October 1, 2019
If you own commercial property in Philadelphia, it’s important to understand the potential Philadelphia tax abatement changes that may be coming in 2020. The President of the Philadelphia City Council, Darrell Clarke, has hinted that the abatement isn’t working for the city anymore, and should be changed. Right now, the abatement is 10 years and 100%, which Clarke says is not needed. There have been fears that the abatement will end, but Clarke has stated that the focus is on making some changes, instead. So far, however, a spokesperson for Clarke has not revealed what the true, proposed changes will be.
Currently, the city’s affordable housing activists say that the abatement is a handout to developers. They argue that it fuels gentrification, and should be abolished completely. Several City Council members have proposed options for the abatement, which range from making minor adjustments to doing away with it entirely. Those who want to keep the tax abatement as-is may not have a lot to worry about. During the last 18 months, the City Council hasn’t voted on any proposed legislation. No hearings have been held, either.
But Clarke says that is expected to change because the abatement is costing too much money — which is being taken away from the city and the school district. Most of the members of the City Council are nearing the end of their terms, so it’s significant that Clarke would make a move now. He also plans to address gun violence, poverty, and zoning codes. A new Council will be seated in January, so anything Clarke wants to change has to be completed by December 12, 2019.
The current Philadelphia tax abatement has been around for more than 20 years. It means owners of residential and commercial property don’t have to pay taxes on rehabilitation of new construction. They will only pay taxes on the land value, which can be significantly less than the taxes would be with the improvements factored in. The abatement has attracted new businesses due to the low tax rates, but there is a cost for the abatement, as well. Anyone who owns commercial property in the city limits will have to wait and see what the Council decides, to see whether the abatement will remain in place.