by Tara Leo Auchey and Andrea Fetchko
Established in 1999, the Keystone Opportunity Zones (KOZ) is a state program offered through the Department of Community and Economic Development (DCED) that gives tax benefits to approved applicants.
Giving an abatement on state and local taxes, the point of a KOZ designation is to encourage the development of buildings in targeted zones. Typically, these zones are designated “distressed” because of blight, vacancy, and neglect. The overall point is to revive local business and economy in areas that are considered underdeveloped, underutilized, and which are not generating much revenue if any. It’s anticipated future taxes can be counted on if redevelopment occurs as well as job creation and increased residency.
Per DCED, the following taxes can be reduced to zero in a KOZ over a set period of time:
- State Taxes: Corporate Net Income Taxes, Capital Stock Foreign Franchise Tax, Personal Income Tax, Sales Use Tax, Bank Shares and Trust Company Shares Tax, Alternative Bank and Trust Company Shares Tax, Mutual Thrift Institutions Tax, Insurance Premiums Tax
- Local Taxes: Earned Income/Net Profits Tax, Business Gross Receipts, Business Occupancy, Business Privilege and Mercantile Taxes, Local Real Property Tax, Sales and Use Tax
The opportunities to form these zones comes only once in a while. The last time a major KOZ was formed in the City of Harrisburg was 2010 when 148 parcels were made into a ten-year KOZ, including the HACC Midtown Campus.
There is currently a new proposal on the table as the window of opportunity has come again with a deadline of October 1, 2013.
Led by the Harrisburg Regional Chamber & CREDC, the proposed KOZ seeks to add 181 acres in Dauphin County, expanding on the previous parcels. In the city, sites include (total assessed value cited, building and land):
- 1000 N Cameron Street (Capitol View Commerce Center)–$2,257,600
- 500 N Cameron Street–$50,000
- 800 N Cameron Street–$85,500
- 47 S 14th Street–$261,900
- 227 S 17th Street–$287,500
- 1714 Mulberry Street–$28,500
- 101 S17th Street–$761,206
- Shimmel School–$1,235,800
- Bishop McDevitt–$2,364,200
- Hamilton Elementary–$3,602,690
- William Penn High School–$6,180,700
The parcels at 14th Street, 17th Street, and Mulberry Street are considered part of the “Hamilton Health Hub” surround the new Hamilton Health Center.
In order to the KOZ application to be accepted by the state, all three municipal taxing bodies must pass resolutions in support of the KOZ. That is, the city, the school district and the county.
The school district unanimously passed a resolution approving the KOZ application with the hope that the tax abatements will entice buyers of its properties.
The City of Harrisburg and the county have yet to vote.
Chamber/CREDC President David Black made a June 20th presentation to the Harrisburg school board of directors and declared that the county is on board as well as Mayor Linda Thompson.
It’s just a matter of City Council taking action on the resolution introduced in April.
“[We need to] make it more attractive for a developer to come in and do something with it,” Black said of the buildings proposed for KOZ, including William Penn, Hamilton School, and parcels on Cameron Street between State and Herr Streets.
He also said that there is new state legislation that requires tax-exempt properties to make payments in lieu of taxes. “Dauphin County will submit notices,” he informed the school directors.
Harrisburg City Council’s Community and Ecnomic Committee, Chair Susan Brown Wilson will have a public hearing on the proposed KOZ on Wednesday, August 28th at 6:00pm in City Council Chambers. See the Agenda here: AGENDA: Harrisburg City Council Community & Economic Development Committee 8/28.
UPDATE: This meeting has been recessed and the public hearing on the KOZ proposal will be continued on September 5th at 5:15pm.