PACDC: We need to rethink tax abatements
Should new million-dollar homes still receive 10 tax-free years?
The Philadelphia Association of Community Development Corporations (PACDC) has raised new questions about Philadelphia’s longstanding tax abatement program.
The organization issued a report yesterday calling on the next mayor and city council members to conduct “an unbiased, thoughtful review” of tax abatements. They want more data to determine whether the policy needs to be adjusted to benefit those it was intended to benefit, and to tax those who may no longer need an “incentive” to develop in Philadelphia.
$700,000 a pop — that’s how much you have to pay for one of the new three-story luxury homes at 17th and Carpenter Streets in the Graduate Hospital neighborhood. Since 2000, the 10-Year Property Tax Abatement law has qualified such new construction and major rehab for government subsidy. In this case, the PACDC report points out, the abatement saves each homeowner $90,000 over the course of the decade.
PACDC believes it might be reasonable to put a cap on the tax abatement “to exclude multi-million dollar homes that don’t need public subsidies to be economically attractive for developers and buyers.”
Moreover, a comprehensive review of the tax abatement system could help determine which neighborhoods might benefit from more subsidies.
“For example, it might make sense to expand tax abatement in neighborhoods that desperately need new market-rate development and some form of subsidy to make the projects viable,” the platform reads.
The full report, titled “Beyond Gentrification: Toward Equitable Neighborhoods,” highlights six planks advocating for equitable development during the 2015 mayoral and city council elections. It can be read online in full.