How do City Revitalization & Improvement Zone funds work?

One in a series explaining key terms and concepts of Pennsylvania government. Today’s topic: City Revitalization & Improvement Zone, part two of six.

Seeking a better understanding of Pennsylvania’s issues and proposed solutions? Sometimes, complicated jargon and concepts can get in the way. That’s why we started Explainers, a series that tries to lay out key facts, clarify concepts and demystify jargon. Today’s topic: City Revitalization & Improvement Zone, part two of six.

How are CRIZ funds calculated?

After the CRIZ is established, the state Department of Revenue calculates existing businesses’ baseline state and local tax revenues. Revenues from property taxes, cigarette sales and hotel occupancy are not included.

When taxes are collected in future years, the state transfers anything above the baseline to the CRIZ fund.If a business opens after the zone is established, its baseline is zero.

How do CRIZ funds work?

The contracting authority chooses how to spend funds, as allowed by CRIZ guidelines:

• Finance projects within the zone• Repay debt issued to fund infrastructure and other types of improvements within the zone• Refinance debt originally issued to finance projects or improvements within the zone• Pay the contracting authority’s auditors

If the authority and a developer combine to finance a project and issue debt, all CRIZ money generated by that project can be pledged to repay that debt.

But it doesn’t have to be.

Lancaster and Bethlehem, for example, have the same policy: pledge some CRIZ money generated by a particular project to repay debt associated with that project and reserve some to use otherwise as allowable by the law.

The goal for that split is 80/20, but the breakdown is set for each project based on the authority’s negotiations with a developer.

Did this article answer all your questions about the City Revitalization & Improvement Zone? If not, you can reach Emily Previti via email at emily_previti@witf.org or through social media @emily_previti.  Have a topic on which you’d like us to do an Explainer? Let us know in the comment section below, or on Twitter @PaCrossroads.