Aye. The ayes are 16, the nays are 0. A majority of all Members having voted in the affirmative, the bill passes. The next bill to be called for consideration is Bill No. 000226.
An ordinance amending Section 19-1303 of the Philadelphia Code by changing the exemption schedule for new construction of residential properties and repealing Bill No. 970214, all under certain terms and conditions.
This bill having been read on two different days, the question now is, shall the bill pass finally? The Chair recognizes Councilman O'Neill. Your light is on, do you want to be GREETING/INVOCATION recognized?
Yes. Thank you, Madam President. I'll be speaking against this bill, I'll be voting against it, and I'd like to put on the record the reason why. This bill calls for an extension of our present real estate tax abatement for residential properties, new construction. Right now, that abatement stands at full abatement 100 percent on the improvements on the building for three consecutive years, following the certificate of occupancy, when a person moves in. This bill would extend that 100 percent abatement from 3 years to 10 years full abatement, effectively more than triple what the current abatement is. Last year, we passed a bill similar to this. It affected both home ownership properties and rental properties and gave a sliding scale. It, in effect, extended the three-year abatement to a 4-and-a-half-year abatement but spread it over ten years on a sliding scale -- 100, 90, 90, and so on -- over the ten years. At that time, I had -- because of the GREETING/INVOCATION rental provision and the problem in my district with rental units and not wanting to encourage anymore, I had amended out my district. That was ruled to be in violation of State law, and that bill was vetoed. This bill replaces it, but extends the abatement to more than twice as much as it was in that bill. I'm told by the Law Department that the rental issue is not a part of this bill, that it stays as -- would only affect owner-occupied units. But I have had more new construction of residential units in my district over the last twenty years since we've been doing abatements than any other part of the City. And I can honestly say there's mixed reviews about them: first, whether they're needed; secondly, whether they really accomplish anything. One thing I can say is that it's the opinion of most people that I've talked to, both in and out of business, that there hasn't been one house built because of the abatement program that wouldn't have been built without it. When real estate is slow, nothing gets built; when real estate is high and going strong, there's plenty of GREETING/INVOCATION interest. But it's the site -- it's where do you put the nicer homes. And what happens is, you have people who may have just bought a house that's an already previously- occupied house, and they're paying 2, $3,000 a year in real estate taxes, and then someone around the corner or across the street moves into a newly constructed house, and they're not paying any taxes for three years, or very little taxes on the land value. And so there's a fairness issue in trying to balance the full payers, who are most people, against the newly abated properties. And I like the idea of stretching it out and gradually breaking it in, as we had in last year's bill, for the first time, a sliding scale. But I'm not sure that even four and a half years spread over ten years isn't more generous than we need to be, but certainly I think ten years is way out of line and just separates too much of a difference, without any real proof, other than some people in the business coming in about how many more apartments would be built and all of that. GREETING/INVOCATION But in fairness to the sponsor, and we've had a lot of discussions over this bill, different parts of the City are in different situations. And if there was a way of targeting a ten-year abatement to where we knew there was, you know, not going to be any new construction without it and at least a strong potential if we had it, I don't think I'd have this problem. It's just that there are areas where we don't need this abatement and we're giving it out. I'd rather be working with the State legislature to find out if there's a way to target areas with it rather than put a blanket over the City, just as last year, when rental apartments were included, I've got a lot of vacancies and a lot of bad management, and most of the problems I get from neighbors in the Far Northeast come from the apartments in their neighborhoods.
I don't need to be subsidizing or encouraging any new apartments with City policy. But I understand there may be a need downtown for more rental units since the vacancy rates are just at zero. And it's a shame you have to pick one neighborhood over another, whether GREETING/INVOCATION there's a good policy for it or not and not be able to tailor it to those to areas. But I just feel that this is going too far, and I think if we did something in between -I mean the four-and-a-half-year abatement over ten years was a 50 percent increase over what we have now, and I think that's a pretty generous step up, rather than the 300 percent plus. So I'm going to vote against it, and I hope at some point, we can do something a little more modest, even though I think 50 percent is not that modest as an increase. The other thing is, we have with our TIFs and with this, and they're similar, is we're trying to encourage things through tax policy -construction and development. The State legislature, which we are really trying to get a lot of help from for the schools, I've heard many comments just recently about this whole area of tax abatement, whether it be through TIFs or real estate tax abatement or a combination, that we, the City Council and the City government, are, by our actions in doing this, removing what we give the schools potentially, which is a real estate GREETING/INVOCATION tax for the period of time that we're abating or TIF-ing. And yet, we get the tax that comes to the City, which is the wage tax, without any offset going to the School District. And that is ringing loud and clear in Harrisburg that they're not quite happy with us coming up there asking for money for the schools at the same time we are abating school taxes, where we're not abating all City taxes, but we are taking in the wage tax. And it's another -- it's another issue here, it's not one that's going to sway me on this, I don't need to go that far. But it has come up both with TIFs and with abatements. And I think we at least have to be cognizant of it and very aware of the implications from the City asking the State for more money for the schools while we're saying we can't give them any more real estate taxes but we're willing to give them less real estate taxes if there's development. I can tell you, new construction in my district is going to be great for people, it's going to be a surprise, it's going to be a nice bonus for them, but it's going to be money that GREETING/INVOCATION could be coming to the City that won't because of an extra-generous or over-generous policy. And while I understand it may work in other parts of City, it's not needed or going to work in my district. And I just want to explain my negative vote and also understanding the purpose behind it. Thank you.
Thank you. The Chair recognizes Councilman DiCicco.
Thank you, Madam President. I'll try to keep my comments short 'cause I know we have a long calendar this morning. But listening to my colleague, and especially the last comment, where if this may stimulate new construction in his district, it's kind of counter to what his opening statement was, where he said that he didn't think this would make that much of a difference.
But the three GREETING/INVOCATION years, in Councilman O'Neill's own words, is not working. People aren't taking advantage of that. And for those folks who, I would hope, would welcome in his district, as they would in other districts, this is an incentive in my opinion. And the reason for my introducing these bills is to keep people in the City by offering them similar types of tax increment incentives that we offer to developers who have taken vacant buildings and converted those buildings into residential facilities. In 1997, a similar argument was being made, why do we need to give developers any additional incentives to do residential development in Center City? Even to my surprise, those incentives have caused well over 30 formerly vacant buildings to now be either converted or are in the process of being converted into residential units. I don't hear any outcry, I haven't heard any outcry from the folks who own buildings that had did conversions before the conversion bill was enacted. There's always a beginning to things. Prior to TIFs, people did development in GREETING/INVOCATION the City of Philadelphia without TIFs, but it was trickling in, it wasn't happening on any massive level of development. So for someone to suggest that current property owners will be maybe outraged or be feeling left out because they have to pay X-amount of dollars in real estate taxes and their neighbor next door, who builds a new home, is now not going to be paying, and that isn't fair, well, I guess the argument was made to current property owners -- I mean, what we have is a companion bill here, 227, that says to current property owners, if you decide to stay in the City of Philadelphia and should you decide to add an addition onto your home, make some improvements, we're going to give you a break the way we should have probably been given you a break and not penalize you for reinvesting in your home. We can't make your real estate taxes go away, but we're not going to add on any additional taxes for the ten-year period. And if I were -- and I am a homeowner, but if I was a homeowner and some vacant lot or lots were in my community or blighted properties were in my community and someone came along and GREETING/INVOCATION rehabilitated those blighted buildings or took those vacant lots and created new housing on those, I would welcome that because I believe in my mind that that will begin the stabilization of my neighborhood. And we will get in return -- and I don't have a crystal ball, none of us do, but all of these numbers that we're talking about that come from the Finance Department and the Revenue Department are all based on assumptions of what may be the impact to the School District and the City. We have lost over 150,000 residents in the last 10 years, with a 3-year real estate tax abatement. " That stimulated construction, it has removed blighted vacant office buildings from Center City, have made those places viable places for people to live. And if you look in the numbers in those buildings, 60 percent or more of the people who are occupying those buildings are formerly non-Philadelphia residents, 20 percent of those GREETING/INVOCATION folks who live in there are non-regional residents, and the other 20 percent are non-state residents. So we're beginning to re-populate Center City. And I see this as an opportunity to begin to re-populate the neighborhoods outside of Center City and, with all due respect, outside of Northeast Philadelphia, that will encourage home ownership and offer opportunities for home ownership for everyone -- not just wealthy people, but low-income -- by giving them an opportunity to be able to come in with a low-interest loan and not have to pay real estate taxes for the better part of ten years. But you know what else will happen, I believe?
When we take that vacant piece of land, of which we are probably not collecting real estate taxes on anyway, because if you talk to the vendors who we have sold the liens to, that is one of the most difficult taxes for even them to collect. Once somebody develops that land, we won't get the taxes on the improvement, but we will in fact begin to collect taxes on the vacant land, that we haven't been collecting for 10, 20, GREETING/INVOCATION years in some cases. I mean, think this is just -- I don't -- again, I don't have a crystal ball, I don't know if we're going to get the development that I hope and wish that we will get. And if we don't, nothing ventured, nothing gained. We don't lose any revenue. I think this is an opportunity long-term to create revenue -- by redeveloping those neighborhoods, by beginning to re-populate those neighborhoods, and by putting us on a level playing field with suburbia. When people move out, they move out for lots of different reasons. Education is one of the major reasons that they move out. If we give them an opportunity to build a new home in the City of Philadelphia, forego the real estate taxes, they can take that money that they save in real estate taxes and use it to either pay down mortgage sooner, buy a summer home, or, in those cases where are people moving because they're not happy with the public school system in Philadelphia, they can send their kids to private and parochial schools with the money they save using that for tuition, and we'll keep GREETING/INVOCATION them in the City and get their wages and all of their economic buying power, keep it in our communities. So that's the reason for this bill. And I've said to the Administration 9:30 this morning, if at some point going forward, this proves to be the negative impact that some people suggest it may have on the School District and on the General Fund, I certainly won't have a problem coming back, asking to amend it or repeal the bill. But I think we have to begin to look at things differently than we have been for the last or 30 years. And it's not just for developers. This is an opportunity for people all across the wave spectrum to begin to look at the opportunity to become homeowners and recreate neighborhoods in the City of Philadelphia. Thank you, Madam President.
Thank you. The Chair recognizes Councilman O'Neill.
I want to clarify if anything I said in any way misled my colleague, the bill's sponsor. I do not believe that this is GREETING/INVOCATION needed in the Far Northeast. I do not believe it will affect the sale of one new home. And these homes are built by developers. There might be a fraction where someone builds their own home, but generally, developers look for suburban-like locations near the edge of the City and put up a development. And, yeah, these taxes abatements are nice, but in ten years, I believe it's not going to have a bit of difference on whether somebody buys a house there or not; it's just how much they're going to have in extra money that the City is not going to have. But every time an abatement bill comes up for residential, we hear about how somebody -and we all have two friends that we grew up with that moved to Bucks County or Jersey or somewhere and for all kinds of reasons. But generally, it's schools, crime and the wage tax. And the only area where we're building houses, that I'm aware of, outside of Center City, we're getting mostly City employees, because they can't move. The wage tax is not an issue for them. Crime's not an issue for them -- maybe they're hoping the GREETING/INVOCATION neighborhood's a little safer than where they're from, but they can't move to the suburbs. They're the predominant buyer of new homes in my district by far. Center City, which is hot right now, as the real estate market's hot and the economy's hot, in Center City, take those three issues, Center City's considered much safer than it was just a few years ago by anybody's standards. The people that are moving into Center City, most of them work in town, and they're no longer afraid to live in town. That's terrific. But the wage tax is not an issue, because it's a fractional difference, whether they live in the City or outside. Schools, for the most part, are not an issue for them. Most of them are not even married, let alone have children. And if they have children, they tend to use private schools anyway, because they're wealthy enough to carry this expense of living in town and the cost of real estate in Center City. So I don't know what we do there. But I just want to go on record that when I have people ask me why we're giving GREETING/INVOCATION ten-year abatements to people who would have bought homes without it, then I'm on record that I voted against it an thought it was a bad idea. Thank you.
Aye. The ayes are 15, the nays are 1. A majority of all Members having voted in the affirmative, the bill passes. The record will reflect that Councilman O'Neill voted no. The next bill to be called for consideration is Bill No. 000227.
An ordinance amending GREETING/INVOCATION Section 19-1303 of Philadelphia Code by changing the exemption schedule for improvements to residential properties, under certain terms and conditions.
This bill having been read on two different days, the question now is, shall the bill pass finally? The clerk will please call the roll.
Aye. The ayes are 16, the nays are 0. A majority of all Members of Council having voted in the affirmative, the bill passes. The next bill to be called for consideration is Bill No. 000344.
An ordinance authorizing GREETING/INVOCATION the Mayor, on behalf of the City, to file an application with the United States Department of Housing and Urban Development for a community development block grant, and to take any and all actions that are necessary to participate in the Section 108 loan guarantee program.
This bill having been read on two different days, the question now is, shall the bill pass finally? The clerk will please call the roll.
Aye. The ayes are 16, the nays are 0. A majority of all Members having voted in the affirmative, the bill passes. The next bill to be called for GREETING/INVOCATION consideration is Bill No. 000346.
An ordinance amending Section 10-1001, entitled "Fees of Commissioner of Records" to the Philadelphia Code.
This bill having been read on two different days, the question now is, shall the bill pass finally? The clerk will please call the roll.
Councilwoman Blackwell? (Councilwoman Blackwell absent from chamber at this time.)
Aye. The ayes are 15, the nays are 0. A majority of all Members having voted in the affirmative, the bill passes. The next bill to be called for consideration is Bill No. 000395. GREETING/INVOCATION
An ordinance authorizing the Philadelphia Authority for Industrial Development to file an application with the Office of the Budget, Commonwealth of Pennsylvania, in an aggregate amount of $34 million.
This bill having been read on two different days, the question now is, shall the bill pass finally? The clerk will please call the roll.
Councilwoman Blackwell? (Councilwoman Blackwell absent from chamber at this time.)