Benefits & Challenges of Economic Development Zones Spring Conference April 21, 2015
Panelists: Linda Goldstein Harrisburg Regional Chamber & CREDC Pat Miller Altoona Blair County Development Corporation Gail Landis Greater Reading Chamber of Commerce
Enterprise Zones and Keystone Opportunity (Expansion) Zones Pat Miller Altoona Blair County Development Corporation PEDA Spring Conference April 22, 2015
Program Intent (Legislative Goals) Increase Employment Increase Capital Investment Reuse of blighted properties and brownfields in specific designated “blighted”, “abandoned” or “deteriorated” areas Stimulate “free-market” investment in the sites and properties through a combination of tax incentives, financial incentives and “REGULATORY RELIEF”
EZ Program Enterprise Zone Program established in 1983 as a stand alone program Program element within Keystone Communities Program and “is designed to encourage the creation of partnerships between the public and private sectors in communities to support joint local initiatives that foster growth and stability in neighborhoods’ and communities’ social and economic diversity and a strong and secure quality of life.”
Enterprise Zones Currently 13 designated zones with access to Enterprise Zone Revolving Loan Funds, NAP-EZ Tax Credits, Greater PIDA Participation ($2.25 million) 12 additional zones can still apply for Enterprise Zone Tax Credits (2 years after exit)
Pat Miller’s Opinion: The #1 long term benefit of the Enterprise Zone program is “Local Capacity Building” Since 1990 – Enterprise Zone Grant to Loans and RLF 54 Loans Paid Off$10,849,500.00 31 Current Loans$8,870,900.00 $19,720,400.00 Current Balance Due$5,514,082.00 Cash Balance$3,695,961.48 8 Loans Approved Awaiting Closing$3,825,000.00
The #1 Challenge: Funding 2013-14$11.251 Million 2014-15$6.1 Million 2015-16 (Gov.)$21.150 Million Note: Includes Housing and Redevelopment Assistance, PA Accessible Housing Program, New Communities appropriations including Main Street, Elm Street and Enterprise Zone)
Keystone Opportunity Zones Keystone Opportunity Zones were originally designated in 1999 (remember one & done) with expansion zones designated in 2001, with extensions approved in 2008, with new extensions, decertifications and substitutions approved in 2009, with more extensions and new designations in 2013. House Bill No. 559 – DCED may designate up to 10 additional KOEZ
Question: Who was responsible for the KOZ Program within DCED in 1999?
Answer: The Honorable DAVID E BLACK, Deputy Secretary for Community Affairs and Development
You Know the Program Business property owners and residents that are located in KOZ/KOEZ are eligible to receive significant state and local tax benefits Projects in KOZ/KOEZ are given priority consideration for assistance under various state programs Thresholds must be met for existing businesses that move into KOZ/KOEZ’s.
Lessons Learned Site targeted economic development can raise employment and business growth if incentives are large enough to off-set any major site disadvantage such as lack of labor, lack of adequate transportation, infrastructure, environmental, distance to market Incentives for capital investment can sometimes work against job creation – technology investment in lieu of jobs
Lessons Learned Job & firm growth in both EZ’s and KOZ’s tend to be concentrated in smaller firms (less than 100 employees) and among firms already located in zones (retention and expansion strategies) Urban zones do better simply because they are in urban areas with better access to markets, transportation, labor, etc. Rural zones and subzones must contend with disadvantages such as need for access and infrastructure
Lessons Learned Sites do best when the environmental issues are dealt with up front (PA Industrial Sites Reuse Program) All zones can make use of modern web technology for site promotion, thus leveling the playing field regarding marketing Both EZ & KOZ programs are truly targeted economic development aimed at very specific but more importantly “Locally Prioritized Sites"
KOZ Example Sheetz Brothers Kitchen / Sheetz Distribution Center Walter Business Park
KOZ/EZ Example American Eagle Paper Mill Tyrone, PA
KOZ/EZ Example DeGol Industrial Center (Former Hollidaysburg Car Shops) Hollidaysburg, PA
THE KEYSTONE INNOVATION ZONES You are now entering... THE KEYSTONE INNOVATION ZONES
The KIZ Program, established in 2003, creates designated geographic zones to: foster innovation & create entrepreneurial opportunities align combined resources of educational institutions and the private sector to create knowledge neighborhoods (zones): – improve and encourage research – business development – technology commercialization efforts he program shall provide economic assistance to KIZ companies for the purpose of improving and encouraging research and development efforts and technology commercialization efforts resulting in employment growth and revitalization of communities.
Keystone Innovation Zone Program 29 KIZs located in rural & urban regions over 91 institutions of higher education (IHEs) research universities to community colleges
Keystone Innovation Zones Pending Map Slide Pending
KIZ Program Focus – accelerate the growth of young technology- based companies (less than 8 years old) – spur the creation of high-paying, high-technology jobs attractive to recent college graduates – provide micro grants to offset costs of R&D and interns – create an opportunity to sell tax credits based on revenue growth for much needed capital
KIZ Tax Credit Program incentive program that provides tax credits for-profit companies less than 8 years old specific targeted industries segments (or sectors) within the boundaries of a zone total pool of up to $25 million in tax credits annually applications submitted by September 15 of each year tax credits awarded December 15 of application year used to offset certain state tax liabilities
KIZ Impact Keystone Innovation ZonesInception to date2014 Calendar Year Jobs created7,567461 Jobs retained20,574593 Businesses assisted6,848184 PA graduates hired2,266379 Patents filed2,39852 Patents awarded66021 Software copyrights filed1377 Software copyrights awarded740 Licenses granted29,614137 Licensing revenue $ 113,017,909 $ 2,219,075 New product innovations1,07176 RDT&E expenditures $ 674,135,895 $ 15,414,479 Leveraged funding $ 3,519,841,188 $ 917,547,361 Tax Credits Awarded (2006 to 2014) $ 102,812,497 $ 17,001,702
KIZ Success Story Urban Innovation21 (formerly the “Pittsburgh Central Keystone Innovation Zone or PCKIZ) utilized KIZ incentives to spur areas economic revitalization projects including the Hill District, Energy Innovation Center and Uptown sections of Pittsburgh.
Urban Innovation 21 Leverage funding & investments: – $687,275: PA KIZ – $1,612,500: its affiliates – $3,667,370: local, national and global foundations CEO is a member of the National Advisory Council on Innovation and Entrepreneurship (NACIE)
Internship Program largest and most diverse in the region; 60% women & 40% are African Americans
KIZ Challenges – currently no KIZ administrative-operational dollars – competing tax zones – requiring decertification – geographic zone coordinator’s resources – ability to offer additional programs – facilities and infrastructure limitations – engaging IHEs and obtaining reports – ensure KIZ company reporting
http://www.newpa.com/ Keystone Innovation Zone Tax Credit Program