Tastykake, the world famous maker of snacks, is moving from it’s old home in Philadelphia’s Nicetown to the Navy Yards in a new state created Keystone Opportunity Improvement Zone. The irony of this is by moving the company will be able to reduce their labor force by 215 jobs by automating their new plant. And because they are going into an Opportunity Zone, the company will not have to pay local and state taxes while getting 32 million in low interest loans from the state.
So you have a company that is firmly entrenched in the city, who is more tied to Philly than Tastykakes (ed: Geno’s Philly Cheese Steaks) and if they moved there would be an outcry. So to keep an entrenched company in town, they offer tax incentives, low interest loans, and the opportunity to cut 215 jobs.
While this is a great move for Tastykake, what a bonehead move by the city and state.
The Tastykake maker will leave its site in Philadelphia’s Nicetown section for a 345,000-square-foot baking facility and 35,000 square feet of office space at a 90,000 square-foot office building. The developer will be Liberty Property Trust (NYSE:LRY) of Malvern, Pa., which is also building three nearby speculative flex buildings totaling 169,000 square feet as part of a $100 million project.
The buildings will be completed by 2009 and Tasty said it anticipates being fully operational at the Navy Yard by 2010. It has signed a 26-year lease on the baking facility, it said, and will spend $75 million on capital expenditures funded by a multibank loan led by Citizens Bank of Pennsylvania.
The site where Tasty will be locating is a Keystone Opportunity Improvement Zone, which means the company will be exempt from state and city taxes until at least 2018. Such zones have been controversial. While they help attract companies to certain areas, they have often meant removing tax-paying businesses from the tax rolls elsewhere. In addition to the $32 million in loans from the state and the Philadelphia Industrial Development Corp., the city’s economic development arm, the company will get a $600,000 opportunity grant from the state. via Philadelphia Business Journal
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