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Lehigh Valley boasts some of the strongest incentive programs in the country, and LVEDC can help connect your company with the right program to help your company grow and succeed. Below are some incentive programs available in the Lehigh Valley.
Keystone Opportunity Zones (KOZ)
Keystone Opportunity Zones (KOZ) eliminate specific state and local taxes within underdeveloped and underutilized areas, providing tax abatements for county and township property taxes, corporate net income taxes, and school taxes for a period of 10 years. As of December 31, 2017, the KOZ applicants have created 7,278 jobs and invested $2,609,725,991 in private capital into the KOZ properties across Pennsylvania. Click here to view the interactive map of active KOZ sites.
Businesses looking to relocate from outside of Pennsylvania to a KOZ need to own or lease property within the zone for at least half the tax year to claim an exemption from state and local taxes. Businesses already in Pennsylvania can also move into a KOZ and be exempt from taxes, provided they either increase full-time employment by at least 20 percent in their first full year in the zone or make a capital investment equal to 10 percent of their previous years gross revenues. For more information on how to take advantage of Lehigh Valley’s KOZ, contact Stephanie Wean at [email protected].
Qualified Opportunity Zones (QOZ)
Qualified opportunity zones present a tremendous opportunity for investment in the Lehigh Valley. The cities of Allentown, Bethlehem, and Easton each includes zones offering generous tax advantages that will deliver enormous benefits to private-sector investors and promising economic growth potential for the region’s communities. Click here to view the Qualified Opportunity Zones in Lehigh Valley.
These zones allow investors to defer taxes by reinvesting capital gains from an asset sale into a qualified opportunity fund during the 180-day period beginning on the date of the sale or exchange giving rise to the capital gain. To maximize the potential benefits, taxpayers must invest in a Qualified Opportunity Fund before December 31, 2019.
Allentown Neighborhood Improvement Zone (NIZ)
The Neighborhood Improvement Zone (NIZ) is a special taxing district that encourages development and revitalization in downtown Allentown, comprising about 128 acres in the city’s downtown neighborhood and riverfront district. All taxes generated by the NIZ, with the exception of school district and city taxes, can be used to pay debt service on any financed improvements within the NIZ. The NIZ is a powerful economic development program that has spurred more than $600 million in investments in downtown Allentown since its inception.
The centerpiece of the NIZ is the PPL Center hockey arena, the home of the Lehigh Valley Phantoms, the minor league affiliate of the Philadelphia Flyers. The 8,500-seat arena also hosts concerts and events. All potential NIZ projects must be geographically located within the NIZ zone and must go through a pre-qualification, application, and if approved, closing process. Watch the video below for more information or visit AllentownNIZ.com.
Bethlehem City Revitalization & Improvement Zone (CRIZ)
The Bethlehem CRIZ consists of 130 acres of parcels designated for economic development and job creation within the city of Bethlehem. State and local taxes collected within the CRIZ will be used to repay debt service to stimulate economic development projects within the zone. Bonds will be issued by the Bethlehem Revitalization and Improvement Zone Authority (BRIA), which will then be paid off using various State and Local Tax Revenues created in the zone.
The focus of this program is to spur new growth, by enhancing development opportunities that will help to revive Bethlehem and create new jobs for the residents of the city. The parcels included in the CRIZ include vacant, desolate, underutilized, and abandoned properties that are ready for redevelopment. These developments will help to create jobs, increase personal income, grow local and state tax revenues, and improve the overall quality of living for residents.
Southside Bethlehem Keystone Innovation Zone (KIZ)
The Southside Bethlehem Keystone Innovation Zone (KIZ) was established in 2004 and is now in its 15th year of operation. The KIZ has had a profound impact on innovation and entrepreneurship in Bethlehem by offering critical financial resources and assistance to early-stage startup companies. To date, the KIZ has invested over $8 million dollars in 100 companies since the program’s inception.
The Southside Bethlehem KIZ is managed by the Bethlehem Economic Development Corporation. For more information, visit southsidebethlehemkiz.com.
Local Economic Revitalization Tax Assistance (LERTA)
The Local Economic Revitalization Tax Assistance (LERTA) authorizes local taxing authorities to provide for tax exemption for certain deteriorated industrial, commercial, and other business property and for new construction in deteriorated areas of economically depressed communities; providing an exemption schedule and establishing standards and qualifications. LERTA creates a graduated increase in tax payments on new construction and property rehabilitation for owners of commercial, industrial, and business properties located within designated zones in the City. LERTA does require that property owners pay full land taxes, while taxes on improvements to the land grow incrementally over 10 years. The LERTA abatement applies to the tax increment from any substantial renovation or new construction, but does not make a property tax-free. Lehigh Valley’s LERTA zones exist in the City of Bethlehem and Upper Mount Bethel Township.
Tax Increment Financing
Tax Increment Financing (TIF) is a public financing method that is used as an incentive for redevelopment, infrastructure, and other community-improvement projects. TIF uses future gains in taxes to subsidize current improvements, which are projected to create the conditions for said gains. Examples of successful Lehigh Valley TIFs include the Hamilton Crossings Shopping Center, the Route 33 Interchange in Palmer Township, West Hills Business Center, and other projects included here. To learn more about TIFs in Lehigh Valley, contact Doug Warfel at [email protected]ley.org.
Redevelopment Assistance Capital Program (RACP)
The Redevelopment Assistance Capital Program (RACP) is a Commonwealth grant program administered by the Office of the Budget for the acquisition and construction of regional economic, cultural, civic, recreational, and historical improvement projects. RACP projects are authorized in the Redevelopment Assistance section of a Capital Budget Itemization Act, have a regional or multi-jurisdictional impact, and generate substantial increases or maintain current levels of employment, tax revenues, or other measures of economic activity. RACP projects are state-funded projects that cannot obtain primary funding under other state programs. To learn more, visit budget.pa.gov.
Foreign Trade Zone (FTZ) #272
A Foreign Trade Zone (FTZ) is a physical location within a United States customs territory, where merchandise receives the same treatment as if it were outside the commerce of the United States. This allows merchandise, while located in the FTZ, not to be subjected to customs duties and other tariff and taxes, enabling domestic manufacturers to import foreign-sourced parts or materials into the FTZ without being responsible for paying duties on them. They could then incorporate those parts or materials into their products, utilizing U.S. labor, and sell the part or materials in the domestic market, thus selecting whether to have the customs duty apply to the components or the finished product.
Distributors can also benefit as the FTZ allows for direct delivery from the ports into the zone, which can save time, money, and reduce customs processing fees. Merchandise can also be moved from one FTZ or another without being subject to customs duty via a process called Zone-to-Zone Transfer.