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Comcast Tax Subsidy Proposal Isn't Good Policy, New Study Finds
Washington, D.C. – A new study by a national research group provides sharp evidence that Pennsylvania residents would be better served by public policy that promotes real economic growth and development in the state's major cities, not a plan that would give one company unneeded and substantial public subsidies, costing taxpayers tens of millions of dollars.
The study was released as Pennsylvania lawmakers returned to Harrisburg for a legislative session.
In "Improving the Proposed Comcast Deal: Policy Options Based on Best Practices," Good Jobs First, a research group that studies state and local economic development practices, analyzed a controversial, proposed amendment to the "Keystone Opportunity Zone" program. This measure would provide state and local tax exemptions, including property, business privilege and use, and occupancy tax exemptions, to Comcast Corp., for relocating its corporate headquarters to a new site in Philadelphia, just three blocks from its current location. The tax breaks would remain in effect through 2015.
The Good Jobs First study reviewed "best practices" in other states with the aim of presenting alternatives that will better achieve the goals of the economic development zone program.
Among the report's findings:
First, a major flaw of the measure is that it would provide substantial benefits to one company, and would do very little to revitalize downtown Philadelphia, the study found. Typically, enterprise zone type subsidies are located in distressed areas, with tax breaks intended to create an incentive for companies to invest and create jobs. In fact, it is uncommon for enterprise zones to be located in central business districts, as the Comcast proposal allows, the study found.
Property owners in the central business district already oppose this deal, exactly because it would provide benefits unfairly to just one landlord and major tenant – Liberty Property Trust and Comcast. In many jurisdictions, a system of tax increment financing is sued to provide benefits to a large number of property owners. Under such a plan, only improvements that benefit the public – such as rebuilding infrastructure, parks, public transit – are subsidized. "The proposed Comcast subsidy, built on the non-payment of taxes to support private, rather than public goods, appears to contradict these concepts," the report found.
Second, the best enterprise zone initiatives also stress bringing residential construction to the area, and promoting 'mixed use' projects that combine residential and retail facilities. For Philadelphia, "the need to attract residents back to the city is a real economic development," the report said, yet this project "conspicuously lacks incentives for attracting people back to live in the city."
Third, the issue of jobs and job creation is critical, but again, the Comcast proposal doesn't clearly define what "full time employment" means. A better solution, used by many jurisdictions, is to add employment retention safeguards tied to subsidies. If employment rates fall, a percentage of the subsidy is canceled.
Some analysts have questioned using state tax dollars to reward a company for moving three blocks, without creating any new jobs. Further, analysts speculated that jobs in western Pennsylvania might be relocated to gain further benefits under the deal.
"Overall, the goal of revitalizing downtown Philadelphia would be better served by strategies such as improving public amenities and attracting new residents," the report said. A review of the best practices now followed for downtown revitalization – and taxpayer safeguards – can suggest alternatives and improvements for the current Comcast deal, or similar proposals being considered, it concluded.
Good Jobs First is a national research group and clearinghouse on state and local economic development practices. The study was commissioned by the Communications Workers of America, representing more than 700,000 workers in communications, technology, state and local government, higher education, media, airlines and manufacturing.
The full report is available at www.comcastwatch.com.
The study was released as Pennsylvania lawmakers returned to Harrisburg for a legislative session.
In "Improving the Proposed Comcast Deal: Policy Options Based on Best Practices," Good Jobs First, a research group that studies state and local economic development practices, analyzed a controversial, proposed amendment to the "Keystone Opportunity Zone" program. This measure would provide state and local tax exemptions, including property, business privilege and use, and occupancy tax exemptions, to Comcast Corp., for relocating its corporate headquarters to a new site in Philadelphia, just three blocks from its current location. The tax breaks would remain in effect through 2015.
The Good Jobs First study reviewed "best practices" in other states with the aim of presenting alternatives that will better achieve the goals of the economic development zone program.
Among the report's findings:
First, a major flaw of the measure is that it would provide substantial benefits to one company, and would do very little to revitalize downtown Philadelphia, the study found. Typically, enterprise zone type subsidies are located in distressed areas, with tax breaks intended to create an incentive for companies to invest and create jobs. In fact, it is uncommon for enterprise zones to be located in central business districts, as the Comcast proposal allows, the study found.
Property owners in the central business district already oppose this deal, exactly because it would provide benefits unfairly to just one landlord and major tenant – Liberty Property Trust and Comcast. In many jurisdictions, a system of tax increment financing is sued to provide benefits to a large number of property owners. Under such a plan, only improvements that benefit the public – such as rebuilding infrastructure, parks, public transit – are subsidized. "The proposed Comcast subsidy, built on the non-payment of taxes to support private, rather than public goods, appears to contradict these concepts," the report found.
Second, the best enterprise zone initiatives also stress bringing residential construction to the area, and promoting 'mixed use' projects that combine residential and retail facilities. For Philadelphia, "the need to attract residents back to the city is a real economic development," the report said, yet this project "conspicuously lacks incentives for attracting people back to live in the city."
Third, the issue of jobs and job creation is critical, but again, the Comcast proposal doesn't clearly define what "full time employment" means. A better solution, used by many jurisdictions, is to add employment retention safeguards tied to subsidies. If employment rates fall, a percentage of the subsidy is canceled.
Some analysts have questioned using state tax dollars to reward a company for moving three blocks, without creating any new jobs. Further, analysts speculated that jobs in western Pennsylvania might be relocated to gain further benefits under the deal.
"Overall, the goal of revitalizing downtown Philadelphia would be better served by strategies such as improving public amenities and attracting new residents," the report said. A review of the best practices now followed for downtown revitalization – and taxpayer safeguards – can suggest alternatives and improvements for the current Comcast deal, or similar proposals being considered, it concluded.
Good Jobs First is a national research group and clearinghouse on state and local economic development practices. The study was commissioned by the Communications Workers of America, representing more than 700,000 workers in communications, technology, state and local government, higher education, media, airlines and manufacturing.
The full report is available at www.comcastwatch.com.