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Philadelphia Councilman Calling For Cap On Tax Abatement For New Construction

(credit: John Ostapkovich)

(credit: John Ostapkovich)

Mike Dunn Mike Dunn
Mike Dunn is City Hall bureau chief for KYW Newsradio 1060. He covers...
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By Mike Dunn

PHILADELPHIA (CBS) - As City Council struggles with setting a new property tax rate for homeowners, the lawmakers face a related question: whether to modify the long-controversial tax abatement for new construction.

Councilman-at-large Wilson Goode believes that the 10-year tax abatement on all new properties in the city has some value, but he believes the city is giving away too much needed revenue.

“For, let’s say, a multi-million dollar property in Rittenhouse Square, we should not be abating millions of dollars when we don’t have to,” he says.

So Goode is now proposing a cap on each abatement at a quarter-million dollars.

“Had we capped the original abatement program at $250,000 per unit, we would be bringing in about $30 million more in revenue, which is about half of what the School District requested from the city this year,” Goode explains.

This is a revision of Goode’s proposal from 2012 to modify the abatement so that it lasts only five years and gradually shrinks in each of those years.

He now says the new approach, a flat cap per property, will spur development in neighborhoods that need it.

“In places that are not benefitting from the abatement, we want to see a benefit from it. And in places that have benefitted from it, we believe it’s probably the proper time to cut back on it,” he says.

Goode wants council members and the Nutter Administration to consider his new plan as the officials grapple with setting a tax rate based on the new assessment system dubbed AVI.

“I always believed there was value to the abatement. I believed it needed to be modified in some way and we think that the appropriate way is to set a cap. We are still discussing what that cap should be,” says Goode.

Those decisions are expected in the coming few weeks.

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