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Tax Subcommittee Chairman Kelly Opening Statement – Field Hearing on Creating More Opportunity and Prosperity in the Rust Belt – Erie, PA

May 20, 2024

“With the new Opportunity Zone legislation in TCJA, investors turned to ErieErie has welcomed 110 new residential spaces, created space for 25 new businesses, restored 8 historic properties, revitalized 100,000 square feet of new commercial space, and established a grocery store in what was previously designated a ‘food desert’.”

As prepared for delivery.

“Good afternoon all and welcome to Erie, Pennsylvania.  My team and I are very excited to have you here today for this field hearing on the success story of Erie’s Opportunity Zone and how this Committee can create opportunities for areas, such as Erie, to thrive in the Rust Belt and throughout the country.  

“Thank you Chairman Smith and your team for all you hard work these past few months to bring this Committee to western Pennsylvania.  I also want to take a moment to thank all of those in this community who have helped my team and I make this event such a success.  Without your efforts none of this would have been possible.  You all are the epitome of what makes Erie thrive and we are here today because of your dedication to protecting and revitalizing this community. 

“For those of you unfamiliar with Erie, Erie residents are proud of their rich history.  In the 1600s, the Eriez Indians first settled on the lake shore.  The French later controlled the region, building a fort on Presque Isle which would later play a pivotal role in the War of 1812. Lake Erie served as a hub for the U.S. Navy’s fleet.  The brigs Niagara and Lawrence helped secure victory in the 1813 Battle of Lake Erie. The reconstructed Oliver Hazard Perry’s flagship U.S. Brig Niagara sails in Lake Erie off the Presque Isle Bay responsible for Erie’s nickname – The Flagship City. 

“After the war and through the 1900s, Erie grew rapidly with busy rail lines and ports.  Manufacturing jobs attracted waves of immigrants to the northwest corner of Pennsylvania.  The population in Erie peaked in 1960 with 140,000 residents. Like many areas in the Rust Belt, Erie experienced the loss of good paying manufacturing jobs and suffered perpetual population decline. Today, Erie’s population sits at just around 90,000.  The downtown zip code, 16501, became home to one of the poorest zip codes in the United States.

“But as I mentioned, western Pennsylvanians are proud of our history and have deep pride in the area where we live, with many folks born and raised in these towns and choosing to raise the next generation here in Erie.  We have a vested interest in making our communities thrive like they did in our parents’ and grandparents’ generations. 

“It was recently stated that ‘Erie is a city with a can-do attitude – great work ethic – and a true sense of community and family.’ Because of this, Erie community leaders came together to begin the revitalization efforts.  With the help from key stakeholders and pivotal leaders in the community, the Erie Refocused plan took shape, and the Erie Downtown Development Corporation began their work through property development in the summer of 2017.  Major employers in downtown Erie, including Mr. Tom Hagen with Erie Insurance, local universities and the city’s top hospitals partnered together to provide the initial funding to launch investment and development. 

“Back in DC, a bipartisan group of members led by former Representatives Pat Tiberi and Ron Kind and Senators Tim Scott and Cory Booker introduced the original Opportunity Zone legislation.  This legislation, later added to the Tax Cuts and Jobs Act, had nearly 100 bipartisan cosponsors. Opportunity Zones were designed to provide tax incentives that encourage long-term private capital investment to revitalize low-income areas.  The Opportunity Zone program was able to facilitate the type of investments that would best serve the community’s needs.

“With the new Opportunity Zone legislation in TCJA, investors turned to Erie. After years of work and leadership from the Erie Downtown Development Corporation and local stakeholders, Erie has welcomed 110 new residential spaces, created space for 25 new businesses, restored 8 historic properties, revitalized 100,000 square feet of new commercial space, and established a grocery store in what was previously designated a ‘food desert’.  Erie Downtown Development Corporation stakeholders have leveraged $40 million in private capital into a $115 million investment throughout the downtown Erie Opportunity Zone.

“But our work on Opportunity Zones is not yet finished.  I am proud to lead the Opportunity Zones Transparency – Extension and Improvement Act with my colleagues Reps. Dan Kildee, Carol Miller, and Terri Sewell.  This legislation strengthens opportunity zones with reporting requirements along with expanded incentives to help those communities that need it most.  Last year, the Ways and Means Committee passed the Small Business Jobs Act, which included these reporting requirements as well as a new Rural Opportunity Zone program that will revitalize struggling communities in our heartlands, a way to ensure cities and towns, regardless of their population, can benefit from this legislation. I look forward to working on these bills and other opportunity zone legislation as we head into 2025. 

“Additionally, as we have seen success on this Main Street in downtown Erie,  that success extends to the businesses beyond downtown. Manufacturing has been a large part of Erie’s history and employs 25 percent of this community.  These jobs, especially those in family-owned businesses, are the backbone of this community.  This is why the Ways and Means Committee have been committed to extending and expanding pro-growth tax policy like immediate expensing for R&D and 100 percent bonus depreciation, so we can give companies the tools to invest in their facilities, their equipment, and most of all, their workers. This will allow for Americans to remain more competitive in the global economy and keep folks on the job here at home. 

“Finally, I am so happy to have this panel of witnesses with us today to testify on the success of Opportunity Zones the impact in this community, as well as other tax provisions that impact the manufacturing industry in the Erie community. “