It's a $54 billion question: Why should Pennsylvanians give a 15-year tax break to Comcast Corp., the Philadelphia cable giant with enough extra cash lying around to make a stunning buyout offer for Walt Disney Co.?

	Kendall/Heaton Associates Comcast's proposed Philadelphia tower.

The answers lie with Gov. Ed Rendell, the former Philadelphia mayor who is pushing to create a "Keystone Opportunity Improvement Zone" in Philadelphia's Center City, producing public subsidies for Comcast's proposed 60-story headquarters skyscraper.

Rendell said the designation will bring new jobs to Philadelphia's downtown and show a state commitment to one of the region's biggest employers.

The building's would-be developer, Liberty Property Trust, says the generous tax abatement is needed to lure Comcast and other companies to the tower. It would be the tallest in Philadelphia and second-tallest in the state, behind Pittsburgh's U.S. Steel Tower.

Comcast, which would occupy at least half of the 60 floors, is the largest cable provider in the Pittsburgh area, following its buyout of AT&T Broadband, and serves 355,000 customers in Allegheny County. The company's $54 billion bid to acquire Disney will be discussed, among other issues, at a Disney shareholders meeting tomorrow in Philadelphia.

The Comcast tax abatement plan is causing a fuss in Philadelphia and Harrisburg. The plan, with roots in a state House bill, would give state and local tax breaks to any company moving to the property at 17th Street and John F. Kennedy Boulevard, where Liberty wants to build its office tower. The zone is in the heart of Philadelphia's business district, three blocks from City Hall.

		On the Net Keystone Opportunity Zone Web site

For now, the measure has stalled in the Senate Finance Committee. But Rendell is pushing for it, debating with legislative leaders as well as city officials who don't think the Keystone "blight" designation should be used in otherwise healthy downtown areas.

"The fact is, unemployment is high in Philadelphia," said Rendell spokeswoman Kate Philips, brushing aside concerns that a Center City Keystone zone would constitute a misuse of the program. "The goal is to either attract or retain business. This zone would do just that."

There are hundreds of Keystone zones across the state. In Allegheny County, there are more than a dozen, mostly old mill and manufacturing sites on river plots. The only non-industrial Keystone property is in Mount Washington, at the site of the old South Hills High School.

The program was created in the 1990s by the Legislature and Gov. Tom Ridge to redevelop blighted, unattractive properties by allowing companies moving to the locations to do business tax-free for a decade or more.

There have been recent local success stories. Hazelwood's business district benefited from the Keystone designation when an O'Hara company, Twin Pine Capital, decided to move its headquarters to Second Avenue, home of the old Spahr Building.

Overall, though, the Keystone sites can be a difficult sell because tax breaks, in many cases, don't make up for the expense required to refurbish the properties. In southwestern Pennsylvania, home to 99 Keystone zones -- some added to the roster just last fall -- about 55 sites are under development or actively seeking developers, said Kelly Hunt, a regional director with the Keystone program.

The empty sites remain that way for a reason. "They are difficult to develop," Hunt said. "We aren't putting these sites in Robinson Town Centre."

That is exactly what's rubbing some Philadelphia leaders, including Mayor John Street, the wrong way. The tax breaks should be reserved for blighted properties that otherwise have no shot at development, they say, not for companies flush with cash that want to move to a fancy new office tower.

"The fairness issue cuts a couple of ways," said Randall Scott, a vice president with Thomas Properties Group, which owns or operates three Center City buildings. "First, the program was originally intended to apply to blighted and impoverished areas. ... Here, you're talking about applying that break to a prime development property."

Secondly, Scott said, he and other downtown property owners object to the clandestine negotiations among Rendell, city leaders and property companies. Those channels aren't available to smaller property owners, and the resulting tax breaks for a select handful of companies means the rest are fighting in what amounts to a handicap match, Scott said.

David J. Campoli, head of a downtown landlords group opposed to the tax breaks, told The New York Times last month that he thinks the proposed designation is rooted in close ties among the Rendell administration and Liberty Property and Comcast.

David L. Cohen, a Comcast executive vice president, was Rendell's chief of staff when he was mayor, and William P. Hankowsky, Liberty Property's chief executive, was director of Philadelphia's development agency.

State Sen. Jane Earll, an Erie Republican who chairs the finance committee, has called the blight designation for a downtown Philadelphia property a "bastardization" of the Keystone program. She and other Republican colleagues are being courted by Democrat Rendell, who needs GOP support.

Rendell is also courting city leaders wary of forfeiting tax revenue. By some estimates, Philadelphia could lose up to $24 million in tax revenue each year by 2007 if the Comcast skyscraper and another are built. The state would lose millions more.

In just its first year in the new building, Comcast would save $2.1 million in tax bills.

But there's more to the debate than a mere tax giveaway or the abuse of "blight" designations. Philadelphia's Center City is nearing the end of a business lease cycle that will suddenly see dozens of major companies, including Comcast, negotiating new deals with land owners.

A sparkling, 60-floor office tower and a few other drawing-board buildings seeking Keystone tax breaks could gobble up a lot of those companies, a fact that riles other downtown property owners already dealing with sinking occupancy rates, now in the mid-80-percent range.

Along those lines, a February study suggests that Philadelphia would have to draw 20,000 new jobs to the city to justify the construction of the Comcast skyscraper and one other building. The study was commissioned by a group of 26 building owners, including Thomas Properties, that object to the Comcast tax breaks, as well as those that would benefit powerhouse Philadelphia law firms Dechert LLP and Woodcock Washburn. Both firms are seeking to move to tax-free properties.

Those in favor of the project say a few new office towers could prevent the companies with expiring leases from bolting to cheaper properties across the river, in New Jersey's Camden business district, something a lot of area real estate experts acknowledge might happen in the next three years.

"Look, companies have the freedom to pick up and move wherever they want these days, be it Ohio or New Jersey or Japan," said Philips, Rendell's spokeswoman. "We have to fight for every job in Pennsylvania."

Comcast could do for Philladelphia what Coca-Cola did for Atlanta or Wal-Mart did for Bentonville, Ark., the governor has said, estimating that the tax breaks could bring anywhere from 1,000 to 4,000 new cable jobs to the area -- something Comcast would have to promise in writing, according to Kevin Ortiz, spokesman with the Department of Community and Economic Development.

If they don't meet the promised staffing levels, their annual application for Keystone tax forgiveness could be denied.

There's also a longevity clause.

"There's basically a five-year commitment," Ortiz said. If the company leaves in less than five years, it must give back a percentage of the tax breaks it received, up to 66 percent. A company is free to leave after five years, but it loses the tax advantages.

Some Pittsburgh-area legislators are criticizing the governor's proposition, worrying that this use of the Keystone program could lead to more questionable deals down the road.

"It appears that Rendell's handling of [the Keystone designation] will be another economic stimulus for moving van owners, this time as businesses relocate from one end of town to the other," said Rep. John Maher, R-Upper St. Clair.

"Philosophically, whenever government tries to choose winners and losers, the market becomes distorted," he said. "The government should tread lightly, and treat everybody evenly."