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Commerce seeks council approval to extend Keystone Opportunity Zone benefits for four sites; members press for guardrails
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Summary
The Commerce Department requested council approval to apply to the Commonwealth to extend Keystone Opportunity Zone benefits for four development sites. Council members acknowledged KOZ’s past role in spurring investment but pressed for stronger transparency, clawbacks and local guardrails to prevent “zone hopping.”
Deputy Commerce Director Dawn Somerville told the finance committee the administration seeks council authorization to apply to the Commonwealth of Pennsylvania to extend Keystone Opportunity Zone (KOZ) benefits for parcels in Harrogate, East Kensington, University City and the Navy Yard managed by private developers and the Philadelphia Industrial Development Corporation. KOZ provides parcel-specific state and local tax incentives intended to spur investment on underutilized property.
Somerville said the application to the Pennsylvania Department of Community and Economic Development must include council authorization and that beneficiaries are expected to enter payment-in-lieu-of-tax (PILOT) agreements at 110% of what the unimproved property tax liability would otherwise be, plus career-connected learning plans and economic opportunity plans demonstrating local workforce and contracting commitments.
Council members raised historic concerns about KOZ outcomes. Councilmember Ahmad summarized independent analyses of the Sierra Center KOZ designation that found substantial foregone tax revenue and questioned whether KOZ designations attracted new employers or simply subsidized relocations within the region. Ahmad urged stronger local guardrails including prohibitions on “zone hopping,” relocation fees, clawbacks for noncompliance and dashboard transparency. Somerville responded that the KOZ program is a state program with state rules, that city staff have raised concerns with the governor’s office, and that Commerce requires career-connected learning plans, PILOTs and economic opportunity plans as city-level mitigation.
Councilmember Gauthier, whose district includes KOZ parcels, said she routinely negotiates community benefits agreements beyond the program’s minimum requirements and called for a standardized approach to ensure community return. Commerce agreed to provide the committee with impact-study results already under way and to share requested relocation and job-creation data with the committee offices.
No formal action on the ordinance was taken at the hearing.
