PROPOSED RULEMAKING
DEPARTMENT OF COMMUNITY AFFAIRS
[16 PA. CODE CH. 15]
Neighborhood Assistance Program; Special Program Priorities and Enterprise Zone Tax Credit Program
[26 Pa.B. 2323] The Department of Community Affairs (Department) proposes to amend §§ 15.41b and 15.49a (relating to special program priorities and Enterprise Zone Tax Credit Program-special program priorities). These amendments are proposed under the authority of Article XIX-A of the Tax Reform Code of 1971 (act) (72 P. S. §§ 8901-A--8960-A).
Summary and Purpose
The Department has the responsibility for administering Pennsylvania Neighborhood Assistance Act Tax Credit Programs under the act. Section 1905-A of the act (72 P. S. § 8905-A) directs the Secretary of Community Affairs, during each fiscal year, to promulgate, with the approval of the Governor, regulations establishing special program priorities for these programs.
Neighborhood Assistance Tax Credit Program The objective of the NAP Tax Credit Program is to encourage private businesses to contribute toward improvements in impoverished neighborhoods throughout this Commonwealth. To meet this objective, section 1905-A of the act authorizes the Department of Revenue to grant tax credits to certain business firms approved by the Department which contribute to neighborhood organizations, or which engage directly in neighborhood improvement activities. Credits equivalent to 50% of a business firm's contribution for approved projects may be awarded for activities related to job creation, education, community services, crime prevention and other activities which tend to enhance the living conditions of people in impoverished areas. Under the Special Program Priorities of § 15.41b, contributors may earn an additional 20%, for an overall 70% tax credit.
Proposed priorities for FY 1995-96 have been amended to include a fourth priority while renaming the first priority of those established for FY 1994-95. With the addition of the fourth priority entitled Comprehensive Service Programs, which mirrors the Neighborhood Assistance Program's Comprehensive Service Program (NAP/CSP) (aka the Philadelphia Plan) established by the act in FY 1994, it became necessary to rename the former comprehensive service program priority as the Community Development Program Priority.
The community development priority is based on a project type activity which is a component of an overall community development plan for the prevention or elimination of physical blight and for education, social and economical services to aid impoverished people within an urban neighborhood or rural community. The new priority CSP proposes to transform an entire distressed community into a healthy stable community through the long term joint efforts of a neighborhood/community organization and a major corporate sponsor for the development and implementation of a Strategic Neighborhood Revitalization Plan over a minimum of a 5-year period. This new priority is being included due to the over subscription to the NAP/CSP and the Department's goal of expanding NAP/CSP beyond the city of Philadelphia. By including this priority the Department will be able to expand the original NAP/CSP $2 million tax credits to a total of $3 million tax credits at the 70% rate.
The Low-Income Housing Program priority has been renamed the Affordable Housing Program, but no changes have been made in the program requirements.
Enterprise Zone Tax Credit Program (EZP)--Special Program Priorities The EZP was established by section 1905-A of the act to encourage private companies to invest in enterprise zones that have been designated by the Department. Currently, 52 zones have been selected in various municipalities throughout this Commonwealth.
Special program priorities adopted for Fiscal Year 1995-96 continue the priorities that have been in effect for several years.
Benefits and Costs
The proposed amendments will continue the tax credits to corporations and businesses that contribute to or administer projects under the NAP and to private companies that rehabilitate land and buildings in impoverished areas designated as enterprise zones. Credits represent a proportionate reduction in State corporate tax revenues; however, the costs are substantially justified by the effect of the NAPs in creating and retaining jobs and ameliorating the factors which tend to cause poverty within this Commonwealth. The amendments have no measurable cost-effect upon local governments.
Paperwork Requirements
Organizations interested in participating in the Neighborhood Assistance Act Special Program for NAP shall submit an addendum to their original NAP proposal. The original proposal is submitted on an NAP form with supporting documentation.
Private companies and neighborhood organizations interested in participating in the EZP shall submit an addendum to their original EZP project application proposal using the Bureau of Human Resources' proposal format.
Consideration of Public Comment
Persons wishing to comment on the proposed amendments may do so within 30 days following publication in the Pennsylvania Bulletin. Written comments should be directed to Dennis Darling, whose address and telephone number are set forth in this Preamble.
Contact Person
For further information, contact Dennis Darling, Director, Bureau of Human Resources, Room 358 Forum Building, Harrisburg, PA 17120, (717) 787-1985.
Sunset Date
As long as authorization for tax credits is provided for by the act, these regulations will be needed. The regulations, by law, are monitored on an annual basis and updated as needed.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), the Department submitted a copy of these proposed amendments on May 8, 1996, to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Committee on Urban Affairs and the Senate Committee on Local Government. In addition to submitting the proposed amendments, the Department has provided IRRC and the Committees with a copy of a detailed regulatory analysis form prepared by the Department in compliance with Executive Order 1982-2, ''Improving Government Regulations.'' A copy of this material is available to the public upon request.
If IRRC has objections to any portion of these proposed amendments, it will notify the Department within 30 days from the close of the public comment period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the regulations, by the Department, the General Assembly and the Governor of objections raised.
WILLIAM C. BOSTIC,
SecretaryFiscal Note: 5-61. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 16. COMMUNITY AFFAIRS
PART I. DEPARTMENT OF COMMUNITY AFFAIRS
Subpart C. BUREAU OF RECREATION AND CONSERVATION
CHAPTER 15. NEIGHBORHOOD ASSISTANCE PROGRAM
TAX CREDITS § 15.41b. Special program priorities.
For Fiscal Year [1994-95] 1995-96, the special program priorities will be accepted in [three] four categories: Community Development, Comprehensive Services, [Low Income] Affordable Housing Programs and Enterprise Zone Programs. Projects in each category shall relate to activities which will improve the physical and economic environment of low income neighborhoods or which will contribute to neighborhood stabilization by reversing patterns of deterioration and blight. The projects shall demonstrate the local commitment through partnerships of community based organizations, local government and the private sector. The following paragraphs set forth the requirements for the project to be eligible for tax credit valuation of 70%.
(1) [Comprehensive Service] Community Development Program. Required program characteristics include the following:
* * * * * (ii) Project activities shall [provide] be included in a [comprehensive] community development plan for the prevention or elimination of physical blight and for educational, social and economic services to aid impoverished people within an urban neighborhood or rural community [or be a component of the comprehensive plan]. A [comprehensive plan] Community Development Project shall include the components of clauses (A) and (B), and two of the remaining components in clauses (C)--(F).
* * * * * (2) [Low-income] Affordable housing programs. Applicants shall be limited to nonprofit neighborhood organizations who produce or preserve through renovation, repair, rehabilitation or new construction affordable housing for low-income persons meeting the following requirements:
* * * * * (4) Comprehensive Service Programs. A program that proposes to transform a distressed community into a healthy stable community through the long term joint efforts of a neighborhood/community organization and a major corporate sponsor for the development and implementation of a Strategic Neighborhood Revitalization Plan. Required program characteristics include the following:
(i) Program activities shall be eligible for the 50% tax credit program as set forth in § 15.22 (relating to submission of proposals).
(ii) Program activities shall benefit low income persons whose family income is no more than 125% of the official poverty line established by the Federal Office of Management and Budget or residents of an economically distressed community. The distressed community shall be specified by geographic boundaries in the plan.
(iii) The program shall have a major corporate sponsor who makes a significant commitment of contributed cash as well as other in-kind services, such as financial advice, legal counsel, public relations, architectural assistance, managerial advice or other expertise that may be available within its corporate structure.
(iv) The program shall include the following areas of concern of the economically distressed neighborhood:
(A) Housing--To substantially improve housing for residents and provide for them both ownership and rental opportunities.
(B) Education--To raise the educational and job readiness levels of community residents.
(C) Health & Social Services--To build capacity of community/neighborhood based organizations and to work creatively with county and State agencies so that social and health services are available for all residents including senior citizens and children.
(D) Community Development--To encourage and assist neighborhood based community development, particularly along the commercial districts, which will create jobs for area residents.
(E) Job Training--To create job training and referral services for adults and young people, including summer job programs for ''in-school'' youth.
(F) Crime Prevention--To develop, in cooperation with State and local law enforcement agencies, local school districts, county and State health departments, an educational program for drug prevention and anti-violence initiatives.
(G) Community Participation--To enhance volunteer recruitment, training, placement and recognition to support comprehensive service project coalitions so that every resident becomes an active and effective citizen.
(v) The program shall include a Comprehensive Service Plan that contains four essential components for the revitalization of a distressed neighborhood.
(A) Community Partnerships.--This component explains how community/neighborhood based organizations will transform a distressed neighborhood into a healthy community by creating significant and lasting partnerships among community based organizations, the private sector, and local and State government and the respective resources available.
(B) Strategic Neighborhood Revitalization Plan.-- This component is designed to provide a cohesive, coordinated plan of action, with strong community support for the project. The plan should include an assessment of needs, identification of resources, assignment of priorities and determination of appropriate course of action and be organized to support a plan of action over a minimum of a 5-year period.
(C) Implementation of Revitalization Plan.--This component sets forth the neighborhood's/community's vision for the future and identifies specific activities and resources needed to accomplish the tasks.
(D) Evaluation.--This component establishes an assessment mechanism for measuring the status and progress of proposed activities in meeting the overall comprehensive service goals for the revitalization of the distressed community.
(vi) The program shall include a detailed budget that is a coordinated plan of financial action that supports the development and implementation of the proposed revitalization plan for the commun- ity/neighborhood.
[(4)] (5) Limitation. During Fiscal Year [1994-95] 1995-96, the Department will allocate no more than $[1] 1.3 million of the available tax credits for valuation at 70%. No more than $1 million dollars of the tax credits will be allocated to the combined applicants for Community Development and Affordable Housing Projects, and no more than $300,000 will be awarded for Comprehensive Service Programs. Approval of projects under special program priorities will be contingent upon the availability of tax credits.
[(5)] (6) Applicability. The special program priorities in this section shall be applicable to programs implemented during Fiscal Year [1994-95] 1995-96.
TAX CREDITS FOR THE ENTERPRISE ZONE TAX CREDIT PROGRAM § 15.49a. Enterprise Zone Tax Credit Program-special program priorities.
(a) Applicability. The special program priorities in this section are applicable to projects for the Fiscal Year [1994-95] 1995-96.
(b) Special program priority status. For the Fiscal Year [1994-95] 1995-96 special program priority status may be granted for projects that will provide employment opportunities for low-income residents of this Commonwealth, or enhance public facilities. If approved under this section, projects will receive tax credits equal to 30% of eligible project costs, up to the maximum amount approved by the Department. The Commonwealth will consider all 20% tax credit requests prior to consideration of 30% tax credit addendum requests for Fiscal Year [1994-95] 1995-96. To qualify for the 30% tax credit, projects shall submit an addendum that addresses the following requirements:
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[Pa.B. Doc. No. 96-806. Filed for public inspection May 17, 1996, 9:00 a.m.]
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