Philly City Council gets bill to phase down 10-year tax abatement

PHILADELPHIA (KYW Newsradio) — Philadelphia City Council has come to an agreement on a phase down for the controversial 10-year tax abatement. The plan is in a bill introduced Thursday, which was the last possible day to get bills passed this term.

The bill reduces the abatement on residential construction in increments of 10% a year instead of abating the full tax bill for all 10 years. Council President Darrell Clarke, who negotiated the plan, said it includes a provision to evaluate how the plan impacts real estate development after a few years. 

"Negative, positive or things stay the same and we will, at that particular time, review and make any necessary adjustments to the program," Clarke said.

The abatement is credited with the building boom in Philadelphia but was hated by many longtime residents who were not eligible for it. 

This is the third bill modifying the abatement to be introduced this term, but this one is co-sponsored by every member of Council, including the sponsors of the other bills, such as Allan Domb. 

"There's the side that wants to eliminate it and a side that wants it to be kept intact, and governing is trying to find that middle ground that works for everybody," Domb said.

The phase down applies only to new residential development, not to renovations or commercial construction. Clarke said retaining the abatement for renovations would allow long-time homeowners to maintain their property without penalty and leaving the commercial construction abatement in place would support the city's economy.

"We think it's important for us to be able to create jobs," he said.

The phase out is projected to generate up to $265 million in revenue over the next 10 years, but that will be offset by a companion bill that expands the homestead exemption for 220,000 homeowners by $5,000. That will cost about $17 million a year.


CORRECTION: An earlier version of this story indicated the bill would completely phase out tax abatements for new residential construction. They will continue beyond 2030.