Our Opinion: Does KOZ Program benefit Luzerne County? Council should get hard data

September 13th, 2015 9:41 am

If Luzerne County Manager Robert Lawton succeeds in hiring someone to focus on economic development, his or her first duty should involve an overdue task. Evaluate the merits of the county’s Keystone Opportunity Zones.

Critics of the zones, in which businesses are granted tax exemptions for up to a dozen years, say they give an unfair advantage to certain companies and rarely deliver the desired job growth. Proponents, however, tout the state-monitored KOZ Program as a necessity to compete with other states and regions for new business and industry, suggesting many of the area’s brownfields-turned-industrial parks would not have succeeded without it.

So, which is it?

The question is more than a curiosity; for the sake of moving the county forward, elected officials should receive a reliable analysis of the KOZ Program’s local effectiveness – or lack thereof.

Later this month, members of Luzerne County Council are expected to vote on a request to approve a Keystone Opportunity Zone extension for a 47-acre parcel in Duryea. The Greater Pittston Chamber of Commerce asked for the extension, which also would apply to the former Avoca Yards railroad property belonging to the county’s Redevelopment Authority. Neither site has been used in decades.

But losing the KOZ status would make the land less marketable, said Rosemary Dessoye, the chamber’s executive vice president. The group has invested nearly $3 million in recent years to improve road and rail access to the area as well as to supply utilities, she told council members last week.

To make informed decisions, the council’s 11 members should have access to data. If accurate numbers cannot soon be provided by an economic development guru on staff, why not create an ad hoc council committee to investigate? Alternatively, might The Institute for Public Policy & Economic Development at Wilkes University be able to shed light? Can the state fill in any blanks?

A 2009 evaluation of the KOZ Program by the Pennsylvania Legislative Budget and Finance Committee noted “serious deficiencies” in program data. Among other findings, the report concluded that “the job creation and retention figures attributed to the KOZ Program to date are not adequately documented and appear to be substantially overstated.”

For cash-strapped governments like Luzerne County, is the loss of tax revenue worth a supposed – but questionable – boost in jobs? In 2013, Keystone Opportunity Zones and other tax-break programs in the county combined to lop off nearly $330 million in taxable property from the tax rolls, the Times Leader reported. That’s serious money.

Pennsylvania established its first Keystone Opportunity Zones in 1999. By now, they should have proven themselves or been replaced by other business incentives.

Our hunch is that Luzerne County probably could find more effective ways to lure new business here. But county council, and other governing bodies, should have concrete evidence on which to base their decisions.