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New Ken, Arnold, Lower Burrell shut out of economic development program

| Tuesday, July 23, 2013, 2:54 p.m.

A new state program leaves New Kensington, Arnold and Lower Burrell on the outside looking in — but they're not alone.

The City Revitalization and Improvement Zone (CRIZ) program is being heralded as an economic development tool for Pennsylvania cities. However, under the enabling legislation, only eight of the state's third-class cities will get the chance to use it, at least for the time being.

Those eight cities are York, Lancaster, Erie, Reading, Altoona, Wilkes-Barre, Chester and Bethlehem.

All have populations greater than 30,000, a requirement set forth in the law that was approved as part of the 2013-14 state budget.

“Because the measure would enable this investment in local economies, cities like ours are the ones who need it the most,” said New Ken-sington Mayor Tom Guzzo. “Cities under 30,000 are certainly struggling and to be excluded is disconcerting to say the least.

“It is unfortunate that we are not going to be a part of this program,” he said.

State Sen. Lloyd Smucker, R-Lancaster/York, who introduced the legislation, said his goal was to get a bill in front of the Legislature that would pass. Attempting to open the program to all third-class cities would have failed, he told the Harrisburg Patriot-News.

“The Department of Revenue and the (Corbett) administration … (are) not ready to make it (open) to all third-class cities,” Smucker said.Smucker said the short-term goal is to set parameters agreeable to everyone.

“I think it's going to be an effective tool, and I think every third-class city (eventually) is going to participate,” he told the Patriot-News. “It started with just one (Allentown), and now we're slowly expanding it to others, and I think you'll see that continue.”

The program allows the establishment of a local authority to create a zone of up to 130 acres to provide economic development and job creation within a city. Unlike a tax-abatement program where businesses pay reduced or no taxes for a designated period of years, the CRIZ program calls for state and local taxes to be collected from businesses locating in the designated zone.

That money is set aside in a fund and used to pay down debt, including the issuance of bonds, that the authority incurs in financing development within the CRIZ. It allows a development zone to remain in effect for a period equal to the time needed to pay off the debt but capped at 30 years.

The bill also allows one “pilot zone” to be established in a township or borough with a population of at least 7,000. Financially distressed communities in receivership, such as Harrisburg, are excluded, even though Harrisburg's population exceeds 40,000.

Businesses that own or lease real estate within the zone from which they conduct business are eligible to benefit from the CRIZ. Businesses that relocate into the zone are not considered eligible unless they increase full-time employment at least 20 percent within the zone in the first full year of operation or make a capital investment in the property equal to 20 percent of the gross revenues of that business in the immediately preceding calendar or fiscal year.

“We've kind of come to the conclusion that this really isn't going to matter to us at all,” said Arnold Mayor Larry Milito. “They basically have left us out of it.”

“We're just trying to stay afloat,” Milito said. “I'm looking to try to get somebody to develop that riverfront property down there. Who knows how long that will take? Every little bit will help.”

Don Kinosz, Lower Burrell's mayor, said he would like to know how the population cutoff was determined. The multiple types of development allowed under the program, including retail, would be ideal for the former Montgomery Ward/JC Penney property along Leechburg Road, he said.

“Where those numbers came from, I have no idea,” he said. “I don't know the magic of 30,000, I don't know the magic of 7,000 (for boroughs).”

“That means if I have 29,999 people, I don't qualify. Why?” Kinosz asked. “Really, it sounds, quite honestly, very exciting. For us, it would hit right on the kind of stuff we are looking for. But if the 30,000 stays a hard and fast number, that doesn't help us.”

House Minority Leader Frank Dermody, D-Oakmont, was critical of Republican Gov. Tom Corbett for narrowing the category of eligible cities.

“His priorities are skewed,” Dermody said. “I don't know what his priorities are because that left out significant cities that need the help. I think his priorities are all out of whack.”

Referring to New Kensington, Arnold and Lower Burrell, he said: “It's ridiculous. They are cities that are struggling, doing their best, and this guy (Corbett) pulls the rug out from them.”

State Sen. Jim Brewster, D-McKeesport, who represents six third-class cities, including the three in the Alle-Kiski Valley, was not happy about the bill.

“Economically struggling cities in my district should have access to funding tools to help them create jobs,” Brewster said. “All cities should have a chance to participate and compete fairly. This program should be inclusive, and tax dollars should not be doled out based on politics.”

“The Department of Revenue has to make sure that the concept is solid moving forward,” said state Rep. Eli Evankovich, R-Murrysville, who also represents New Kensington, Arnold and Lower Burrell. “We have to make sure this works before we offer it to more communities.”

“It wasn't like New Kensington, Arnold and Lower Burrell are excluded, and if they merged, they certainly would be eligible for this,” he said.

State Sen. Jim Ferlo, D-Highland Park, said Senate Democrats were for the program but wanted it to be uniform and consistent. He believes politics were involved in setting the cutoff, noting that a lot of cities that were excluded are represented by Democratic legislators.”

“We're not against the Department of Community and Economic Development establishing criteria for evaluation, but we believe it should be uniform and for all third-class cities,” he said.

“This could potentially be another tool in the tool box for the struggling cities, some of which I represent, to spur development in their region,” Evankovich said. “I don't see why it can't be successful for everyone, but before we open it up to everyone, we have to make sure that it is a good deal for the taxpayers.”

He conceded that to open it up to other cities, more legislation would have to be enacted.

“You can bet that if it proves to be a good tool, I'm going to be there to make sure the communities can utilize it,” Evankovich said.

Tom Yerace is a staff writer for Trib Total Media. He can be reached at 724-226-4675 or

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