PRIOR PRINTER'S NOS. 3138, 3382 PRINTER'S NO. 3525
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 19980H2328B3525 - 70 -
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. <-- 19980H2328B3525 - 71 -
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. C9L72RZ/19980H2328B3525 - 72 -