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Tax-exempt zone is a risk that is worth taking

Posted 9/10/13

It appears that local municipalities will endorse Harrisburg International Airport’s proposal to create a Keystone Opportunity Zone on 114 acres of land it owns in Middletown, Highspire and Lower Swatara Twp.

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Tax-exempt zone is a risk that is worth taking

Posted

The acres include land where the old Crawford Station once stood, former Bethlehem Steel Corp. property and the airport’s former terminal. Under the Keystone Opportunity Zone program, a state program begun in 1999 to spark development of long-vacant land and create jobs, development would be exempt from local real estate taxes for 10 years, and businesses would pay reduced state taxes.

Middletown Borough Council approved the zone at its meeting on Tuesday, Sept. 3. The Steelton-Highspire School Board, Highspire Borough Council and Lower Swatara Twp., Board of Commissioners already have approved it, leaving the Middletown Area School Board as the final thumbs-up needed for it to become reality. The Middletown board has agreed 7-2 to draw up a resolution for a vote at a future meeting, a sign that it will likely pass.

There has been some opposition to the idea, mainly concerning the tax exemption. Some elected officials are hesitant to grant such an exemption to a business while the rest of their constituents are required to pay taxes on their homes. There’s also a fear that businesses that move into the new development that could spring up as a result of the program will simply abandon the area when the 10-year exemption expires.

State Sen. Mike Folmer, who will become the area’s senator in 2014 as a result of redistricting, sees the program as a necessary evil. It would be more effective to reform business taxes than entice business to come here with a temporary incentive program like the Keystone Opportunity Zone, he argues.

The opposition makes some good points. But the 114 acres of airport property under consideration already is tax exempt – it is owned by the board that oversees HIA. And it's property that, in state jargon, is “underutilized’’ – developers have not lined up to build on it. It would indeed be unwise to propose tax exemption for borough or township land on which taxes already are being paid.

Municipalities have nothing to lose.

Whether they gain a bounty of revenue in the future is certainly up for debate. It’s hoped that businesses that are lured here by the Keystone Opportunity Zone will remain after the tax exemption expires. As Timothy Edwards, executive director of HIA, points out, the zone designation is a long-term plan with no guarantees of attracting developers.

Still, it offers local municipalities a chance to reap revenue from land that currently is producing nothing for them. Optimistic? Yes – but it’s worth taking a chance.

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