Pa. stretches tax breaks for Old City tech

Software and life-science start-up companies in Old City can now qualify for a state income tax break -- even if they're not making money yet -- without moving to the university neighborhoods where the program was previously established.

Mayor Kenney, an Old City resident, joined Arcweb Technologies founder Chris Cera and other N.3rd St.-area firm owners at Cera's Market St. office to mark the expansion of the University City Keystone Innovation Zone to include blocks between Walnut St. and the Ben Franklin Bridge west to 5th St. Unprofitable start-ups, with no income taxes to reduce, can sell the tax credits to investors, typically for up to 90 cents on the dollar, said Kristen Fitch, a Science Center employee who directs the Zone.

The Zone had already spread beyond U.C. to embrace much of Center City and a corner of South Philly. The program gives tax credits of up to $100,000 a year to qualified firms less than 8 years old in neighborhoods adjoining the Penn, Drexel and PCS campuses, the former DuPont Co. paint plant at Grays Ferry that now houses Penn Engineering's business incubator, and a wide strip of Center City including the Thomas Jefferson University campus and the neighborhoods around City Hall and Rittenhouse Square.

Cera, whose design firm employs 35, said he welcomed the Zone as a way to help reduce the number of firms leaving Old City as they grow. He named SevOne, PerPay and Lamps.com among tech firms that might have taken more space in the old brick neighborhood, instead of moving west, if they'd enjoyed more public financial encouragement. He expressed confidence Old City will develop over the next decade into Philadelphia's technology center, reversing a long history of firms moving from college campuses to the U.S. 202 suburban corridor.

The Zone has spread $8 million in tax credits to 48 Philadelphia companies in the past ten years, including $1.8 million to 21 companies last year, Science Center boss Dr. Steve Tang said. Firms including biosensor maker Graphene Frontiers and autism-guidance system develper Guiding Technologies Inc. said in a statement that they have used cash from credits to hire new software professionals. 

The program is administered by the Pennsylvania Department of Community and Economic Development, which lists tax credit recipients on its Web site.