As the state government worked to get a proposed petrochemical plant in Beaver County, they forgot about a key deciding factor: the local government. Potter Township was left out of key decisions including approval of the local tax exemption. The township also missed out on the opportunity to apply for a Keystone Opportunity Zone (KOZ) expansion. Because of this discrepancy, Potter may lose out on funding for services provided to the community such as fire and police protection.
Potter Township is a small town in Beaver County with a population of about 600, and an average per-capita income of $20,000. The township could, if it chose to, stop the process of bringing Shell to the state.
Potter is already home to a Keystone Opportunity Zone (KOZ). The zones allow businesses moving into them to operate tax-free for 15 years. Businesses in the zones are exempt from paying state and local taxes, including property, sales and corporate income taxes.
The Pennsylvania Senate introduced a bill this year to increase the size of all the state’s Keystone Opportunity Zones. The bill makes the township’s tax-free zone large enough to accommodate Shell’s plant, but the township never asked for an expansion of its KOZ.
The plant could boost revenues for Potter Township if Shell hires a significant number of employees. Potter collects a local services tax of $52 a year from all who live or work in the township, including those Shell will eventually employ. Shell is required to hire 400 employees under the KOZ—a number that equates to $20,800 each year. The township also collects a wage tax of 0.5 percent from employed residents.
There is an alternative: the Local Economic Revitalization Tax Assistance (LERTA) program already operating in Potter. LERTA allows local governments to give businesses up to 10 years of tax breaks—a decrease from the 15 years provided by the KOZ program. Under LERTA businesses are exempt from local taxes on construction and building improvements, but must pay property and other taxes. The program would still give Shell some exemptions, but it would allow Potter Township to collect taxes from the company granting the township a bit more control.
This process would require Shell to file an application with the township before it could receive the local tax breaks. Once an application is filed, the township would have to hold at least one public hearing before making a decision. A public hearing would provide residents an opportunity to ask questions and learn about the environmental and economic impacts of the plant.
Potter Township could be the deciding factor in securing Shell’s move to the state, and many issues have to be ironed out before final decisions are made regarding the plant’s future.