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A02895
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1102
Session of
2019
INTRODUCED BY KAIL, TURZAI, KAUFER, MIHALEK, FRITZ, TOOHIL,
NELSON, PUSKARIC, O'NEAL, GILLESPIE, GREINER, ROTHMAN,
BERNSTINE, MOUL, KAUFFMAN, CAUSER, ZIMMERMAN, OWLETT AND
SCHMITT, APRIL 29, 2019
REFERRED TO COMMITTEE ON COMMERCE, APRIL 29, 2019
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:
"Alternative energy sources." The term shall include the
following existing and new sources for the production of
electricity:
(1) Solar photovoltaic or other solar electric energy.
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(2) Solar thermal energy.
(3) Wind power.
(4) Large-scale hydropower, which shall mean the
production of electric power by harnessing the hydroelectric
potential of moving water impoundments, including pumped
storage that does not meet the requirements of low-impact
hydropower under paragraph (5).
(5) Low-impact hydropower consisting of any technology
that produces electric power and that harnesses the
hydroelectric potential of moving water impoundments,
provided such incremental hydroelectric development:
(i) does not adversely change existing impacts to
aquatic systems;
(ii) meets the certification standards established
by the Low Impact Hydropower Institute and American
Rivers, Inc., or their successors;
(iii) provides an adequate water flow for protection
of aquatic life and for safe and effective fish passage;
(iv) protects against erosion; and
(v) protects cultural and historic resources.
(6) Geothermal energy, which shall mean electricity
produced by extracting hot water or steam from geothermal
reserves in the earth's crust and supplied to steam turbines
that drive generators to produce electricity.
(7) Biomass energy, which shall mean the generation of
electricity utilizing the following:
(i) organic material from a plant that is grown for
the purpose of being used to produce electricity or is
protected by the Federal Conservation Reserve Program
(CRP) and provided further that crop production on CRP
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lands does not prevent achievement of the water quality
protection, soil erosion prevention or wildlife
enhancement purposes for which the land was primarily set
aside; or
(ii) any solid nonhazardous, cellulosic waste
material that is segregated from other waste materials,
such as waste pallets, crates and landscape or right-of-
way tree trimmings or agricultural sources, including
orchard tree crops, vineyards, grain, legumes, sugar and
other crop by-products or residues.
(8) Biologically derived methane gas, which shall
include methane from the anaerobic digestion of organic
materials from yard waste, such as grass clippings and
leaves, food waste, animal waste and sewage sludge. The term
also includes landfill methane gas.
(9) Fuel cells, which shall mean any electrochemical
device that converts chemical energy in a hydrogen-rich fuel
directly into electricity, heat and water without combustion.
(10) Demand-side management consisting of the management
of customer consumption of electricity or the demand for
electricity through the implementation of:
(i) energy efficiency technologies, management
practices or other strategies in residential, commercial,
institutional or government customers that reduce
electricity consumption by those customers;
(ii) load management or demand response
technologies, management practices or other strategies in
residential, commercial, industrial, institutional and
government customers that shift electric load from
periods of higher demand to periods of lower demand; or
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(iii) industrial by-product technologies consisting
of the use of a by-product from an industrial process,
including the reuse of energy from exhaust gases or other
manufacturing by-products that are used in the direct
production of electricity at the facility of a customer.
(11) Distributed generation system, which shall mean the
small-scale power generation of electricity and useful
thermal energy.
(12) Energy from nuclear fission used to generate
electricity.
"Alternative energy sources business." An association,
partnership, corporation, sole proprietorship, limited
liability company or employer that engages in alternative
energy sources.
"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
that contains economically undesirable land use.
"Downstream business." Any business that uses natural gas
and natural gas byproducts, chemical products or chemical
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compounds produced or extracted in this Commonwealth as raw
materials in the business's 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
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.
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"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.
(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
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in a manufacturing business, petrochemical business,
alternative energy sources 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
for the duration of the chairperson's 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.
(c) Organization.--The appointees of the President pro
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
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held within 60 days of the effective date of this section. In
addition to the chairperson, the board 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
(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
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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.
(g) Statutes applying to authority.--The provisions of the
following acts shall apply to the authority:
(1) The act of July 19, 1957 (P.L.1017, No.451), known
as the State Adverse Interest Act.
(2) The act of February 14, 2008 (P.L.6, No.3), known as
the Right-to-Know Law.
(3) 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, alternative
energy sources business and other downstream business
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opportunities through the increased use of natural gas and
alternative energy sources 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, alternative energy sources
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
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 and
alternative energy sources transmission and distribution
infrastructure and recommendations on how to address the
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challenges that 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 and alternative
energy sources.
(3) To facilitate the proliferation of transmission and
distribution pipelines for the transportation of natural gas
and, natural gas liquids and alternative energy sources,
which are necessary for the development of manufacturing
business, petrochemical business, alternative energy sources
business and other downstream business opportunities in
zones, the authority shall:
(i) Identify corridors for safe and efficient siting
of natural gas and alternative energy sources
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
Utility Commission to provide recommendations to
streamline the issuance of permits in a timely,
predictable and efficient manner for natural gas and
alternative energy sources 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.
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(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, alternative energy sources
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
established in the State Treasury as a restricted account. The
fund shall consist of money appropriated by the General
Assembly.
(b) Continuing appropriation.--All money in the fund and the
interest accruing on the money 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
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the Keystone Energy Enhancement Fund for expenditure during the
fiscal year July 1, 2019, to June 30, 2020, to carry out the
provisions of this act.
Section 207. Term of existence.
The authority shall exist until December 31, 2032.
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
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
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exceed 10 years beginning January 1, 2021, and ending before
January 1, 2032.
(c) Authorization for local tax exemption.--Each political
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,
2021, 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:
(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
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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, alternative energy sources 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.
(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 and alternative energy sources.
(ix) Any other information deemed appropriate by the
authority.
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(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, 2020.
(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, 2020.
(4) The authority may make designations under this
section:
(i) On a rolling basis during the application
period.
(ii) That meet the requirements of this act, except
that:
(A) not more than five zones may be reserved for
counties of the first class;
(B) not more than three zones may be reserved
for counties of the second class;
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(C) not more than two zones per county may be
reserved for counties of the second class A through
eighth classes; 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, alternative energy sources
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
liquids and alternative energy sources 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.
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(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.
(c) Tax exemption ordinances.--An area may not be authorized
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
1, 2021, 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
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exemption, deduction, abatement or credit under this act, a
business must own or lease real property in a zone from which
the business actively does one of the following:
(1) conducts a manufacturing business, petrochemical
business, alternative energy sources business or downstream
business;
(2) provides support or services to a manufacturing
business, petrochemical business, alternative energy sources
business or downstream business; or
(3) operates an apprenticeship program approved under
the act of July 14, 1961 (P.L.604, No.304), known as The
Apprenticeship and Training Act.
(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, alternative energy
sources 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.
(c) Relocation.--A business that relocates from outside of a
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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 the individual or business 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.
(c) Violations.--
(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) 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:
"Illegal alien." A noncitizen of the United States who is
violating Federal immigration laws and is providing compensated
labor within this Commonwealth.
Section 307. Requirement to exclusively use construction
contractors that participate in apprenticeship
programs that meet State standards.
(a) General rule.--An individual or business that receives a
tax exemption, deduction, abatement or credit under this act may
not enter into any agreement or contract with a contractor to
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perform construction work with the contractor's employees or by
using a subcontractor unless the contractor and the contractor's
subcontractors provide an apprenticeship program which meets the
standards established by the State Apprenticeship and Training
Council under the act of July 14, 1961 (P.L.604, No.304), known
as The Apprenticeship and Training Act.
(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 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 the individual or business
fails to meet the requirements under subsection (a).
(c) Ineligibility period.--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 after the individual or business has established that
the individual or business has complied with the repayment
requirements under section (b).
Section 308. Requirement to comply with prevailing wage
requirements.
An individual or business that receives a tax exemption,
deduction, abatement or credit under this act may not enter into
any agreement or contract with a contractor to perform
construction work with the contractor's employees or by using a
subcontractor unless the contractor and the contractor's
subcontractors comply with the act of August 15, 1961 (P.L.987,
No.442), known as the Pennsylvania Prevailing Wage Act.
CHAPTER 4
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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 shall receive the
exemptions, deductions, abatements or credits 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's,
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.
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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
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 the business's 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
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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.
(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
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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.
(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 period 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 that would have been exempt
under this act if received by a resident-beneficiary
directly.
(b) Exemption.--Beginning in taxable year 2021, 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).
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A person shall not be allowed an exemption for activities
conducted prior to designation of the real property as part of a
zone.
(c) Pass-through entities.--The exemptions provided for
under subsection (a)(2), (3)(i) and (4) shall apply to all of
the following:
(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
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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 that would qualify as a regulated
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 beginning on or after
January 1, 2021, 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.
(c) Determinations of attributable tax liability.--Tax
liability attributable to business activity conducted within a
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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
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,
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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
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
(C) some of the service is performed in the zone
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
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tax year.
Section 405. Capital stock franchise tax.
(a) Credits.--For tax years that begin on or after January
1, 2021, 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
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.
(c) Determination of attributable tax liability.--The
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.
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(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
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.
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.
(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 county
assessment), each qualified political subdivision for taxable
years beginning after December 31, 2020, 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.--
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(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
the real property's owner, when this act is in effect.
(2) An abatement may not be provided to deteriorated
real property prior to designation of the deteriorated real
property as part of a zone.
(c) Investment in lieu of tax payment.--
(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
deteriorated real property was not located in a zone in
improvements to the deteriorated real property.
(2) A qualified political subdivision may require a
nonresident owner of deteriorated real property who leases
the deteriorated real property to an individual for
residential use to invest 50% of all real property taxes
which would have been due if the deteriorated real property
was not located in a zone in improvements to the deteriorated
real property.
(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
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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
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
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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
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
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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.
(c) Calculation for education subsidy for school district.--
(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
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.
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(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
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
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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's,
landowner's or lessee's facility located within a zone.
(c) Exception.--
(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
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
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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's 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%.
(c) Exceptions.--
(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
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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.
(c) Later compliance and eligibility.--
(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.
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(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.--
(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,
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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.
(c) Notice.--A qualified political subdivision shall
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
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.
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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.
(c) Approval.--An exemption, deduction, abatement or credit
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
receive priority consideration for State assistance under State
economic, community and economic development programs and
community building initiatives.
(c) Marketing.--The authority, in cooperation with political
subdivisions, shall develop and implement a consolidated
marketing strategy for a zone for use in job retention and
attraction activities.
(d) Local governments.--The Center for Local Government
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Services in the Department of Community and Economic Development
shall do all of the following:
(1) Provide technical assistance to political
subdivisions relating to:
(i) taxation;
(ii) implementation of the strategic plan; and
(iii) establishment of annual benchmarks and
reporting requirements to the authority.
(2) 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.
(3) 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
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.--
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(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.
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
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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. Reports.
(a) State zone report.--By June 15 following the baseline
year and each year thereafter, each qualified business shall
file a report with the department in a form or manner required
by the department which shall include the following:
(1) Amount of each eligible tax which was paid to the
Commonwealth by the qualified business in the prior calendar
year.
(2) Amount of each eligible tax refund received from the
Commonwealth in the prior calendar year by the qualified
business.
(b) Local zone report.--By June 15 following the baseline
year and for each year thereafter, each qualified business shall
file a report with the local taxing authority which shall
include the following:
(1) Amount of each eligible tax which was paid to the
local taxing authority by the qualified business in the prior
calendar year.
(2) Amount of each eligible tax refund received from the
local taxing authority in the prior calendar year by the
qualified business.
Section 1305. Penalties.
(a) Civil penalty.--In addition to a penalty under the act
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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 1306. Construction.
This act shall be interpreted to ensure that all provisions
relating to State and local tax exemptions, deductions,
abatements and credits are strictly construed in favor of the
Commonwealth.
Section 1307. 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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