Pennsylvania Amends Keystone Opportunity Zone Act

Pennsylvania Governor Tom Corbett has signed legislation amending the Keystone Opportunity Zone (KOZ), Keystone Opportunity Expansion Zone (KOEZ), and Keystone Opportunity Improvement Zone (KOIZ) Act. Effective immediately, the legislation authorizes the extension of tax exemptions, deductions, abatements, and credits; the creation of additional KOEZs, and; the expansion of existing zones for job creation. The law’s original sunset date of December 31, 2018 is also repealed. Tax benefits available to businesses and residents located in one of the above zones include a sales and use tax exemption, a property tax abatement, and credits against corporate and personal income, capital stock and franchise, insurance gross premiums, bank shares, and mutual thrift institutions taxes. The Pennsylvania Department of Community and Economic Development is authorized to extend the tax exemptions, deductions, abatements, and credits for a parcel in any of the zones set to expire in 2013 for an additional period of 7-10 years from the date of occupancy or from the date of expiration. For zones expiring after 2013, the extension will apply to parcels that are unoccupied on a date determined by the department. The department must receive an application for extension at least three months before the expiration date. The department is authorized to designate up to 15 additional KOEZs. Each zone must be at least 10 but not larger than 350 acres. The KOEZ parcels must be comprised of parcels that are deteriorated, underutilized, or unoccupied, or are occupied by a qualified business that creates or retains at least 1000 full time jobs within three years of the designation, or makes a capital investment of at least $500 million within three years of designation. If a business in a KOEZ invests at least $1 billion and creates at least 400 new permanent full-time jobs in one or more zones within seven years of designation, the department will grant the business and its affiliates exemptions, deductions, abatements, and credits under the act for 15 years from the date of occupancy. That period reverts to 10 years if the business and its affiliates fail to comply. The tax benefits for new zones begin on January 1, 2014 and end on December 31, 2023. The department is authorized to expand one of the above zones to include additional parcels, no larger than 15 acres, that are deteriorated, underutilized, or unoccupied and that are contiguous to an existing zone if the expansion of the existing zones is for job creation or capital investment. All exemptions, deductions, abatements, and credits will be extended to the new parcels of the zone. (Act 2012-16 (S.B. 1237), Laws 2012, effective as noted)

Posted on May 21, 2012