Fiscal Code expands blight program
Tax breaks aim to spur housing projects in blighted areas
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The scope of a three-decade old state program providing state and local tax breaks expands under the new Fiscal Code to spur housing projects in blighted areas.
The Fiscal Code, Senate Bill 146, authorizes creation of a Keystone Opportunity Zone (KOZ) of 300 acres in the Johnstown area to help city officials tear down several hundred blighted buildings and build new housing in their place, said Rep. Frank Burns, D-Cambria.
SB146 also creates a new Keystone Opportunity Expansion Zone (KOEZ) for new investment transforming the Philadelphia Navy Yard since its purchase by a South Korea firm, said Rep. Ed Neilson, D-Philadelphia.
The KOZ program was created under Gov. Tom Ridge in the 1990s providing long-term state and local tax breaks to development projects in designated zones in blighted and underdeveloped areas.
The program later expanded to include KOEZs, designated zones eligible for tax breaks to spur economic development.
The Johnstown zone will be the first time the KOZ program is used for "residential revitalization." The fiscal code authorizes only state tax breaks for this zone.
The tax breaks are for attracting private investors to tear down some 300 blighted non-commercial buildings identified by Johnstown City Manager Art Martynuska. The estimated demolition costs are $3.9 million.
"The new Residential KOZ will incentivize private investors to remove blight and rebuild neighborhoods," said Burns.
The fiscal code authorizes KOZ designations for residential revitalization projects involving acquisition or demolition of blighted residential property; environmental remediation and site preparation; public or private infrastructure improvements and rehabilitation or reconstruction of existing structures; adaptive reuse of existing structures; and new residential construction and mixed-use development containing a residential component.
"The Department of Community and Economic Development, which administers the KOZ program, will review the parameters of the Residential Revitalization KOZ designations authorized by the Fiscal Code and intends on utilizing the designation authority as one of the implementation tools for the Housing Action Plan," said DCED spokeswoman Kat Breitmayer.
She referred to Gov. Josh Shapiro's strategy for expanding access and affordability for housing.
Philly shipyard
The KOEZ covers 350 acres at the shipyard.
"This investment gives Philadelphia another competitive advantage in attracting shipbuilding and maritime businesses to the Navy Yard," said Neilson.
Hanwha Group of South Korea announced a $5 billion investment last year in the shipyard installing additional docks and quays to increase capacity.
The new KOEZ fits with Shapiro's economic development strategy, said Breitmayer.
"At the intersection of that strategy is an underutilized area of the former US Navy Yard," she said. "To catalyze what is viewed to be significant potential for job creation and investment, a KOZ was designated in order to attract private investment commitments."