Officials eye tax abatments, nonprofits to ease property tax hit

AS ELECTED officials eye ways to protect those who will see astronomical increases under the city's property-tax reform, many say it's time to reconsider tax abatements for new construction and exempt properties.

The total market value of properties citywide is $137 billion, but the total taxable value is $99.8 billion.

Exempt properties, which include churches, hospitals, universities and museums, make up the majority of nontaxable property value - $30.6 billion - and abated properties make up $6.8 billion, according to a City Council analysis of data related to the Actual Value Initiative.

"You can't say we're going to tax this $100 billion worth of property, but not tax this $37 billion worth of property. It's simply not fair," Councilman Wilson Goode Jr. said during a budget hearing Tuesday. Goode has proposed reducing the city's tax abatement for developers from 10 years to five. The plan would begin in 2014 with a full abatement the first year and an annual gradual decrease of 20 percent.

To help stimulate development in Center City and surrounding areas, a tax abatement was created in 1999 to incentivize developers to convert vacant office buildings into apartments and restore rowhouse shells.

More than a decade later, though, many say that the abatement is no longer needed and that Philadelphia has now become a place of choice for developers.

"There's a national trend toward urban living. People don't need 10-year tax abatements to build in this city," Anne Gemmell, political organizer for Fight for Philly, said at one of two news conferences held in City Hall on Tuesday by a broad coalition of groups discussing AVI.

The total value of exempt properties has increased over the years and is the highest among any big cities in the country.

"It's a major problem," City Controller Alan Butkovitz told Council at Tuesday's budget hearing, adding that Council should push for amendments to the state constitution to address nonprofits that are exempt. "You have entities that are very, very profitable, very significant entities in Philadelphia, and they are not paying their fair share and therefore that burden is being put on homeowners, many of whom don't have any major resources."

Meanwhile, the Crosstown Coalition of Taxpayers presented in a separate news conference its analysis of the new assessments. The group claimed that 15 to 20 percent of the assessments are off by 100 percent. The group said it would have a full report on the accuracy of the assessments in two weeks.

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