The Keystone Opportunity Zone (KOZ) Program is one of the nation’s boldest and most innovative economic and community development programs. This unique program develops a community’s abandoned, unused, underutilized land and buildings into business districts and residential areas that present a well-rounded and well-balanced approach to community revitalization. The Department of Community and Economic Development administers this partnership between state and local Government in collaboration with the Department of Revenue (state taxes) and the Department of Labor and Industry (Unemployment Compensation taxes), based on the Keystone Opportunity Zone and Keystone Opportunity Expansion Zone Act, 73 P.S. §§820.101- 820.1309 (the “Act”) and Senate Bill 1412, which extends and expands the program.

 

The Keystone Opportunity Zones are designated by the local communities and approved by the State. The Keystone Opportunity Improvement Zones were designated by Executive Order of the Governor, and approved by the local communities. All Keystone Opportunity Zones provide specific state and local tax benefits. Keystone Opportunity Zones entitle businesses and residents to certain tax benefits when they locate in a Keystone Opportunity Zone. Keystone Opportunity Zones consist of 12 defined areas in 61counties across Pennsylvania, covering more than 46,800 acres in over 193 sub-zones. Sizes of the KOZs range from under 10 acres to over 500. Along with the remark able tax advantages, these areas provide close proximity to major inter states, ports, rail lines and international airports.

 

1. Qualified Business: A business authorized to do business in this Commonwealth which is located or partially located within a subzone, expansion subzone or improvement subzone and is engaged in the active conduct of a trade or business in accordance with the requirements of section 307 of the statute for the taxable year. An agent, broker or representative of a business is not engaged in the active

conduct of trade or business for the business. In order to qualify each year for a tax exemption, deduction, abatement or credit under this act, a business shall own or lease real property in a subzone, improvement subzone or expansion subzone from which the business actively conducts a trade, profession or business. The qualified business shall receive certification from the department that the business is located and is in the active conduct of a trade, profession or business, within the subzone,

improvement subzone or expansion subzone. The business shall obtain annual renewal of the certification form the department to continue to qualify as a qualified business.
 

2. Relocation: An existing qualified business relocating into a KOZ must demonstrate a significant economic impact that will result from relocation into a KOZ.
 

3. Recapture: Any qualified business that has received KOZ benefits and moves out of the zone within the first 5 years may be subject to penalties.
 

4. Property Owner Qualifications: Please be advised that you must apply annually to the Department in order to receive approval for property tax abatement, as required by Section 907 of the Act. If you are found to be noncompliant with any tax or zoning requirements during the calendar year, your KOZ status will be revoked and you may be subject to penalties and/or recapture under the Act.
 

5. Resident Qualifications: Residents must maintain compliance with all state and local tax laws and must reside 184 consecutive days in the KOZ during each tax year. All KOZ applicants must file an annual application with the Department of Community and Economic Development. The KOZ Change of Status notification must be submitted to the Department if a change takes place.

Through credits, waivers and broad-based tax abatements, total taxes on economic activity in Keystone Opportunity Zones are significantly reduced. These benefits affect the following taxes:
 

· Corporate Net Income tax

· Capital Stock and Foreign Franchise tax

· Personal Income tax

· Sales and Use tax (purchases consumed and used by business in the Zone)

· Mutual Thrift Institution tax

· Bank and Trust Company Shares tax

· Insurance Premiums tax

· Earned In come/Net Prof its tax

· Business Gross Receipts, Business Occupancy, Business Privilege and Mercantile tax

· Sales and Use tax (county/city; purchases exclusively used and consumed by business in the Keystone Opportunity Zone)

· Property Tax

 

In 1999, the Commonwealth of Pennsylvania designated 12 KOZ’s throughout the state. The Southern Alleghenies KOZ was one of the 12 Zones designated at that time and consists of 18 subzones located in six counties including Bedford, Blair, Cambria, Fulton, Huntingdon, and Somerset. In 2009, the Commonwealth of Pennsylvania approved the extension of benefits for locally selected and approved unoccupied parcels located within the KOZ. The Southern Alleghenies KOZ is strategically located with access to major markets with acreage within business/industrial parks, municipalities, and rural areas. Highlights of this zone include an excellent transportation network -- including I-70, I-76, I-99, US 22, US 30, US 219, and US 522; exceptional rail access; and the availability of water, sewer, and telecommunications systems.

The Southern Alleghenies initial KOZ Subzones have expiration dates in 2010 and 2013. In 2009, through Act 79 of 2008, the Commonwealth of Pennsylvania approved the extension of benefits for selected unoccupied parcels. These selected parcels were extended for a period of either seven years past their initial expiration dates or ten years from their occupancy, extending benefits to 2015, 2017, 2020, or 2025 dependent on the respective parcel. All extended benefits take effect only upon occupancy of the property. Please check with the Southern Alleghenies Region KOZ Coordinator for specific Subzone deadlines.

The Department of Community and Economic Development provides the organizational framework, including the certification and operations of KOZ. Additionally, the Department of Revenue provides tax expertise. Each Sub-zone Region and County has designated a single point of contact for zone facilitation. For the Southern Alleghenies KOZ, the KOZ Coordinator is Fred Querry, Southern Alleghenies Planning & Development Commission. He can be contacted at querry@sapdc.org or (814) 949-6508.

Bedford County: Bette Slayton, Bedford County Development Association (BCDA) at (814) 623-4816 or slayton@bcda.org

Blair County: Pat Miller, Altoona-Blair County Development Corporation (ABCD CORP) at (814) 944-6133 or patm@abcdcorp.org

Cambria County: Ken Mesko, Cambria County Industrial Development Corporation (CCIDC) at (814) 472-7420 or cambria@twd.net

Fulton County: Dan Swain, Fulton County Courthouse, at (717) 485-3691 or commissioners@co.fulton.pa.us

Huntingdon County: Nick Felice, Huntingdon Business & Industry (HCB&I) at (814) 641-3733 or felicen@juniata.edu

Somerset County: Jeff Silka, Somerset County Economic Development Corporation (SCEDC) at (814) 445-9655 or jsilka@scedc.net