Philadelphia’s 46 City Council candidates may not agree on much, but the majority do agree on one point –– it’s time to renegotiate the city’s 10-year real estate tax abatement on new construction.
Most candidates say they are seeking to end or reform the current policy, which the real estate industry has argued helps encourages development, according to a recent survey of council candidates conducted ahead of the May primary by Rebuild, a progressive political group.
At-large Democratic candidate Erika Almirón supports abolishing the abatement altogether. She says the current policy deprives the city of tax revenue and forces longtime residents to pick up the cost of tax-free construction.
“Wealthy and rich people aren’t paying and that’s the kind of money that could go back to the kinds of things we need in this city,” she said. “We have underfunded schools, we have a housing crisis, they should be funding those things.”
Almirón is also refusing donations from real estate developers –– they already wield too much influence over City Hall, she says. In 2018, the real estate industry was the largest single source of City Council campaign donation, a PlanPhilly analysis of campaign donations found.
Justin DiBerardinis is a Democratic council candidate who says he supports rebooting the abatement. He wants to turn the incentive on its head –– doling out more tax breaks for more affordable housing, historic preservation or environmentally friendly construction projects.
"I think the best thing we can be abating is homeowners with limited incomes or fixed incomes being able to maintain and stay in their homes. I think that's a great place to be targeting abatements," he said.
Candidates are harnessing a broader movement to renegotiate the abatement. A string of prior city council bills have sought to water down the abatement. A protest this week is scheduled to take place at City Hall. And although the city’s building trades have traditionally supported the abatement as a construction driver, labor leader John Dougherty authored a letter last year indicating he would be willing to give up the perk to stave off a construction tax.
Leo Addimando, head of the city’s Building Industry Association, said misinformation is fueling anti-abatement sentiments. He estimated that rising city land assessments had eaten away at around 20% of the abatement value and the BIA has previously circulated an industry-sponsored report asserting that the tax break was a net contributor to city tax rolls.
Addimando described the proliferation of anti-tax abatement candidates as an opportunistic trend.
“I think it’s a very easy political position to take right now,” he said. “There has been a wave of progressive candidates not just here, but nationally. And who doesn't want to say ‘I’m taking money from millionaires and putting it back into schools’?”
However, he said that his organization was open to renegotiating the perk, saying that the “one-size-fits-all” nature of the current abatement should be “studied.”
“Development is going to happen. The question is how fast will it happen and the question is how do we make it more inclusive?,”Addimando said. “People who criticize the abatement are often responding to our failure to make [development] more inclusive.”