WHEREAS, Keystone Opportunity Zones were originally established by an Act of the State Legislature in 1998 to address problems of blight and joblessness by providing incentives in the form of tax abatement to companies that pledged to increase full-time employment 20 percent and make capital improvements within impoverished areas; and
WHEREAS, The original criteria for authorization of a Keystone Opportunity Zone required that at least 20% of the population be below the poverty level, and stringently restricted designation to areas that were severely “deteriorated or underutilized,” pursuant to Act 92, Section 304; and
WHEREAS, Subsequent legislation concerning Keystone Opportunity, Improvement, and Expansion Zones (“KOIZ”) provided for designation by the Governor through executive order but did not alter the legislative intent and requirement that the Zones specifically address issues of blight and deterioration; and
WHEREAS, On May 6, 2003, the City Director of Commerce presented testimony to the Committee of the Whole projecting that the designation of KOIZs including the site of the Cira Centre at 30th Street would result in new revenue of $11 million annually in wage taxes during construction and $18 million upon completion; and
WHEREAS, Those projections of new revenue contributed to Council’s unanimous approval of the designation, and it now appears those dollars will be lost as affluent firms already located within the City take advantage of the tax abatement while failing to create new jobs; and
WHEREAS, As a result, the designation of the Cira Centre as a KOIZ and a proposed KOIZ at 17th and JFK have now come under question from economists, finance professors, local development groups such as Center City District, and from the Mayor, who has expressed his “grave reservations” about the proposals, according to the Philadelphia
Daily News
on January 21, 2004; and
WHEREAS, The proposed area at 17th and JFK Boulevard does not appear to meet any of the criteria for the designation of KOIZs, and the developers and proposed tenants of the Cira Centre who will be exempt for 15 years from taxes will not be creating new jobs but will be displacing occupancy from one side of town to another; and
WHEREAS, Studies of the fiscal impact of these KOIZs on the City and the Philadelphia School District project a steep loss of tax revenue to the City and School District; which will have a profoundly negative impact on the City’s economy at a time when there is already an estimated $155 million dollar deficit; and
WHEREAS, The establishment of KOIZs should be considered in the context of a comprehensive tax and economic development plan for Philadelphia; and
WHEREAS, The designation of other areas citywide as KOIZs has failed to generate the desired economic results, and nationally, scholars have questioned whether opportunity zones are beneficial to cities; and
WHEREAS, Joseph Gyourko, Professor of Real Estate and Finance at the Wharton School of the University of Pennsylvania, has found that subsidies made to real estate development are a “grossly inefficient” way to persuade firms to remain in Philadelphia, and describes the current KOZ projects as “the economic development policy equivalent of rearranging the deck chairs on the Titanic”; now therefore
resolved, THAT THE COUNCIL OF THE CITY OF PHILADELPHIA, Authorizes the Committee on Law and Government to hold public hearings to investigate the establishment, use, and economic impact of Keystone Opportunity Zones and Improvement Zones in Philadelphia, and, toward a remedy, authorizing the issuance of subpoenas to compel the attendance of witnesses and the production of documents to the full extent authorized under Section 2-401 of the Home Rule Charter.
End