One in a series explaining key terms and concepts of Pennsylvania government. Today’s topic: the City Revitalization & Improvement Zone, part five 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 five of six.
A Keystone Opportunity Zone, or KOZ, is not the same thing as a City Revitalization & Improvement Zone, or CRIZ.
Like CRIZ and TIF, the KOZ program aims to promote economic growth in by incentivizing developers without decreasing the tax revenues that fund public services. Also similarly, the KOZ begins by calculating tax revenue baselines in that area, which is picked by local officials and approved by the state.
There are differences, though:
Developers get a temporary tax break in a KOZ, but don’t in a CRIZ or TIF district.
In a KOZ, property owners pay the same amount of taxes for a decade no matter how much they improve their property, or how much its value increases. They pay at the full rate after the KOZ expires.
CRIZ and TIF district developers pay their taxes in full. Taxes may rise – and should, if their project’s doing well – but the additional revenue repays debt issued to enable their project or improve the surrounding area.
CRIZ and TIF districts offer lower rates on financing for projects within their boundaries,
Developers get financing for a CRIZ or TIF project at a lower interest rate if it’s financed with the debt issued on their behalf by the public authority overseeing the CRIZ or TIF.
The state will guarantee debt for a CRIZ or TIF under certain conditions, which are different for each.
In a CRIZ, the developer might be asked to issue debt directly or guarantee bonds issued by the authority. The Commonwealth and its taxpayers issue or guarantee TIF bonds up to $5 million per project or $100 million statewide.
The state will step in temporarily if CRIZ revenues can’t cover authority-incurred debt repayments, but the zone’s host community ultimately is liable for repaying the state and bondholders if revenues never catch up. This doesn’t apply in scenarios where the developer has issued debt directly or guaranteed authority bonds.
Did this article answer all your questions about the City Revitalization & Improvement Zone? If not, you can reach Emily Previti via email at email@example.com 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.