1Amending the act of April 9, 1929 (P.L.343, No.176), entitled,
2as amended, "An act relating to the finances of the State
3government; providing for the settlement, assessment,
4collection, and lien of taxes, bonus, and all other accounts
5due the Commonwealth, the collection and recovery of fees and
6other money or property due or belonging to the Commonwealth,
7or any agency thereof, including escheated property and the
8proceeds of its sale, the custody and disbursement or other
9disposition of funds and securities belonging to or in the
10possession of the Commonwealth, and the settlement of claims
11against the Commonwealth, the resettlement of accounts and
12appeals to the courts, refunds of moneys erroneously paid to
13the Commonwealth, auditing the accounts of the Commonwealth
14and all agencies thereof, of all public officers collecting
15moneys payable to the Commonwealth, or any agency thereof,
16and all receipts of appropriations from the Commonwealth,
17authorizing the Commonwealth to issue tax anticipation notes
18to defray current expenses, implementing the provisions of
19section 7(a) of Article VIII of the Constitution of
20Pennsylvania authorizing and restricting the incurring of
21certain debt and imposing penalties; affecting every
22department, board, commission, and officer of the State
23government, every political subdivision of the State, and
24certain officers of such subdivisions, every person,
25association, and corporation required to pay, assess, or
26collect taxes, or to make returns or reports under the laws
27imposing taxes for State purposes, or to pay license fees or
28other moneys to the Commonwealth, or any agency thereof,
29every State depository and every debtor or creditor of the
30Commonwealth," providing for city opportunity zones.

31The General Assembly of the Commonwealth of Pennsylvania
32hereby enacts as follows:

1Section 1. The act of April 9, 1929 (P.L.343, No.176), known
2as The Fiscal Code, is amended by adding an article to read:

3ARTICLE XVI-K

4CITY OPPORTUNITY ZONES

5Section 1601-K. Scope of article.

6This article relates to city opportunity zones.

7Section 1602-K. Definitions.

8The following words and phrases when used in this article
9shall have the meanings given to them in this section unless the
10context clearly indicates otherwise:

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

12"City opportunity zone." A revitalization improvement zone
13designated by a contracting authority that demonstrably will
14result in sustainable economic development and job creation
15within a city.

16"Contracting authority." An authority established under 53
17Pa.C.S. Ch. 56 (relating to municipal authorities) for the
18purpose of designating revitalization zones and constructing
19facilities or other authority established under the laws of this
20Commonwealth.

21"Department." The Department of Community and Economic
22Development of the Commonwealth.

23"Earned income tax." A tax or portion of a tax imposed on
24earned income within a neighborhood improvement zone under the
25act of December 31, 1965 (P.L.1257, No.511), known as The Local
26Tax Enabling Act, which a city, or a school district contained
27entirely within the boundaries of or coterminous with the city,
28is entitled to receive.

29"Facility." A structure to be used for industrial,
30commercial, exhibition, hospitality, conference, retail,

1community, office, recreational or mixed-use purposes. The term
2includes a park.

3"Fund." The City Opportunity Zone Fund established under
4section 1607-K.

5"Qualified business." An entity which meets all of the
6following:

7(1) Is any of the following that conducts business or
8provides services:

9(i) A sole proprietorship.

10(ii) A corporation.

11(iii) A limited liability company.

12(iv) A partnership.

13(v) An association.

14(2) Locates or partially locates in a zone.

15(3) Meets the requirements of section 1606-K.

16"Zone." A city opportunity zone.

17Section 1603-K. City Opportunity Zone Pilot Program.

18(a) Establishment.--The department shall establish and
19administer a pilot City Opportunity Zone Pilot Program.

20(b) Number.--Participation in the pilot program is open to:

21(1) four cities with populations above 60,000;

22(2) four cities with populations above 20,000, but not
23more than 60,000; and

24(3) four cities with populations up to 20,000.

25No more than three additional cities may be selected when
26openings for their population category have been filled if they
27otherwise meet program criteria established by the department.

28(c) Selection.--The department shall develop a scoring tool
29for selection that considers:

30(1) The following factors:

1(i) significance of the city, including its
2importance to the State, regional and local economies;

3(ii) whether it:

4(A) is a county seat;

5(B) has a disproportionate share of tax-exempt
6properties;

7(C) is or has been historically a local or
8regional center of commerce and industry;

9(iii) the historical importance of the city; and

10(iv) whether it provides municipal services to other
11municipalities.

12(2) Need, including population trends, stability and
13strength of the tax base, real estate tax levels, poverty and
14unemployment rates, potential for economic growth without
15participation in the program and whether the city is
16distressed within the meaning of the act of July 10, 1987
17(P.L.246, No.47), known as the Municipalities Financial
18Recovery Act.

19(3) Viability and impact, including the ability to raise
20sufficient bond revenue and the projected effects of the
21program on the needs criteria and the financial situation of
22the city at two years and seven years following establishment
23of the city opportunity zone.

24(d) Eligibility.--A city participating in a substantially
25similar program is not eligible to participate in the City
26Opportunity Zone Pilot Program.

27(e) Report.--No later than March 31, the department shall
28annually report to the Senate and to the House of
29Representatives on the status and effectiveness of each city
30opportunity zone operating during the previous year, along with

1any recommendations for improvements to the program, including
2the advisability of making the program universally available.

3Section 1604-K. Approval.

4(a) Submission.--Prior to the designation of a zone, a
5contracting authority shall apply to the department for approval
6of a city opportunity zone plan. The plan shall include:

7(1) A plan to establish one or more facilities.

8(2) An economic development plan.

9(3) Specific information relating to a facility which
10will be constructed or renovated as part of the plan.

11(4) Other information as required by the department.

12(b) Approval.--The zone may be designated under section
131605-K upon approval of the plan under subsection (a)(1). If the
14plan is not approved by the department within 180 days, the plan
15shall be deemed approved.

16Section 1605-K. Facility.

17The contracting authority may do the following:

18(1) Designate one or more zones within the city of not
19greater than 100 acres in total in which a facility may be
20constructed or redeveloped.

21(2) Provide for or borrow funds for the purpose of:

22(i) improvement and development within the zone;

23(ii) construction or improvement of a facility
24within the zone; or

25(iii) redevelopment of a deteriorated facility in
26existence prior to the designation of the zone.

27Section 1606-K. Qualified business.

28(a) Qualifications.--In order to qualify under this article,
29a business must own or lease real property in the zone from
30which the business actively conducts a trade, profession or

1business. The qualified business must receive certification from
2the Department of Revenue that the business is located and is in
3the active conduct of a trade, profession or business within the
4zone.

5(b) Relocation.--A business that relocates into the zone
6shall be a qualified business if it:

7(1) increases full-time employment of the qualified
8business in the first full year of operation within the zone
9by at least 20%; or

10(2) makes a capital investment in the property located
11within a zone in the immediately preceding calendar or fiscal
12year of at least $2,500,000.

13Section 1607-K. Fund.

14(a) Establishment.--The contracting authority shall notify
15the State Treasurer within ten days of the designation of a
16zone. Thereafter, the State Treasurer shall establish a special
17fund for the benefit of the contracting authority to be known as
18the City Opportunity Zone Fund. Interest income derived from
19investment of the money in a fund shall be credited by the
20Treasury Department to the fund.

21(b) Certification.--

22(1) Within 30 days of the end of each calendar year,
23each qualified business shall file a report with the
24Department of Revenue which complies with all of the
25following:

26(i) States each State tax, calculated in accordance
27with subsection (c), which was paid by the qualified
28business in the prior calendar year.

29(ii) Lists each State tax refund which complies with
30all of the following:

1(A) The refund is for a tax:

2(I) set forth in subsection (c); and

3(II) certified as paid under subsection (c).

4(B) The refund was received in the prior
5calendar year by the qualified business.

6(iii) Is in a form and manner required by the
7Department of Revenue.

8(2) In addition to any penalties imposed under the act
9of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
10of 1971, for failure to timely pay State taxes, failure to
11file a timely and complete report under paragraph (1) shall
12result in the imposition of a penalty of 10% of all State
13taxes, calculated in accordance with subsection (c), which
14were payable by the qualified business in the prior calendar
15year.

16(3) Any penalty imposed under this subsection shall be
17imposed, assessed and collected by the Department of Revenue
18under the provisions for imposing, assessing and collecting
19penalties under Article II of the Tax Reform Code of 1971.
20When the penalty is received, the money shall be transferred
21from the General Fund to the fund of the contracting
22authority that designated the zone in which the qualifying
23business is located.

24(4) Within 30 days of the end of each calendar year,
25each qualified business shall file a report with the local
26taxing authority reporting all local taxes, calculated in
27accordance with subsection (c), which were paid by the
28qualified business in the prior calendar year. The report
29from each qualified business shall also list any local tax
30refunds of taxes set forth in subsection (c) received in the

1prior calendar year by the qualified business and any refunds
2related to the local taxes as calculated in accordance with
3subsection (c). The report shall be in a form and manner
4required by the Department of Revenue.

5(c) Calculation.--

6(1) Within 60 days of the end of each calendar year, the
7Department of Revenue shall certify separately for each zone
8the amounts of State taxes paid, less any State tax refunds
9received, by the qualified businesses filing reports under
10subsection (a) to the Office of the Budget. Beginning in the
11first full calendar year following the designation of a zone
12and in each calendar year thereafter, the Department of
13Revenue shall calculate amounts of State taxes actually
14received by the Commonwealth from each qualified business
15that filed a report under subsection (b) in the prior year
16and certify the amounts received to the office.

17(2) The contracting authority shall provide good faith
18estimates of quarterly amounts to be calculated in a form and
19manner prescribed by the Department of Revenue.

20(3) The Department of Revenue shall estimate the
21quarterly amounts, subject to an annual reconciliation, and
22shall certify the amounts to the Office of the Budget within
2390 days of the end of each fiscal quarter.

24(4) An entity collecting a local tax within the zone
25shall, within 30 days of the end of a fiscal quarter, submit
26all of the local taxes collected that are to be calculated
27under this subsection to the State Treasurer for transfer to
28the fund under subsection (e).

29(5) The following shall be the amounts calculated:

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

1capital stock and franchise tax, personal income tax,
2business privilege tax, business privilege licensing fees
3and earned income tax related to the ownership and
4operation of a facility or qualified business in the
5zone.

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

7(A) All personal income tax, earned income tax
8and local services tax withheld from its employees by
9a facility or qualified business in the zone.

10(B) All personal income tax, earned income tax
11and local services tax withheld from the employees of
12any facility or qualified business in the zone.

13(iii) An amount equal to all sales and use tax
14related to the operation of a facility in the zone. This
15subparagraph shall include sales and use tax paid by any
16provider of events or activities at or services to a
17facility, including sales and use tax paid by vendors and
18concessionaires and contractors at a facility.

19(iv) An amount equal to all tax paid to the
20Commonwealth related to the sale of any liquor, wine or
21malt or brewed beverage in a facility.

22(v) An amount equal to all personal income tax,
23earned income tax and local services tax withheld from
24personnel by a contractor or other entity involved in the
25construction of a facility.

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

27(A) All corporate net income tax, capital stock
28and franchise tax, personal income tax, business
29privilege tax, business privilege licensing fees and
30earned income tax related to the ownership and

1operation of any qualified business within the zone.

2(B) All personal income tax, earned income tax
3and local services tax withheld from its employees by
4a qualified business within the zone.

5(C) All personal income tax, earned income tax
6and local services tax withheld from the employees of
7a qualified business that provides events, activities
8or services in the zone.

9(D) All personal income tax, earned income tax
10and local services tax to which the Commonwealth
11would be entitled from performers or other
12participants at an event or activity in the zone.

13(E) All sales and use tax related to the
14operation of a qualified business within the zone.
15This clause shall include sales and use tax paid by a
16qualified business that provides events, activities
17or services in the zone.

18(F) All tax paid by a qualified business to the
19Commonwealth related to the sale of any liquor, wine
20or malt or brewed beverage within the zone.

21(G) The amount paid a qualified business within
22the zone of any new tax enacted by the Commonwealth
23following the effective date of this section.

24(H) All personal income tax, earned income tax
25and local services tax withheld from personnel by a
26qualified business involved in the improvement,
27development or construction of the zone.

28(I) All sales and use tax paid on materials and
29other construction costs, directly related to the
30improvement, development or construction of a

1facility in the zone.

2(J) An amount equal to any amusement tax paid by
3a facility or a qualified business operating in the
4zone. No political subdivision or other entity
5authorized to collect amusement taxes may impose or
6increase the rate of any tax on admissions to places
7of entertainment, exhibition, amusement or upon
8athletic events in the zone which are not in effect
9on the date the zone is designated by the contracting
10authority.

11(vii) Except for a tax levied against real property,
12an amount equal to any tax imposed by the Commonwealth or
13any of its political subdivisions on a qualified business
14engaged in an activity within a zone or directly or
15indirectly on any sale or purchase of goods or services
16if the point of sale or purchase is within the zone.

17(d) Income apportionment.--A business with locations inside
18and outside the zone shall apportion taxes attributable to the
19location within the zone or calculate the percentage of tax
20payments attributable to the location within the zone.

21(e) Transfers.--

22(1) Within ten days of receiving notification under
23subsection (a), the Secretary of the Budget shall direct the
24State Treasurer to, notwithstanding any other law, transfer
25the amounts calculated under subsection (c) from the General
26Fund to each fund of the contracting authority. Beginning in
27the second calendar year following the designation of a zone
28and in each year thereafter, the amounts certified by the
29department to the State Treasurer and the amounts transferred
30by the State Treasurer to the fund of each contracting

1authority shall be determined as follows:

2(i) Add amounts certified by the department under
3subsection (b) for the prior calendar year.

4(ii) Subtract from the sum under subparagraph (i)
5any State tax refunds paid as certified by the department
6under subsection (b).

7(iii) Add to the difference under subparagraph (ii)
8any amounts certified under subsection (b) with respect
9to the second prior calendar year.

10(iv) Subtract from the sum under subparagraph (iii)
11any amounts certified under subsection (b) which are less
12than the amounts previously certified under subsection
13(b) with respect to the second prior calendar year.

14(2) The State Treasurer shall provide quarterly payments
15to the contracting authority until the bonds issued or the
16other debt incurred to finance the improvement and
17development of the zone and the construction of a contracted
18facility are retired. The payment in each quarter shall be
19equal to the balance of the fund on the date of the last day
20of the prior calendar quarter.

21(f) Restriction on use of funds.--Funds transferred under
22subsection (e):

23(1) May only be utilized for:

24(i) payment of debt service on bonds issued,
25refinancing loans to repay bonds or for payment of other
26debt incurred, for the improvement and development of all
27or any part of the zone. Payments may be made directly or
28indirectly through a multitiered ownership structure or
29other structure authorized by the contracting authority
30to facilitate financing;

1(ii) construction of all or a part of a facility;

2(iii) payment of debt service on bonds issued, or
3payment of other debt incurred, for the development of a
4facility in existence prior to the designation; or

5(iv) replenishment of amounts in debt service
6reserve funds established to pay debt service on bonds.

7(2) May not be utilized for purposes of renovating or
8repairing a facility, except for capital maintenance,
9improvement projects and furniture, fixtures and equipment
10reserve funds.

11Section 1608-K. Keystone Opportunity Zone.

12Within 30 days of the effective date of this section, the
13contracting authority shall apply to the department to decertify
14and remove the designation of all or part of any Keystone
15Opportunity Zone that is coterminous with the city opportunity
16zone in accordance with section 309 of the act of October 6,
171998 (P.L.705, No.92), known as the Keystone Opportunity Zone,
18Keystone Opportunity Expansion Zone and Keystone Opportunity
19Improvement Zone Act. The department shall act on the
20application within 30 days.

21Section 1609-K. Duration.

22The zone shall be in effect for a period equal to the length
23of time for the repayment of debt incurred for the zone,
24including the time of bonds initially issued. The term of bonds
25initially issued may not exceed 20 years.

26Section 1610-K. Commonwealth pledges.

27(a) Pledge.--If and to the extent that the contracting
28authority pledges amounts required to be transferred to the fund
29of the contracting authority under section 1607-K for the
30payment of bonds issued by the contracting authority, until all

1bonds secured by the pledge of the contracting authority,
2together with the interest on the bonds, are fully paid or
3provided for, the Commonwealth pledges to and agrees with any
4person, firm, corporation or government agency, whether in this
5Commonwealth or elsewhere, and to and with any Federal agency
6subscribing to or acquiring the bonds issued by the contracting
7authority that the Commonwealth itself will not, nor will it
8authorize any government entity to do any of the following:

9(1) Abolish or reduce the size of the zone.

10(2) Amend or repeal section 1607-K(b), (c) or (d).

11(3) Limit or alter the rights vested in the contracting
12authority in a manner inconsistent with the obligations of
13the contracting authority with respect to the bonds issued by
14the contracting authority.

15(4) Impair revenues to be paid under this article to the
16contracting authority necessary to pay debt service on bonds.

17(b) Limitation.--Nothing in this section shall limit the
18authority of the Commonwealth or any government entity to change
19the rate, tax bases or any subject of any specific tax or to
20repeal or enact any tax.

21Section 1611-K. Regulations.

22The Department of Revenue and the department shall develop
23regulations necessary to implement this article. The department
24shall include regulations to require annual reports relating to
25the development of the zone.

26Section 2. This act shall take effect immediately.