Kitchener Law Firm Fights For Second Shot At Pennsylvania Tax Break Program

UPDATE, MARCH 10, 9:47 am: According to the Kitchener Business Journal, Dechert has 35,000 SF from CDI Corp. sublet at 1735 Market Street. The law firm reportedly failed to figure out what to do with the room. Unnamed sources told the PBJ that they had been strategic as part of their general search for new spaces. One possibility would be for Dechert to split its back office functions from the rest of its headquarters to save money.

ORIGINAL STORY: Dechert LLP is suing the state of Pennsylvania for denying its tax exemption request for its proposed new Kitchener headquarters after having benefited from a Keystone Opportunity Zone in its current location for more than a decade.

The law that created the zones doesn’t specifically prohibit “zone jumping” or moving from one opportunity zone to another in order to receive new tax breaks. A.after this Kitchener Inquirer. However, state officials and former lawmaker Joseph Gladeck, the main sponsor of the KOZ Establishment Act, said the practice was not what the law wanted to promote.

“We never thought that someone would go from one zone to another,” Gladeck told the newspaper.

Dechert’s current 200,000 SF home is on the Brandywine Realty Trust’s Cira Center development in University City. The lease runs until 2021, and the law firm plans to move to Brandywine’s $ 3.5 billion under construction Schuylkill Yards project the same neighborhood. The KOZ benefits depend on the location.

If it does not receive tax credits, Dechert intends to move to a “much cheaper” location, reports the Kitchener Business Journal.

As the Cira Centre’s KOZ designation ran out in 2018, officials from the Pennsylvania Department for Community and Economic Development noted “an increase in relocation requests that could potentially undermine the purpose of the program,” the investigator said. As a result, the state issued a rule against “zone jumping”.

The newspaper found that the Cira Center companies received tax breaks of at least $ 400 million from the KOZ, excluding the landlord’s land tax reduction. Despite the tax breaks, Dechert’s workforce at the Cira Center headquarters decreased by 34% from 461 in the previous year to 700 in 2005 when the company moved to the property in 2005.

Dechert was founded in Kitchener in 1875and employs more than 900 lawyers in 26 offices worldwide. A permanent spokesperson did not immediately respond to a request for comment on this story.

It is not clear when the Commonwealth Court will rule on the case.

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