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OK to extend tax-free zone sought

January 23, 2009|By DON AINES

CHAMBERSBURG, Pa. - The Letterkenny Industrial Development Authority is seeking local government approval to extend the lifespan of a tax-free zone in the Cumberland Valley Business Park in an attempt to attract more industries and develop raw land.

The Keystone Opportunity Zone (KOZ) was established in 1999 for 280 acres of raw land and one building in the business park, LIDA Executive Director John Van Horn told the Chambersburg School Board earlier this month.

Businesses that developed those properties received exemptions from local real estate taxes, as well as state sales and use taxes and the corporate net income tax, Van Horn said. Seventy-eight acres have been developed with $4.2 million in construction and 182 jobs created, he said.

Much of the KOZ remains undeveloped, one reason being locally imposed criteria, including a requirement that businesses pay an average of three times the minimum wage. Those were later done away with, and school district solicitor Jan Sulcove said at the Jan. 14 meeting the state will not allow locally imposed requirements that are not authorized by legislation.

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Board President Stanley Helman said he was concerned that businesses within the KOZ will take the tax breaks and then ask for lower assessments on properties when the KOZ expires.

The original KOZ is set to expire at the end of 2010, but the state passed legislation that allows extension of the tax breaks until 2025 for undeveloped parcels that are built on between now and the end of 2015, Van Horn said.

Extending the life of the KOZ will require the approval of the Franklin County Board of Commissioners, the Chambersburg School Board and the boards of supervisors of Greene and Letterkenny townships, Van Horn said. Those governments can impose real estate taxes on the business park, he said.

Those governments have waived about $420,000 in local taxes for the developed KOZ properties, Van Horn told the board. The developed parcels will begin paying $83,000 a year in taxes to the school district after 2010, adding to the $170,000 paid annually by properties in the business park that are not part of the KOZ, he said.

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