More on KOZ's

The Legislative Budget and Finance committee released a report last week on the Keystone Opportunity Zone program. The thing that jumped out at me was that there isn't enough data to adequately evaluate the program's effectiveness. From what data that is available it looks like 75% of participants didn’t create any jobs.


Policy Blog: If that wasn’t bad enough, the Department of Community and Economic Development does not even have a method to calculate total program costs. Therefore, it is impossible to run a cost-benefit analysis to determine if KOZ-related “job creations and capital investment” (see above) justify the amount of state and local tax revenues being forfeited.


CV: "We found that many KOZ participants are providing little, if any, job creation of capital investment in return for the KOZ tax abatement and exemption benefits they receive," said study director John Rowe.


The recommendations in the report's highlights are the same I have been advocating for a few years. The tax breaks should only go to someone that has a believable business plan to develop the parcel and if they don't produce in a agreed to time the tax exemption should be revoked. While many of us look at large increases in our property tax bills the owners of the now defunct Lowe's Restaurant didn't pay local property taxes for the last 10 years and didn't create one new job. And I'm sure there are many other sweetheart deals for the well connected that shortchanged our local school districts and local governments.

Another corporate welfare success story

Firm might default on county loan

Luzerne County may be dealing with another business development loan default.

Unified Medical Informatics has missed three monthly payments on its $50,000 loan from the county – prompting the county’s community development office to seek a status report from the company’s lawyer, county Community Development Director Andy Reilly said Monday.

County commissioners had approved the loan in July through a program designed to help start-up companies located in Hazleton and Wilkes-Barre innovation centers.

Unified Medical had promised to provide electronic office systems, software and support for medical offices...

Luzerne County’s community development office is already wrestling with another default of a loan to the former Gelpia’z Restaurant in Kingston. The county hasn’t received payment in a year and is owed $117,870.

It looks to me that these companies couldn't put together a business plan that they could sell to a bank or the capitol markets so they made some promises of "good jobs" because we have a great "work ethic" and got the politicians to back them. There was a reason why the banks wouldn't loan them any money.

Gatorade and corporate welfare

WRIGHT TWP. — Construction of Pepsi’s 500,000-square-foot Gatorade distribution center began in November...The $37 million capital investment by Pepsi will add 93 new jobs to a workforce of 236 already employed at the company’s manufacturing plant in the park. State, county and local taxing authorities agreed to tax incentives to ensure the project.

Just how much Incentive did PepsiCo get. Under the terms of the Local Economic Revitalization Tax Assistance plan, the county would waive an estimated $52,741 in annual property taxes per year between 2010 and 2016....Pennsylvania’s Department of Community and Economic Development granted $1.25 million for the project, primarily in infrastructure costs for roads. Luzerne County donated a $100,000 grant to the project....The seven-year LERTA will reduce property taxes for Pepsi by about 50 percent and kicks in after the Keystone Opportunity Zone status expires in three years. KOZ sites have temporary state and local tax breaks. The combined tax breaks guarantee Pepsi reduced tax status for 10 years. Rapid Edward tells us that The Greater Wilkes-Barre Chamber of Commerce supported efforts to obtain a $1.25 million funding offer for the project from DCED that includes a grant of up to $1 million through the Infrastructure Development Program and a grant of up to $250,000 through the Opportunity Grant Program.

I just got my county/municipal property tax bill for 2007 and will pay the full amount. We've done many improvements to the property over the years keeping local contractors busy without any government loans or tax breaks. How did we do it? Remember this and all the other sweetheart deals when you get your new valuation if the reassessment is ever done.

Capitol Ideas suggests a payoff may be involved:

What the statement failed to mention is that Rendell will now have 36 cases of Diet Pepsi delivered to the governor's mansion each week until he leaves office.

Wilkes-Barre council districts

Thanks to Mark for the graphic.

The biggest electoral change in the history of the city of my birth takes effect this year. Instead of electing seven at-large members of the city council the choice will now be five seats chosen by districts. Some are fretting that this will reduce city government to some sort of tribal warfare and deal making such as you vote to pave my road and I'll vote to repair your bridge, etc. That may come to pass but I hope not. In the end the overall health of the city is in everybodys interest.

We can all wax nostalgic about Mr. Peanut walking around Public Square and the big department stores that dominated the landscape but those days are over. Like any small city Wilkes-Barre needs a vibrant, clean and safe downtown. That benefits all residents and I've seen progress in the last few years. Still a long way to go but there has been progress.

Not to say I'm happy with everything that has been going on. It seems like every developer has his hand out and wants to get out of paying property taxes for every proposed project. Sometimes it comes across as blackmail. "Give me a tax break and a government loan or I won't build this project." The city, Luzerne County and the W-B Area school district are always happy to oblige. My economics training tells me you should do things because they make business sense not to lower your tax bill.

The TL has rundown of some the announced council hopefuls.