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PCAPS: End property tax abatement program

By the Notebook on Oct 29, 2013 02:58 PM

by Naveed Ahsan

The Philadelphia Coalition Advocating for Public Schools will launch a new campaign to end 10-year property tax abatements at a press conference today at 4:30 p.m. held at the luxury high-rise condos 10 Rittenhouse Square.

The city of Philadelphia now offers a 10-year tax abatement for building developers and owners, making them exempt from paying property taxes on new construction or renovations. PCAPS says these tax abatements will deprive the School District of Philadelphia of nearly $50 million in 2014. With that money, the group says, the District could have avoided the closure of 24 schools this past June and the layoffs of thousands of employees.

At the rally, PCAPs members will release a new white paper, Short-changing Philadelphia Students: How the 10-Year Tax Abatement Underwrites Luxury Developments and Starves Schools, which examines some of the city’s most valuable buildings that benefit from property tax abatements and the impact that they have on District schools. According to the report, just 20 buildings in Philadelphia account for almost $15 million in lost tax revenue that would otherwise go toward schools next year. Four of the 20 properties with the largest tax abatements are located in Rittenhouse Square.

“There are a number of businesses receiving tax abatements. That could, instead, help fund schools,” said PCAPS member Kia Hinton.

“Our priority should be to fund the necessary programs to make sure our children get a good education,” said Hinton, whose daughter attends Motivation High School in Southwest Philadelphia.

Hinton added that there are laws put in place to help end blight in lower-income neighborhoods, but not much has been done. Most of the development, she said, has been in the Center City area.

Councilman W. Wilson Goode Jr. has introduced a bill that would require the School Reform Commission to determine whether to continue the property tax abatements that go to the District beyond June 2014. The decision now rests with City Council.

As a part of the campaign, PCAPS members said, they will rally at some of the most valuable buildings in the city that benefit from these abatements. At today’s rally, two days before Halloween, attendees are asked to dress in costumes that represent corporate greed. After the protest, they will “monster march” to some of these large buildings.

Naveed Ahsan is an intern at the Notebook.

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Comments (29)

Submitted by Taxpayer (not verified) on October 29, 2013 9:35 pm
Why march outside buildings already under tax abatement? They would be grandfathered in. The only effect of rescinding the tax abatement would be a complete crash of any new construction. Then PCAPS would have the trades unions to deal with, and they don't play nice.
Submitted by Anonymous (not verified) on October 31, 2013 1:39 pm
Not if Ron is going to get $50 million a year beginning this year, they won't be grandfathered. This "white paper" is of the thin tissue variety. It fails to differentiate between flow and stock, debt and income, etc. Don't they teach that in 6th grade? If only they had $50 million more, maybe they could. Or maybe it's $5 million. Who cares. Just make sure to give everyone a raise like it's $50 million. And don't mind that the city made a promise to people who bought these properties. Just stick a gun in their face and take what you want now that you defrauded them into moving here. Anyone who owns a condo obviously deserves it for being "rich". Just never, ever, even consider paying a penny for your own healthcare premium. That is the definition of a low-life thug mentality. Hey, but it's all for the kids, so it's ok.
Submitted by Anonymously Anon (not verified) on October 29, 2013 10:41 pm
The 2009 Econosult report had two major conclusions: "The abatement program has generated an additional $154m in tax revenues to the City and Commonwealth from conversions, improvements and new construction of real estate. This is a one‐time revenue payment (although it occurred over several years)." "As abatements expire, this will eventually generate an additional $60.6m+ in property tax revenue to the city. This payment will continue in perpetuity" These abatements are helping development in Philly and increasing the tax base. That is desperately something we need for the long-term prospects of our districts.
Submitted by tom-104 on October 29, 2013 10:51 pm lowering taxes on the wealthy will create jobs and make the lower classes wealthy.
Submitted by Anonymous (not verified) on October 29, 2013 11:55 pm
And like continually raising taxes on everyone and driving your tax base out of the city will really help except in the very short term. Hence Detroit.
Submitted by Anonymous (not verified) on October 30, 2013 5:40 am
The problem with the abatement is it limits property tax. The city has historically underfunded the schools by only providing 55 % of property taxes and also not diligently collecting property taxes. The city collects wage and sales taxes which currently go only to the city. If the city divided all taxes more equitably between the schools and the city, I'm sure more would question the tax abatement. City Council and Nutter do not have the political will to go after everyone who owes property taxes and increase money to schools. Yes, if the sales tax is given to the school starting in 2014, that will make a difference. Unfortunately, most of City Council is saying no. (Note no one in City Council has cut their staff or salaries to fund schools.)
Submitted by Anonymous (not verified) on October 30, 2013 11:43 am
How is the city going to give a higher percentage of its revenue to the SDP when we have as many municipal union workers as 30 years ago, even though our population (taxpayers) has dropped by a third? All with ridiculous and unsustainable pay and benefits packages, just like the SDP employees. No contribution towards your healthcare costs? Unheard of in this day and age.
Submitted by Anonymous (not verified) on October 30, 2013 4:35 pm
Why isn't PCAPS protesting outside the Sheriff's Office? There should be a focus on making delinquent property owners, the majority of whom are not owner-occupants and many of whom are suburban speculators, pay up not discouraging people who do pay from buying here.
Submitted by Anonymous (not verified) on October 30, 2013 11:30 am
The abatement is on new construction so it does not "lower" existing taxes. The whole issue--an economic one--is whether it can be demonstrated that the abatement causes developments to proceed that would otherwise not get built. If it does, then it is good for the city, if it does not than it is an needed handout to developers and home buyers.
Submitted by Anonymous (not verified) on October 30, 2013 11:42 am
Submitted by Anonymous (not verified) on October 30, 2013 11:06 am
Ask Comcast. They are saying they will think about building another high rise tower if, and only if, they get another tax abatement. All business decisions are made at the margin. The question isn't if the city gets more development from the tax abatement, but how much.
Submitted by Anonymous (not verified) on October 30, 2013 8:14 pm
Abatement does lower existing taxes. Abatements are on construction not on getting tennents new to the city. There has been a glut of office space in center city for decades. When a new building goes up, already existing center city tennants just jump buildings, leaving the older one empty. The city is known for this stupidity. Like everything else in Philly politics, its all about hide the shell game.
Submitted by Anonymous (not verified) on October 30, 2013 10:01 pm
You might want to check the lease rates for office space in center city. There is no glut. Lots of prior office space that was empty was converted to condos because, drumroll, TAX ABATEMENTS made the projects viable! A win all around.
Submitted by monetize (not verified) on February 21, 2014 8:33 pm
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Submitted by Anonymous (not verified) on October 30, 2013 3:23 pm
All the abatements from the mid 2003-2008 real estate boom will be coming off abatement every year. That's millions in new tax revenues added each year. But taxes are never high enough on other people. And that $50 million number is completely made up, pulled out of Wilson Goode's mathematically incapable butt. Zero basis in reality. If PCAPS has its way, the district will spend it, probably on a pay raise, and then come back next year with a whole new set of tax increases to solve the new financial crisis. Stupid.
Submitted by Anonymous (not verified) on October 30, 2013 3:40 pm
I would support reforms to the tax-abatement program such as having the abatement decrease by 10% each year until it is zero. The buildings will still get built, the city and school district will get more money and homeowners can't claim to be shocked by the jump in property taxes on the 11th year. Continually disappointed in PCAPS and the execution of its platforms. This proposal is DOA as the building trades, which have benefited HEAVILY from the abatements and fund City Council races just as heavily.
Submitted by Ron Whitehorne on October 30, 2013 3:13 pm

People should read the report.   None of the figures are made up.   They all come from the public record.   Comcast, corporations and many rich people will continue to practice extortion, demanding subsidies from the rest of us.  It is obscene that while Comcast reaps record profits, it should get public money to construct another tower.   That's why we have deepening inequality and declining public services.  The choice is clear - fight back or submit.  It

And just so we are clear, I don't hear anyone talking about pay raises.  Bring back the laid off people and restore adequate levels of staffing, that is what PCAPS has focused on.   School employees are certainly deserving of pay increases and defintely should not see their wages cut, but job one is getting people back to work in order to enable our schools to educate children.

Submitted by Anonymous (not verified) on October 30, 2013 4:42 pm
Ron, could you respond to my comment above yours?
Submitted by Ron Whitehorne on October 30, 2013 4:17 pm

Your idea about phasing out the abatements  should be part of the discussion.   So too should be standards and abatements that are targetted to produce decent jobs and provide affordable housing.   I know the building trades will not look kindly on ending abatements and they certainly exercise considerable power.   I'm not unsympathetic to their concern for jobs and maintaining wage standards, but a robust program of public investment in schools, transit infrastructure and affordable housing would achieve the same ends and create more social good.

Submitted by Anonymous (not verified) on October 30, 2013 5:31 pm
The only good purpose for public funds I ever hear from you is what is in the best interests of the PFT. How are the concessions negotiations coming along? I hope they get it resolved before the paychecks start bouncing, because the district still has a $133 Million shortfall for this year and there is no new money coming.
Submitted by Ron Whitehorne on October 30, 2013 5:15 pm

And the only thing we hear from you and your ilk is glee at the prospect of driving down wages, breaking unions and destroying the public sector.

Submitted by Anonymous (not verified) on October 31, 2013 9:21 am
Instead of having that conversation about reforms, you're marching around Rittenhouse calling for the END of ALL abatements right next to a tower built by the pension fund of the building trades. If your goal is to give people who like to protest something to protest, then well done. If you're trying to get taken seriously by just about anyone else in the city, you're on the wrong track. And you are delusional if you think the trades are going to give up one cent for your "robust program" for social good. So disappointed in you, Ron. So disappointed in PCAPS.
Submitted by Anonymous (not verified) on October 30, 2013 5:50 pm
OK then Comcast can build a new campus in the burbs and give their employees a 4% pay raise since they won't have city wage tax to pay and give them a free parking spot to boot. They'll just vote with their feet.
Submitted by Ron Whitehorne on October 30, 2013 5:56 pm

Doubt they will pass on their savings on the wage tax to their workers...more likely another big bonus for Brian Roberts and David Cohen.   


Submitted by Anonymous (not verified) on October 31, 2013 2:45 am
You think they Comcast would actually cut the salaries of all the suburban based workers (many of them six figure executives) that currently commute into the city to pay the wage tax? Naive to say the least. Comcast is a successful organization, unlike the SDP. And we see how difficult it is to get even $1 of past raises back even amidst its current insolvency.
Submitted by Anonymous (not verified) on October 31, 2013 2:49 am
The numbers are completely contrived. The report cites costs with no benefits. And it calculates the costs incorrectly. Its purpose is filling the heads of the ignorant and motivating the ideological with rhetorical points. It ignores the benefit that the school district receives 4% of the investment income of the "rich" people moving into the city. It ignores the extra sales tax revenue that the school district will soon get. And of course, ignores the extra revenue to the city. The claim that the abatement has zero impact on construction, on people's decision to live in the city is simply a lie. Anyone with a brain knows it is a question of degree. There is an argument to be made that the impact now is minimal, but the impact is still there. Creating numbers based on the assumption of no impact is fraud and you know it. It would actually more credible to take the same facts and conclude that, "The school district of Philadelphia will be receiving $50 million MORE A YEAR within the next 10 years due to tax abatements." And even that $50 million would be low since it excluded the other taxes and positive impact on non-abated properties. I've redeveloped a few vacant homes and never gone for a tax abatement (this was before AVI when the taxes stayed low). I paid lots of taxes, fees to the city in the process. I never took an abatement, but if it weren't for all the abated new construction around my properties and the positive flow of people into the city, I wouldn't have done it. But because I did, instead of $500 that the city wasn't even collecting on that vacant property, they are now getting $3k to $7k. And all the other properties in the neighborhood are worth more as well. I am just a small fry and there are hundreds if not thousands of people like me.
Submitted by Anonymous (not verified) on October 31, 2013 9:29 am
Since 2000, when the abatements really started... 1. Philadelphia population has increased for the first time in 50 years 2. Even while job growth in Philadelphia is stagnant, underperforming the region and nation. 3. The average city resident has become wealthier for the first time in 50 years 4. Funding per pupil to the SDP (not charters, the SDP) has DOUBLED, with most of that money going to increased employee compensation. Even with doubled funding per pupil, the SDP is still in a perpetual financial crisis. Lesson: the abatement works and the SDP doesn't.
Submitted by Anonymous (not verified) on November 5, 2013 10:12 pm
This is a short-sighted argument. Without the 10 year abatement there would be no new apartment inventory for years which would drive rents through the roof making the city only affordable to the rich who send their kids to private school anyway.
Submitted by Amber Conklin (not verified) on November 14, 2013 8:35 am
Truly, our main concern should be to finance the necessary programs to make certain that our future generation get a good academic knowledge. I am agreed with this.

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