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Keystone Opportunity Zones

"No new taxes" is a promise often made, but hardly ever kept. In Pennsylvania's Keystone Opportunity Zones (KOZs), though, the offer's for real. Companies creating jobs pay virtually no state or local taxes for the life of the zone (see chart).

"Pennsylvania has become a leader in providing its communities with incentives to attract new businesses and create new jobs," Gov. Ridge says. "After all, what better incentive is there to create jobs and build stronger communities than to eliminate taxes? In Pennsylvania, there now are more than 26,000 acres (10,500 hectares) available -- tax free -- for job creation and community development. And job-creators are taking notice."

Gov. Ridge created the 12 special zones in February 1999. Just one year later, companies had announced plans to create some 3,500 new jobs in KOZs.

"This really is the Rolls-Royce of tax-free programs, and I think at this point we're just scratching the surface of what it can become," says the Governor's Action Team's Kohler. He says the positive impact of KOZ tax benefits can be staggering.

"One distribution client we were working with was unclear as to what the exact value of the KOZ designation was to its operation. The project was a 1.2 million-sq.-ft. (111,500-sq.-m.) facility, with in excess of 1,500 jobs. Our Dept. of Revenue and an independent consultant showed that the program would have a $35 million impact over the life of the Zone."

The 12 zones are: Philadelphia; Lehigh Valley; Lackawanna/Luzerne; North Central; Northern Tier; Northwest; Schuylkill/Carbon; Central Pennsylvania; South Central; Southeast; Southern Alleghenies; and Southwest. Each zone includes as many as 5,000 acres (2,025 hectares) and can comprise up to 12 subzones of at least 20 contiguous acres (8 hectares).

KOZ benefits are attracting sizable investments. In Hazleton, for instance, in the Lackawanna/Luzerne zone, Convergys's 45,000-sq.-ft. (4,200-sq.-m.) customer service center is bringing 600 new jobs to Luzerne County. And GUARD Insurance Group's expansion in nearby Wilkes-Barre will create another 150 jobs.

Several KOZ-spurred projects are making news in the city of York, in southeastern Pennsylvania (www.yorkcity.org). Speeder and Earle's Mid Atlantic, a new startup coffee roasting and distribution business, renovated and moved into a former laundry facility. Local firm Susquehanna Pfaltzgraff Co. is building Susquehanna Commerce Center, an office complex. And printing concern Graphic Works has moved into the York zone.

In West Deer Township, near Pittsburgh, Rock Airport (www.rock-port.com) and the adjacent RockPointe Business Park have been designated as a KOZ site. Owned by entrepreneur and aviator Rock Ferrone, the airport is slated to receive some $20 million to $30 million to fund a new and improved runway. The location will be a particularly good choice for companies that need quick air access, like one of Ferrone's -- Rock-Built -- which makes printing equipment. Ferrone plans to model the site after an airpark in Scottsdale, Ariz., which now houses 1,800 businesses and 25,000 jobs.

Officials are already in discussions with potential corporate tenants, and they're eager to take the project to the next stage. "We want to walk before we run, but we want to walk quickly," says David E. McMaster, vice president and general counsel of Rock Airport of Pittsburgh LLC.