PRINTER'S NO. 857
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 177
Session of
2025
INTRODUCED BY LAWRENCE, OWLETT, KENYATTA, GREINER, JAMES, SMITH,
REICHARD AND MOUL, MARCH 10, 2025
REFERRED TO COMMITTEE ON AGRICULTURE AND RURAL AFFAIRS,
MARCH 10, 2025
AN ACT
1 Providing for the creation of keystone opportunity dairy zones
2 to facilitate the economic development of Pennsylvania's
3 dairy industry; authorizing expenditures; providing for tax
4 exemptions, tax deductions, tax abatements and tax credits;
5 creating additional obligations of the Commonwealth and local
6 governmental units; prescribing powers and duties of certain
7 State and local departments, agencies and officials; and
8 imposing penalties.
9 TABLE OF CONTENTS
10 Chapter 1. Preliminary Provisions
11 Section 101. Short title.
12 Section 102. Legislative findings.
13 Section 103. Definitions.
14 Chapter 3. Keystone Opportunity Dairy Zones
15 Section 301. Keystone opportunity dairy zones.
16 Section 302. Application.
17 Section 303. Review.
18 Section 304. Criteria for authorization of zone.
19 Section 305. Zone limitations.
20 Section 306. Residency.
 1 Section 307. Qualified businesses.
2 Section 308. Forms.
3 Chapter 5. State Taxes
4 Subchapter A. General Provisions
5 Section 501. State taxes.
6 Subchapter B. Particular State Taxes
7 Section 511. Sales and use tax.
8 Section 512. Personal income tax.
9 Section 513. Residency considerations.
10 Section 514. Corporate net income tax.
11 Chapter 7. Local Taxes
12 Section 701. Local taxes.
13 Section 702. Real property tax.
14 Section 703. Local earned income and net profits taxes and
15 business privilege taxes.
16 Section 704. Mercantile license tax.
17 Section 705. Local sales and use tax.
18 Chapter 9. Administration of Tax Provisions
19 Section 901. Transferability.
20 Section 902. Recapture.
21 Section 903. Delinquent or deficient State or local taxes.
22 Section 904. Code compliance.
23 Section 905. Appeals.
24 Section 906. Notice requirements.
25 Section 907. Application time.
26 Chapter 11. Procedures for Zones
27 Section 1101. Keystone opportunity dairy zone prioritizations.
28 Section 1102. Reporting.
29 Section 1103. Other Commonwealth tax credits.
30 Section 1104. Monitoring data.
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 1 Chapter 13. Miscellaneous Provisions
2 Section 1301. Illegal activity.
3 Section 1302. Rules and regulations.
4 Section 1303. Compliance.
5 Section 1304. Penalties.
6 Section 1305. Construction.
7 Section 1306. Severability.
8 Section 1307. Repeals.
9 Section 1308. Applicability.
10 Section 1309. Effective date.
11 The General Assembly of the Commonwealth of Pennsylvania
12 hereby enacts as follows:
13 CHAPTER 1
14 PRELIMINARY PROVISIONS
15 Section 101. Short title.
16 This act shall be known and may be cited as the Keystone
17 Opportunity Dairy Zone Act.
18 Section 102. Legislative findings.
19 The General Assembly finds and declares as follows:
20 (1) Dairy farmers are a vital, integral and
21 irreplaceable part of the agricultural heritage of this
22 Commonwealth.
23 (2) Dairy farmers contribute to the continued economic
24 health of this Commonwealth's agricultural sector, provide
25 jobs and pay taxes, provide local and sustainable food
26 products for nourishment and enjoyment and promote the
27 preservation of farmland in the public interest of all
28 residents of this Commonwealth.
29 (3) The continued viability of dairy farming is in the
30 best interest of the residents of this Commonwealth.
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 1 (4) In light of continued economic forces and market
2 pressures, the long-term viability of dairy farming requires
3 coordinated efforts by private and public entities to ensure
4 economic viability and ensure the continuation of the
5 significant contributions dairy farmers make to the economic
6 and social life of this Commonwealth.
7 (5) The long-term economic viability of dairy farming
8 requires the cooperative involvement of residents,
9 businesses, State and local elected officials and community
10 organizations.
11 (6) It is in the best interest of this Commonwealth to
12 assist and encourage the creation of zones to accomplish the
13 purposes of this act.
14 Section 103. Definitions.
15 The following words and phrases when used in this act shall
16 have the meanings given to them in this section unless the
17 context clearly indicates otherwise:
18 "Applicant." An individual or business that submits or
19 intends to submit a zone application to the department.
20 "Business." An association, partnership, cooperative,
21 corporation, sole proprietorship, limited liability company or
22 employer.
23 "Dairy processing facility." A factory or plant directly and
24 primarily involved in processing, refining or manufacturing raw
25 milk that is at least 75% Pennsylvania milk or Pennsylvania milk
26 products into milk, butter, milk powder, cheese, yogurt, ice
27 cream, sour cream or a value-added dairy product intended for
28 the wholesale or retail market.
29 "Department." The Department of Community and Economic
30 Development of the Commonwealth.
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 1 "Domicile." The place where an individual has a true and
2 fixed home and principal establishment for an indefinite time
3 and to which, whenever absent, that individual intends to
4 return. Domicile continues until another place of domicile is
5 established.
6 "Keystone opportunity dairy zone" or "zone." A defined
7 geographic area comprised of one or more political subdivisions
8 or portions of political subdivisions as designated by the
9 department under section 301.
10 "Opportunity plan." A written plan that addresses the
11 criteria and meets the requirements under section 302(a)(2).
12 "Pennsylvania dairy farm." A farm that produces Pennsylvania
13 milk.
14 "Pennsylvania milk." Raw milk produced by the milking of
15 cows physically located on a farm within the geographic
16 boundaries of this Commonwealth and certified as such by the
17 Pennsylvania Milk Board.
18 "Pennsylvania milk product." A food or beverage made from or
19 primarily made from at least 75% Pennsylvania milk, or a value-
20 added dairy product, processed within this Commonwealth that
21 utilized 75% or more Pennsylvania milk in its manufacture.
22 "Political subdivision." A county, city, borough, township,
23 town or school district with taxing jurisdiction in a defined
24 geographic area within this Commonwealth.
25 "Qualified business." A business authorized to do business
26 in this Commonwealth that is located or partially located within
27 a zone.
28 "Qualified political subdivision." A political subdivision
29 that has real property within its jurisdiction that has been
30 designated by the department as a zone.
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 1 "Resident." An individual who is domiciled and resides in an
2 area that is designated a zone.
3 "Small scale dairy processing facility." A factory, plant or
4 operation that exclusively utilizes Pennsylvania milk produced
5 from a single Pennsylvania dairy farm with a total average herd
6 size of 250 milking cows or fewer, or a combination of
7 Pennsylvania dairy farms with a total collective average herd
8 size of 250 milking cows or fewer, and that is directly and
9 primarily involved in processing, refining or manufacturing raw
10 Pennsylvania milk or Pennsylvania milk products into milk,
11 butter, milk powder, cheese, yogurt, ice cream, sour cream or a
12 value-added dairy product intended for the wholesale or retail
13 market.
14 "Tax Reform Code of 1971." The act of March 4, 1971 (P.L.6,
15 No.2), known as the Tax Reform Code of 1971.
16 "Value-added dairy product." Pennsylvania milk or a
17 Pennsylvania milk product that has been additionally processed,
18 improved, shredded, combined, aged, flavored, separated,
19 condensed or otherwise prepared to provide additional value or
20 convenience for the wholesale or retail market.
21 CHAPTER 3
22 KEYSTONE OPPORTUNITY DAIRY ZONES
23 Section 301. Keystone opportunity dairy zones.
24 (a) Establishment.--The department may designate up to 30
25 zones in accordance with this section, with up to 15 Class A
26 zones and up to 20 Class B zones.
27 (b) Zone authorization.--The department shall authorize not
28 more than 30 zones in this Commonwealth. Individuals and
29 businesses within an authorized zone that are qualified under
30 this act shall be entitled to all tax exemptions, deductions,
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 1 abatements or credits provided under this act for a period not
2 to exceed 10 years beginning no sooner than one year from the
3 effective date of this subsection and no later than three years
4 from the effective date of this subsection. The department
5 shall, upon approval, specify the precise beginning and ending
6 dates for the tax exemptions, deductions, abatements or credits
7 provided under this act.
8 (c) Authorization for local tax exemption.--Every political
9 subdivision within which a proposed zone is located, whether in
10 whole or in part, is authorized to provide tax exemptions,
11 deductions, abatements or credits to individuals and businesses
12 qualified under this act. The political subdivision shall agree
13 to provide exemptions, deductions, abatements or credits from
14 all local taxes provided under this act in order to qualify to
15 be designated a zone. The exemptions, deductions, abatements or
16 credits shall be effective on the date determined by the
17 department. The exemptions, deductions, abatements or credits
18 shall be binding upon the political subdivision for the duration
19 of the zone designation.
20 (d) Authorization to extend duration of zone.--A zone may
21 request to extend its designation for a period of three years.
22 The request to extend a zone designation shall be made on a
23 zone-by-zone basis. A qualified political subdivision having an
24 approved zone within its jurisdiction and seeking to extend the
25 zone designation shall pass the required ordinances, resolutions
26 or other required action of the qualified political subdivision
27 for the necessary exemptions, deductions, abatements or credits
28 under this act, and shall submit copies of the ordinance,
29 resolution or other action to the department. The department may
30 grant the request to extend provided all the proper binding
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 1 ordinances, resolutions or other governing documents are passed
2 by all qualified political subdivisions within the zone
3 extending the necessary exemptions, deductions, abatements and
4 credits to the entire zone. The department shall approve or deny
5 the request for extension of duration of a subzone within 90
6 days of receipt and shall provide written notice, irrespective
7 of whether approved or denied, to each qualified applicant,
8 political subdivision, resident and qualified business affected.
9 Upon approval of a request for extension of duration of a zone,
10 the exemptions, deductions, abatements or credits shall be
11 binding upon the qualified political subdivision as provided in
12 subsection (c).
13 Section 302. Application.
14 (a) Initial application.--An applicant may apply to the
15 department to designate a parcel as a zone. The application
16 shall contain the following:
17 (1) The geographic area of the proposed zone, including
18 the specific political subdivision or subdivisions.
19 (2) An opportunity plan, which shall include the
20 following:
21 (i) A detailed map of the proposed zone, including
22 geographic boundaries, total area and present use and
23 conditions of the land and structures of the proposed
24 zone.
25 (ii) Evidence of support from and participation of
26 local government, school districts and other educational
27 institutions, business groups, community organizations
28 and the public.
29 (iii) A detailed proposal outlining the proposed
30 improvements in the zone, including, but not limited to,
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 1 proposed capital investment, job creation and increased
2 dairy processing capacity for Pennsylvania milk or
3 Pennsylvania milk products according to the
4 specifications of this act.
5 (iv) A description of anticipated activity in the
6 proposed zone, including, but not limited to, site
7 improvements.
8 (v) Evidence of potential private and public
9 investment in the proposed zone.
10 (vi) The role of the proposed zone in economic
11 development of the dairy industry in this Commonwealth
12 and the anticipated impacts to dairy farmers producing
13 Pennsylvania milk.
14 (vii) Any other information deemed appropriate by
15 the department or by the Secretary of Agriculture in
16 consultation with the department.
17 (3) The duration of the proposed zone, including the
18 anticipated beginning and end date.
19 (4) A formal, binding ordinance or resolution passed by
20 every political subdivision in which the proposed zone is
21 located that specifically provides for all local tax
22 exemptions, deductions, abatements or credits for businesses
23 provided in this act.
24 (5) Evidence that the proposed zone meets the required
25 criteria under this act.
26 Section 303. Review.
27 (a) Action of department.--The department, in consultation
28 with the Secretary of Agriculture, shall review all completed
29 applications submitted under section 302. An application for
30 authorization as a zone must be received by a date to be
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 1 determined by the department in order to be considered by the
2 department. The date to be determined by the department shall
3 not be sooner than 120 days after the effective date of this
4 subsection, nor later than two years after the effective date of
5 this subsection.
6 (b) Process.--The department shall authorize up to 30 zones
7 from applications meeting the criteria under section 304 based
8 upon need, likelihood of success, potential for increased dairy
9 processing capacity and overall impact on the market for
10 Pennsylvania milk or Pennsylvania milk products. The department
11 may not alter the geographic boundaries of a zone described in
12 an application unless mutually agreed upon between the
13 department, the applicant and any affected local municipality.
14 The department shall not deny an application due to an
15 applicant's prior receipt of or consideration for any other
16 State community and economic development program funding.
17 (c) Authorizations.--Any zone approved shall be approved no
18 later than three years after the effective date of this
19 subsection.
20 Section 304. Criteria for authorization of zone.
21 (a) Class A zones.--
22 (1) A class A zone shall:
23 (i) Be not less than five acres, unless contiguous
24 to or co-located with an existing or proposed dairy
25 processing facility.
26 (ii) Be not more than 150 acres.
27 (2) In order to qualify for authorization as a class A
28 zone under this section, an application shall:
29 (i) Provide specific geographic information on the
30 proposed zone location.
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 1 (ii) Show anticipated private investment of $10
2 million or more in a dairy processing facility.
3 (iii) Create 25 or more new jobs as defined by the
4 department.
5 (iv) Demonstrate an exceptional and meaningful
6 opportunity for the expansion of dairy processing
7 capacity within this Commonwealth.
8 (b) Class B zones.--A class B zone shall:
9 (1) Be not less than five acres, unless contiguous to or
10 co-located with an existing or proposed dairy processing
11 facility.
12 (2) Be not more than 25 acres, unless co-located with a
13 Pennsylvania dairy farm directly supplying Pennsylvania milk
14 for an existing or proposed small