City Councilman Darrell L. Clarke wants to stimulate the city real estate market by offering tax breaks for homebuyers and incentives for builders.
Clarke offered bills in Council yesterday that would entitle anyone buying property in 2009 to a rebate or credit for part of the real estate transfer tax levied on all transactions.
The bills would entitle purchasers to a rebate or credit, spread out over five years, for all or part of the city's portion of the transfer fee. The city gets three-quarters of the 4 percent tax, with the rest going to the state.
Whether the city can afford to offer a giveback while freezing other tax cuts is not clear. Clarke's bills were introduced only minutes before Council approved a package of six bills that Mayor Nutter proposed to address the $1 billion shortfall in the five-year plan. The legislation will raise fees for licenses and permits and delay wage- and business-tax cuts for five years.
Clarke said hearings would determine the cost of such a program vs. the economic activity it could trigger.
"The anticipation is it will impact the sale of existing homes dramatically," said Clarke, who consulted with the Greater Philadelphia Association of Realtors.
William Festa, president of the association, said he could not see the city giving up all of the transfer tax, which is forecast to bring in $155 million this fiscal year.
But even refunding half the tax would mean a $3,000 saving on a $200,000 house, reducing closing costs from an average of $10,000 to $7,000, Festa said.
"That gets more property sold," he said. "That's just making it easier in difficult times to be a buyer in the city."
Clarke's target is the housing market, and he said he would introduce legislation next week to ease building-code requirements that would save on construction costs.
Clarke has promised such incentives as mandatory companion legislation to his inclusionary zoning law. That law, passed earlier this year, requires residential developers to build affordable housing as part of larger-scale developments.
He also proposed a bill that developers will likely not welcome - a reduction in the 10-year tax abatement on new construction. Currently, all new construction is exempt from 100 percent of property taxes for 10 years. Clarke's bill would reduce the tax break to 80 percent of property taxes for 10 years.
"I really don't think that the 20 percent . . . is going to create that much of a difference," Clarke said.
Nutter spokesman Doug Oliver said the mayor had talked with Clarke earlier in the day and found both pieces of legislation interesting. Nutter looks forward to talking further with Clarke after reviewing the details, Oliver said.