Regular Session 2015-2016 House Bill 1731 P.N. 2604

PRINTER'S NO. 2604

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1731

Session of

2015

INTRODUCED BY TURZAI, ELLIS, CUTLER, BENNINGHOFF, MAJOR,

OBERLANDER, SACCONE, JAMES, GREINER, BAKER, BOBACK, BARRAR,

HELM, MARSHALL, LEWIS, RAPP, JOZWIAK, GODSHALL, GIBBONS,

COHEN, PAYNE, CAUSER, GROVE, SNYDER, MATZIE, P. DALEY, DUSH,

DIAMOND, PHILLIPS-HILL, RADER, GINGRICH, BURNS, EVERETT,

HICKERNELL, WATSON, PYLE, SCHEMEL, KLUNK, EVANKOVICH, GABLER,

SANKEY, NESBIT, BIZZARRO, KAMPF, KILLION, A. HARRIS, TOPPER,

MOUL, GERGELY, CORBIN, REGAN, WARNER, FEE, EMRICK, BLOOM,

ZIMMERMAN, WARD, ROTHMAN, MUSTIO, DeLUCA, WHITE AND SIMMONS,

DECEMBER 3, 2015

REFERRED TO COMMITTEE ON COMMERCE, DECEMBER 3, 2015

AN ACT

Establishing the Keystone Energy Authority; and providing for

the designation of Keystone Energy Enhancement Zones.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

CHAPTER 1

PRELIMINARY PROVISIONS

Section 101. Short title.

This act shall be known and may be cited as the Keystone

Energy Enhancement Act.

Section 102. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Authority." The Keystone Energy Authority established in

section 201.

"Board." The board of the authority established in section

202.

"Butane." A colorless, odorless gaseous alkane, C4H10, which

occurs as a constituent of natural gas and is used as the raw

material in the manufacturing of ethylene and butadiene.

"Commonwealth." The Commonwealth of Pennsylvania.

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

"Deteriorated property." Any blighted, impoverished area

containing residential, industrial, commercial or other real

property that is abandoned, unsafe, vacant, undervalued,

underutilized, overgrown, defective, condemned, demolished or

which contains economically undesirable land use.

"Downstream business." Any business that uses natural gas

and natural gas byproducts, chemical products or chemical

compounds produced or extracted in this Commonwealth as raw

materials in its production process.

"Ethane." A colorless, odorless gaseous alkane, C2H6, which

occurs as a constituent of natural gas and is used as the raw

material in the manufacturing of ethylene.

"Keystone Energy Enhancement Zone." A defined geographic

area comprised of one or more political subdivisions or portions

of political subdivisions designated by the authority.

"Manufacturing." Operations which use natural gas extracted

in this Commonwealth as a primary means of fuel or power to

produce finished goods from raw materials.

"Manufacturing business." An association, partnership,

corporation, sole proprietorship, limited liability company or

employer that engages in manufacturing.

"Natural gas." A fossil fuel consisting of a mixture of

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hydrocarbon gases, primarily methane, and possibly including

ethane, propane, butane, pentane, carbon dioxide, oxygen,

nitrogen and hydrogen sulfide and other gas species. The term

includes natural gas from oil fields known as associated gas or

casing head gas, natural gas fields known as nonassociated gas,

coal beds, shale beds and other formations. The term does not

include coal bed methane.

"Natural gas liquids." Ethane, propane, butane and other

liquid fossil fuels associated with natural gas.

"Petrochemical business." An association, partnership,

corporation, sole proprietorship, limited liability company or

employer that uses ethane, butane or propane, extracted in this

Commonwealth or the derivatives of these products as a raw

material in the production of plastics, chemicals or other

finished products in this Commonwealth.

"Propane." A colorless, odorless gaseous alkane, C3H8, which

occurs as a constituent of natural gas and is used as the raw

material in the manufacturing of propylene.

"Zone." A Keystone Energy Enhancement Zone.

CHAPTER 2

KEYSTONE ENERGY AUTHORITY

Section 201. Authority established.

The Keystone Energy Authority is established as a public

authority and instrumentality of the Commonwealth, exercising

public powers of the Commonwealth as an agency and

instrumentality of the Commonwealth. The exercise by the

authority of the powers conferred under this act is declared to

be, and shall for all purposes be deemed and held to be, the

performance of an essential public function.

Section 202. Governing board.

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(a) Composition of board.--

(1) The powers and duties of the authority shall be

exercised by a governing board composed of the following

members:

(i) One member who shall be appointed by the

Governor.

(ii) Two members who shall be appointed by the

President pro tempore of the Senate.

(iii) One member who shall be appointed by the

Minority Leader of the Senate.

(iv) Two members who shall be appointed by the

Speaker of the House of Representatives.

(v) One member who shall be appointed by the

Minority Leader of the House of Representatives.

(2) Each member must have at least 10 years' experience

in a manufacturing business, petrochemical business or

downstream business.

(3) Each member of the board must be a resident of this

Commonwealth.

(b) Term and chairperson.--

(1) Appointing authorities shall appoint the initial

members of the board within 30 days of the effective date of

this section. The term of a board member shall begin on the

date of the appointment. A member's term shall be coterminous

with that of the appointing authority.

(2) The appointed members shall select a chairperson

from among the members at the initial organizational meeting

of the board and upon any subsequent vacancy in the office of

chairperson. The member selected as chairperson shall serve

in that capacity for two years from the date of selection or

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for the duration of his or her term on the board, whichever

is less, and may be reelected to subsequent two-year terms.

(3) An appointed board member shall serve at the

discretion of the member's appointing authority. If a vacancy

occurs among the appointed members on the board prior to or

on the expiration of a term, the appointing authority who

originally appointed the board member whose seat has become

vacant shall appoint a successor member within 30 days of the

vacancy.

tempore of the Senate and the Speaker of the House of

Representatives shall set a date, time and place for the initial

meeting of the board within five days of the appointment of all

of the initial members of the board. The initial meeting must be

held within 60 days of the effective date of this section. In

addition to the chairperson, the members shall elect other

officers as they may deem necessary. A member may hold more than

one office on the board at any time.

(d) Meetings.--

(1) After the initial meeting, the board shall meet as

frequently as the board deems appropriate but at least once

during each quarter of the fiscal year, except that a meeting

of the board must be called by the chairperson if a request

for a meeting is submitted to the chairperson by at least two

members of the board.

(2) A majority of the board shall constitute a quorum

for the purpose of conducting the business of the board and

for all other purposes. All actions of the board shall be

taken by a majority of the board except as otherwise

specifically noted. The provisions of 65 Pa.C.S. Ch. 7

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(relating to open meetings) shall apply to meetings of the

board.

(e) Employees and agents.--The board shall determine the

necessary number of employees of the authority and their

respective compensation and duties. The board may contract for

or receive the loan of services of persons in the employ of

other government agencies, and other government agencies shall

be authorized to make the employees available. The board may

designate an executive director upon a majority vote. The board

may, by a majority vote, hire an independent general counsel to

the authority and may engage consultants and contract for other

professional services upon a majority vote. The board may, by a

majority vote, delegate to the executive director powers of the

board as the board deems necessary to carry out the purposes of

the authority, subject to the supervision and control of the

board.

(f) Public officials and party officers.--

(1) A member of the board or the executive director may

not seek or hold a position as any other public official

within this Commonwealth or as a party officer while in the

service of the authority.

(2) The following shall apply:

(i) Except as provided in subparagraph (ii),

employees and agents of the authority may not seek or

hold other positions as public officials or party

officers while in the employment of the authority.

(ii) The authority may receive the loan of services

of individuals in other government agencies in accordance

with subsection (e), notwithstanding that the individuals

are public officials.

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(g) Statutes applying to authority.--The provisions of the

following acts shall apply to the authority:

(i) The act of February 14, 2008 (P.L. 6, No. 3),

referred to as the Right-to-Know Law.

(ii) The act of July 19, 1957 (P.L.1017, No.451),

known as the State Adverse Interest Act.

(iii) 65 Pa.C.S. Ch. 11 (relating to ethics

standards and financial disclosure).

Section 203. Powers and duties of authority.

(a) General powers and duties.--The authority is established

for the purposes, without limitation, by itself or by agreement

in cooperation with others, of furthering the development of

manufacturing business, petrochemical business and other

downstream business opportunities through the increased use of

natural gas produced in this Commonwealth. The authority shall

work to increase job creation and capital investments in

manufacturing, petrochemical and other downstream businesses in

this Commonwealth.

(b) Specific duties.--The authority shall have the powers

and its duties shall be:

(1) To administer this act.

(2) To encourage the development of manufacturing

business, petrochemical business and other downstream

business opportunities and to cooperate with other industrial

development agencies, local authorities and the Department of

Community and Economic Development, Department of

Environmental Protection, Department of Revenue, Pennsylvania

Public Utility Commission and other agencies of the

Commonwealth. To achieve that purpose, the authority shall:

(i) Act as a point of contact. The authority shall

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designate a point of contact to work directly with

applicants who seek to develop or utilize a zone. The

point of contact shall assist in coordinating all

necessary permit and regulatory reviews required to move

the project forward in a timely fashion.

(ii) Report. Within six months of the date of the

final appointment to the authority, the authority shall

compile and submit to the Governor and the General

Assembly a report identifying the challenges which exist

across this Commonwealth to expanded natural gas

transmission and distribution infrastructure and

recommendations on how to address the challenges which

are identified, including legislative and regulatory

policy changes necessary to facilitate the expansion of

infrastructure and increased utilization of natural gas

and natural gas liquids.

(3) To facilitate the proliferation of transmission and

distribution pipelines for the transportation of natural gas

and natural gas liquids, which are necessary for the

development of manufacturing business, petrochemical business

and other downstream business opportunities in zones, the

authority shall:

(i) Identify corridors for safe and efficient siting

of natural gas transmission and distribution pipelines to

zones.

(ii) Coordinate with all relevant regulatory

agencies, including, but not limited to, the Federal

Energy Regulatory Commission, the Department of

Environmental Protection and the Pennsylvania Public

Utilities Commission to provide recommendations to

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streamline the issuance of permits in a timely,

predictable and efficient manner for natural gas

transmission and distribution line projects.

(4) To conduct examinations and investigations and to

hear testimony and take proof at public or private hearings,

on any matter material for the authority's information and

necessary to the carrying out of the authority's duties.

(5) To sue and be sued, implead and be impleaded,

complain and defend in all courts.

(6) To adopt, use and alter at will a corporate seal.

(7) To make by-laws for the management and regulation of

the authority's affairs.

(8) To make contracts of every name and nature and to

execute all instruments necessary or convenient for the

carrying on of its business.

(9) To do any other thing necessary to carry out the

functions of the authority under this act.

Section 204. Duties of other entities.

Industrial development agencies, local authorities, county

and municipal governments, the Department of Community and

Economic Development, the Department of Environmental

Protection, the Pennsylvania Public Utility Commission and other

agencies of the Commonwealth shall cooperate fully with the

authority to facilitate the growth of the manufacturing

business, petrochemical business and downstream business

opportunities in this Commonwealth and shall provide documents

and information as required by the authority for the exercise of

the authority's powers and duties.

Section 205. Keystone Energy Enhancement Fund.

(a) Establishment.--The Keystone Energy Enhancement Fund is

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established in the State Treasury as a restricted account. The

fund shall consist of funds appropriated by the General

Assembly.

(b) Continuing appropriation.--All funds in the fund and the

interest accruing on the funds are appropriated to the authority

on a continuing basis to carry out the provisions of this act.

Section 206. Transfer for initial funding.

The sum of $500,000 is transferred from the General Fund to

the Keystone Energy Enhancement Fund for expenditure during the

fiscal year July 1, 2015, to June 30, 2016, to carry out the

provisions of this act.

Section 207. Term of existence.

The authority shall exist until December 31, 2028.

Section 208. Fiscal year.

The fiscal year of the authority shall be the same as the

fiscal year of the Commonwealth.

Section 209. Sovereign immunity.

Members of the board shall not be liable personally for any

obligations of the authority. It is declared to be the intent of

the General Assembly that the authority and the authority's

members, officers, officials and employees shall enjoy sovereign

and official immunity as provided in 1 Pa.C.S. § 2310 (relating

to sovereign immunity reaffirmed; specific waiver) and shall

remain immune from suit except as provided by and subject to 42

Pa.C.S. Ch. 85 Subchs. A (relating to general provisions) and B

(relating to actions against Commonwealth parties).

CHAPTER 3

KEYSTONE ENERGY ENHANCEMENT ZONES

Section 301. Keystone Energy Enhancement Zone.

(a) Establishment.--There is established within the

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authority a program providing for Keystone Energy Enhancement

Zones. A zone shall be comprised of deteriorated property and

shall not exceed a total of 500 acres.

(b) Zone designation.--The authority shall designate not

more than 20 zones in this Commonwealth. Individuals and

businesses within an authorized zone that are qualified under

this act shall be entitled to all tax exemptions, deductions,

abatements or credits set forth in this act for a period not to

exceed 10 years beginning January 1, 2017, and ending before

January 1, 2028.

subdivision within which a proposed zone may be located in whole

or in part is authorized to provide tax exemptions, deductions,

abatements or credits to individuals and businesses qualified

under this act. The political subdivision must agree to provide

exemptions, deductions, abatements or credits from all local

taxes set forth in this act in order for property to be included

in a zone. Except as otherwise provided, the exemptions,

deductions, abatements or credits shall take effect January 1,

2017, if designation of a zone within the political subdivision

is granted by the authority. The exemptions, deductions,

abatements or credits shall be binding upon the political

subdivision for the duration of the zone designation.

Section 302. Application.

(a) Initial application.--One or more individuals,

businesses, political subdivisions or a designee of one or more

businesses or political subdivisions, may apply to the authority

to designate deteriorated property within the political

subdivision or portions of the political subdivision. The

application must contain the following:

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(1) The geographic area of the proposed zone. The

geographic area must be located within the boundaries of the

participating political subdivisions and shall not contain

more than 500 acres.

(2) A strategic plan that must include the following:

(i) A detailed map of the proposed zone, including

geographic boundaries, total area and present use and

conditions of the land and structures of the proposed

zone.

(ii) Evidence of support from and participation of

local government, school districts and other educational

institutions, business groups, community organizations

and the public.

(iii) A proposal to increase economic opportunity,

reduce the local regulatory burden and identify potential

jobs and job training opportunities and which states

whether or not the zone is located in an area which has

tax revenue dedicated to the payment of debt.

(iv) A description of the current social, economic

and demographic characteristics of the proposed zone and

anticipated enhancements in employment that will result

from zone designation.

(v) A description of anticipated activity in the

proposed zone, including, but not limited to,

opportunities for manufacturing businesses, petrochemical

businesses and downstream businesses.

(vi) Evidence of potential private and public

investment in the proposed zone.

(vii) The role of the proposed zone in regional

economic and community development.

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(viii) Plans to utilize existing resources for the

administration of the proposed zone, including, but not

limited to, transmission and distribution pipelines for

the transportation of natural gas and natural gas

liquids.

(ix) Any other information deemed appropriate by the

authority.

(3) A formal, binding ordinance or resolution passed by

each political subdivision in which the proposed zone is

located that specifically provides for all local tax

exemptions, deductions, abatements or credits for individuals

and businesses provided in this act.

(4) Evidence that the proposed zone meets the required

criteria under section 303.

(b) Eligibility.--

(1) In order to be eligible for a zone designation, the

authority must receive an application from an individual,

business or political subdivision or a designee of a business

or political subdivision no later than June 30, 2016.

(2) The authority, in consultation with the department,

must review the application and, if approved, issue a

certification of each tax exemption, deduction, abatement or

credit under this act for the zone within three months of

receipt of the application and any additional required

information.

(3) The authority must act on an application for a

designation under this section by December 1, 2016.

(4) The authority may make designations under this

section:

(i) On a rolling basis during the application

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period.

(ii) That meet the requirements of this act, except

that:

(A) not more that five zones may be reserved for

counties of the first class;

(B) not more that three zones may be reserved

for counties of the second class;

reserved for counties of the second class A through

eighth class; and

(D) four zones must be reserved for counties of

the fifth through eighth classes.

(5) If the authority receives less than four

applications that meet the requirements of this act from

counties of the fifth through eighth classes by the

application deadline under this subsection, the number of

zones reserved under paragraph (4)(ii)(D), minus the number

of the applications for zones the authority has approved

under paragraph (4)(ii)(D), shall be available for

designation in a county.

Section 303. Authorization.

(a) Specific criteria.--In order to qualify for

authorization under this act, a proposed zone must meet the

following criteria:

(1) Have the potential to provide manufacturing

business, petrochemical business or downstream business

opportunities.

(2) Consist of deteriorated property.

(3) Have substantial real property with adequate

infrastructure and access to natural gas and natural gas

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liquids to support new or expanded development.

(b) Additional criteria.--In addition to the required

criteria under subsection (a), the authority shall consider the

following criteria:

(1) Evidence of distress and adverse economic and

socioeconomic conditions in the proposed zone.

(2) The strength and viability of the proposed goals,

objectives and strategies in the strategic plan.

(3) Whether the strategic plan is creative and

innovative in comparison to other applications.

(4) Local public and private commitment to the

development of the proposed zone and the potential

cooperation of surrounding communities.

(5) Existing resources available to the proposed zone.

(6) How zone designation or economic redevelopment

relates to other current economic and community development

projects and to regional initiatives or programs.

(7) How the local regulatory burden will be eased for

businesses operating in the proposed zone.

(8) Proposals to implement energy enhancements.

(9) Proposals to maximize job creation.

as a zone unless, as a part of the application, each political

subdivision in which the proposed zone is to be located adopts

and provides a copy of an ordinance, resolution or other

required action from the governing body of each political

subdivision that exempts or provides deductions, abatements or

credits to qualified persons and qualified businesses from local

taxes upon designation of the area as a zone. Each appropriate

ordinance and resolution must take effect on or before January

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1, 2017, if designation as a zone is granted. A resolution,

ordinance or other required action shall be binding and

nonrevocable on the qualified political subdivisions for the

duration of the zone.

Section 304. Qualified businesses.

(a) Qualifications.--In order to qualify each year for a tax

exemption, deduction, abatement or credit under this act, a

business must own or lease real property in a zone from which

the business actively:

(1) conducts a manufacturing business, petrochemical

business or downstream business; or

(2) provides support or services to a manufacturing

business, petrochemical business or downstream business.

(b) Certification.--A qualified business shall receive

certification from the authority that the business meets the

qualifications in subsection (a). The business must obtain

annual renewal of the certification from the authority to

continue to qualify under this section. The certification form

shall include, but not be limited to, all of the following:

(1) The duration of the zone designation.

(2) The number of jobs created.

(3) The number of jobs retained.

(4) The amount of capital investment.

(5) The manufacturing, petrochemical or downstream

activity of the business or the manner in which the business

supports or provides services to a manufacturing business,

petrochemical business or downstream business.

(6) Any other information, conditions or requirements

reasonably required by the authority.

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zone into a zone shall not receive any of the exemptions,

deductions, abatements or credits provided under this act unless

the business does one of the following:

(1) increases full-time employment by at least 20% in

the first full year of operation within the zone;

(2) makes a capital investment in the property located

within the zone equivalent to at least 10% of the gross

revenues of the business in the immediately preceding

calendar or fiscal year; or

(3) enters into a lease agreement for property located

within the zone:

(i) for a term equivalent to at least the duration

of the zone; and

(ii) with aggregate payment under the lease

agreement equivalent to at least 5% of the gross revenues

of the business in the immediately preceding calendar or

fiscal year.

(d) Waiver.--The authority, in consultation with the

department, may waive or modify the requirements of subsection

(a) as appropriate.

Section 305. Forms.

(a) Application forms.--Applications for authorization as a

zone shall be on forms prescribed by the authority.

(b) Authority assistance.--The authority shall assist

political subdivisions in using the Internet as a tool for

encouraging new business development, including assisting

political subdivisions in making available, via the Internet,

information, applications and other forms necessary under this

act.

Section 306. Prohibition on illegal alien labor.

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(a) General rule.--An individual or business that receives a

tax exemption, deduction, abatement or credit under this act may

not knowingly permit the labor services of an illegal alien

under a contract to which the individual or business is a party

in the applicable zone. An individual or business shall be

deemed to have knowingly employed or knowingly permitted the

prohibited services if he or she had active knowledge of or had

reason to know that the services have been provided under the

contract in the applicable zone.

(b) Reimbursement.--As a condition of the receipt of a tax

exemption, deduction, abatement or credit under this act, the

authority or political subdivision that awards the tax

exemption, deduction, abatement or credit under this act must

require full repayment of the value or amount of the tax

exemption, deduction, abatement or credit if subsection (c)

applies.

(1) Repayment under subsection (b) is required if any of

the following apply:

(i) The individual or business that received the tax

exemption, deduction, abatement or credit under this act

is sentenced under Federal law for an offense involving

knowing use of labor by an illegal alien under the

contract in the applicable zone.

(ii) All of the following apply:

(A) A contractor to an individual or business

that received the tax exemption, deduction, abatement

or credit under this act is sentenced under Federal

law for an offense involving knowing use of labor by

an illegal alien on the contract.

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(B) The individual or business knew or had

reason to know of the contractor's knowing use of

labor by an illegal alien on the contract.

(2) An individual or business who is required to repay

the authority or a political subdivision under this section

shall be ineligible to apply for a tax exemption, deduction,

abatement or credit under this act for a period of two years.

(3) It shall be an affirmative defense to a violation of

this section if the individual or business contracts with a

contractor to provide labor under the contract in the

applicable zone and establishes that the contractor has

certified compliance with the requirements of section 274A of

the Immigration Reform and Control Act of 1986 (Public Law

99-603, 8 U.S.C. § 1324A) with respect to the hiring,

recruiting or referral for employment of an alien in the

United States and has notified the appropriate Federal

authority, if the individual or business knew that the

contractor used labor by an illegal alien.

(d) Definition.--As used in this section, the term "illegal

alien" means a noncitizen of the United States who is violating

Federal immigration laws and is providing compensated labor

within this Commonwealth.

CHAPTER 4

STATE TAXES

SUBCHAPTER A

GENERAL PROVISIONS

Section 401. State taxes.

(a) General rule.--An individual who is a resident of a

zone, a qualified business or a nonresident under section 407(b)

shall receive the exemptions, deductions, abatements or credits

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as provided in this chapter and Chapter 5 for the duration of

the zone designation. Exemptions, deductions, abatements or

credits shall expire on the date of expiration of the zone

designation.

(b) Construction.--The Department of Revenue shall

administer, construe and enforce the provisions of this chapter

in conjunction with Articles II, III, IV, VI, VII, IX and XV of

the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform

Code of 1971.

SUBCHAPTER B

PARTICULAR STATE TAXES

Section 402. Sales and use tax.

Sales at retail of services or tangible personal property,

other than motor vehicles, to a qualified business or a

construction contractor pursuant to a construction contract with

a qualified business, landowner or lessee for the exclusive use,

consumption and utilization of the tangible personal property or

service by the qualified business at the qualified business',

landowner's or lessee's facility located within a zone are

exempt from the sales and use tax imposed under Article II of

the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform

Code of 1971. An exemption shall not be allowed for sales

conducted prior to designation of the real property as part of a

zone.

Section 403. Personal income tax.

(a) General rule.--A person shall be allowed an exemption

for:

(1) Compensation received during the time period when

the person was a resident of a zone.

(2) Net income from the operation of a qualified

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business received by a resident or nonresident of a zone

attributable to business activity conducted within a zone,

determined in accordance with section 404. Any business that

operates both inside and outside of this Commonwealth, before

computing its zone exemption, shall first determine its

Pennsylvania activity over its activity everywhere by

applying the three-factor apportionment formula as set forth

in the department's personal income tax regulations

applicable to income apportionment in connection with a

business, trade or profession carried on both inside and

outside of this Commonwealth.

(3) All of the following:

(i) Net gains or income, less net losses, derived by

a resident or nonresident of a zone from the sale,

exchange or other disposition of real or tangible

personal property located in a zone as determined in

accordance with accepted accounting principles and

practices. The exemption provided in this subparagraph

shall not apply to the sale, exchange or other

disposition of any stock of goods, merchandise or

inventory, or any operational assets unless the transfer

is in connection with the sale, exchange or other

disposition of all of the assets in complete liquidation

of a qualified business located in a zone. This

subparagraph shall apply to intangible personal property

employed in a trade, profession or business in a zone by

a qualified business, but only when transferred in

connection with a sale, exchange or other disposition of

all of the assets in complete liquidation of the

qualified business in the zone.

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(ii) Net gains, less net losses, realized by a

resident of a zone from the sale, exchange or disposition

of intangible personal property or obligations issued on

or after February 1, 1994, by the Commonwealth, a public

authority, commission, board or other Commonwealth

agency, political subdivision or authority created by a

political subdivision or by the Federal Government as

determined in accordance with accepted accounting

principles and practices.

(iii) The exemption from income for gain or loss

provided for in subparagraphs (i) and (ii) shall be

prorated based on the following:

(A) In the case of gains, less net losses, in

subparagraph (i), the percentage of time, based on

calendar days, the property located in a zone was

held by a resident or nonresident of the zone during

the time period the zone was in effect in relation to

the total time the property was held.

(B) In the case of gains, less net losses, in

subparagraph (ii), the percentage of time, based on

calendar days, the property was held by the taxpayer

while a resident of a zone in relation to the total

time the property was held.

(4) Net gains or income derived from or in the form of

rents received by a person, whether or not a resident of a

zone, to the extent that income or loss from the rental of

real or tangible personal property is allocable to a zone.

For purposes of calculating this exemption:

(i) Net rents derived from real or tangible personal

property located in a zone shall be allocable to a zone.

20150HB1731PN2604 - 22 -

(ii) If the tangible personal property was used both

inside and outside of the zone during the taxable year,

only the net income attributable to use in the zone shall

be exempt. The net rental income shall be multiplied by a

fraction, the numerator of which is the number of days

the property was used in the zone and the denominator of

which is the total days of use.

(5) Dividends received during the time the person was a

resident of a zone.

(6) Interest received during the time period the person

was a resident of a zone.

(7) The part of the income or gains received by an

estate or trust for its taxable year ending within or without

the resident-beneficiary's taxable year which, under the

governing instrument and applicable State law, is required to

be distributed currently or is in fact paid or credited to

the resident-beneficiary and which would have been exempt

under this act if received by a resident-beneficiary

directly.

(b) Exemption.--Beginning in taxable year 2017, a person

located in a designated zone shall be allowed an exemption under

subsection (a) from the tax imposed by Article III of the act of

March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of

1971, for the classes of income set forth under subsection (a).

A person shall not be allowed an exemption for activities

conducted prior to designation of the real property as part of a

zone.

under subsection (a)(2), (3)(i) and (4) shall apply to all of

the following:

20150HB1731PN2604 - 23 -

(1) The income or gain of a partnership or association.

The partner or member shall be entitled to the exemptions

under this section for the partner's or member's share,

whether or not distributed, of the income or gain received by

the partnership or association for its taxable year.

(2) The income or gain of a Pennsylvania S corporation.

The shareholder shall be entitled to the exemptions under

this section for the shareholder's pro rata share, whether or

not distributed, of the income or gain received by the

corporation for its taxable year ending within or without the

shareholder's taxable year.

(3) The income or gain of a limited liability company.

The member shall be entitled to the exemptions under this

section for the member's pro rata share, whether or not

distributed, of the income or gain received by the limited

liability company for its taxable year ending within or

without the member's taxable year.

(d) Limitation.--A partnership, association, Pennsylvania S

corporation, sole proprietorship, limited liability company,

resident or nonresident may not apply an exemption from income

under this act for any class of income against any other classes

of income or gain. A partnership, association, Pennsylvania S

corporation, resident or nonresident may not carry back or carry

forward any exemption under this act from year to year. The

credit allowed under this section shall not exceed the tax

liability of the taxpayer under Article III of the Tax Reform

Code of 1971 for the tax year.

(e) Nonapplicability.--Any portion of net income or gain

that is attributable to operation of a railroad, truck, bus or

airline company or entity which would qualify as a regulated

20150HB1731PN2604 - 24 -

investment company under Article IV of the Tax Reform Code of

1971 or would qualify as a holding company under Article VI of

the Tax Reform Code of 1971 shall not be used to calculate an

exemption under this section. This subsection shall not apply to

the exemption from tax provided under subsection (a)(5).

Section 404. Corporate net income tax.

(a) Credits.--For the tax years that begin on or after

January 1, 2017, a corporation that is a qualified business

under this act may claim a credit against the tax imposed by

Article IV of the act of March 4, 1971 (P.L.6, No.2), known as

the Tax Reform Code of 1971, for tax liability attributable to

business activity conducted within the zone in the taxable year.

A credit may not be claimed for activities conducted prior to

designation of the real property as part of a zone. The business

activity must be conducted directly by a corporation in the zone

in order for the corporation to claim the tax credit.

(b) Tax liability determinations.--The corporate tax

liability attributable to business activity conducted within a

zone shall be determined by multiplying the corporation's

taxable income that is attributable to business activity

conducted within the zone by the rate of tax imposed under

Article IV of the Tax Reform Code of 1971 for the taxable year.

liability attributable to business activity conducted within a

zone shall be computed, construed, administered and enforced in

conformity with Article IV of the Tax Reform Code of 1971 and

with specific reference to the following:

(1) If the entire business of the corporation in this

Commonwealth is transacted wholly within the zone, the

taxable income attributable to business activity within the

20150HB1731PN2604 - 25 -

zone shall consist of the Pennsylvania taxable income as

determined under Article IV of the Tax Reform Code of 1971.

(2) If the entire business of the corporation in this

Commonwealth is not transacted wholly within the zone, the

taxable income of a corporation in the zone shall be

determined upon the portion of the Pennsylvania taxable

income of the corporation attributable to business activity

conducted within the zone and apportioned in accordance with

subsection (d).

(d) Income apportionment.--The taxable income of a

corporation that is a qualified business shall be apportioned to

the zone by multiplying the Pennsylvania taxable income by a

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

payroll factor and the denominator of which is two, in

accordance with the following:

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

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

tangible personal property owned or rented and used in the

zone during the tax period and the denominator of which is

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

personal property owned or rented and used in this

Commonwealth during the tax period but shall not include the

security interest of any corporation as seller or lessor in

personal property sold or leased under a conditional sale,

bailment lease, chattel mortgage or other contract providing

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

sales price of the property.

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

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

tax period by the taxpayer for compensation and the

20150HB1731PN2604 - 26 -

denominator of which is the total compensation paid in

this Commonwealth during the tax period.

(ii) Compensation is paid in the zone if:

(A) the person's service is performed entirely

within the zone;

(B) the person's service is performed both

within and without the zone, but the service

performed without the zone is incidental to the

person's service within the zone; or

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

operations, the place from which the service is

directed or controlled is in the zone or the base of

operations or the place from which the service is

directed or controlled is not in any location in

which some part of the service is performed, but the

person's residence is in the zone.

(e) Computation.--A corporation shall compute its

Commonwealth taxable income in conformity with Article IV of the

Tax Reform Code of 1971 with no adjustments or subtractions for

energy enhancement zone taxable income.

(f) Limitation on amount of credit.--The credit allowed

under this section shall not exceed the tax liability of the

taxpayer under Article IV of the Tax Reform Code of 1971 for the

tax year.

Section 405. Capital stock franchise tax.

(a) Credits.--For tax years that begin on or after January

1, 2017, a corporation that is a qualified business under this

act may claim a credit against the tax imposed by Article VI of

the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform

20150HB1731PN2604 - 27 -

Code of 1971, for tax liability attributable to the capital

employed within the zone in the taxable year. A credit may not

be claimed for capital employed prior to designation of the real

property as part of a zone. The business activity must be

conducted directly by a corporation in the zone in order for the

corporation to claim the tax credit.

(b) Tax liability.--The corporation's tax liability

attributable to capital employed within a zone shall be

determined by multiplying the corporation's taxable value

attributable to capital employed within the zone by the rate of

tax imposed under Article VI of the Tax Reform Code of 1971 for

the taxable year. The corporation shall compute its Pennsylvania

taxable value in conformity with Article VI of the Tax Reform

Code of 1971 with no adjustments or subtractions for the capital

employed in the zone.

determination of the corporation's taxable value attributable to

the capital employed within a zone shall be determined with

specific reference to the following:

(1) If the entire business of the corporation in this

Commonwealth is transacted wholly within a zone, the taxable

value attributable to the capital employed within a zone

shall consist of the Pennsylvania taxable value as determined

under Article VI of the Tax Reform Code of 1971.

(2) If the entire business of the corporation in this

Commonwealth is not wholly transacted within a zone, the

taxable value of a corporation in a zone shall be determined

upon the portion of the Pennsylvania taxable value

attributable to the capital employed within the zone by

employing the apportionment factors set forth in section

20150HB1731PN2604 - 28 -

404(d).

(d) Limitation on amount of credit.--The credit allowed

under this section shall not exceed the tax liability of the

taxpayer under Article VI of the Tax Reform Code of 1971 for the

tax year.

Section 406. Keystone energy enhancement zone job creation tax

credit.

(a) Credits.--For tax years that begin on or after January

1, 2017, a qualified business under this act may apply to the

department for a zone job creation tax credit against the tax

imposed by Article III, IV or VI of the Tax Reform Code of 1971.

The credit shall be for all full-time jobs created within a zone

in the taxable year. The job must be held directly with the

qualified business in the zone in order for the qualified

business to apply for the tax credit. The department shall

prescribe the form and manner to obtain the credit.

(b) Relocation.--The following shall apply:

(1) A business that relocates from a location in a

political subdivision in this Commonwealth that is not in a

zone to a location in a zone may not apply for a credit for

an existing job that is transferred, discontinued or lost in

this Commonwealth which is attributable to the relocation.

(2) A business that has relocated pursuant to paragraph

(1) and becomes a qualified business may apply for a zone job

creation tax credit, for a new full-time job that is created

in the zone. A new full-time job is created with a qualified

business if the average monthly employment for that qualified

business has increased from the prior 12-month calendar year

in the zone.

20150HB1731PN2604 - 29 -

for a credit under this section for the previous fiscal year by

January 15.

(d) Apportionment.--The department shall apportion a zone

job creation tax credit for a business that is a qualified

business that has not operated in a zone for a full fiscal year.

(e) Credit determinations.--The zone job creation tax credit

shall be determined by multiplying the monthly average of all

full-time jobs by the allowance. The allowance for purposes of

the zone job creation tax credit, for taxable years beginning

within the dates set forth shall be as follows:

January 1, 2017, to December 31, 2017 $500 per job

January 1, 2018, to December 31, 2018 $750 per job

January 1, 2019, to December 31, 2019 $1,000 per job

January 1, 2020, to December 31, 2020 $1,250 per job

January 1, 2021, to December 31, 2021 $1,250 per job

January 1, 2022, to December 31, 2022 $1,250 per job

January 1, 2023, to December 31, 2023 $1,250 per job

January 1, 2024, to December 31, 2024 $1,250 per job

January 1, 2025, to December 31, 2025 $1,250 per job

January 1, 2026, to December 31, 2026 $1,250 per job

January 1, 2027, to December 31, 2027 $1,250 per job

(f) Notification of credit.--By March 15, the department

shall notify the qualified business of the amount of the

qualified business' job creation tax credit that was approved.

(g) Allocation.--The total amount of credits approved by the

department under this section may not exceed $10,000,000

annually. If the credits exceed the $10,000,000 cap in a given

year, the credits shall be allocated on a pro rata basis.

(h) Calculation of allocation.--If the total amount of zone

job creation tax credits applied for by all qualified businesses

20150HB1731PN2604 - 30 -

under this section exceeds $10,000,000, the credit to be

received by each qualified business shall be the product of

$10,000,000 multiplied by the quotient of the credit applied for

by the qualified business divided by the total of all credits

applied for by all qualified businesses, the algebraic

equivalent of which is:

qualified business zone job creation tax credit =

$10,000,000 x (the amount of zone job creation tax credit

applied for by the qualified business/the sum of all zone

job creation tax credits applied for by all qualified

businesses).

(i) Pass-through entities.--The zone job creation tax credit

shall apply to the following:

(1) A partner or member of a partnership or association

that qualifies under this section shall be entitled to a job

creation tax credit in proportion to the partner's or

member's share, whether or not distributed, of the income or

gain received by the partnership or association for its

taxable year.

(2) A shareholder of a Pennsylvania S corporation that

qualifies under this section shall be entitled to a job

creation tax credit in proportion to the shareholder's pro

rata share, whether or not distributed, of the income or gain

received by the corporation for its taxable year ending

within or without the shareholder's taxable year.

(3) A member of a limited liability company that

qualifies under this section shall be entitled to a job

creation tax credit in proportion to the member's pro rata

share, whether or not distributed, of the income or gain

received by the limited liability company for its taxable

20150HB1731PN2604 - 31 -

year ending within or without the member's taxable year.

(4) A partnership, association, Pennsylvania S

corporation or limited liability company, or partner, member

or shareholder, may not claim any other tax benefit, expense

or credit for the same zone job creation tax credit.

Section 407. Residency.

(a) Qualifications.--In order to qualify each year for a tax

exemption, deduction, abatement or credit under this act, an

individual shall be domiciled and shall reside in a zone for a

period of 184 consecutive days during each taxable year, which

may begin on the date of designation by the department or on the

date the individual first resides within the zone.

(b) Residency considerations.--If an individual completes

the residency requirements under subsection (a) or if a

nonresident realizes income attributable to business activity or

property within a zone on or before the end of the tax year, the

individual may claim the exemptions from income for the items

set forth in section 403 for that portion of the tax year that

the individual was a resident or for that portion of the tax

year during which the area is designated as a zone.

CHAPTER 5

LOCAL TAXES

Section 501. Local taxes.

(a) Requirement.--Every political subdivision in which a

zone is located shall exempt, deduct, abate or credit local

taxes in accordance with ordinances and resolutions adopted to

comply with section 301(c).

(b) Noncompliance.--Failure to comply with subsection (a)

shall result in the revocation of the zone designation.

Section 502. Real property tax.

20150HB1731PN2604 - 32 -

(a) Abatement.--Notwithstanding the act of May 22, 1933

(P.L.853, No.155), known as The General County Assessment Law,

and 53 Pa.C.S. Ch. 88 (relating to consolidated accounting

assessment), each qualified political subdivision for taxable

years beginning after December 31, 2016, shall by ordinance or

resolution abate 100% of the real property taxation on the

assessed valuation of deteriorated property in an area

designated as a zone within this Commonwealth.

(b) Applicability.--

(1) The real property tax abatement under this section

shall apply to all real property located in a zone,

irrespective of any business activity, made of the realty by

its owner, when this act is in effect.

(2) An abatement may not be provided to deteriorated

property prior to designation of the deteriorated property as

part of a zone.

(1) A qualified political subdivision may require a

resident of deteriorated real property, in order for the

residents to be qualified for exemptions, deductions,

abatements and credits under this act, to invest up to 25% of

all real property taxes which would have been due if the real

property was not located in a zone in improvements to the

real property.

(2) A qualified political subdivision may require a

nonresident owner of deteriorated real property who leases

the real property to an individual for residential use to

invest 50% of all real property taxes which would have been

due if the real property was not located in a zone in

improvements to the real property.

20150HB1731PN2604 - 33 -

(d) Annual real property report.--By January 31, a political

subdivision in which a zone is located shall submit to the

authority an annual report listing the address of each real

property in a designated zone and its owner of record.

(e) Interest and penalties.--A person that claims an

abatement of real property tax to which the person is not

entitled under this act shall be liable for the abated taxes and

subject to the applicable interest and penalty provisions

provided by law.

(f) Calculations for education subsidy for school

districts.--In determining the market value of real property in

each school district, the State Tax Equalization Board shall

exclude any increase in value above the base value prior to the

effect of the abatement of local taxes to the extent and during

the period of time that real estate tax revenues attributable to

the increased value are not available to the school district for

general school district purposes.

Section 503. Local earned income and net profits taxes;

business privilege taxes.

(a) General exemption.--

(1) If a political subdivision has enacted a tax on the

privilege of engaging in a business or profession, measured

by gross receipts or on a flat rate basis, by earned income

or by net profits, imposed within the boundaries of a zone,

except as set forth in paragraph (2), the qualified political

subdivision shall exempt all of the following from the tax:

(i) Business gross receipts for operations conducted

by a qualified business within a zone.

(ii) Earned income received by a resident of a zone.

(iii) Net profits of a qualified business

20150HB1731PN2604 - 34 -

attributable to business activity conducted within the

zone.

(2) An exemption may not be granted for operations

conducted, for earned income received or for activities

conducted prior to designation of the real property as part

of a zone.

(b) Additional exemptions.--

(1) This subsection applies if a qualified political

subdivision has enacted a tax on the privilege of engaging in

a profession or business, on wages or compensation, on net

profits from the operation of a business or profession or

other activity or on the occupancy or use of real property

under any of the following:

(i) The act of August 5, 1932 (Sp.Sess., P.L.45,

No.45), referred to as the Sterling Act.

(ii) The act of March 10, 1949 (P.L.30, No.14),

known as the Public School Code of 1949.

(iii) The act of August 24, 1961 (P.L.1135, No.508),

referred to as the First Class A School District Earned

Income Tax Act.

(iv) The act of August 9, 1963 (P.L.640, No.338),

entitled "An act empowering cities of the first class,

coterminous with school districts of the first class, to

authorize the boards of public education of such school

districts to impose certain additional taxes for school

district purposes, and providing for the levy, assessment

and collection of such taxes."

(v) The act of May 30, 1984 (P.L.345, No.69), known

as the First Class City Business Tax Reform Act.

(vi) The act of June 5, 1991 (P.L.9, No.6), known as

20150HB1731PN2604 - 35 -

the Pennsylvania Intergovernmental Cooperation Authority

Act for Cities of the First Class.

(2) If there is an enactment under paragraph (1), the

qualified political subdivision shall provide an exemption,

deduction, abatement or credit from the imposition and

operation of the local tax ordinance or resolution for all of

the following:

(i) The privilege of engaging in a business or

profession within a zone by an individual or a qualified

business, whether a resident or nonresident of the zone.

(ii) Salaries, wages, commissions, compensation or

other income received for services rendered or work

performed by a resident of the zone.

(iii) The gross or net income or gross or net

profits realized from the operation of a qualified

business to the extent attributable to business activity

conducted within the zone.

(iv) The occupancy or use of real property located

within the zone.

(1) Except as set forth in paragraph (2), in determining

the personal income valuation of a school district, the

Secretary of Revenue shall exclude any increase in personal

income valuation above the base value prior to the abatement

of local taxes in a zone located within the school district

to the extent and during the period of time that personal

income revenue attributable to the increase in the personal

income valuation are not available to the school district for

general school district purposes.

(2) An exemption under this section may not be granted

20150HB1731PN2604 - 36 -

to an individual or qualified business prior to designation

of the real property as part of a zone.

(d) Determination of exemption.--For the purposes of

determining an exemption under this section, a tax on or

measured by any of the following shall be attributed to business

activity conducted within a zone by applying the apportionment

factors under section 404(d):

(1) Business gross receipts.

(2) Gross or net income.

(3) Gross or net profits.

(e) Definitions.--As used in this section, the following

words and phrases shall have the meanings given to them in this

subsection unless the context clearly indicates otherwise:

"Earned income." As defined in section 501 of the act of

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

Enabling Act.

"Net profits." As defined in section 501 of The Local Tax

Enabling Act.

"Personal income valuation." As defined in section 2501(9.1)

of the act of March 10, 1949 (P.L.30, No.14), known as the

Public School Code of 1949.

Section 504. Mercantile license tax.

An individual or qualified business in a zone may not be

required to pay any fee authorized pursuant to a mercantile

license tax imposed under the act of June 20, 1947 (P.L.745,

No.320), entitled "An act to provide revenue for school

districts of the first class A by imposing a temporary

mercantile license tax on persons engaging in certain

occupations and businesses therein; providing for its levy and

collection; for the issuance of mercantile licenses upon the

20150HB1731PN2604 - 37 -

payment of fees therefor; conferring and imposing powers and

duties on boards of public education, receivers of school taxes

and school treasurers in such districts; saving certain

ordinances of council of certain cities, and providing

compensation for certain officers, and employes and imposing

penalties."

Section 505. Local sales and use tax.

(a) Applicable taxes.--This section applies to a tax imposed

by a political subdivision under any of the following:

(1) Subarticle E of Article XXXI-B of the act of July

28, 1953 (P.L.723, No.230), known as the Second Class County

Code.

(2) Chapter 5 of the act of June 5, 1991 (P.L.9, No.6),

known as the Pennsylvania Intergovernmental Cooperation

Authority Act for Cities of the First Class.

(b) Exemption.--Except as set forth in subsection (c), a

political subdivision which enacts a tax specified in subsection

(a) shall exempt from the tax sales at retail of services or

tangible personal property, to a qualified business or a

construction contractor pursuant to a construction contract with

a qualified business, landowner or lessee for the exclusive use,

consumption and utilization of the tangible personal property or

service by the qualified business at the qualified business',

landowner's or lessee's facility located within a zone.

(1) This subsection does not apply to the sale at retail

of a motor vehicle.

(2) An exemption may not be granted for sales occurring

prior to designation of the real property as part of a zone.

(d) Definitions.--As used in this section, the following

20150HB1731PN2604 - 38 -

words and phrases shall have the meanings given to them in this

subsection unless the context clearly indicates otherwise:

"Sale at retail." As defined in section 201(k) of the act of

March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of

1971.

"Tangible personal property." As defined in section 201(m)

of the Tax Reform Code of 1971.

CHAPTER 6

ADMINISTRATION OF TAX PROVISIONS

Section 601. Transferability.

Any exemption, deduction, abatement or credit provided to an

individual or a qualified business under Chapter 4 or 5 is

nontransferable and may not be applied, used or assigned to any

other person, business or tax account.

Section 602. Recapture.

(a) Refund.--Except as set forth in subsection (c), if a

qualified business located within a zone has received an

exemption, deduction, abatement or credit under this act and

subsequently relocates outside of the zone within the first five

years of locating in a zone, the business shall refund to the

Commonwealth and the political subdivision which granted the

exemption, deduction, abatement or credit received.

(b) Amount.--The refund under subsection (a) shall be in the

amount of the following percentages of the exemptions,

deductions, abatements or credits attributed to the qualified

business' participation in the zone:

(1) If the qualified business relocates within three

years from the date of first locating in a zone, 66%.

(2) If the qualified business relocates within three to

five years from the date of first locating in a zone, 33%.

20150HB1731PN2604 - 39 -

(1) If the qualified business was located within a

facility operated by a nonprofit organization to assist in

the creation and development of a start-up business, an

exemption, deduction, abatement or credit may not be

refunded.

(2) The authority, in consultation with the department

and the political subdivision, may waive or modify recapture

requirements under this section if the authority determines

that the business relocation was due to circumstances beyond

the control of the business. This paragraph includes:

(i) Natural disaster.

(ii) Unforeseen industry trends.

(iii) Loss of a major supplier or market.

Section 603. Delinquent or deficient State or local taxes.

(a) Individuals.--An individual may not claim or receive an

exemption, deduction, abatement or credit under this act unless

that individual is in full compliance with tax statutes,

ordinances and resolutions.

(b) Qualified business.--

(1) A qualified business may not claim or receive an

exemption, deduction, abatement or credit under this act

unless that qualified business is in full compliance with

tax statutes, ordinances and resolutions.

(2) A qualified business may not claim or receive an

exemption, deduction, abatement or credit under this act if a

person or business with a 20% or greater interest in that

qualified business is not in full compliance with tax

statutes, ordinances and resolutions.

20150HB1731PN2604 - 40 -

(1) Subject to paragraph (2), an individual or a

qualified business that is not eligible to claim an

exemption, deduction, abatement or credit due to

noncompliance under subsection (b) may become eligible if the

individual or qualified business subsequently comes into full

compliance to the satisfaction of the authority and

department or the political subdivision within the calendar

year in which the noncompliance first occurred.

(2) If full compliance is not attained by February 5 of

the calendar year following the calendar year when

noncompliance first occurred, then the individual or

qualified business is precluded from claiming any exemption,

deduction, abatement or credit for that calendar year,

whether or not full compliance is achieved subsequently.

(d) Tax appeals.--An individual or a qualified business

shall be deemed to be in full compliance under this section if

the individual or qualified business:

(1) makes a timely administrative or judicial appeal for

the tax; or

(2) is in compliance with an authorized deferred payment

plan with the department or a political subdivision for the

tax.

Section 604. Zoning, building and housing compliance.

(a) General rule.--An individual or a qualified business

shall be precluded from claiming any exemption, deduction,

abatement or credit provided for in this act if the individual

or qualified business owns real property in a zone and the real

property is not in compliance with applicable zoning, building

and housing statutes, regulations, ordinances and codes.

(b) Opportunity to achieve compliance.--

20150HB1731PN2604 - 41 -

(1) Except as set forth in paragraph (2), an individual

or a qualified business that is not in compliance under

subsection (a) shall have until December 31 of the calendar

year following designation of the real property as part of a

zone to be in compliance in order to claim a State exemption,

deduction, abatement or credit for that year. If the time

limit under this paragraph is not met, the individual or

qualified business is precluded from claiming any exemption,

deduction or credit for that calendar year, whether or not

compliance is achieved in a subsequent calendar year.

(2) The political subdivision may extend the time period

in which an individual or a qualified business must come into

compliance with a local ordinance or building code for a

period not to exceed one year if the political subdivision

determines all of the following:

(i) The individual or qualified business has made

and will continue to make a good faith effort to come

into compliance.

(ii) An extension will enable the individual or

qualified business to achieve full compliance.

annually notify the authority and the department in writing of

all persons or qualified businesses that are not in compliance

with this section by January 30.

Section 605. Notice requirements; State and local authorities.

(a) Requirement.--

(1) After compliance reviews have been conducted by

appropriate Commonwealth and political subdivision

authorities, the authority shall notify each zone applicant

by regular mail each year of the authority's approval or

20150HB1731PN2604 - 42 -

denial of the applicant's application.

(2) An applicant shall not be entitled to a tax benefit

unless it receives approval from the authority.

(b) Transmittal.--The authority or its designated official

shall, within 15 business days of receipt of an application made

under this act, forward a copy of the application to appropriate

Commonwealth and political subdivision authorities for review

and processing.

Section 606. Application time.

(a) Requirement.--Except as set forth in subsection (b), an

applicant must file an application in a manner prescribed by the

department by December 31 of the year for which the applicant

claims any exemption, deduction, abatement or credit under this

act.

(b) Extension or waiver.--Upon request of the applicant, the

authority may extend or waive the application deadline for good

cause if the political subdivision does not object to the waiver

or extension.

may not be claimed or received for a calendar year until

approval has been recommended by the department and granted by

the authority.

CHAPTER 7

PROCEDURES FOR ZONES

Section 701. Relation to other programs.

(a) Reduced interest.--Projects in a zone which are approved

for Pennsylvania Industrial Development Authority or the Small

Business First financing shall receive the lowest interest rate

extended to borrowers.

(b) Priority consideration.--Projects in a zone shall

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receive priority consideration for State assistance under State

economic, community and economic development programs and

community building initiatives.

subdivisions, shall develop and implement a consolidated

marketing strategy for a zone for use in job retention and

attraction activities.

(d) Local governments.--

(1) The Center for Local Government Services in the

Department of Community and Economic Development shall do all

of the following:

(i) Provide technical assistance to political

subdivisions relating to:

(A) taxation;

(B) implementation of the strategic plan; and

reporting requirements to the authority.

(ii) Provide political subdivisions with property

designated as a zone with technical assistance to

encourage the implementation of best practices in

achieving efficient and effective local government

administration.

(iii) Coordinate activities with other Commonwealth

agencies providing various assistance to communities.

Section 702. Reporting.

The authority shall report to the General Assembly on the

economic effects of this act in each zone every four years.

Section 703. Other Commonwealth tax credits.

(a) Prohibition.--An individual or a qualified business that

is entitled to claim an exemption, deduction, abatement or

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credit under this act may not claim or accumulate any of the

following tax credits:

(1) Research and development under Article XVII-B of the

act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform

Code of 1971.

(2) Job creation under Article XVIII-B of the Tax Reform

Code of 1971.

(3) Neighborhood assistance under Article XIX-A of the

Tax Reform Code of 1971.

(b) Outside of zone.--

(1) An individual or a qualified business may apply an

exemption, deduction, abatement or credit to income realized

from activity or transactions outside the zone, but only for

the taxable year to which the exemption, deduction, abatement

or credit applies.

(2) This subsection applies only to the taxes set forth

in Chapters 4 and 5.

Section 704. Monitoring data.

The authority shall monitor all of the following:

(1) Verifiable job creation and job retention data.

(2) Information on the types of jobs created and average

hourly wages.

(3) Number of years in the program.

(4) Annual, unduplicated public and private capital

investment amounts.

(5) Business type and description.

(6) Types and amounts of other economic development

assistance received from the Commonwealth.

(7) Documentation that proper participants identified as

relocations meet the requirements of this act.

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CHAPTER 13

MISCELLANEOUS PROVISIONS

Section 1301. Illegal activity.

Money and other forms of consideration received by a person

conducting illegal activity shall not be eligible for any

exemption, deduction, abatement or credit or any other benefit

created under this act.

Section 1302. Regulations.

The department, in consultation with the authority, may

promulgate regulations necessary to effectuate the provisions of

this act.

Section 1303. Compliance.

An individual or a qualified business eligible for an

exemption, deduction or credit under this act shall comply with

all reporting, filing and compliance requirements under the act

of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of

1971, unless otherwise provided for in this act.

Section 1304. Penalties.

(a) Civil penalty.--In addition to a penalty under the act

of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of

1971, the department may impose an additional administrative

penalty not to exceed $10,000 for any act or violation of this

act relating to State and local tax, including the filing of any

false statement, return or document.

(b) Criminal penalty.--In addition to a criminal penalty

under the Tax Reform Code of 1971, a person that knowingly

violates this act commits a misdemeanor of the third degree.

Section 1305. Construction.

This act shall be interpreted to ensure that all provisions

relating to State and local tax exemptions, deductions,

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abatements and credits are strictly construed in favor of the

Commonwealth.

Section 1306. Applicability.

The provisions of this act shall be applied prospectively. An

individual or qualified business may not claim any exemption,

deduction, abatement or credit until:

(1) the individual or business becomes qualified under

this act; and

(2) in the case of a business, receives certification

from the authority that the business is qualified.

Section 1308. Repeals.

All acts and parts of acts are repealed insofar as they are

inconsistent with this act.

Section 1309. Effective date.

This act shall take effect immediately.

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