Transcript Benefits & Challenges of Economic Development Zones

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
2014-15
2015-16 (Gov.)
$11.251 Million
$6.1 Million
$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
EZ / KOZ
Gardner Denver
I-99 Industrial Park
Enterprise Zone
Sheetz Center for Entrepreneurial Excellence
Downtown Altoona
Enterprise Zone
Devorris Center / Aaron Building
Downtown Altoona
EZ Tax Credits
Vicini Realty, LLC
(Former Casanave Building)
Downtown Altoona
East Juniata Housing KOZ
East Juniata Housing KOZ
You are now leaving…
You are now entering . . .
THE
KEYSTONE
INNOVATION
ZONES
he program shall provide economic assistance to KIZ companies for the purpose of improving and encouraging research and development efforts and technology c
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
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
Map Slide Pending
KIZ Coordinators
KIZ Program Focus
– accelerate the growth of young technologybased 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 Companion Programs
• Keystone Innovation Grant (KIG)
Technology Commercialization
• Keystone Innovation Starter Kit (KISK)
Faculty Recruitment
• Keystone Innovation Network (KIN)
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 Zones
Jobs created
Jobs retained
Businesses assisted
PA graduates hired
Patents filed
Patents awarded
Software copyrights filed
Software copyrights awarded
Licenses granted
Licensing revenue
New product innovations
RDT&E expenditures
Leveraged funding
Tax Credits Awarded
(2006 to 2014)
Inception to date
7,567
20,574
6,848
2,266
2,398
660
137
74
29,614
$
113,017,909
1,071
$
674,135,895
$
3,519,841,188
$
102,812,497
2014 Calendar Year
461
593
184
379
52
21
7
0
137
$
2,219,075
76
$
15,414,479
$
917,547,361
$
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
Citizen Science Lab
Community Based Entrepreneurship
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
You are now leaving all the
QUESTIONS