In an attempt to attract new business and increase industry throughout Pennsylvania, the state government has designated a number of tax-free incentive zones.
Through a program known as "Keystone Opportunity Zones" -- created in 1999 under the administration of Gov. Tom Ridge -- the legislature has the ability to designate properties as tax-free in order to entice businesses to locate there.
The idea is to promote the utilization of underdeveloped or blighted land. As an incentive for developing these underperforming areas, property owners and businesses will receive partial or complete tax breaks at both the state and local levels.
However, the businesses in KOZ in Philadelphia are not completely tax free. The main tax that still remains is the city wage tax that all employees in the city must pay.
In a Philadelphia KOZ, the government collects taxes from individual workers, but not businesses. The zones should therefore provide lucrative opportunities for business development and increase the city's tax base by creating more jobs.
"They were intended to encourage development that would be considered otherwise economically disadvantageous, like brownfield sites and old industrial sites -- areas that without special incentives would be very difficult to develop," said Eric Goldstein, the executive director of University City District.
Several significant areas that are KOZ-designated in University City include a 30th Street location next to the Amtrak train station, the land that currently belongs to the post office on the west side of the Schuylkill River and several surface parking lots on Market Street between 34th and 39th streets.
The KOZ program targets new and developing businesses that are either rapidly expanding or plan to bring heavy investment into the area. The program attempts to give such businesses a conducive environment in which to expand and add jobs to areas that otherwise would not be developed.
KOZ have been used in a variety of ways, from commerce to transportation centers and manufacturing-related business.
Philadelphia has been attempting to use KOZ to lure new businesses into the area, as well as to retain its current tenants.
Since the program's creation, it has expanded to create nearly 14,000 jobs and has retained 8,000 more, according to the state Web site.
