Last January, the state “denied Urban Outfitters a lucrative package of tax breaks for a second e-commerce fulfillment center it wanted to build next to its current one near Gap in eastern Lancaster County,” staff writer Tim Mekeel noted in last week’s Sunday LNP. Urban — a Philadelphia-based global retailer of clothing, accessories, home furnishings and home decor that has been a part of the Gap area for more than 20 years — expressed disappointment and said at the time it would “re-evaluate” the project “while continuing to work with the Wolf administration and Lancaster County’s legislators,” Mekeel wrote. “Now that time of ‘re-evaluation’ is nearing its end.” But things have changed, not just for Urban, but for the state.
This is complicated, so we’re going to make this as simple as we can (mostly for our own sake, we admit).
As Mekeel explained, Urban’s existing fulfillment center in Salisbury Township is in a Keystone Opportunity Zone. That is, it was built in a designated area deemed to be underdeveloped and underutilized and so was exempted from certain state and local taxes for 10 years.
Urban wanted to expand the Keystone Opportunity Zone to an adjacent farm, where a second fulfillment center would have gone, creating a Keystone Opportunity Expansion Zone (the jargon is ... something).
Mekeel explained: “The second fulfillment center would have been a twin of the first, which is 1.1 million square feet (almost the size of Park City Center), cost $106 million and employs 1,100, Urban said at the time.”
But the Pennsylvania Department of Community and Economic Development said nope — no go.
Michael Gerber, a spokesman for the department, explained at the time that Keystone zone designations only go to sites that, in the department’s judgment, would likely not get developed without them.
Fast forward eight months.
As Mekeel reported last week, “Urban says it now intends to develop a smaller, but still substantial, facility that will handle a wider range of work. Urban also is considering other parts of North America, not just Gap, for the location.
“If Urban picks Gap, applies for the tax breaks and gets rejected by the state Department of Community and Economic Development again, this time there will be new consequences — for the department.”
Note: This is where it gets weird.
To the surprise of many — lawmakers included — the state tax code signed into law in June states that if the Department of Community and Economic Development rejects Urban’s new application, it must hold a public hearing within 30 days to explain its decision and detail the jobs and investment lost as a consequence.
“In addition, the new law requires the department to come up with an alternative project in the same municipality that has the same amount of investment and jobs,” Mekeel reported.
State Rep. Keith Greiner, an Upper Leacock Republican, was a co-sponsor of the tax code bill. But even he was unaware of the provision.
“That comes as a little bit of a shock because it’s never been done this way,” Greiner told Mekeel. “This seems a little bit out of the ordinary.”
Nathan Benefield, vice president and chief operating officer of the Commonwealth Foundation, a conservative think tank, also told Mekeel that the provision was “very unusual.”
This is the thing with complex legislation: Provisions and amendments get sneaked into lengthy bills all of the time. So not even the people making the sausage know all the ingredients that end up in it.
This, obviously, is not the way the public’s business ought to be conducted. This is why transparency is essential. And why lawmakers need to carefully read the bills on which they vote.
Gerber, of the Department of Community and Economic Development, told Mekeel that the provision won’t change the way the department evaluates applications for the tax breaks. We’ll take him at his word. But human nature suggests that with so much riding on this decision — and with Urban toying with the state by suggesting it might take its new facility somewhere else in North America — the department is going to feel some pressure.
Mekeel contacted other county lawmakers to see if they devised the new consequences for the Department of Community and Economic Development. State Sen. Scott Martin, whose district includes Salisbury Township, did not.
Among those Mekeel could not reach for comment: state Rep. David Zimmerman, who represents Salisbury Township in the House, and West Donegal’s state Rep. David Hickernell, a co-sponsor of the bill.
The bill’s prime sponsor, state Rep. Carl Walker Metzgar of Somerset, referred Mekeel’s question to state Rep. Bryan Cutler of Peach Bottom, the House majority leader.
Jake Smeltz, Cutler’s chief of staff, told Mekeel that his boss didn’t know who originated the provision, but Cutler supports it as a way to hold the Department of Community and Economic Development accountable.
We agree that when the department declines to grant Keystone zone status to a project that could bring a significant number of new jobs to an area — and local officials support the new development, which, in Urban’s case, they do — it should have to explain its reasoning.
But to require that the Department of Community and Economic Development find an alternative project in the same municipality — and with the same amount of investment and same number of jobs?
How is that even practicable? Is the department supposed to scramble to find passable projects worthy of Keystone zone designation? Isn’t that just basically pressuring the department to approve the project it previously had denied?
We would like to know who wrote the potentially impactful provision. And how it came into existence without the knowledge of key lawmakers.
David Ziel, Urban’s chief development officer, told Mekeel that Urban had “no role” in establishing the new consequences for the Department of Community and Economic Development.
So who did? And why don’t we know? And why isn’t anyone coming forward to explain the reasoning behind this provision — a provision that purportedly, and ironically, calls for more accountability?