Pennsylvania – Keystone Opportunity Zone Act Amended

SALT Report 1410 – Legislation was passed in Pennsylvania that amends the Keystone Opportunity Zone, Keystone Opportunity Expansion Zone, and Keystone Opportunity Improvement Zone Act.  Effective immediately, the new legislation authorizes the extension of tax exemptions, deductions, abatements, and credits; creates additional KOEZs; expands the existing zones for job creation; and repeals the original sunset date of December 31, 2018.

Tax benefits available to businesses and residents located in KOZs, KOEZs, and KOIZs include sales and use tax exemptions, property tax abatement, credits against corporate and personal income, capital stock and franchise, insurance gross premiums, bank shares, and mutual thrift institutions taxes.

Zone Designation Extensions

The 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 that are set to expire in 2013 for an additional period of at least seven but no more than 10 years from the date of occupancy or from the date of expiration. For a zone that expires 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 date of expiration.

Additional Zones

The department is authorized to designate up to 15 additional KOEZs. Each additional zone must be at least 10 but not larger than 350 acres.  All qualified KOEZ parcels must be comprised of parcels that are deteriorated, underutilized, unoccupied, or occupied by a qualified business that,

  • Creates or retains at least 1,000 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 makes an investment of at least $1 billion and creates at least 400 new permanent full-time jobs in one or more of the zones within seven years of designation, the department will grant the business and its affiliates exemptions, deductions, abatements, and credits for a period of 15 years from the date of occupancy. The tax benefits will begin on January 1, 2014 and end on December 31, 2023.  Failure to comply with any of the requirements will revert the benefit period back to 10 years.
Expansion
The department is authorized to expand a KOZ, KOEZ, or KOIZ to include additional parcels.  All new parcels must be no larger than 15 acres, are deteriorated, underutilized, or unoccupied and are contiguous to an existing zone.  The expansion of existing zones must be for job creation or capital investment purposes.  All applicable exemptions, deductions, abatements, and credits will be extended to the new parcels of the KOZ, KOEZ, or KOIZ.
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