The Philadelphia board of education made history when it voted down the extension of the tax-free status of the former Sunoco refinery site in South Philadelphia. This precedent-setting decision must stick because extending the tax break will harm, not help, the economic prospects of this city.
Keep in mind this was no small decision, and it is no small parcel of land. Hilco Redevelopment Partners, the new owner of the site and a subsidiary of a global conglomerate, sought the district’s agreement to abate any increase in school taxes through 2033 on the site, which is larger than Center City from river to river, from South Street to Spring Garden.
The refinery site was designated as a Keystone Opportunity Zone, exempting it from state and local taxes for 10 years, in 2013. Then-Gov. Tom Corbett signed the legislation enabling its KOZ status just months after he slashed nearly $1 billion in state public education funding, resulting in layoffs and swelling classes across the district. Now, seven years later, this school board is in the position to terminate the site’s KOZ status in 2023.
To be sure, Hilco will make another run at the school board to convince members to change their votes. Here are the reasons they should not do so:
First, the company’s offer of a $1.25 million annual payment in lieu of taxes for the next 13 years is not a good deal for the district. Industrial properties appreciate slowly, but assuming a conservative rate of 4% appreciation a year, the district would be giving up $700,000 over the 10-year period. That might not sound like a lot, but 10 new teacher salaries could be covered with these funds. Basically, Hilco is asking the district to subsidize an economic development project. Instead, the board must be a savvy and singularly focused investor in public education.
Second, the tax waiver is not fair to the city’s taxpayers. If the district abates the taxes for another 10 years, all other taxpayers will need to make up the revenue that Hilco should be paying, or the district will have cut what it spends to educate students. It’s time to stop the Philadelphia tradition of short-changing students and overburdening residential taxpayers for guaranteed returns for private investors.
Third, Hilco’s request could not come at a worse time for the district. The district is facing a deficit next year, projected to grow in the years ahead. Under these circumstances, the school board cannot responsibly meet their core obligation by approving a tax break that will impact the quality of education for the kindergarten students who will start school this week and graduate the year the extended tax break would expire.
Philadelphia students already suffer the indignity of an inferior education. The approval of this tax break would add insult to injury by taking funds out of our classrooms to make a meaningless contribution toward an enormous redevelopment project, orchestrated by a company managing $2.5 billion in assets. It simply belies credibility to think that a project this large cannot afford to make their school property tax payments. To put a finer point on it, Hilco paid nearly as much for this one large parcel of land, $225.5 million, as the $252 million the district will spend on all high school (secondary) students this school year.
The mayor and Hilco are knocking on the wrong door. Instead, our corporate and civic leaders should be using their political leverage to get the state to fund our schools. Until that happens, this school board should reject every request to support economic development projects. When we mobilize the resources needed to support a world-class education for every student, we will be doing exactly what respected experts tell us must happen for high-impact development projects to take hold and abound in Philadelphia.