New State Bill Would Ban Double Dipping On Keystone Opportunity Zone Tax Breaks
Recruiting businesses to Schuylkill Yards may get harder for Brandywine Realty Trust.
A new bill proposed in the Pennsylvania state house would ban companies from using Keystone Opportunity Zone tax breaks a second time when relocating from a property that had already benefited from the program, the Philadelphia Inquirer reports. The proposal seeks to close a loophole brought to light when law firm Dechert LLP applied to receive a KOZ benefit for a potential move from Brandywine's Cira Centre building to a new space within its Schuylkill Yards megaproject.
Dechert sued the Pennsylvania Department of Community and Economic Development for rejecting its planned move, and the Pennsylvania Supreme Court upheld a lower court's decision that the statute that created KOZs did not prohibit "zone hopping," the Inquirer reports. The high court's decision, issued on Wednesday, correctly predicted that the ruling "may generate a legislative response."
That response was introduced by state Rep. Karen Boback, a Republican from Northeastern Pennsylvania, with 33 co-sponsors from both sides of the aisle, the Inquirer reports. The bill includes a provision granting an exemption if a move “is necessary to meet the expansion or operational needs of the business and the business anticipates a significant financial impact on the zone into which the business is relocating.”
The KOZ that included Cira Centre, created in 2002, expired in 2018 after providing roughly $400M to the building's tenants, the Inquirer reports. Some of the zones created for Schuylkill Yards in 2012 are set to expire next year, according to the city of Philadelphia.
A spokesperson for the city's Commerce Department told the Inquirer that Philadelphia City Council has granted Mayor Jim Kenney permission to seek extensions to KOZ designations for unspecified portions of University City, the Philadelphia Navy Yard and the former site of the PES refinery, which Hilco Redevelopment Partners is cleaning up in anticipation of a massive project of its own.
