5 May 2014

The Honorable Darrell Clarke
President, Philadelphia City Council  
City Hall, Room 490
Philadelphia, PA  19107

Dear President Clarke:  

The Committee of Seventy opposes legislation that would authorize the School Reform Commission to determine whether to end a portion of abated property taxes to provide additional revenue for the city’s public schools. (Bill No. 130724)

As desperate as the schools are for funding, crippling the highly successful tax abatement program for new home construction, and improvements to residential and business properties, is not a sensible solution. A well-run city doesn’t take a huge bite out of one of its most powerful drivers of economic development in order to nibble around the edges of another problem.

Scaling back abatements has enormous potential to drive away property owners who would not choose Philadelphia otherwise. Current residents benefit from living in neighborhoods with higher property values and the amenities they attract. Queen Village and Northern Liberties are two examples. On the business side, losing the incentive for improvements could easily make the difference between staying here – or leaving.    

Abated property owners also bring in significant non-property tax dollars, for example, wage taxes from construction jobs, sales taxes from supporting local businesses and real estate transfer taxes from housing sales. Once abatements end, these properties will generate substantial real estate tax dollars as well.     

A recent study by economist Kevin Gillen showed that current and future benefits associated with abatements far outweigh the revenue generated for the schools by cutting abatements.   

Changes to the abatement program to meet certain policy objectives – for instance, tailoring abatements to blighted or lower-income areas – might be worthwhile. The question today is whether doing this is a responsible remedy for public school funding. It is not.  

Please enter this letter into the public record of today’s hearing.

Sincerely,

Zack Stalberg