Elmer Smith: In 'Hard Times,' the tax-abated should kick in

CHARLES DICKENS never lived in the 5th Councilmanic District. I know because I looked it up.

But testimony at a City Council hearing in Darrell Clarke's stratified district Wednesday night could have come from the lost chapters of "Tale of Two Cities."Dickens' classic chronicled the "best of times and the worst of times" in 19th-century London. Time ran out at a special Council session at Ritter Hall on Temple's North Philly campus before the Council members heard from anyone representing the "best of."

But 11 Council members and a half-dozen other high-ranking city officials got an earful from those folks who showed up to attest to the worst of times.

The Cliff's Notes version went something like this: We don't mind sharing our district with the well-to-do. But you'd do well to get them off our backs.

It's a familiar refrain from folks who believe their taxes have been raised because of people who live tax-free in the "central" part of the north-central Philadelphia district, thanks to the 10-year real-estate-tax abatement.

To hear the advocates tell it, the tax abatement has single-handedly jump-started a dormant housing market in the city. A study released by Econsult four months ago claims that two-thirds of all the new development in the city since 1997 results from the abatement program.

The earliest recipients of the abatements will pay their first real-estate taxes this year. Econsult estimates that the program will start to turn a profit by 2021. By 2045, they say, the city will reap a $3 billion windfall from the abatements.

That may be music to the ears of the city's Revenue Department. But it smelled like a huge slice of pie-in-the-sky to the people in Ritter Hall.

"We're supposed to be all in this together," one witness groused to applause. "Everybody has to pay their fair share . . . It can't be just us."

Clarke, an early and ardent supporter of abatements, still favors the program. But the city's fiscal crisis has led him consider some adjustments.

I, too, have supported the abatements and I have the scars to show for it.

The Nutter administration's call for a two-year temporary tax hike casts the tax break in a different light for me. I would not cancel or even alter the abatement for people who have already made decisions to live here based on the tax-free inducement.

But there is no way to square a tax hike for most Philadelphians with an abatement that allows some to avoid making any sacrifice.

I don't see anything unfair about expecting those who are receiving the abatement to pony up a small surcharge equal to the real-estate-tax hike that others are being asked to shoulder.

The administration's proposal before Council would raise real-estate taxes 19 percent the first year and 14 percent the second year of the temporary hike. I would ask the new residents to pay an amount equal to the average increase.

Since most of the new development parcels are more valuable than the average, it would be less than they would have to kick in if they were assessed at 19 percent or 14 percent of their projected tax bills.

My approach would require state authorization. Clarke's approach could be handled in City Hall.

"I have a bill in now that would reduce the abatement to 80 percent for new buyers," Clarke said. "The 20 percent we collected would go right into the general fund."

Clarke's bill has been parked in the finance committee.

"But it's starting to get a little more traction now," he said. "I don't think there is much support in Council for a 19 percent tax hike.

"The second year of the temporary tax hike would come just as the Board of Revision of Taxes starts full-valuation tax assessments. Even at 14 percent, that would be a double hit for some of our people."

But not all. Unless some adjustment is made, hard times will still be the best of times for some. *

Send e-mail to smithel@phillynews.com or call 215-854-2512. For recent columns: http://go.philly.com/smith