropriations.
     3  Keystone opportunity zones shall comply with the provisions of
     4  the appropriation.
     5     (b)  Reduced interest.--Projects in designated keystone
     6  opportunity zones that are approved for Pennsylvania Industrial
     7  Development Authority (PIDA), or Small Business First financing
     8  shall receive the lowest interest rate extended to borrowers.
     9     (c)  Priority consideration.--Projects in keystone
    10  opportunity zones shall receive priority consideration for State
    11  assistance under State economic, community and economic
    12  development programs and community building initiatives.
    13     (d)  Marketing.--The department shall develop and implement a
    14  consolidated marketing strategy for the keystone opportunity
    15  zones for use in job retention and attraction activities.
    16     (e)  Education.--The Department of Education shall provide
    17  technical assistance to school districts located in or school
    18  districts having parts of their districts located in keystone
    19  opportunity zones.
    20     (f)  Local governments.--The Center for Local Government
    21  Services in the department shall provide technical assistance to
    22  political subdivisions relating to taxation, implementation of
    23  the opportunity plan, establishing annual benchmarks and annual
    24  reporting requirements to the departments. Additionally, the
    25  Center for Local Government Services shall provide political
    26  subdivisions in keystone opportunity zones with technical
    27  assistance to encourage the implementation of best practices in
    28  achieving efficient and effective local government
    29  administration and shall coordinate activities with other
    30  departments and agencies providing various assistance to
    19980H2328B3525                 - 39 -

     1  communities.
     2     (g)  Community-based organizations.--The department shall
     3  provide technical assistance for capacity building of existing
     4  community-based organizations dealing with socio-economic needs,
     5  housing assistance and job training in the keystone opportunity
     6  zones.
     7  Section 1102.  Reporting.
     8     The department shall report to the General Assembly on the
     9  economic effects of this act in each keystone opportunity zone
    10  every four years.
    11  Section 1103.  Other Commonwealth tax credits.
    12     A person or qualified business that is entitled to claim an
    13  exemption, deduction, abatement or credit in accordance with the
    14  provisions of this act shall not be entitled to claim or
    15  accumulate any of the following exemptions, deductions,
    16  abatements or credits that it may otherwise have qualified for
    17  due to activity within a keystone opportunity zone:
    18         (1)  Tax Reform Code of 1971:
    19             (i)  Article XVII relating to economic revitalization
    20         tax credits;
    21             (ii)  Article XVII-A relating to employment incentive
    22         payments;
    23             (iii)  Article XVII-B relating to research and
    24         development tax credits; or
    25             (iv)  Article XIX-A relating to neighborhood
    26         assistance and enterprise zone tax credits;
    27         (2)  tax credits under section 109 of the act of December
    28     19, 1996 (P.L.1478, No.190), known as the Waste Tire
    29     Recycling Act;
    30         (3)  homeowners mortgage credits;
    19980H2328B3525                 - 40 -

     1         (4)  insurance premiums tax credits; and
     2         (5)  job creation tax credit under the act of June 29,
     3     1996 (P.L.434, No.67), known as the Job Enhancement Act.
     4  The person or qualified business may apply the exemptions,
     5  deductions, abatements or credits to income realized from
     6  activity or transactions outside the keystone opportunity zone,
     7  but only for the taxable year to which the exemptions,
     8  deductions, abatements or credits apply. The provisions of this
     9  section shall apply only to the taxes set forth in Chapters 5
    10  and 7.
    11                             CHAPTER 13                             <--
    12                     ECONOMIC DEVELOPMENT ZONES
    13  SECTION 1301.  SHORT TITLE OF CHAPTER.
    14     THIS CHAPTER SHALL BE KNOWN AND MAY BE CITED AS THE ECONOMIC
    15  DEVELOPMENT ZONES ACT.
    16  SECTION 1302.  LEGISLATIVE FINDINGS.
    17     THE GENERAL ASSEMBLY FINDS AND DECLARES AS FOLLOWS:
    18         (1)  THERE PERSIST IN THIS COMMONWEALTH AREAS OF ECONOMIC
    19     DISTRESS CHARACTERIZED BY HIGH UNEMPLOYMENT, LOW INVESTMENT
    20     OF NEW CAPITAL, BLIGHTED CONDITIONS, OBSOLETE OR ABANDONED
    21     INDUSTRIAL OR COMMERCIAL STRUCTURES AND DETERIORATING TAX
    22     BASES.
    23         (2)  THE SEVERE AND PERSISTENT DETERIORATION OF THESE
    24     AREAS DEMANDS VIGOROUS AND COORDINATED EFFORTS BY PRIVATE AND
    25     PUBLIC ENTITIES TO RESTORE THEIR PROSPERITY AND ENABLE THEM
    26     TO RESUME SIGNIFICANT CONTRIBUTIONS TO THE ECONOMIC AND
    27     SOCIAL LIFE OF THIS COMMONWEALTH.
    28         (3)  THE ECONOMIC REVITALIZATION OF THESE AREAS REQUIRES
    29     APPLICATION OF THE SKILLS AND ENTREPRENEURIAL VIGOR OF
    30     PRIVATE ENTERPRISE. IT IS THE RESPONSIBILITY OF GOVERNMENT TO
    19980H2328B3525                 - 41 -

     1     PROVIDE A FRAMEWORK WITHIN WHICH:
     2             (I)  ENCOURAGEMENT IS GIVEN TO PRIVATE CAPITAL
     3         INVESTMENT IN THESE AREAS;
     4             (II)  DISINCENTIVES TO INVESTMENT ARE REMOVED OR
     5         ABATED; AND
     6             (III)  MECHANISMS ARE PROVIDED FOR THE COORDINATION
     7         AND COOPERATION OF PRIVATE AND PUBLIC AGENCIES IN
     8         RESTORING THE ECONOMIC VIABILITY AND PROSPERITY OF THESE
     9         AREAS.
    10  SECTION 1303.  DEFINITIONS.
    11     THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS CHAPTER
    12  SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
    13  CONTEXT CLEARLY INDICATES OTHERWISE:
    14     "DEVELOPMENT ZONE."  A ZONE DESIGNATED BY THE DEPARTMENT
    15  UNDER THIS CHAPTER. SUCH A ZONE SHALL BE KNOWN AS A PENNZONE.
    16     "FUND."  THE ECONOMIC DEVELOPMENT ZONE ASSISTANCE FUND
    17  ESTABLISHED IN SECTION 1327.
    18     "PUBLIC ASSISTANCE."  INCOME MAINTENANCE FUNDS ADMINISTERED
    19  BY THE DEPARTMENT OF PUBLIC WELFARE OR BY A COUNTY ASSISTANCE
    20  OFFICE.
    21     "QUALIFIED BUSINESS."  AN ENTITY AUTHORIZED TO DO BUSINESS IN
    22  THIS COMMONWEALTH WHICH MEETS ANY OF THE FOLLOWING:
    23         (1)  AT THE TIME OF DESIGNATION AS A DEVELOPMENT ZONE, IS
    24     ENGAGED IN THE ACTIVE CONDUCT OF A TRADE OR BUSINESS IN THAT
    25     ZONE.
    26         (2)  AFTER THAT DESIGNATION BUT DURING THE DESIGNATION
    27     PERIOD, BECOMES NEWLY ENGAGED IN THE ACTIVE CONDUCT OF A
    28     TRADE OR BUSINESS IN THAT DEVELOPMENT ZONE AND HAS AT LEAST
    29     25% OF ITS FULL-TIME EMPLOYEES EMPLOYED AT A BUSINESS
    30     LOCATION IN THE ZONE WHO ARE:
    19980H2328B3525                 - 42 -

     1             (I)  RESIDENTS WITHIN THE ZONE, WITHIN ANOTHER ZONE
     2         OR WITHIN A QUALIFYING MUNICIPALITY;
     3             (II)  UNEMPLOYED FOR AT LEAST SIX MONTHS PRIOR TO
     4         BEING HIRED AND RESIDING IN THIS COMMONWEALTH;
     5             (III)  RECIPIENTS OF PUBLIC ASSISTANCE PROGRAMS FOR
     6         AT LEAST SIX MONTHS PRIOR TO BEING HIRED; OR
     7             (IV)  DETERMINED TO BE ECONOMICALLY DISADVANTAGED
     8         PURSUANT TO THE JOBS TRAINING PARTNERSHIP ACT (PUBLIC LAW
     9         97-300, 29 U.S.C. § 1501 ET SEQ.).
    10     "QUALIFYING MUNICIPALITY."  ANY OF THE FOLLOWING:
    11         (1)  A MUNICIPALITY IN WHICH THE MUNICIPAL AVERAGE ANNUAL
    12     UNEMPLOYMENT RATE FOR THE PRECEDING TWO YEARS EXCEEDED THE
    13     STATE AVERAGE ANNUAL UNEMPLOYMENT RATE.
    14         (2)  A MUNICIPALITY WHICH QUALIFIES UNDER THE ACT OF JULY
    15     10, 1987 (P.L.246, NO.47), KNOWN AS THE MUNICIPALITIES
    16     FINANCIAL RECOVERY ACT.
    17         (3)  AT THE TIME OF DESIGNATION AS A DEVELOPMENT ZONE,
    18     HAS AT LEAST 1,000 UNEMPLOYED PERSONS.
    19  THE ANNUAL AVERAGE OF UNEMPLOYED PERSONS, THE TOTAL NUMBER OF
    20  UNEMPLOYED PERSONS AND THE AVERAGE ANNUAL UNEMPLOYMENT RATES
    21  SHALL BE ESTIMATED FOR THE RELEVANT CALENDAR YEAR BY THE
    22  DEPARTMENT OF LABOR AND INDUSTRY. FOR ANY MUNICIPALITY FOR WHICH
    23  THE DEPARTMENT OF LABOR AND INDUSTRY IS UNABLE TO ESTIMATE THE
    24  ANNUAL AVERAGE OF UNEMPLOYED PERSONS, THE TOTAL NUMBER OF
    25  UNEMPLOYED PERSONS AND THE AVERAGE ANNUAL UNEMPLOYMENT RATE, THE
    26  DEPARTMENT OF LABOR AND INDUSTRY SHALL DETERMINE THE ESTIMATE
    27  BASED UPON UNEMPLOYMENT DATA IN THE MOST RECENT FEDERAL
    28  DECENNIAL CENSUS.
    29     "ZONE."  A DEVELOPMENT ZONE.
    30     "ZONE DEVELOPMENT CORPORATION."  A NONPROFIT CORPORATION OR
    19980H2328B3525                 - 43 -

     1  ASSOCIATION CREATED OR DESIGNATED BY THE GOVERNING BODY OF A
     2  QUALIFYING MUNICIPALITY TO FORMULATE AND PROPOSE A PRELIMINARY
     3  ZONE DEVELOPMENT PLAN UNDER SECTION 1308 AND TO PREPARE,
     4  MONITOR, ADMINISTER AND IMPLEMENT THE ZONE DEVELOPMENT PLAN.
     5     "ZONE DEVELOPMENT PLAN."  A PLAN ADOPTED BY THE GOVERNING
     6  BODY OF A QUALIFYING MUNICIPALITY FOR THE DEVELOPMENT OF A
     7  DEVELOPMENT ZONE IN THE MUNICIPALITY AND FOR THE DIRECTION AND
     8  COORDINATION OF ACTIVITIES OF THE MUNICIPALITY, DEVELOPMENT ZONE
     9  BUSINESSES AND COMMUNITY ORGANIZATIONS WITHIN THE DEVELOPMENT
    10  ZONE TOWARD THE ECONOMIC BETTERMENT OF THE RESIDENTS OF THE
    11  DEVELOPMENT ZONE AND THE MUNICIPALITY.
    12     "ZONE NEIGHBORHOOD ASSOCIATION."  A CORPORATION OR
    13  ASSOCIATION OF PERSONS WHO EITHER ARE RESIDENTS OF OR HAVE THEIR
    14  PRINCIPAL PLACE OF EMPLOYMENT IN A MUNICIPALITY IN WHICH A
    15  DEVELOPMENT ZONE HAS BEEN DESIGNATED WHICH IS ORGANIZED UNDER 15
    16  PA.C.S. (RELATING TO CORPORATIONS AND UNINCORPORATED
    17  ASSOCIATIONS) OR OTHER APPLICABLE LAW AND WHICH HAS FOR ITS
    18  PRINCIPAL PURPOSE THE ENCOURAGEMENT AND SUPPORT OF COMMUNITY
    19  ACTIVITIES WITHIN, OR ON BEHALF OF, THE ZONE SO AS TO:
    20         (1)  STIMULATE ECONOMIC ACTIVITY;
    21         (2)  INCREASE OR PRESERVE RESIDENTIAL AMENITIES; OR
    22         (3)  OTHERWISE ENCOURAGE COMMUNITY COOPERATION IN
    23     ACHIEVING THE GOALS OF THE ZONE DEVELOPMENT PLAN.
    24  SECTION 1304.  POWERS AND DUTIES.
    25     THE DEPARTMENT HAS THE FOLLOWING POWERS AND DUTIES:
    26         (1)  PROMULGATE REGULATIONS TO ADMINISTER THIS CHAPTER.
    27         (2)  RECEIVE AND EVALUATE APPLICATIONS OF MUNICIPALITIES
    28     FOR THE DESIGNATION OF DEVELOPMENT ZONES.
    29         (3)  ENTER INTO DISCUSSIONS WITH APPLYING MUNICIPALITIES
    30     REGARDING ZONE DEVELOPMENT PLANS.
    19980H2328B3525                 - 44 -

     1         (4)  ACT AS AGENT OF THE COMMONWEALTH WITH RESPECT TO
     2     ZONE DEVELOPMENT PLANS AND IN DETERMINING THE STATE-FURNISHED
     3     COMPONENTS TO BE INCLUDED IN THOSE PLANS.
     4         (5)  DESIGNATE DEVELOPMENT ZONES.
     5         (6)  EXERCISE CONTINUING REVIEW AND SUPERVISION OF THE
     6     IMPLEMENTATION OF ZONE DEVELOPMENT PLANS.
     7         (7)  RECEIVE AND EVALUATE PROPOSALS OF QUALIFYING
     8     MUNICIPALITIES IN WHICH DEVELOPMENT ZONES ARE DESIGNATED FOR
     9     FUNDING OF PROJECTS AND INCREASED ELIGIBLE MUNICIPAL SERVICES
    10     FROM THE FUND AND CERTIFY ANNUALLY TO THE STATE TREASURER
    11     AMOUNTS TO BE PAID FROM THE FUND TO SUPPORT APPROVED PROJECTS
    12     AND INCREASED ELIGIBLE MUNICIPAL SERVICES IN DEVELOPMENT
    13     ZONES.
    14         (8)  ASSIST AND REPRESENT QUALIFYING MUNICIPALITIES IN
    15     NEGOTIATIONS WITH, OR PROCEEDINGS BEFORE, FEDERAL OR STATE
    16     AGENCIES TO SECURE NECESSARY OR APPROPRIATE ASSISTANCE,
    17     SUPPORT AND COOPERATION IN THE IMPLEMENTATION OF ZONE
    18     DEVELOPMENT PLANS IN ACCORDANCE WITH THIS CHAPTER AND ANY
    19     OTHER APPLICABLE FEDERAL OR STATE LAW.
    20         (9)  UPON REQUEST, ASSIST AGENCIES OF MUNICIPAL
    21     GOVERNMENT IN GATHERING, COMPILING AND ORGANIZING DATA TO
    22     SUPPORT AN APPLICATION FOR DESIGNATION OF A DEVELOPMENT ZONE
    23     AND IN IDENTIFYING AND COORDINATING THE ELEMENTS OF A ZONE
    24     DEVELOPMENT PLAN SUITABLE FOR THE DEVELOPMENT ZONE SEEKING TO
    25     BE DESIGNATED.
    26         (10)  PROVIDE ASSISTANCE TO STATE AND LOCAL GOVERNMENT
    27     AGENCIES RELATING TO APPLICATION FOR THE SECURING OF PERMITS,
    28     LICENSES AND OTHER REGULATORY APPROVALS TO ASSURE
    29     CONSIDERATION AND EXPEDITIOUS HANDLING OF REGULATORY
    30     REQUIREMENTS OF ANY DEVELOPMENT ZONE BUSINESS, ZONE
    19980H2328B3525                 - 45 -

     1     DEVELOPMENT CORPORATION OR ZONE NEIGHBORHOOD ASSOCIATION.
     2     REGULATORY AGENCIES OF THE COMMONWEALTH AND POLITICAL
     3     SUBDIVISIONS MAY AGREE TO SIMPLIFICATION, CONSOLIDATION OR
     4     OTHER LIBERALIZATION OF PROCEDURAL REQUIREMENTS REQUESTED BY
     5     THE DEPARTMENT WHICH IS NOT INCONSISTENT WITH PROVISIONS OF
     6     LAW.
     7         (11)  ASSIST THE COMMONWEALTH IN APPLYING TO, OR ENTERING
     8     INTO NEGOTIATIONS OR AGREEMENTS WITH, THE FEDERAL GOVERNMENT
     9     FOR FEDERAL ENTERPRISE ZONE DESIGNATIONS.
    10         (12)  EXERCISE CONTINUING REVIEW OF THE IMPLEMENTATION OF
    11     THIS CHAPTER AND REPORT ANNUALLY TO THE GOVERNOR AND THE
    12     GENERAL ASSEMBLY ON THE EFFECTIVENESS OF DEVELOPMENT ZONES IN
    13     ADDRESSING THE CONDITIONS CITED IN THIS CHAPTER, INCLUDING
    14     ANY RECOMMENDATIONS FOR LEGISLATION TO IMPROVE THE
    15     EFFECTIVENESS OF OPERATION OF THOSE DEVELOPMENT ZONES. THE
    16     REPORT SHALL BE SUBMITTED ANNUALLY BY JULY 31.
    17  SECTION 1305.  STUDY ON FISCAL IMPACT OF DEVELOPMENT ZONES;
    18                 CONTENTS; RECOMMENDATIONS; SUBMISSION TO GOVERNOR
    19                 AND GENERAL ASSEMBLY; FUNDING FOR COST OF STUDY.
    20     IN ADDITION TO THE DUTIES OF THE DEPARTMENT REQUIRED UNDER
    21  SECTION 1304, THE DEPARTMENT SHALL ALSO PREPARE A FISCAL IMPACT
    22  STUDY OF EACH DEVELOPMENT ZONE. THE STUDY SHALL INCLUDE AN
    23  ANALYSIS OF THE EFFECTS OF EACH DEVELOPMENT ZONE ON THE LOCAL
    24  ECONOMY OF THE AREA IN WHICH THE ZONE IS LOCATED AND AN
    25  ASSESSMENT OF THE EFFECTIVENESS OF THE DEVELOPMENT ZONES IN
    26  ADDRESSING THE PURPOSES OF THIS CHAPTER. THE STUDY SHALL BE
    27  COMPLETED WITHIN A REASONABLE TIME AFTER THE END OF ONE YEAR
    28  FOLLOWING THE DESIGNATION OF THE DEVELOPMENT ZONES. THE
    29  DEPARTMENT SHALL SUBMIT ITS STUDY TO THE GOVERNOR AND THE
    30  GENERAL ASSEMBLY, INCLUDING ANY RECOMMENDATIONS FOR LEGISLATION
    19980H2328B3525                 - 46 -

     1  TO IMPROVE THE EFFECTIVENESS OF OPERATION OF THE DEVELOPMENT
     2  ZONES, WITHIN TWO YEARS FROM THE EFFECTIVE DATE OF THIS SECTION.
     3  THE DEPARTMENT SHALL USE FUNDS AVAILABLE FROM THE ACCOUNT
     4  CREATED IN THE NAME OF THE DEPARTMENT IN THE FUND FOR THE
     5  ADMINISTRATION OF THE PROGRAM TO PAY FOR THE COST OF THE STUDY.
     6  SECTION 1306.  ECONOMIC DEVELOPMENT ZONES; DESIGNATION;
     7                 DURATION.
     8     THE DEPARTMENT SHALL DESIGNATE DEVELOPMENT ZONES FROM AMONG
     9  THOSE AREAS OF QUALIFYING MUNICIPALITIES DETERMINED TO BE
    10  ELIGIBLE UNDER THIS CHAPTER. NO MORE THAN 30 DEVELOPMENT ZONES
    11  SHALL BE IN EFFECT AT ANY ONE TIME. NO MORE THAN ONE DEVELOPMENT
    12  ZONE SHALL BE DESIGNATED IN ANY ONE MUNICIPALITY. A DESIGNATION
    13  GRANTED SHALL BE FOR A PERIOD OF 10 YEARS AND MAY BE RENEWED FOR
    14  ONE ADDITIONAL TEN-YEAR PERIOD. IN DESIGNATING DEVELOPMENT
    15  ZONES, THE DEPARTMENT SHALL SEEK TO AVOID EXCESSIVE GEOGRAPHIC
    16  CONCENTRATION OF DEVELOPMENT ZONES IN ANY PARTICULAR REGION OF
    17  THIS COMMONWEALTH. THE DEPARTMENT SHALL ACCEPT APPLICATIONS
    18  WITHIN 90 DAYS OF THE EFFECTIVE DATE OF THE FINAL ADOPTION OF
    19  REGULATIONS UNDER THIS ACT. PRIORITY CONSIDERATION FOR INITIAL
    20  DESIGNATION OF THESE ZONES BY THE DEPARTMENT SHALL BE GIVEN TO
    21  ZONES LOCATED IN QUALIFYING MUNICIPALITIES THAT HAD AT LEAST
    22  1,500 UNEMPLOYED PERSONS BASED UPON THE FEBRUARY 1998
    23  PENNSYLVANIA CIVILIAN LABOR FORCE DATA BY CITY/BOROUGH/TOWNSHIP
    24  OF RESIDENCE AS PUBLISHED BY THE DEPARTMENT OF LABOR AND
    25  INDUSTRY. FOR ANY MUNICIPALITY FOR WHICH UNEMPLOYMENT DATA IS
    26  NOT AVAILABLE IN THE FEBRUARY 1998 PENNSYLVANIA CIVILIAN LABOR
    27  FORCE DATA BY CITY/BOROUGH/TOWNSHIP OF RESIDENCE AS PUBLISHED BY
    28  THE DEPARTMENT OF LABOR AND INDUSTRY, THE DEPARTMENT OF LABOR
    29  AND INDUSTRY SHALL DETERMINE THE NUMBER OF UNEMPLOYED PERSONS IN
    30  THAT MUNICIPALITY BASED UPON UNEMPLOYMENT DATA IN THE MOST
    19980H2328B3525                 - 47 -

     1  RECENT FEDERAL DECENNIAL CENSUS.
     2  SECTION 1307.  ZONE DEVELOPMENT CORPORATION.
     3     (A)  DESIGNATION.--THE GOVERNING BODY OF A QUALIFYING
     4  MUNICIPALITY MAY, BY ORDINANCE, DESIGNATE A NONPROFIT
     5  CORPORATION ESTABLISHED PURSUANT TO THE PROVISIONS OF 15 PA.C.S.
     6  (RELATING TO CORPORATIONS AND UNINCORPORATED ASSOCIATIONS) TO
     7  ACT AS THE ZONE DEVELOPMENT CORPORATION FOR THE MUNICIPALITY. A
     8  ZONE DEVELOPMENT CORPORATION SO DESIGNATED SHALL INCLUDE ON ITS
     9  BOARD OF DIRECTORS REPRESENTATIVES OF THE GOVERNMENT OF THE
    10  QUALIFYING MUNICIPALITY, MEMBERS OF THE BUSINESS COMMUNITY, AND
    11  REPRESENTATIVES OF COMMUNITY ORGANIZATIONS IN THE MUNICIPALITY.
    12  THE TOTAL MEMBERSHIP OF THE BOARD OF DIRECTORS SHALL BE BROADLY
    13  REPRESENTATIVE OF BUSINESSES AND COMMUNITIES WITHIN THE
    14  MUNICIPALITY NOTWITHSTANDING THE PROVISIONS OF ANY OTHER LAW TO
    15  THE CONTRARY.
    16     (B)  STATUS.--A ZONE DEVELOPMENT CORPORATION SHALL BE
    17  CONSIDERED TO BE AN INDUSTRIAL DEVELOPMENT CORPORATION FOR THE
    18  PURPOSE OF RECEIVING STATE FINANCIAL OR TECHNICAL ASSISTANCE AS
    19  MAY BE AVAILABLE. THE CREATION OF A ZONE DEVELOPMENT CORPORATION
    20  SHALL NOT PRECLUDE A QUALIFYING MUNICIPALITY FROM CREATING
    21  ANOTHER INDUSTRIAL DEVELOPMENT CORPORATION FOR THE MUNICIPALITY
    22  WITH RESPONSIBILITIES NOT RELATED TO THE DEVELOPMENT ZONE NOR
    23  PRECLUDE THAT OTHER CORPORATION FROM RECEIVING STATE FINANCIAL
    24  OR TECHNICAL ASSISTANCE.
    25  SECTION 1308.  PRELIMINARY ZONE DEVELOPMENT PLAN.
    26     BEFORE APPLYING FOR DESIGNATION OF A DEVELOPMENT ZONE, THE
    27  MUNICIPAL GOVERNING BODY SHALL CAUSE A PRELIMINARY ZONE
    28  DEVELOPMENT PLAN TO BE FORMULATED, EITHER BY A ZONE DEVELOPMENT
    29  CORPORATION OR BY THE GOVERNING BODY, WITH THE ASSISTANCE OF
    30  THOSE OFFICERS AND AGENCIES OF THE MUNICIPALITY AS THE GOVERNING
    19980H2328B3525                 - 48 -

     1  BODY MAY SEE FIT. THE PRELIMINARY ZONE DEVELOPMENT PLAN SHALL
     2  SET FORTH THE BOUNDARIES OF THE PROPOSED DEVELOPMENT ZONE,
     3  FINDINGS OF FACT CONCERNING THE ECONOMIC AND SOCIAL CONDITIONS
     4  EXISTING IN THE AREA PROPOSED FOR A DEVELOPMENT ZONE AND THE
     5  MUNICIPALITY'S POLICY AND INTENTIONS FOR ADDRESSING THESE
     6  CONDITIONS. THE PRELIMINARY ZONE DEVELOPMENT PLAN MAY INCLUDE
     7  PROPOSALS RESPECTING:
     8         (1)  UTILIZING THE POWERS CONFERRED ON THE MUNICIPALITY
     9     BY LAW FOR THE PURPOSE OF STIMULATING INVESTMENT IN AND
    10     ECONOMIC DEVELOPMENT OF THE PROPOSED ZONE.
    11         (2)  UTILIZING STATE ASSISTANCE THROUGH THE PROVISIONS OF
    12     THIS ACT RELATING TO STATE TAXES.
    13         (3)  SECURING THE INVOLVEMENT IN AND COMMITMENT TO ZONE
    14     ECONOMIC DEVELOPMENT BY PRIVATE ENTITIES, INCLUDING ZONE
    15     NEIGHBORHOOD ASSOCIATIONS, VOLUNTARY COMMUNITY ORGANIZATIONS
    16     SUPPORTED BY RESIDENTS AND BUSINESSES IN THE DEVELOPMENT
    17     ZONE.
    18         (4)  UTILIZING THE POWERS CONFERRED BY LAW TO REVISE
    19     MUNICIPAL PLANNING AND ZONING ORDINANCES AND OTHER LAND USE
    20     REGULATIONS AS THEY PERTAIN TO THE DEVELOPMENT ZONE, IN ORDER
    21     TO ENHANCE THE ATTRACTION OF THE ZONE TO PROSPECTIVE
    22     DEVELOPERS.
    23         (5)  INCREASING THE AVAILABILITY AND EFFICIENCY OF
    24     SUPPORT SERVICES, PUBLIC AND PRIVATE, GENERALLY USED BY AND
    25     NECESSARY FOR THE EFFICIENT FUNCTIONING OF COMMERCIAL AND
    26     INDUSTRIAL FACILITIES IN THE AREA AND THE EXTENT TO WHICH THE
    27     INCREASE OR IMPROVEMENT IS TO BE PROVIDED AND FINANCED BY THE
    28     MUNICIPAL GOVERNMENT OR BY OTHER ENTITIES.
    29  SECTION 1309.  ELIGIBILITY FOR DESIGNATION.
    30     AN AREA DEFINED BY A CONTINUOUS BORDER WITHIN ONE QUALIFYING
    19980H2328B3525                 - 49 -

     1  MUNICIPALITY OR WITHIN TWO OR MORE CONTIGUOUS QUALIFYING
     2  MUNICIPALITIES AND TWO NONCONTIGUOUS AREAS EACH HAVING A
     3  CONTINUOUS BORDER WITHIN TWO NONCONTIGUOUS QUALIFYING
     4  MUNICIPALITIES SHALL BE ELIGIBLE FOR DESIGNATION AS A
     5  DEVELOPMENT ZONE IF IT MEETS THE CRITERIA ESTABLISHED BY THE
     6  DEPARTMENT UNDER THIS CHAPTER RELATING TO THE INCIDENCE OF
     7  UNEMPLOYMENT AND GENERAL ECONOMIC DISTRESS.
     8  SECTION 1310.  PRIORITY DEVELOPMENT ZONES.
     9     THE FIRST AREAS AND MUNICIPALITIES DESIGNATED AS DEVELOPMENT
    10  ZONES BY THE DEPARTMENT SHALL BE THOSE AREAS AND MUNICIPALITIES
    11  ACCORDED PRIORITY CONSIDERATION UNDER SECTION 1306.
    12  SECTION 1311.  DESIGNATION OF ELIGIBLE AREAS AS DEVELOPMENT
    13                 ZONES.
    14     (A)  GENERAL RULE.--IN DESIGNATING ELIGIBLE AREAS AS
    15  DEVELOPMENT ZONES, THE DEPARTMENT SHALL ACCORD PREFERENCE TO
    16  ZONE DEVELOPMENT PLANS WHICH:
    17         (1)  HAVE THE GREATEST POTENTIAL FOR SUCCESS IN
    18     STIMULATING PRIMARILY NEW ECONOMIC ACTIVITY IN THE AREA.
    19         (2)  ARE DESIGNED TO ADDRESS THE GREATEST DEGREE OF
    20     DISTRESS, AS MEASURED BY EXISTING LEVELS OF UNEMPLOYMENT,
    21     POVERTY AND PROPERTY TAX ARREARAGES.
    22         (3)  DEMONSTRATE THE MOST SUBSTANTIAL AND RELIABLE
    23     COMMITMENTS OF RESOURCES BY ZONE BUSINESSES, ZONE
    24     NEIGHBORHOOD ASSOCIATIONS, VOLUNTARY COMMUNITY ORGANIZATIONS
    25     AND OTHER PRIVATE ENTITIES TO THE ECONOMIC SUCCESS OF THE
    26     ZONE.
    27         (4)  DEMONSTRATE THE MOST SUBSTANTIAL EFFORT AND
    28     COMMITMENT BY THE MUNICIPALITY TO ENCOURAGE ECONOMIC ACTIVITY
    29     IN THE AREA AND TO REMOVE DISINCENTIVES FOR JOB CREATION
    30     COMPATIBLE WITH THE FISCAL CONDITION OF THE MUNICIPALITY.
    19980H2328B3525                 - 50 -

     1     (B)  ADDITIONAL CONSIDERATIONS.--IN ADDITION TO THE
     2  CONSIDERATIONS SET FORTH IN SUBSECTION (A), THE DEPARTMENT IN
     3  EVALUATING A ZONE DEVELOPMENT PLAN FOR DESIGNATION PURPOSES
     4  SHALL CONSIDER:
     5         (1)  THE LIKELIHOOD OF ATTRACTING FEDERAL ASSISTANCE TO
     6     PROJECTS IN THE ELIGIBLE AREA AND OF OBTAINING FEDERAL
     7     DESIGNATION OF THE AREA AS AN ENTERPRISE ZONE FOR FEDERAL TAX
     8     PURPOSES.
     9         (2)  THE ADVERSE OR BENEFICIAL EFFECTS OF A DEVELOPMENT
    10     ZONE LOCATED AT THE PROPOSED AREA UPON ECONOMIC DEVELOPMENT
    11     ACTIVITIES OR PROJECTS OF STATE OR OTHER PUBLIC AGENCIES OR
    12     AUTHORITIES WHICH ARE IN OPERATION, OR ARE APPROVED FOR
    13     OPERATION, IN THE QUALIFYING MUNICIPALITY.
    14         (3)  THE DEGREE OF COMMITMENT MADE BY PUBLIC AND PRIVATE
    15     ENTITIES TO UTILIZE MINORITY CONTRACTORS AND ASSURE EQUAL
    16     OPPORTUNITIES FOR EMPLOYMENT IN CONNECTION WITH ANY
    17     CONSTRUCTION OR RECONSTRUCTION TO BE UNDERTAKEN IN THE
    18     ELIGIBLE AREA.
    19         (4)  THE IMPACT OF THE ZONE DEVELOPMENT PLAN UPON THE
    20     SOCIAL, NATURAL AND HISTORIC ENVIRONMENT OF THE ELIGIBLE
    21     AREA.
    22         (5)  THE DEGREE TO WHICH THE IMPLEMENTATION OF THE PLAN
    23     INVOLVES THE RELOCATION OF RESIDENTS FROM THE ELIGIBLE AREA
    24     AND THE ADEQUACY OF COMMITMENTS AND PROVISIONS WITH RESPECT
    25     THERETO.
    26  SECTION 1312.  APPLICATION FOR DESIGNATION; GRANT OR DENIAL;
    27                 ADOPTION OF ORDINANCE OF ACCEPTANCE.
    28     (A)  APPLICATION.--A QUALIFYING MUNICIPALITY MAY DESIGNATE
    29  ANY AREA SET FORTH IN THE ZONE DEVELOPMENT PLAN AS A DEVELOPMENT
    30  ZONE. THE MUNICIPALITY MAY THEN MAKE WRITTEN APPLICATION TO THE
    19980H2328B3525                 - 51 -

     1  DEPARTMENT TO HAVE THE AREA SELECTED FOR FEDERAL AND STATE
     2  ASSISTANCE OFFERED TO DEVELOPMENT ZONES OR EITHER TYPE OF
     3  ASSISTANCE. THE APPLICATION SHALL INCLUDE THE ZONE DEVELOPMENT
     4  PLAN ADOPTED FOR THE AREA AND ANY OTHER INFORMATION THE
     5  DEPARTMENT MAY REQUIRE.
     6     (B)  REVIEW.--UPON RECEIPT OF AN APPLICATION FROM THE
     7  QUALIFYING MUNICIPALITY, THE DEPARTMENT SHALL REVIEW THE
     8  APPLICATION TO DETERMINE WHETHER THE AREA DESCRIBED IN THE
     9  APPLICATION QUALIFIES FOR STATE ASSISTANCE UNDER THE CRITERIA OF
    10  THIS CHAPTER.
    11     (C)  PROCEDURE.--THE DEPARTMENT SHALL ESTABLISH A DATE FOR
    12  THE RECEIPT OF INITIAL APPLICATIONS FOR DESIGNATIONS UNDER THIS
    13  CHAPTER, WHICH SHALL BE WITHIN ONE YEAR OF THE EFFECTIVE DATE OF
    14  THIS SECTION. THEREAFTER, THE DEPARTMENT SHALL COMPLETE ITS
    15  REVIEW WITHIN 90 DAYS OF RECEIPT OF AN APPLICATION, BUT MAY
    16  EXTEND THIS TIME PERIOD BY AN ADDITIONAL 60 DAYS IF NECESSARY.
    17  IF THE DEPARTMENT DENIES THE APPLICATION, IT SHALL INFORM THE
    18  MUNICIPALITY OF THAT FACT IN WRITING SETTING FORTH THE REASONS
    19  FOR THE DENIAL.
    20     (D)  ORDINANCE.--THE DESIGNATION OF A DEVELOPMENT ZONE BY THE
    21  DEPARTMENT SHALL TAKE EFFECT UPON THE ADOPTION BY THE QUALIFYING
    22  MUNICIPALITY OF AN ORDINANCE ACCEPTING THAT DESIGNATION.
    23  SECTION 1313.  BENEFITS AVAILABLE TO QUALIFIED BUSINESS.
    24     A QUALIFIED BUSINESS IN A DEVELOPMENT ZONE SHALL BE ELIGIBLE
    25  TO RECEIVE THOSE BENEFITS AUTHORIZED IN SECTIONS 1314 THROUGH
    26  1318 AS DETERMINED TO BE APPLICABLE BY THE DEPARTMENT. THE
    27  DEPARTMENT SHALL STATE IN WRITING TO THE QUALIFYING MUNICIPALITY
    28  AT THE TIME OF DESIGNATION ITS DETERMINATIONS AS TO WHICH
    29  BENEFITS APPLY IN THAT DEVELOPMENT ZONE.
    30  SECTION 1314.  AWARD; ELIGIBILITY OF QUALIFIED BUSINESS;
    19980H2328B3525                 - 52 -

     1                 SCHEDULE.
     2     A QUALIFIED BUSINESS SHALL BE ELIGIBLE FOR AN AWARD BASED
     3  UPON THE AMOUNT OF UNEMPLOYMENT INSURANCE TAX IT HAS PAID FOR
     4  THOSE NEW EMPLOYEES WHO MEET THE CRITERIA SET FORTH IN THE
     5  DEFINITION OF "QUALIFIED BUSINESS" UNDER SECTION 1303. THE AWARD
     6  SHALL APPLY ONLY TO THOSE NEW EMPLOYEES WHOSE GROSS SALARIES ARE
     7  LESS THAN $4,500 PER QUARTER AND SHALL COMMENCE IN THE NEXT
     8  SUCCEEDING QUARTER. THE AWARD SHALL BE BASED ON THE FOLLOWING
     9  SCHEDULE:
    10         FIRST FOUR YEARS IN ZONE         AN AMOUNT EQUAL TO 50% OF THE
    11                                          EMPLOYER'S UNEMPLOYMENT
    12                                          INSURANCE PAYMENT.
    13         SECOND FOUR YEARS IN ZONE        AN AMOUNT EQUAL TO 40% OF THE
    14                                          EMPLOYER'S UNEMPLOYMENT
    15                                          INSURANCE PAYMENT.
    16         THIRD FOUR YEARS IN ZONE         AN AMOUNT EQUAL TO 30% OF THE
    17                                          EMPLOYER'S UNEMPLOYMENT
    18                                          INSURANCE PAYMENT.
    19         FOURTH FOUR YEARS IN ZONE        AN AMOUNT EQUAL TO 20% OF THE
    20                                          EMPLOYER'S UNEMPLOYMENT
    21                                          INSURANCE PAYMENT.
    22         FIFTH FOUR YEARS IN ZONE         AN AMOUNT EQUAL TO 10% OF THE
    23                                          EMPLOYER'S UNEMPLOYMENT
    24                                          INSURANCE PAYMENT.
    25  SECTION 1315.  BUSINESS TAX EXEMPTION.
    26     A QUALIFIED BUSINESS SUBJECT TO THE PROVISIONS OF ARTICLE VI
    27  OF THE ACT OF MARCH 4, 1971 (P.L.6, NO.2), KNOWN AS THE TAX
    28  REFORM CODE OF 1971, EMPLOYING A LARGER NUMBER OF PERSONS AT A
    29  PLACE OF BUSINESS LOCATED WITHIN A DEVELOPMENT ZONE THAN AT ALL
    30  OTHER PLACES OF BUSINESS OF THE TAXPAYER WITHIN THIS
    19980H2328B3525                 - 53 -

     1  COMMONWEALTH SHALL BE EXEMPT FROM THE TAX IMPOSED PURSUANT TO
     2  ARTICLE VI OF THE TAX REFORM CODE OF 1971 FOR A PERIOD OF 20 TAX
     3  YEARS FROM THE DATE OF DESIGNATION OF THE DEVELOPMENT ZONE, OR
     4  FOR A PERIOD OF 20 TAX YEARS FROM THE DATE UPON WHICH THE
     5  TAXPAYER IS FIRST SUBJECT TO THE PROVISIONS OF ARTICLE VI OF THE
     6  TAX REFORM CODE OF 1971, WHICHEVER DATE IS LATER. THE
     7  TERMINATION OF THE DESIGNATION OF A DEVELOPMENT ZONE SHALL NOT
     8  TERMINATE THE EXEMPTION PROVIDED UNDER THIS SECTION IF THE
     9  EXEMPTION WAS GRANTED PRIOR TO THE END OF THE DESIGNATION
    10  PERIOD.
    11  SECTION 1316.  DEVELOPMENT ZONE EMPLOYEE OR INVESTMENT TAX
    12                 CREDITS; LIMITATIONS AND CARRYOVERS.
    13     DEVELOPMENT ZONE EMPLOYEE TAX CREDITS OR DEVELOPMENT ZONE
    14  INVESTMENT TAX CREDITS PROVIDED UNDER THIS CHAPTER SHALL NOT
    15  REDUCE A TAXPAYER'S TAX LIABILITY UNDER THE ACT OF MARCH 4, 1971
    16  (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, FOR THE TAX
    17  TO WHICH THE TAX CREDIT APPLIES IN ANY TAX YEAR BY MORE THAN 50%
    18  OF THE AMOUNT OTHERWISE DUE; BUT EITHER EMPLOYEE TAX CREDITS OR
    19  INVESTMENT TAX CREDITS REMAINING AND UNUSED IN A TAX YEAR MAY BE
    20  CARRIED FORWARD BY THE TAXPAYER TO THE NEXT SUCCEEDING TAX YEAR
    21  AND APPLIED AGAINST 50% OF THE AMOUNT OF TAX OTHERWISE DUE IN
    22  THAT SUCCEEDING TAX YEAR.
    23  SECTION 1317.  DEVELOPMENT ZONE EMPLOYEE TAX CREDIT;
    24                 QUALIFICATIONS; AMOUNT.
    25     ANY QUALIFIED BUSINESS SUBJECT TO THE PROVISIONS OF PART IV
    26  OR IV-A OF ARTICLE III OR ARTICLE IV OF THE ACT OF MARCH 4, 1971
    27  (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, AS ACTIVELY
    28  ENGAGED IN THE CONDUCT OF BUSINESS FROM A LOCATION WITHIN A
    29  DEVELOPMENT ZONE WHICH DOES BUSINESS AT THAT LOCATION CONSISTING
    30  PRIMARILY OF MANUFACTURING OR OTHER BUSINESS THAT IS NOT RETAIL
    19980H2328B3525                 - 54 -

     1  SALES OR WAREHOUSING-ORIENTED SHALL RECEIVE A DEVELOPMENT ZONE
     2  EMPLOYEE TAX CREDIT AGAINST THE AMOUNT OF TAX IMPOSED UNDER PART
     3  IV OR IV-A OF ARTICLE III OR ARTICLE IV OF THE TAX REFORM CODE
     4  OF 1971.
     5         (1)  A ONE-TIME CREDIT OF $1,500 FOR EACH NEW FULL-TIME,
     6     PERMANENT EMPLOYEE EMPLOYED AT THAT LOCATION WHO:
     7             (I)  IS A RESIDENT OF THE QUALIFYING MUNICIPALITY IN
     8         WHICH THE DEVELOPMENT ZONE IS LOCATED OR OF ANY OTHER
     9         QUALIFYING MUNICIPALITY IN WHICH A DEVELOPMENT ZONE IS
    10         LOCATED; AND
    11             (II)  IMMEDIATELY PRIOR TO EMPLOYMENT BY THE TAXPAYER
    12         WAS UNEMPLOYED FOR AT LEAST 90 DAYS OR WAS DEPENDENT UPON
    13         PUBLIC ASSISTANCE AS THE PRIMARY SOURCE OF INCOME.
    14         (2)  A ONE-TIME CREDIT OF $500 FOR EACH NEW FULL-TIME,
    15     PERMANENT EMPLOYEE EMPLOYED AT THAT LOCATION WHO:
    16             (I)  IS A RESIDENT OF A QUALIFYING MUNICIPALITY IN
    17         WHICH THE DEVELOPMENT ZONE IS LOCATED OR OF ANY OTHER
    18         QUALIFYING MUNICIPALITY IN WHICH A DEVELOPMENT ZONE IS
    19         LOCATED;
    20             (II)  DOES NOT MEET THE REQUIREMENTS OF PARAGRAPH
    21         (1); AND
    22             (III)  WAS NOT, IMMEDIATELY PRIOR TO EMPLOYMENT BY
    23         THE TAXPAYER, EMPLOYED AT A LOCATION WITHIN THE
    24         QUALIFYING MUNICIPALITY.
    25         (3)  A QUALIFIED BUSINESS WHICH IS NOT ENTITLED TO AN
    26     EMPLOYEE TAX CREDIT UNDER THIS SECTION BUT WHICH MEETS THE
    27     ELIGIBILITY CRITERIA UNDER SECTION 1325(3) SHALL RECEIVE A
    28     ONE-TIME CREDIT IN AN AMOUNT EQUAL TO 8% OF EACH NEW
    29     INVESTMENT MADE BY THE QUALIFIED BUSINESS IN THE DEVELOPMENT
    30     ZONE UNDER AN AGREEMENT APPROVED BY THE DEPARTMENT. THIS
    19980H2328B3525                 - 55 -

     1     CREDIT SHALL BE APPLIED AGAINST THE TAXPAYER'S TAX LIABILITY
     2     UNDER PART IV OR IV-A OF ARTICLE III OR ARTICLE IV SUBJECT TO
     3     THE LIMITATIONS AND CARRYFORWARD PROVISIONS SET FORTH IN
     4     SECTION 1316. A QUALIFIED BUSINESS MAY NOT CLAIM AN EMPLOYEE
     5     TAX CREDIT AND AN INVESTMENT TAX CREDIT AUTHORIZED UNDER THIS
     6     PARAGRAPH IN THE SAME YEAR, REGARDLESS OF WHETHER THOSE
     7     CREDITS WERE EARNED FOR THE TAX YEAR OR CARRIED FORWARD FROM
     8     A PREVIOUS YEAR.
     9         (4)  THE DEVELOPMENT ZONE EMPLOYEE TAX CREDIT SHALL BE
    10     ALLOWED IN THE TAX YEAR IMMEDIATELY FOLLOWING THE TAX YEAR IN
    11     WHICH THE NEW FULL-TIME, PERMANENT EMPLOYEE WAS FIRST
    12     EMPLOYED BY THE TAXPAYER AND SHALL BE PERMITTED IN ANY TAX
    13     YEAR OF A 20-YEAR PERIOD FROM THE DATE OF DESIGNATION OF THE
    14     DEVELOPMENT ZONE OR OF A PERIOD OF 20 TAX YEARS FROM THE DATE
    15     WITHIN THAT DESIGNATION PERIOD UPON WHICH THE TAXPAYER IS
    16     FIRST SUBJECT TO THE PROVISIONS OF PART IV OR IV-A OF ARTICLE
    17     III OR ARTICLE IV OF THE TAX REFORM CODE OF 1971, WHICHEVER
    18     DATE IS LATER. THE TERMINATION OF THE DESIGNATION OF A
    19     DEVELOPMENT ZONE SHALL NOT TERMINATE THE ELIGIBILITY PERIOD
    20     PROVIDED UNDER THIS SECTION.
    21         (5)  A TAX CREDIT SHALL BE PERMITTED UNDER THIS SECTION
    22     ONLY FOR THOSE NEW FULL-TIME, PERMANENT EMPLOYEES WHO HAVE
    23     BEEN EMPLOYED FOR AT LEAST SIX CONTINUOUS MONTHS BY THE
    24     TAXPAYER DURING THE TAX YEAR FOR WHICH THE TAX CREDIT IS
    25     CLAIMED.
    26         (6)  A NEWLY EMPLOYED EMPLOYEE SHALL NOT BE DEEMED A NEW
    27     FULL-TIME, PERMANENT EMPLOYEE FOR THE PURPOSES OF THIS
    28     SECTION UNLESS THE TOTAL NUMBER OF FULL-TIME, PERMANENT
    29     EMPLOYEES, INCLUDING THE NEWLY EMPLOYED EMPLOYEE, EMPLOYED BY
    30     THE EMPLOYER IN THE DEVELOPMENT ZONE DURING THE CALENDAR YEAR
    19980H2328B3525                 - 56 -

     1     EXCEEDS THE GREATEST NUMBER OF FULL-TIME, PERMANENT EMPLOYEES
     2     EMPLOYED IN THE DEVELOPMENT ZONE BY THE EMPLOYER DURING ANY
     3     PRIOR CALENDAR YEAR DURING THE PERIOD COMMENCING WITH THE
     4     DATE OF DEVELOPMENT ZONE DESIGNATION.
     5  SECTION 1318.  SALES AND USE TAX.
     6     (A)  GENERAL RULE.--EXCEPT AS SET FORTH IN SUBSECTION (B),
     7  RETAIL SALES OF TANGIBLE PERSONAL PROPERTY AND SALES OF SERVICES
     8  TO A QUALIFIED BUSINESS FOR THE EXCLUSIVE USE OR CONSUMPTION OF
     9  SUCH BUSINESS WITHIN A DEVELOPMENT ZONE ARE EXEMPT FROM THE
    10  TAXES IMPOSED UNDER SECTION 202 OF THE ACT OF MARCH 4, 1971
    11  (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971.
    12     (B)  EXCEPTION.--SUBSECTION (A) DOES NOT APPLY TO RETAIL
    13  SALES OF ANY OF THE FOLLOWING:
    14         (1)  MOTOR VEHICLES THE SALE OF WHICH IS OTHERWISE
    15     TAXABLE UNDER ARTICLE II OF THE TAX REFORM CODE OF 1971.
    16         (2)  "LIQUOR" OR "MALT OR BREWED BEVERAGES" AS DEFINED IN
    17     SECTION 102 OF THE ACT OF APRIL 12, 1951 (P.L.90, NO.21),
    18     KNOWN AS THE LIQUOR CODE.
    19         (3)  "CIGARETTES" AS DEFINED IN SECTION 1201 OF THE TAX
    20     REFORM CODE OF 1971.
    21         (4)  UTILITY SERVICES.
    22         (5)  TELECOMMUNICATIONS SERVICES.
    23         (6)  ENERGY.
    24  SECTION 1319.  PARTIAL EXEMPTION; CERTIFICATION; DISPOSITION OF
    25                 REVENUE.
    26     (A)  PARTIAL EXEMPTION.--
    27         (1)  EXCEPT AS SET FORTH IN PARAGRAPH (2), RETAIL SALES
    28     MADE BY A CERTIFIED VENDOR FROM A PLACE OF BUSINESS OWNED OR
    29     LEASED AND REGULARLY OPERATED BY THE VENDOR FOR THE PURPOSE
    30     OF MAKING RETAIL SALES AND LOCATED IN A DEVELOPMENT ZONE ARE
    19980H2328B3525                 - 57 -

     1     EXEMPT FROM 50% OF THE TAX IMPOSED BY SECTION 202 OF THE ACT
     2     OF MARCH 4, 1971 (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE
     3     OF 1971.
     4         (2)  PARAGRAPH (1) DOES NOT APPLY TO RETAIL SALES OF ANY
     5     OF THE FOLLOWING:
     6             (I)  MOTOR VEHICLES THE SALE OF WHICH IS OTHERWISE
     7         TAXABLE UNDER ARTICLE II OF THE TAX REFORM CODE OF 1971.
     8             (II)  "LIQUOR" OR "MALT OR BREWED BEVERAGES" AS
     9         DEFINED IN SECTION 102 OF THE ACT OF APRIL 12, 1951
    10         (P.L.90, NO.21), KNOWN AS THE LIQUOR CODE.
    11             (III)  "CIGARETTES" AS DEFINED IN SECTION 1201 OF THE
    12         TAX REFORM CODE OF 1971.
    13             (IV)  MANUFACTURING MACHINERY, EQUIPMENT OR
    14         APPARATUS.
    15             (V)  ENERGY.
    16     (B)  CERTIFICATION.--ANY VENDOR THAT IS A QUALIFIED BUSINESS
    17  HAVING A PLACE OF BUSINESS LOCATED IN A DEVELOPMENT ZONE MAY
    18  APPLY TO THE DEPARTMENT OF REVENUE FOR CERTIFICATION UNDER THIS
    19  SECTION. THE DEPARTMENT OF REVENUE SHALL CERTIFY A VENDOR IF IT
    20  FINDS THAT THE VENDOR OWNS OR LEASES AND REGULARLY OPERATES A
    21  PLACE OF BUSINESS LOCATED IN THE DEVELOPMENT ZONE FOR THE
    22  PURPOSE OF MAKING RETAIL SALES, THAT ITEMS ARE REGULARLY
    23  EXHIBITED AND OFFERED FOR RETAIL SALE AT THAT LOCATION AND THAT
    24  THE PLACE OF BUSINESS IS NOT UTILIZED PRIMARILY FOR THE PURPOSE
    25  OF CATALOG OR MAIL ORDER SALES. THE CERTIFICATION UNDER THIS
    26  SECTION SHALL REMAIN IN EFFECT DURING THE TIME THE BUSINESS
    27  RETAINS ITS STATUS AS A QUALIFIED BUSINESS MEETING THE
    28  ELIGIBILITY CRITERIA OF SECTION 1325. THE DEPARTMENT OF REVENUE
    29  MAY REVOKE A CERTIFICATION GRANTED UNDER THIS SECTION IF IT
    30  DETERMINES THAT THE VENDOR NO LONGER COMPLIES WITH THE
    19980H2328B3525                 - 58 -

     1  PROVISIONS OF THIS SECTION NOTWITHSTANDING ANY OTHER PROVISIONS
     2  OF LAW TO THE CONTRARY.
     3     (C)  DISPOSITION OF REVENUE.--
     4         (1)  AFTER FIRST DEPOSITING 10% OF THE GROSS AMOUNT OF
     5     REVENUE RECEIVED FROM THE TAXATION OF RETAIL SALES MADE BY
     6     CERTIFIED VENDORS FROM BUSINESS LOCATIONS IN DEVELOPMENT
     7     ZONES TO WHICH THE EXEMPTION UNDER SUBSECTION (A) APPLIES
     8     INTO THE ACCOUNT CREATED IN THE NAME OF THE DEPARTMENT IN THE
     9     FUND, PURSUANT TO SECTION 1327, THE REMAINING 90% SHALL BE
    10     DEPOSITED IMMEDIATELY UPON COLLECTION BY THE TREASURY
    11     DEPARTMENT, AS FOLLOWS:
    12             (I)  IN THE FIRST FIVE-YEAR PERIOD DURING WHICH THE
    13         COMMONWEALTH HAS COLLECTED REDUCED RATE REVENUES WITHIN A
    14         DEVELOPMENT ZONE, ALL OF THAT REVENUE SHALL BE DEPOSITED
    15         IN THE FUND.
    16             (II)  IN THE SECOND FIVE-YEAR PERIOD DURING WHICH THE
    17         COMMONWEALTH HAS COLLECTED REDUCED RATE REVENUES WITHIN A
    18         DEVELOPMENT ZONE, 66 2/3% OF THAT REVENUE SHALL BE
    19         DEPOSITED IN THE FUND; AND 33 1/3% SHALL BE DEPOSITED IN
    20         THE GENERAL FUND.
    21             (III)  IN THE THIRD FIVE-YEAR PERIOD DURING WHICH THE
    22         COMMONWEALTH HAS COLLECTED REDUCED RATE REVENUES WITHIN A
    23         DEVELOPMENT ZONE, 33 1/3% OF THAT REVENUE SHALL BE
    24         DEPOSITED IN THE FUND; AND 66 2/3% SHALL BE DEPOSITED IN
    25         THE GENERAL FUND.
    26             (IV)  IN THE FINAL PERIOD, OF THE LESSER OF FIVE
    27         YEARS OR THE EXISTENCE OF THE DEVELOPMENT ZONE DURING
    28         WHICH THE COMMONWEALTH HAS COLLECTED REDUCED RATE
    29         REVENUES WITHIN A DEVELOPMENT ZONE, ALL OF THAT REVENUE
    30         SHALL BE DEPOSITED IN THE GENERAL FUND.
    19980H2328B3525                 - 59 -

     1         (2)  NO DEVELOPMENT ZONE SHALL RECEIVE THE DEPOSIT
     2     BENEFIT GRANTED BY ANY ONE SUBPARAGRAPH OF PARAGRAPH (1) FOR
     3     MORE THAN FIVE CUMULATIVE YEARS.
     4         (3)  THE REVENUES REQUIRED TO BE DEPOSITED IN THE FUND
     5     UNDER THIS SECTION SHALL BE USED FOR THE PURPOSES OF THAT
     6     FUND AND FOR THE USES PRESCRIBED IN SECTION 1327, SUBJECT TO
     7     ANNUAL APPROPRIATIONS BEING MADE FOR THOSE PURPOSES AND USES.
     8     (D)  ALTERNATE DISPOSITION OF REVENUE.--IF THE PARTIAL
     9  EXEMPTION PROVIDED IN THIS SECTION CANNOT TAKE EFFECT BECAUSE OF
    10  THE JUDGMENT OF A COURT OF COMPETENT JURISDICTION HOLDING IT
    11  UNCONSTITUTIONAL, 50% OF THE GROSS AMOUNT OF REVENUE RECEIVED
    12  FROM THE TAXATION OF RETAIL SALES MADE BY CERTIFIED VENDORS FROM
    13  BUSINESS LOCATIONS IN DEVELOPMENT ZONES TO WHICH THE EXEMPTION
    14  WOULD HAVE OTHERWISE APPLIED SHALL BE DEPOSITED IN THE FUND IN
    15  THE AMOUNTS AND FOR THE PURPOSES PROVIDED IN THIS CHAPTER.
    16  SECTION 1320.  REGULATIONS.
    17     (A)  DEPARTMENT OF REVENUE.--THE DEPARTMENT OF REVENUE SHALL
    18  PROMULGATE REGULATIONS AS NECESSARY TO EFFECTUATE THE PROVISIONS
    19  OF SECTIONS 1315 THROUGH 1319, AND SECTIONS 1325 AND 1327.
    20     (B)  DEPARTMENT.--THE DEPARTMENT SHALL PROMULGATE REGULATIONS
    21  AS MAY BE NECESSARY TO EFFECTUATE THE PROVISIONS OF SECTION
    22  1314.
    23  SECTION 1321.  STATE FINANCING ASSISTANCE; PRIORITY TO PROJECT
    24                 IN MUNICIPALITY WITH DEVELOPMENT ZONE.
    25     NOTWITHSTANDING ANY PROVISIONS OF THE ACT OF MAY 17, 1956
    26  (1955 P.L.1609, NO.537), KNOWN AS THE PENNSYLVANIA INDUSTRIAL
    27  DEVELOPMENT AUTHORITY ACT OR ANY OTHER ACT TO THE CONTRARY,
    28  PROJECTS WHICH ARE OTHERWISE ELIGIBLE UNDER THE PENNSYLVANIA
    29  INDUSTRIAL DEVELOPMENT AUTHORITY ACT OR OTHER STATUTE, BUT WHICH
    30  ARE LOCATED IN A MUNICIPALITY IN WHICH THERE IS A DEVELOPMENT
    19980H2328B3525                 - 60 -

     1  ZONE DESIGNATED, SHALL, UPON THE WRITTEN RECOMMENDATION OF THE
     2  DEPARTMENT, BE ACCORDED PRIORITY AND THE LOWEST INTEREST RATE
     3  PROVIDED OVER OTHER ELIGIBLE PROJECTS IN RECEIVING ASSISTANCE
     4  FROM THE PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY OR FROM
     5  ANY AGENCY OR AUTHORITY.
     6  SECTION 1322.  SKILL TRAINING PROGRAMS; DELIVERY.
     7     THE DEPARTMENT OF LABOR AND INDUSTRY AND THE DEPARTMENT OF
     8  EDUCATION SHALL JOINTLY DEVELOP AND COORDINATE THE DELIVERY OF
     9  SKILL TRAINING PROGRAMS NECESSARY TO MEET THE NEEDS OF
    10  QUALIFYING BUSINESSES.
    11  SECTION 1323.  REGULATIONS; EXEMPTION OF DEVELOPMENT ZONES.
    12     IN ORDER TO CARRY OUT THE PURPOSES OF THIS CHAPTER, ANY
    13  COMMONWEALTH OR LOCAL AGENCY MAY EXEMPT DESIGNATED DEVELOPMENT
    14  ZONES FROM THE PROVISIONS OF ANY REGULATION PROMULGATED BY THAT
    15  ENTITY OR AGENCY, UPON FINDING BY THE AGENCY THAT THE EXEMPTION
    16  WOULD NOT ENDANGER THE HEALTH AND SAFETY OF THE CITIZENS OF THIS
    17  COMMONWEALTH.
    18  SECTION 1324.  REVIEW OF STATE REGULATIONS BY DEPARTMENT.
    19     THE DEPARTMENT SHALL CONDUCT A CONTINUING REVIEW OF ALL
    20  COMMONWEALTH REGULATIONS AND SHALL RECOMMEND TO THE APPROPRIATE
    21  ADMINISTRATIVE BODIES INCLUDING THE INDEPENDENT REGULATORY
    22  REVIEW COMMISSION THE MODIFICATION OR WAIVER OF REGULATIONS
    23  PROMULGATED BY THAT AGENCY IN ORDER TO CONTRIBUTE TO THE
    24  IMPLEMENTATION OF THIS CHAPTER.
    25  SECTION 1325.  ELIGIBILITY FOR INCENTIVES BY QUALIFIED BUSINESS.
    26     TO BE ELIGIBLE FOR ANY OF THE INCENTIVES PROVIDED UNDER THIS
    27  ACT, A QUALIFIED BUSINESS MUST DEMONSTRATE TO THE SATISFACTION
    28  OF THE DEPARTMENT THAT:
    29         (1)  THE BUSINESS WILL CREATE NEW EMPLOYMENT IN THE
    30     MUNICIPALITY.
    19980H2328B3525                 - 61 -

     1         (2)  THE BUSINESS WILL NOT CREATE UNEMPLOYMENT IN OTHER
     2     AREAS OF THIS COMMONWEALTH, INCLUDING THE MUNICIPALITY IN
     3     WHICH THE ZONE IS LOCATED.
     4         (3)  FOR THE PURPOSES OF ELIGIBILITY FOR THE INCENTIVES
     5     PROVIDED UNDER SECTIONS 1315, 1317, 1318 AND 1319, A
     6     QUALIFIED BUSINESS SHALL NOT BE REQUIRED TO MEET THE
     7     REQUIREMENTS OF PARAGRAPH (1) IF ALL OF THE FOLLOWING APPLY:
     8             (I)  AT THE TIME OF DESIGNATION OF THE DEVELOPMENT
     9         ZONE OR AT THE TIME ZONE DESIGNATION IS EXTENDED BY
    10         EXPANSION TO THE LOCATION OF A BUSINESS, THE QUALIFIED
    11         BUSINESS HAD BEEN ENGAGED IN THE ACTIVE CONDUCT OF A
    12         TRADE OR BUSINESS IN THAT ZONE OR IN THE ADDED AREA OF
    13         THAT ZONE FOR AT LEAST ONE YEAR.
    14             (II)  THE QUALIFIED BUSINESS EMPLOYS FEWER THAN 50
    15         EMPLOYEES.
    16             (III)  THE QUALIFIED BUSINESS HAS ENTERED INTO AN
    17         AGREEMENT, APPROVED BY THE DEPARTMENT, WITH THE GOVERNING
    18         BODY OF THE QUALIFYING MUNICIPALITY IN WHICH THE
    19         DEVELOPMENT ZONE IS LOCATED UNDER WHICH THE QUALIFIED
    20         BUSINESS AGREES TO UNDERTAKE AN INVESTMENT IN THE
    21         DEVELOPMENT ZONE IN LIEU OF THE EMPLOYMENT OF NEW
    22         EMPLOYEES. AN INVESTMENT UNDER THIS SUBPARAGRAPH MUST BE
    23         IN AN AMOUNT AND OF A NATURE WHICH THE MUNICIPAL
    24         GOVERNING BODY AND THE DEPARTMENT FIND CONTRIBUTE
    25         SUBSTANTIALLY TO THE ECONOMIC ATTRACTIVENESS OF THE
    26         DEVELOPMENT ZONE. AN INVESTMENT UNDER THIS SUBPARAGRAPH
    27         INCLUDES ALL OF THE FOLLOWING:
    28                 (A)  IMPROVEMENT OF THE EXTERIOR APPEARANCE OR
    29             CUSTOMER FACILITIES OF THE PROPERTY CONSTITUTING THE
    30             PLACE OF BUSINESS OF THE QUALIFIED BUSINESS WITHIN
    19980H2328B3525                 - 62 -

     1             THE ZONE IF THE IMPROVEMENT IS OF A PERMANENT NATURE
     2             AND NOT REQUIRED TO MEET EXISTING ORDINANCES OR CODE
     3             REGULATIONS.
     4                 (B)  PURCHASE OF EQUIPMENT BY THE QUALIFIED
     5             BUSINESS IF THE EQUIPMENT IS TO BE USED EXCLUSIVELY
     6             IN THE DEVELOPMENT ZONE.
     7                 (C)  MONETARY CONTRIBUTIONS TO THE QUALIFYING
     8             MUNICIPALITY TO UNDERTAKE IMPROVEMENTS TO INCREASE
     9             THE SAFETY OR ATTRACTIVENESS OF THE ZONE TO
    10             BUSINESSES WHICH MAY WISH TO LOCATE THERE OR TO
    11             CONSUMER VISITORS TO THE ZONE. THIS CLAUSE INCLUDES
    12             LITTER CLEANUP AND CONTROL; LANDSCAPING; PARKING
    13             AREAS AND FACILITIES; RECREATIONAL AND REST AREAS AND
    14             FACILITIES; REPAIR OR IMPROVEMENTS TO PUBLIC STREETS,
    15             CURBING, SIDEWALKS AND PEDESTRIAN THOROUGHFARES;
    16             STREET LIGHTING; AND INCREASED POLICE, FIRE OR
    17             SANITATION SERVICES IN THE DEVELOPMENT ZONE.
    18         (4)  IN ORDER TO MEET THE REQUIREMENT OF PARAGRAPH
    19     (3)(III), IF THE QUALIFIED BUSINESS EMPLOYS LESS THAN 11
    20     INDIVIDUALS, AN INVESTMENT MUST BE IN AN AMOUNT OF AT LEAST
    21     $5,000, IF THE QUALIFIED BUSINESS EMPLOYS MORE THAN TEN
    22     INDIVIDUALS, AN INVESTMENT MUST BE IN AN AMOUNT OF AT LEAST
    23     THE NUMBER OF INDIVIDUALS EMPLOYED TIMES $500. A QUALIFIED
    24     BUSINESS MUST MAKE AN INVESTMENT FOR EACH YEAR THE QUALIFIED
    25     BUSINESS DOES NOT MEET THE REQUIREMENTS OF PARAGRAPH (1). IN
    26     ORDER TO RECEIVE THE INCENTIVES PERMITTED BY THIS SECTION,
    27     THE BUSINESS MUST PROVIDE WRITTEN EVIDENCE OF THE INVESTMENT
    28     TO THE DEPARTMENT.
    29  SECTION 1326.  QUALIFIED BUSINESS RECIPIENT OF BENEFITS; ANNUAL
    30                 CERTIFICATION.
    19980H2328B3525                 - 63 -

     1     (A)  REQUIREMENT.--A FIRM THAT RECEIVES ANY BENEFITS SET
     2  FORTH IN SECTIONS 1314 THROUGH 1322 SHALL ANNUALLY CERTIFY TO
     3  THE DEPARTMENT THAT IT IS A QUALIFIED BUSINESS.
     4     (B)  PENALTY.--
     5         (1)  A FIRM MAY NOT DO ANY OF THE FOLLOWING:
     6             (I)  FAIL TO MAKE THE CERTIFICATION UNDER SUBSECTION
     7         (A).
     8             (II)  INTENTIONALLY FALSIFY DATA IN THE CERTIFICATION
     9         UNDER SUBSECTION (A).
    10         (2)  A FIRM THAT VIOLATES PARAGRAPH (1) COMMITS A
    11     MISDEMEANOR OF THE SECOND DEGREE AND SHALL, UPON CONVICTION,
    12     BE SENTENCED TO PAY A FINE IN THE AMOUNT OF NOT MORE THAN
    13     $5,000 OR TO IMPRISONMENT OF NOT MORE THAN TWO YEARS, OR
    14     BOTH.
    15  SECTION 1327.  FUND.
    16     (A)  ESTABLISHMENT.--THERE IS HEREBY ESTABLISHED THE ECONOMIC
    17  DEVELOPMENT ZONE ASSISTANCE FUND TO BE HELD BY THE STATE
    18  TREASURER. THE FUND SHALL BE THE REPOSITORY FOR ALL MONEY
    19  REQUIRED TO BE DEPOSITED UNDER SECTION 1319 AND MONEY
    20  APPROPRIATED ANNUALLY TO THE FUND. ALL MONEY DEPOSITED IN THE
    21  FUND SHALL BE HELD AND DISBURSED IN THE AMOUNTS NECESSARY TO
    22  FULFILL THE PURPOSES OF THIS SECTION. THE STATE TREASURER MAY
    23  INVEST AND REINVEST ANY MONEY IN THE FUND IN LEGAL OBLIGATIONS
    24  OF THE UNITED STATES OR OF THE COMMONWEALTH OR OF ANY POLITICAL
    25  SUBDIVISION. ANY INCOME FROM MONEY SO INVESTED OR REINVESTED
    26  SHALL BE INCLUDED IN THE FUND. THE STATE TREASURER SHALL
    27  MAINTAIN SEPARATE ACCOUNTS FOR EACH DEVELOPMENT ZONE DESIGNATED
    28  UNDER THIS CHAPTER AND ONE SEPARATE ACCOUNT IN THE DEPARTMENT'S
    29  NAME FOR THE ADMINISTRATION OF THE ECONOMIC DEVELOPMENT ZONE
    30  PROGRAM. THE STATE TREASURER SHALL CREDIT TO EACH ACCOUNT AN
    19980H2328B3525                 - 64 -

     1  AMOUNT OF THE MONEY DEPOSITED IN THE FUND PROPORTIONATE TO THE
     2  AMOUNT OF REVENUE COLLECTED FROM THE TAXATION OF RETAIL SALES
     3  MADE IN THE ZONE AND APPROPRIATED TO THE DEVELOPMENT ZONE
     4  ASSISTANCE FUND OR AN AMOUNT OF MONEY APPROPRIATED TO THE FUND
     5  AND REQUIRED TO BE CREDITED TO THE DEVELOPMENT ZONE ACCOUNT OF
     6  THE QUALIFYING MUNICIPALITY UNDER SECTION 1319. THE STATE
     7  TREASURER SHALL PROMULGATE REGULATIONS NECESSARY TO GOVERN THE
     8  ADMINISTRATION OF THE FUND FOR THE PURPOSES OF THIS SECTION.
     9     (B)  USE.--THE FUND SHALL BE USED FOR THE PURPOSE OF
    10  ASSISTING QUALIFYING MUNICIPALITIES IN WHICH DEVELOPMENT ZONES
    11  ARE DESIGNATED IN UNDERTAKING PUBLIC IMPROVEMENTS AND ECONOMIC
    12  DEVELOPMENT PROJECTS AND IN UPGRADING ELIGIBLE MUNICIPAL
    13  SERVICES IN DEVELOPMENT ZONES.
    14     (C)  PROPOSAL.--THE GOVERNING BODY OF A QUALIFYING
    15  MUNICIPALITY IN WHICH A DEVELOPMENT ZONE IS LOCATED AND THE ZONE
    16  DEVELOPMENT CORPORATION CREATED OR DESIGNATED BY THE
    17  MUNICIPALITY FOR THAT DEVELOPMENT ZONE MAY, BY RESOLUTION
    18  JOINTLY ADOPTED AFTER PUBLIC HEARING, PROPOSE TO UNDERTAKE A
    19  PROJECT FOR THE PUBLIC IMPROVEMENT OF THE DEVELOPMENT ZONE OR TO
    20  INCREASE ELIGIBLE MUNICIPAL SERVICES IN THE DEVELOPMENT ZONE AND
    21  TO FUND THAT PROJECT OR INCREASE ELIGIBLE MUNICIPAL SERVICES
    22  FROM MONEY DEPOSITED IN THE FUND AND CREDITED TO THE ACCOUNT
    23  MAINTAINED BY THE STATE TREASURER FOR THE DEVELOPMENT ZONE. THE
    24  PROPOSAL MUST SET FORTH A PLAN FOR THE PROJECT OR FOR THE
    25  INCREASE IN ELIGIBLE MUNICIPAL SERVICES AND MUST INCLUDE ALL OF
    26  THE FOLLOWING:
    27         (1)  A DESCRIPTION OF THE PROPOSED PROJECT OR OF THE
    28     MUNICIPAL SERVICES TO BE INCREASED.
    29         (2)  AN ESTIMATE OF THE TOTAL PROJECT COSTS, OR OF THE
    30     TOTAL COSTS OF INCREASING THE MUNICIPAL SERVICES, AND AN
    19980H2328B3525                 - 65 -

     1     ESTIMATE OF THE AMOUNTS OF FUNDING NECESSARY ANNUALLY FROM
     2     THE DEVELOPMENT ZONE ACCOUNT.
     3         (3)  A STATEMENT OF ANY OTHER REVENUE SOURCES TO BE USED
     4     TO FINANCE THE PROJECT OR TO FUND THE INCREASE IN ELIGIBLE
     5     MUNICIPAL SERVICES.
     6         (4)  A STATEMENT OF THE TIME NECESSARY TO COMPLETE THE
     7     PROJECT OR OF THE TIME DURING WHICH THE INCREASED MUNICIPAL
     8     SERVICES ARE TO BE MAINTAINED.
     9         (5)  A STATEMENT OF THE MANNER IN WHICH THE PROPOSED
    10     PROJECT OR INCREASE IN MUNICIPAL SERVICES FURTHERS THE
    11     MUNICIPALITY'S POLICY AND INTENTIONS FOR ADDRESSING THE
    12     ECONOMIC AND SOCIAL CONDITIONS EXISTING IN THE AREA OF THE
    13     DEVELOPMENT ZONE AS SET FORTH IN THE ZONE DEVELOPMENT PLAN
    14     APPROVED BY THE DEPARTMENT.
    15         (6)  A DESCRIPTION OF THE FINANCIAL AND PROGRAMMATIC
    16     CONTROLS AND REPORTING MECHANISMS TO BE USED TO GUARANTEE
    17     THAT THE FUNDS WILL BE SPENT IN ACCORDANCE WITH THE PLAN AND
    18     THAT THE PROJECT OR INCREASED MUNICIPAL SERVICE WILL
    19     ACCOMPLISH ITS PURPOSE.
    20     (D)  PROPOSAL APPROVAL.--UPON ADOPTION BY THE GOVERNING BODY
    21  OF THE QUALIFYING MUNICIPALITY AND BY THE ZONE DEVELOPMENT
    22  CORPORATION, THE PROPOSAL SHALL BE SENT TO THE DEPARTMENT FOR
    23  ITS EVALUATION AND APPROVAL. THE DEPARTMENT SHALL APPROVE THE
    24  PROPOSAL IF IT FINDS ALL OF THE FOLLOWING:
    25         (1)  IN THE CASE OF A PROJECT, THAT THE PROPOSED PROJECT
    26     FURTHERS THE POLICY AND INTENTIONS OF THE ZONE DEVELOPMENT
    27     PLAN APPROVED BY THE DEPARTMENT AND THAT THE ESTIMATED ANNUAL
    28     PAYMENTS FOR THE PROJECT FROM THE DEVELOPMENT ZONE ACCOUNT TO
    29     WHICH THE PROPOSAL PERTAINS ARE NOT LIKELY TO RESULT IN A
    30     DEFICIT IN THAT ACCOUNT.
    19980H2328B3525                 - 66 -

     1         (2)  IN THE CASE OF AN INCREASE IN ELIGIBLE MUNICIPAL
     2     SERVICES, THAT THE PROPOSED PROJECT FURTHERS THE POLICY AND
     3     INTENTIONS OF THE ZONE DEVELOPMENT PLAN APPROVED BY THE
     4     DEPARTMENT; THAT THE QUALIFYING MUNICIPALITY HAS FURNISHED
     5     SATISFACTORY ASSURANCES THAT THE ADDITIONAL POLICEMEN OR
     6     FIREMEN TO BE HIRED OR THE ADDITIONAL VEHICLES, EQUIPMENT OR
     7     APPARATUS TO BE PURCHASED OR LEASED SHALL BE USED TO AUGMENT
     8     OR UPGRADE PUBLIC SAFETY IN THE DEVELOPMENT ZONE AND SHALL
     9     NOT BE USED IN OTHER AREAS OF THE MUNICIPALITY; THAT THE
    10     QUALIFYING MUNICIPALITY SHALL ANNUALLY APPROPRIATE FOR THE
    11     INCREASED ELIGIBLE MUNICIPAL SERVICES AN AMOUNT EQUAL TO 20%
    12     OF THE AMOUNT OF ANNUAL PAYMENTS FOR THE ELIGIBLE MUNICIPAL
    13     SERVICES FROM THE DEVELOPMENT ZONE ACCOUNT AND SHALL NOT
    14     REQUEST FOR THE INCREASED ELIGIBLE MUNICIPAL SERVICES AN
    15     AMOUNT EQUAL TO MORE THAN 35% OF THE AMOUNT OF ANNUAL
    16     PAYMENTS INTO THE DEVELOPMENT ZONE ACCOUNT; AND THAT THE
    17     ESTIMATED ANNUAL PAYMENTS FOR THE ELIGIBLE MUNICIPAL SERVICES
    18     FROM THE DEVELOPMENT ZONE ACCOUNT TO WHICH THE PROPOSAL
    19     PERTAINS ARE NOT LIKELY TO RESULT IN A DEFICIT IN THAT
    20     ACCOUNT.
    21     (E)  CERTIFICATION.--IF THE DEPARTMENT APPROVES THE PROPOSAL,
    22  IT SHALL ANNUALLY, UPON ITS RECEIPT OF A WRITTEN STATEMENT FROM
    23  THE GOVERNING BODY OF THE QUALIFYING MUNICIPALITY AND THE ZONE
    24  DEVELOPMENT CORPORATION, CERTIFY TO THE STATE TREASURER THE
    25  AMOUNT TO BE PAID IN THAT YEAR FROM THE DEVELOPMENT ZONE ACCOUNT
    26  IN THE FUND WITH RESPECT TO EACH PROJECT OR INCREASE IN ELIGIBLE
    27  MUNICIPAL SERVICES APPROVED. THE DEPARTMENT MAY REVOKE APPROVAL
    28  OF A PROJECT OR AN INCREASE IN ELIGIBLE MUNICIPAL SERVICES IF IT
    29  FINDS THAT THE ANNUAL PAYMENTS MADE FROM THE FUND ARE NOT BEING
    30  USED AS REQUIRED BY THIS SECTION.
    19980H2328B3525                 - 67 -

     1     (F)  PAYMENT.--UPON CERTIFICATION BY THE DEPARTMENT OF THE
     2  ANNUAL AMOUNT TO BE PAID TO A QUALIFYING ZONE WITH RESPECT TO
     3  ANY PROJECT OR INCREASE IN ELIGIBLE MUNICIPAL SERVICES, THE
     4  STATE TREASURER SHALL PAY IN EACH YEAR TO THE QUALIFYING
     5  MUNICIPALITY THE AMOUNT CERTIFIED, WITHIN THE LIMITS OF THE
     6  AMOUNTS CREDITED TO THE DEVELOPMENT ZONE ACCOUNT OF THE
     7  QUALIFYING MUNICIPALITY.
     8     (G)  ADMINISTRATION.--AN AMOUNT NOT TO EXCEED ONE-THIRD OF
     9  THE AMOUNT DEPOSITED IN THE ACCOUNT CREATED IN THE NAME OF THE
    10  DEPARTMENT IN THE FUND SHALL BE USED BY THE DEPARTMENT FOR THE
    11  COORDINATION AND ADMINISTRATION OF THE PROGRAM THROUGHOUT THIS
    12  COMMONWEALTH, INCLUDING COSTS FOR PERSONNEL, OPERATING EXPENSES
    13  AND MARKETING. THE BALANCE OF THE REMAINING AMOUNT SHALL BE
    14  DISTRIBUTED TO QUALIFYING MUNICIPALITIES IN PROPORTION TO EACH
    15  MUNICIPALITY'S CONTRIBUTION TO THE FUND FOR THE COORDINATION AND
    16  ADMINISTRATION OF THE PROGRAM WITHIN THE MUNICIPALITY, INCLUDING
    17  COSTS FOR PERSONNEL, OPERATING EXPENSES AND MARKETING.
    18     (H)  DEFINITIONS.--AS USED IN THIS SECTION, THE FOLLOWING
    19  WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS
    20  SUBSECTION:
    21     "ELIGIBLE MUNICIPAL SERVICES."  THE HIRING OF ADDITIONAL
    22  POLICE OFFICERS OR FIREFIGHTERS ASSIGNED DUTIES IN THE
    23  DEVELOPMENT ZONE OR THE PURCHASING OR LEASING OF ADDITIONAL
    24  POLICE OR FIRE VEHICLES, EQUIPMENT OR APPARATUS TO BE USED FOR
    25  THE PROVISION OF AUGMENTED OR UPGRADED PUBLIC SAFETY SERVICES IN
    26  THE DEVELOPMENT ZONE AND ITS IMMEDIATE VICINITY.
    27     "PROJECT."  AN ACTIVITY FUNDED BY THE FUND THROUGH THE
    28  QUALIFIED MUNICIPALITY AND IMPLEMENTED BY THE ZONE DEVELOPMENT
    29  CORPORATION. THE TERM INCLUDES ALL OF THE FOLLOWING:
    30         (1)  PURCHASING, LEASING, CONDEMNING OR OTHERWISE
    19980H2328B3525                 - 68 -

     1     ACQUIRING OF LAND OR OTHER PROPERTY IN THE DEVELOPMENT ZONE
     2     OR AS NECESSARY FOR A RIGHT-OF-WAY OR OTHER EASEMENT TO OR
     3     FROM THE DEVELOPMENT ZONE; RELOCATING AND MOVING OF PERSONS
     4     OR BUSINESSES DISPLACED BY THE ACQUISITION OF LAND OR
     5     PROPERTY.
     6         (2)  REHABILITATION AND REDEVELOPMENT OF LAND OR
     7     PROPERTY. THIS PARAGRAPH INCLUDES DEMOLITION, CLEARANCE,
     8     REMOVAL, RELOCATION, RENOVATION, ALTERATION, CONSTRUCTION,
     9     RECONSTRUCTION, INSTALLATION OR REPAIR OF LAND OR ANY
    10     BUILDING, STREET, HIGHWAY, ALLEY, UTILITY, SERVICE OR OTHER
    11     STRUCTURE OR IMPROVEMENT WHICH WILL LEAD TO INCREASED
    12     ECONOMIC ACTIVITY WITHIN THE DEVELOPMENT ZONE.
    13         (3)  ACQUISITION, CONSTRUCTION, RECONSTRUCTION,
    14     REHABILITATION OR INSTALLATION OF PUBLIC FACILITIES AND
    15     IMPROVEMENTS, EXCEPT BUILDINGS AND FACILITIES FOR THE GENERAL
    16     CONDUCT OF GOVERNMENT AND SCHOOLS.
    17         (4)  ESTABLISHMENT OF REVOLVING LOAN OR GRANT PROGRAMS
    18     FOR QUALIFIED BUSINESSES IN THE ZONE TO ENCOURAGE PRIVATE
    19     INVESTMENT AND JOB CREATION.
    20         (5)  ESTABLISHMENT OF MATCHING GRANT PROGRAMS FOR THE
    21     ESTABLISHMENT OR OPERATION OF PEDESTRIAN MALLS, SPECIAL
    22     IMPROVEMENT DISTRICTS AND TAX INCREMENT DISTRICTS OR OTHER
    23     APPROPRIATE ENTITY.
    24         (6)  THE COSTS ASSOCIATED WITH ACTIVITIES UNDER
    25     PARAGRAPHS (1) THROUGH (5), INCLUDING THE COSTS OF
    26     ADMINISTRATIVE APPRAISALS, ECONOMIC AND ENVIRONMENTAL
    27     ANALYSES, ENVIRONMENTAL REMEDIATION, ENGINEERING, PLANNING,
    28     DESIGN, ARCHITECTURE, SURVEYING OR OTHER PROFESSIONAL OR
    29     MANAGERIAL SERVICES NECESSARY TO EFFECTUATE THE PROJECT.
    30  SECTION 1328.  CONSTITUTIONALITY.
    19980H2328B3525                 - 69 -

     1     IT IS THE INTENTION OF THE GENERAL ASSEMBLY THAT, IF THIS
     2  CHAPTER CANNOT TAKE EFFECT IN ITS ENTIRETY BECAUSE OF THE
     3  JUDGMENT OF ANY COURT OF COMPETENT JURISDICTION HOLDING
     4  UNCONSTITUTIONAL ANY PART OR PARTS THEREOF, THE REMAINING
     5  PROVISIONS OF THIS CHAPTER SHALL BE GIVEN FULL FORCE AND EFFECT,
     6  AS COMPLETELY AS IF THE PART OR PARTS HELD UNCONSTITUTIONAL HAD
     7  NOT BEEN INCLUDED IN THIS CHAPTER. IT IS THE INTENTION OF THE
     8  GENERAL ASSEMBLY THAT, IF ANY COURT OF COMPETENT JURISDICTION
     9  SHALL HOLD UNCONSTITUTIONAL ANY PROVISION OF THIS CHAPTER
    10  PROVIDING FOR TAX EXEMPTION OR SPECIAL TAX PROVISION, THAT
    11  UNCONSTITUTIONAL PROVISION SHALL BECOME INOPERATIVE UNTIL SUCH
    12  TIME AS IT IS CONSTITUTIONAL. THE REMAINING TAX EXEMPTIONS AND
    13  SPECIAL TAX PROVISIONS OF THIS ACT SHALL IN ANY SUCH CASE BE
    14  GIVEN FULL FORCE AND EFFECT.
    15                             CHAPTER 21
    16                      MISCELLANEOUS PROVISIONS
    17  Section 1104 2101.  Illegal activity.                             <--
    18     Any funds or other forms of consideration received by a
    19  person or business conducting any type of illegal activity shall
    20  not be eligible for any of the exemptions, deductions,
    21  abatements and credits or any other benefits that are created
    22  under this act.
    23  Section 1105 2102.  Rules and regulations.                        <--
    24     The Department of Revenue shall promulgate such rules and
    25  regulations as may be necessary to effectuate the provisions of
    26  this act. The department shall promulgate such rules and
    27  regulations as may be necessary to effectuate the provisions of
    28  this act.
    29  Section 1106 2103.  Compliance.                                   <--
    30     Any person eligible for an exemption, deduction or credit
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     1  under this act shall comply with all reporting, filing and
     2  compliance requirements pursuant to the Tax Reform Code of 1971,
     3  unless otherwise provided for in this act.
     4  Section 1107 2104.  Penalties.                                    <--
     5     (a)  Civil penalty.--
     6         (1)  In addition to any penalties authorized by the Tax
     7     Reform Code of 1971 for violations of that act, the
     8     Department of Revenue may impose an additional administrative
     9     penalty not to exceed $10,000 for any act or violation of
    10     this act relating to State and local taxes, including the
    11     filing of any false statement, return or document.
    12         (2)  The department may impose a civil penalty not to
    13     exceed $10,000 for a violation of this act, including the
    14     filing of any false statement, return or document.
    15     (b)  Criminal penalty.--In addition to any criminal penalty
    16  under the Tax Reform Code of 1971, any person who knowingly
    17  violates any of the provisions of this act commits a misdemeanor
    18  of the third degree.
    19  Section 1108 2105.  Construction.                                 <--
    20     This act shall be interpreted to ensure that all provisions
    21  relating to State and local tax exemptions, deductions,
    22  abatements and credits are strictly construed in favor of the
    23  Commonwealth.
    24  Section 1109 2106.  Applicability.                                <--
    25     The provisions of this act shall be applied prospectively. No
    26  person or business may claim any exemption, deduction, abatement
    27  or credit until that person or business becomes qualified under
    28  this act, and, in the case of a business, receives certification
    29  from the department that the business is qualified.
    30  Section 1110 2107.  Severability.                                 <--
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     1     The provisions of this act are severable. If any provision of
     2  this act or its application to any person or circumstance is
     3  held invalid, the invalidity shall not affect other provisions
     4  or applications of this act which can be given effect without
     5  the invalid provision or application.
     6  Section 1111 2108.  Repeals.                                      <--
     7     All acts and parts of acts are repealed insofar as they are
     8  inconsistent with this act.
     9  Section 1112 2109.  Expiration.                                   <--
    10     This EXCEPT FOR CHAPTER 13 AND THIS CHAPTER, THIS act and all  <--
    11  benefits associated with this act shall terminate December 31,
    12  2010.
    13  Section 1113 2110.  Effective date.                               <--
    14     This act shall take effect immediately.











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