Local economic development groups are preparing for the benefits of a City Revitalization and Improvement Zone (CRIZ) in the area; while lawmakers say there’s legislative tweaks that could be made in Harrisburg this year to give the program even more success.

Erie’s application for a City Revitalization and Improvement Zone (CRIZ) was approved by Pennsylvania’s governor on December 30.

The state program designates 130 acres as a zone. Some of the state and local taxes generated in the zone are given to the region as grant money. That money can be awarded to economic development projects happening in the CRIZ or that will directly impact a project in the CRIZ.

“We are in a really strong position to attract more investment from outside of our market,” Brandon Mendoza said, the president & CEO of Erie Regional Chamber & Growth Partnership. "And then also help those businesses [already] here invest here. Not just new buildings, but expanding current businesses too."

The money and projects are managed by a locally appointed, 9 person authority. Matt Wachter, who formerly worked at the Erie Downtown Development Corp, will chair Erie’s CRIZ authority. The authority is taking input from the city and county, along with many regional economic and community growth groups.

The CRIZ authority is still about two years out from having money on hand. Senator Dan Laughlin says its enough time to improve the state program legislatively.

For example—right now, once a city picks the 130 acres zone, it is stuck with those boundaries for 30 years. Laughlin has a new idea;

“I call it the rolling footprint. If you fix up an entire city block within the CRIZ and everything's fixed, why not put it back on the tax rolls?” Laughlin said in a sit down interview earlier this week. "And then take that same footprint and move it somewhere else that needs to be rehabilitated?”

Laughlin also wants to ensure money from the CRIZ can be used at Erie's airport. Current legislation is vague on if airports would qualify for CRIZ money if outside of the zone acreage.

“One of the biggest complaints that we have with our businesses downtown is it's very difficult to get the Erie now,” Laughlin said.

Capitalizing on current momentum-- and with many expecting to generate millions a year from the program—Laughlin has high hopes for what the CRIZ can accomplish.

“If we get this rolling footprint put through, like— we're literally going to be able to rebuild the entire city,” Laughlin said. “The entire city. I mean, it’s— it's huge.”

 

So What Is a CRIZ Again?

A CRIZ is money in a community's pocket to incentivize non profits and businesses to start or expand projects in a certain geographic location.

For year’s Erie was a manufacturing stronghold. Then that industry began to shrink, and so did the city’s population. In recent year’s, city leaders have advocated the need for a unified, concentrated plan to get the region back to thriving.

Their efforts have already shown results.

“Before we can talk about growth, we have to recognize the momentum that’s already going, and the hundreds of millions of dollars in investments that have already been made,” Mendoza said.

Erie Insurance and the city’s healthcare industry continue to grow. Developments made downtown, on the Bayfront, and even this week’s opening of an Erie Bank on Parade street (organized by the East Side Renaissance) show concentrated efforts have reaped rewards.

Now, here comes a CRIZ.

This is a state program established in 2013. It had a predecessor program, the Neighborhood Improvement Zone (NIZ), created in 2009 for Allentown (no other cities have a NIZ in the state). There are only five cities in the state that have a CRIZ. Lancaster and Bethlehem were each given a CRIZ in 2013. Tamaqua got one in 2014.

The program was then closed… until July, 2024. Lawmakers for the city of Erie and the city of Reading negotiated to have the program re opened and funded in the state budget.

The 9 person authority (one member was appointed by the mayor, four appointed by two local state representatives, and four appointed by the local state senator) determines which properties will be in the zone. They have to present to the Pennsylvania Department of Economic Development the zone area(s), their plan/vision for the zone, and projects already in mind. 

Erie already did this, and that application is what got approved on December 30.

The state will now measure how much the properties in the zone generate in state and local taxes in a year. That number becomes the base. From then on, if the zone properties generate more state and local taxes than the base year, the city gets to keep the increase.

For example, if the properties in the zone generate $10 million in taxes in the base year, then the next year, they generate $11 million in taxes— the city gets to keep $1 million.

All of the properties and businesses in the zone still pay all their taxes. This is not a tax break for local businesses.

The state has specific regulations on how the authority can spend CRIZ money. For example, the money should be spent on physical construction and expansion. It cannot be spent on daily operations (like a non profit paying the monthly internet bill for their already existing office building).

For many business and project ideas, its the initial new building costs that are a hindrance.

“Between inflation and higher costs and everything going on, projects always have a gap in their project fund,” Mendoza said.

The CRIZ can be operational for 30 years. There is a cap of $15 million a year that the authority can get from new generated taxes in the zone. 

Prior to 2024, there was a list of 11 taxes that qualified for the CRIZ reimbursements. Erie lawmakers negotiated to have the Insurance Premium Tax included in the list. Erie Insurance is included in the zone, and with their continued company growth, many city leaders expect Erie to benefit immediately from the CRIZ.

From expanding access to the Bayfront, to housing developments, to growing already existing industries and inviting new ones to town—

“It’s huge,” Laughlin said.