University City continues to set the trend for innovation in Pennsylvania, with 36 companies receiving over $2 million in tax credits for profitable startups.
The 2016 Keystone Innovation Zone Tax Credits are $15 million in tax credits that are available to startup companies in cartain geographic areas throughout the state , called “Keystone Innovation Zones.” KIZs were originally created as part of former Governor Ed Rendell’s stimulus plan to encourage startup growth throughout Pennsylvania.
Eligible startups can receive a tax credit for up to half of the total increase in revenues from the previous year.
Senior manager for marketing and media relations at the University City Science Center Kristen Fitch said that most of the startups don’t need these tax credits, so they can sell them instead at market value and use the money at their discretion to pursue new projects.
“Most of these companies do not have tax liabilities, so most of them are selling the tax credits. What’s unique about these tax credits is that once they sell it they can apply the money to anything they want at the company,” she said.
Fitch administers the KIZ, and the University City Science Center provides resources and lab space for companies like Phelix Therapeutics, which received a KIZ tax credit for 2016 to pursue research that is not normally covered through the grants they receive.
“KIZ companies are using the tax credits for everything from research and development to hiring a new employee to buying new equipment,” she said. “The great part about the program is it provides flexibility to these companies.”
Specifically, KIZs are designed around educational institutions to foster a startup environment. The University City KIZ is a partnership between Drexel University, Penn, Thomas Jefferson University, the University of the Sciences, the Wistar Institute, BioAdvance and the University City Science Center, which has Penn administrators serving on the board according to the Science Center website.
The success of University City companies at gaining nearly 15 percent of the total KIZ tax credits awarded in Pennsylvania reflects the growing startup community within University City, which was recently named the ‘hottest tech submarket’ and continues to develop real estate to encourage startups.
University City Science Center spokesperson Jeanne Mell said,“I think it’s just one more tool in the Commonwealth’s ability to attract, retain, and foster startups. Startups really help us develop a thriving and a vibrant economy, and we’re excited to do our part for it.”