CRIZ is a ‘Pay Check Loan’ for cities

In effect, CRIZ is little different from a loan against next week’s paycheck.

“A CRIZ is an area of up to 130 acres, comprised of parcels designated by a contracting authority, which will provide economic development and job creation within a political subdivision. State and local taxes collected within the CRIZ will be used to repay debt service to stimulate economic development projects within the CRIZ.” – Commonwealth of Pennsylvania.

In other words, taxes from the future are to be used to create a feeding trough to pay for current development. This means taxes that otherwise would be available to meet future needs will instead be used to pay for the cost of past projects.

This is a device for the current generation to usurp the tax income that otherwise would be earned by future generations to meet the needs of our children and grand children.

Furthermore, the CRIZ program encourages investments that are not feasible enough to attract conventional investment or loans.

For further details, read below the official explanation of the CRIZ program published by the Commonwealth of Pennsylvania.

Also, for more specifics, see “Bonanza or disaster? CRIZ is a two edged sword”.
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The City Revitalization and Improvement Zone (CRIZ)

Overview

The City Revitalization and Improvement Zone (CRIZ) Program was created by Act 52 of 2013. The Pennsylvania Department of Revenue (Revenue Department), the Pennsylvania Department of Community and Economic Development (DCED) and the Governor’s Office of Budget are tasked with administration of the CRIZ Program. These guidelines provide information for municipalities looking to apply to the CRIZ Program.

A CRIZ is an area of up to 130 acres, comprised of parcels designated by a contracting authority, which will provide economic development and job creation within a political subdivision. State and local taxes collected within the CRIZ will be used to repay debt service to stimulate economic development projects within the CRIZ.

The CRIZ Program also permits one pilot zone to be designated. A pilot zone is an area of not more than 130 acres designated by a contracting authority within a township or borough with a population of at least 7,000 based on the most recent federal decennial census. Program guidelines apply to both zones.

The focus of the program is to provide opportunity to spur new growth, helping to revive downtowns and create jobs for the residents in the regions. Vacant, desolate, underutilized or abandoned space will be developed, thereby creating jobs, increasing personal incomes, growing state and local tax revenues, reviving local economies and improving the lives of city residents and visitors.

Uses

Funds may only be used for the following:

Payment of debt service on bonds issued for the construction, including related infrastructure and site preparation, reconstruction or renovation of a facility in the zone.

Construction, including related infrastructure and site preparation, reconstruction or renovation of all or a part of a facility.

Replenishment of amounts in debt service reserve funds established to pay debt service on bonds.

Employment of an independent auditing firm to perform required duties on behalf of the contracting authority.
Improvement or development of all or part of a zone.

Improvement projects including fixtures and equipment for a facility owned by a public authority.

Funding

Bonds will be issued by the contracting authority. Various State and Local Tax Revenues created in the zone will be then used to pay off the bonds.

Eligibility

A city with a population of at least 30,000 based upon the most recent federal decennial census designated as distressed under the Act of July 10, 1987 (P.L. 246, No. 47) that is not located in a home rule county.

A home rule county where a city with a population of at least 30,000 based upon the most recent federal decennial census designated as distressed under the Act of July 10, 1987 (P.L. 246, No. 47).

A city of the third class with a population of at least 30,000 based upon the most recent federal decennial census, so long as the city has not had a receiver appointed under Chapter 7 of the Act of July 10, 1987 (P.L. 246, No. 47).

The CRIZ Program also permits one pilot zone to be designated. A pilot zone is an area of not more than 130 acres designated by a contracting authority within a township or borough with a population of at least 7,000 based on the most recent federal decennial census.

Additional Information

City Revitalization and Improvement Zone Q&A
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How to Decertify Economic Development Zones

A CRIZ may not include any of the following unless and until these special zones are decertified: Keystone Opportunity Zones (KOZs), Keystone Opportunity Expansion Zones (KOEZs), Keystone Opportunity Improvement Zones (KOIZs)[Opportunity Zones, collectively] or Strategic Development Areas (SDAs).

A CRIZ may not include Keystone Special Development Zones (KSDZs) or Keystone Innovations Zones (KIZs) unless and until modifications to the geographical boundaries are made to the KSDZ or KIZ.