Despite unease, school board approves Keystone Opportunity Zones
Philadelphia’s newly formed school board took what was, by board members’ own estimations, its first tough vote Thursday night, deciding to approve a tax-break package despite opposition from some public school advocates.
All board members expressed unease with the resolution because they felt the package included properties that would develop with or without abatements. But six of the nine board members decided the overall opportunity was too good to turn down.
Board members Christopher McGinley and Mallory Fix Lopez voted against, and Lee Huang abstained.
It was a decision that riled some activists. This vote, they said, was an early litmus test for whether the new board will establish a populist streak or bend to the consensus from City Hall and the business community.
“If you vote to remove the properties where development is inevitable, you will be seen as responsible, putting the kids first, and willing to make tough decisions,” said Donna Cooper, executive director of Public Citizens for Children & Youth, before the vote. “Should you not do so, you’ll be seen as business as usual in Philadelphia.”
The tussle was over the Keystone Opportunity Zone (KOZ) program, through which the state can waive state and local taxes for 10 years in specific areas deemed blighted or under-developed. Philadelphia can apply for the designation, but only if the school board signs off.
But that’s not because the school board will directly lose real estate tax revenue from the properties included in the KOZs. Just the opposite, actually. Properties abated under the KOZ program have to make a special payment to the School District that’s higher than what they would normally pay in real estate tax.
“The School District of Philadelphia stands to gain in this process by receiving more revenue than it does today,” said Sylvie Gallier Howard, first deputy director for the city’s Commerce Department. “We believe this is a win-win situation.”
Critics argue, however, that the fiscal hit delivered by the waived taxes outweighs any extra cash that the District would receive, in part because it would deprive the city itself of tax revenue. Because the city helps fund the District, they say, a hit to the city will ultimately hurt city schools.
Taking a long view, the debate about KOZs mirrors any debate about tax incentives for businesses.
City officials say they’re targeting properties that either won’t develop without an abatement boost or will develop in a way that doesn’t produce jobs. Some of these parcels are “destined to sit vacant for decades without an incentive like KOZ,” said Gallier Howard. “They might not even see development with a KOZ.”
They also argue that Philadelphia needs incentive programs like this to compete with neighboring New Jersey for business growth.
“We normally can’t offer anything close to what New Jersey can offer,” said Gallier Howard. “But we have to offer something.”
Skeptics see this kind of competition as a race to the bottom, and they don’t think that programs like KOZ live up to their promise as job-creators or development-drivers. Those skeptics span the political spectrum, from former City Controller Alan Butkovitz to City Councilwoman Helen Gym, a progressive, to Republican gubernatorial nominee Scott Wagner, who decries KOZs as a form of “corporate welfare.”
Thursday’s vote doesn’t mean that the properties named in the city’s KOZ application will actually become KOZs. The state still has final say. Even if Harrisburg green-lights Philadelphia’s application, it’s not the type of decision that would make or break District finances.
The vote stood out, though, because it comes so early in the new board’s tenure and exposed some of the tensions that this new body will have to navigate.
At a time when some City Council members are calling to end a different, local tax abatement program, Thursday’s meeting felt like an early gauge of how politically adventurous the board might be. Members showed a willingness to question the wisdom of Mayor Kenney, who appointed them, and City Council, which earlier in the day approved the KOZ package by a 16-1 vote, with Gym voting no. The school board members seemed dismayed by the inclusion of certain properties in fast-developing Fishtown, for instance.
But in the end, they did not break with City Hall, much to the chagrin of some.
“Lots of people in this city organized so you would exist,” said Cooper, who was policy director for former Gov. Ed Rendell.
The school board also welcomed its first two student members during last night’s meeting.
Julia Frank of Northeast High and Alfredo Praticó of Julia R. Masterman High, both 17, took their oaths of office to serve as non-voting student representatives.
“It was definitely a lot because I’ve never been to a board meeting before,” said Frank. “But it’s also really exciting being able to hear what other people think, being able to hear about problems that I don’t know about. So it’s definitely a lot, but it’s also really promising.”
Frank said she wants to be a surgeon. Her experience on the school board, she said, ought to help her develop her listening skills.
Praticó wants to “go into public service.” However, he said, whatever path he and Frank choose, the experience will be beneficial.
Although the two students won’t be able to vote, they will be able to weigh in on matters that the board discusses, except during executive sessions that cover legal and personnel matters.
The two hope to launch an outreach campaign through school visits and social media.
“The School District is enormous,” Praticó said. “We’re two students for 200,000 students. It’s a difficult job, and it’s important for both of us to really learn to outreach to as many students as we can.”
Frank and Praticó were selected by a board-chosen committee from a pool of 54 high school juniors and seniors who attend District and charter schools.
The committee was made up of students and adults from the Mayor’s Office of Education, Mayor’s Office of Youth Engagement, the District’s Charter Schools Office, Philadelphia Youth Commission, and more.
Kenney made an appearance to welcome the newly appointed members.
“We can’t improve the quality of our schools without hearing directly from the young people who attend them every single day,” he said.
Frank and Praticó will serve for the 2018-19 school year.
The board also voted to approve the charter application, with conditions, for a MaST Community Charter School III in the Northeast. It will serve grades K-12 beginning in 2019.
Back in February, the school was the lone survivor out of seven new charter school applications up for a vote by the School Reform Commission.
The approval’s significant conditions included limiting enrollment to 1,300 students, half of whom must come from the 19120, 19124, 19140, and 19141 zip codes in order to enroll a more diverse student population.
Also, the school had to develop a plan to provide transportation for its kindergarten students.
According to the board, the school has “satisfied conditions.”
MaST has also applied to create a multiple charter school organization, which is now permitted under state law. This would allow MaST to consolidate operations and have just one board instead of separate boards for each school.
Several speakers at the meeting opposed the idea. In part, they argued that MaST’s schools are mostly white in a predominantly black and Latino district and said that such a move could lead to further segregation.