KOZ tax break request submitted to Luzerne County Council

Aug. 10--The Greater Wilkes-Barre Chamber of Commerce is seeking a 10-year Keystone Opportunity Zone tax break extension on a Wright Township property it wants to sell for a new construction project, according to Luzerne County Council's Tuesday work session agenda.

Known as a KOZ, the break forgiving real estate taxes would be for the 27.35-acre former Poseidon Pools property on Crestwood Drive in the Crestwood Industrial Park. The chamber took possession of the property after the prior owner went bankrupt in the 1990s.

Full forgiveness through Dec. 31, 2029, may be a hard sell, in part because most, if not all, of the estimated 58 remaining KOZ breaks expire in 2024, records show.

Instead, council members have been more receptive to Local Economic Revitalization Tax Assistance, or LERTA, breaks because the land portion remains taxable throughout and the forgiveness on structures can be reduced to lower percentages over time.

Business tenants in KOZ properties also are exempt from some other taxes while the break is in effect, including the business privilege tax, occupancy or use tax, sales tax on certain purchases, net profit tax and mercantile license tax, according to prior published reports and a proposed resolution.

In a communication to council Chairman Tim McGinley attached to council's agenda, chamber President/CEO Wico van Genderen presented this background:

The Greater Wilkes-Barre Industrial Fund Inc., an arm of the chamber, is seeking the break as part of its plans to sell the property to Mericle Commercial Real Estate Services.

Mericle plans to build a new speculative industrial building totaling more than 200,000 square feet. The project would create approximately 174 jobs and involve an estimated $6 million in private investment.

When the KOZ expires, the developed property would generate around $150,000 in total annual taxes for the township, Crestwood School District and county.

"Approval of the KOZ extension is a vital part of the redevelopment strategy for this property," he wrote.

The chamber would use sales proceeds to fully repay a county community development business development loan, the communication said.

This loan was provided to help with environmental cleanup and site development, past published reports said. County Community Development Executive Director Andrew Reilly said $925,040 is owed on the loan. The payment would be deposited back into the loan fund, which contains about $2.2 million, he said.

It's unclear how the chamber plans to address the $1.6 million in school, county and local real estate taxes still tied to the parcel from 1994 through 1999, as verified by county tax-claim records. Van Genderen could not immediately be reached for comment Friday.

His letter to McGinley said the current KOZ designation expires the end of 2019, and the chamber has been working for years on the site's cleanup and redevelopment. That work included demolition of the old building, environmental remediation and excavation and grading to prepare a building pad.

Before a sale can proceed, the chamber must resolve some regulatory issues to obtain final clearance from the state Department of Environmental Protection, the letter said.

Council is set to discuss the request at Tuesday's work session, which follows a 6 p.m. on-the-road voting meeting at the Back Mountain Regional EMA Building on Route 118 in Dallas.

McGinley said the chamber is attempting to obtain school district and municipal approval of the KOZ extension before council votes on Aug. 27.

Van Genderen told county officials last year the chamber has been working diligently in recent years to pay down its county debt, get out of the real estate business and make the organization a "transformative force" driving economic, entrepreneurial and workforce development.

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.

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