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  #21  
Old Posted Dec 18, 2013, 4:35 PM
bywoods bywoods is offline
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I know this is a controversial topic and my opinion won't win any friends on this forum, but I think Goode has a point here. Yes philly has high construction costs and relatively low rents, and the tax abatement program has definitely helped spur development. Yes, city government is corrupt and should do a better job collecting taxes from slumlords. On the other hand Dranoff has implied he will try to sell his new condos for a similar price as Ten Rittenhouse, which is $1000/sqft. A tax abatement is generally good policy, but having it cover virtually all the real estate taxes for a full ten years for incredibly expensive property that can only be afforded by the richest people in Philly, I think it is just too much. I'm sure most of the owners here will continue to pay taxes to Lower Merion on their other home on the Main Line.

Anyone who can afford to live here can easily afford to also pay some real estate taxes to help their community pay its bills and keep the schools open
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  #22  
Old Posted Dec 18, 2013, 4:49 PM
Flyers2001 Flyers2001 is offline
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Originally Posted by BenKatzPhillytoParis View Post
Whooaaah slow it down.

1) Not that dramatic. Councilman Goode has consistently been in the minority on this issue and there's no evidence it will be any different this time.

2) While I disagree with him here, he's not corrupt. He's one of the only councilpeople who actually make probitive analyses of these issues. And even though I think there's room for public subsidies here due to the economic benefits and wanting to see this built, there are many valid, compelling arguments for skepticism of these giveaways.

3) Philadelphia improved its delinquent tax collection dramatically this past year. It was in plan philly the other day.

Perhaps it would be better not to jump on these kinds of news items as dramatically and pessimistically...
While I am glad to hear delinquent tax collection is up, Goode Jr. will always be remembered to me with, "Don't you ever disrespect a black woman that way!"
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  #23  
Old Posted Dec 18, 2013, 4:55 PM
Pennsgrant Pennsgrant is offline
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Originally Posted by bywoods View Post
I know this is a controversial topic and my opinion won't win any friends on this forum, but I think Goode has a point here. Yes philly has high construction costs and relatively low rents, and the tax abatement program has definitely helped spur development....

Anyone who can afford to live here can easily afford to also pay some real estate taxes to help their community pay its bills and keep the schools open

Bottom line . No tax abatements then No Center City residential renaissance. No Ten Rittenhouse, No 1706 Rittenhouse ,No Graduate Hospital resurgence, perhaps No Granary,No 2116 Chestnut,No SLS International announcement. Center City and Philadelphia would be a much lesser place without these property tax abatements.


If Goode was in control. Center City would be a shell of its current self and the schools would still be fractured,broken and underfunded. At least the tax abatements bring wealthy residents into the city where their wage taxes and ancillary spending will contribute to the tax coffers.

The 10 year property tax abatement is the least this city can do to help new residents deal with the nightmare that is the public schools and Goode and Blackwell's surrounding hoods.

Last edited by Pennsgrant; Dec 18, 2013 at 5:48 PM.
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  #24  
Old Posted Dec 18, 2013, 4:56 PM
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CentralGrad258 CentralGrad258 is offline
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It's all posturing, just like the W got its Tax increment financing, so will Dranoff get some kind of a sweetener for sure. It's a beautiful project and as a fan of the Philly skyline I hope it gets built, but the tax abatement issue is not so cut and dry. How many additional tax breaks to the wealthy condo buyers, developers and hotel guests really need?
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  #25  
Old Posted Dec 18, 2013, 5:16 PM
Flyers2001 Flyers2001 is offline
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Originally Posted by CentralGrad258 View Post
It's all posturing, just like the W got its Tax increment financing, so will Dranoff get some kind of a sweetener for sure. It's a beautiful project and as a fan of the Philly skyline I hope it gets built, but the tax abatement issue is not so cut and dry. How many additional tax breaks to the wealthy condo buyers, developers and hotel guests really need?
The tax abatement is not new, it has been here for years now and has been a positive element for growth as Pennsgrant mentioned. Goode is setting this issue up for his own name and future considerations as in a fight with Comcast and its abatement's for when their new tower is announced.

Again its shortsighted. The "wealthy condo buyers, developers and hotel guest" all pay taxes multiple other ways. They argument is whether they would even be here without the help/intrigue of an abatement. The shortsightedness comes from not realizing abatement's don't last for ever and Philly would benefit much better in the long run.
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  #26  
Old Posted Dec 18, 2013, 5:31 PM
BenKatzPhillytoParis BenKatzPhillytoParis is offline
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Problem is there is virtually no statistically valid evidence that the abatements are necessary to induce the new residents. Of course developers act like getting rid of them would be catastrophic, but their point of view is completely biased.

I think there should be more study before getting rid of them since they could indeed be having an effect that's worth the expense. But it really needs to be up for debate because we're potentially losing a huge amount that could be invested in our underfunded school, transportation, and parks systems and there's never been a rigorous cost-benefit analysis. It's complete speculation that the abatements have been worth the cost.
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  #27  
Old Posted Dec 18, 2013, 5:32 PM
BenKatzPhillytoParis BenKatzPhillytoParis is offline
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Btw, high-quality schools, transportation, and parks also attract residents
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  #28  
Old Posted Dec 18, 2013, 5:54 PM
Pennsgrant Pennsgrant is offline
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Originally Posted by BenKatzPhillytoParis View Post
Problem is there is virtually no statistically valid evidence that the abatements are necessary to induce the new residents.
The "past" is all the statistical evidence you need regarding this issue.

Pre Tax abatements - residential development in Center City and Philadelphia was almost non existent.

Post Tax abatements- Residential development in Center City and Philadlephia has skyrocketed.

I'm sure there are plenty of housing records to verify this.
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  #29  
Old Posted Dec 18, 2013, 6:02 PM
BenKatzPhillytoParis BenKatzPhillytoParis is offline
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Originally Posted by Pennsgrant View Post
The "past" is all the statistical evidence you need regarding this issue.

Pre Tax abatements - residential development in Center City and Philadelphia was almost non existent.

Post Tax abatements- Residential development in Center City and Philadlephia has skyrocketed.

I'm sure there are plenty of housing records to verify this.
That is correlative, not causative. There are other important factors that must be accounted for that are causing people to move to the city. To determine the value of the abatement, we need to know the its share of all the factors influencing people to move to Philly. Making tax policy without that information is amateurish at best, and a serious waste of resources at worst.
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  #30  
Old Posted Dec 18, 2013, 6:17 PM
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PHL10 PHL10 is offline
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Would a $500,000 condo entice you more if the taxes were $100 rather than $10,000 per annum?

I suppose the only way to conduct the study is to interview the people who purchase these homes and ask them if they would have done so without the abatement. I’m sure at the least, it would have decreased their budget as most people look at the monthly payment rather than the total debt they are incurring. Remember that due to the incredible construction costs in this city, you can’t sell condos in a new construction building for $250k and make money. The tax incentive can make or break the deal for a homebuyer and by extension, the builder.
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  #31  
Old Posted Dec 18, 2013, 6:24 PM
Flyers2001 Flyers2001 is offline
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Originally Posted by BenKatzPhillytoParis View Post
Btw, high-quality schools, transportation, and parks also attract residents
All that you mentioned could be fixed/funded with cutting the extra fat that the City government has put on in the past 10-15 years.

So in this case you can keep the abatement's and fix the attractions you mentioned! Happy happy joy joy!
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  #32  
Old Posted Dec 18, 2013, 7:03 PM
MikeNigh MikeNigh is offline
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I think the abatement makes sense. He is redefining that area and the residents of the building should have a break until development around it catches up.

To my understanding abatements are for those to not get penalized for upgrading something which is exactly what is happening to the area.
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  #33  
Old Posted Dec 18, 2013, 8:03 PM
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summersm343 summersm343 is offline
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Wilson Goode is in the minority here. The majority of City Council is in favor of the project. Anything Goode proposes will never even make it to a vote... not enough support. This is the same thing that happened with the W Hotel, and City Council pretty much unanimously passed the TIF. SLS International is 95% privately funded, the city would be moronic not to allow a tax abatement for the project that will bring hundreds of tax paying residents and thousands of tourists a year and create several hundred jobs. You would rather let the properties remain as is? Two empty buildings and an empty lot that generate not even 1/16th what the new building would generate in taxes? But they pay property taxes and have no abatement! Where the new building will have an abatement! Yes, but the new building will bring so much more in tax revenue from residents, jobs and tourists.

People in this city can be so shortsighted.

Will City council deny the development a tax abatement? I think not. City Council isn't THAT moronic.
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  #34  
Old Posted Dec 18, 2013, 8:39 PM
MSFHQ MSFHQ is offline
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I'll never understand the issue against abatement. As if CC residents don't pay wage tax, sales tax, fuel businesses, etc. Nothing like penny wise, pound foolish. And that isn't even looking at the benefits of new, clean and shinny construction on this city.

People don't send their kids to Philly schools because they are unsafe, not underfunded. Philly needs an influx of moderately priced private schools for CC residents to send their kids.
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  #35  
Old Posted Dec 18, 2013, 9:32 PM
UCityGardener UCityGardener is offline
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If I understand the abatement correctly, taxes are paid on a new or improved property based on the pre-improved assessment of the land/property. So in a simple example, if a plot of land that was paying $1,000 a year in property taxes has 10 condos built on it, that $1,000 would be divided among the 10 units – so in a simple breakdown, each condo owner would pay $100 for 10 years. After that, each unit would pay whatever the improved property assesses at. So no revenue is lost in the 10 years of the abatement.

There is no evidence that new buyers will flee the city once their taxes rise at the expiration of the abatement. In fact, population trends support the idea that population will increase as a result of the improved safety and quality of life that comes from a densely populated city. The 1st abatements expired in the late 2000s and the city’s population has been steadily increasing almost in lock-step with those expirations.

So… no lost revenue, improved quality of life, and an apparent population increase of high wage earners in the areas most impacted by the abatement. These all sound like arguments to keep the abatement, while arguments against it largely sound like sour grapes.
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  #36  
Old Posted Dec 18, 2013, 11:42 PM
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CentralGrad258 CentralGrad258 is offline
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I really hate to turn this into a pro-abatement vs anti-abatement arguments, because this project is awesome and I hope it gets built. However, if since we're there now, I think the pro-abatement side is not looking at the issue critically, simply by parroting the developers talking points. To act as if nobody would be moving to Philly if not for abatements does not stand up to close scrutiny-

a.) It completely ignores the fact that downtown living has seen a major boost across the entire country. Every single city has seen its downtown population boom and to pretend that Philly would have missed out on the trend, had it not been for abatement is a serious reach.

b.) Assuming the demand for downtown living is there, would paying real estate taxes diminish the demand or constrain the supply? Maybe in some marginal cases, but developers build where there's demand. Their profit margins might suffer and maybe a project here or there doesn't get built, but if the wealthy want to live downtown, someone will be more than happy to build a property for them.

c.) Philly real estate taxes are substantially lower than the surrounding counties. Even after AVI, you're likely paying twice as much for equivalent property value in the burbs than in the city.

Again, the developers love abatements. They don't have to pay property tax while the property sits, and can charge higher amounts, knowing that the new owners monthly mortgage payments would still be lower due to them not paying real estate taxes. The fact that the properties coming off abatement haven't resulted in a sudden outflows of residents proves that abatements are not longer necessary, to attract development imo. Maybe in the 90s when the legislation was being considered it did make some sense. At this point, not really.

Also, one last thing. If the abatement is really about dealing with the high cost of construction, then you know that's just code for unions. Maybe, just maybe working with developers to find alternatives to hiring building trades contractors for every project could help lower costs of projects, instead of taking money out of city and school district coffers.
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Last edited by CentralGrad258; Dec 19, 2013 at 12:01 AM.
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  #37  
Old Posted Dec 19, 2013, 12:07 AM
MSFHQ MSFHQ is offline
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You get a lot more in the suburbs than you do in Philadelphia. Imagine paying Radnor property taxes and having the schools you have in Philly? Also, Philadelphia hasn't exactly seen a population boom. Yes, more people are moving to the city, but Philadelphia has a relatively bad rap to outsiders.

The lower property tax also ignores the fact that you get nailed for 4% just by living in the city.

I don't see much hard fact refuting. Only other side talking points. IMO, anything that entices developers to build in Philly is a good thing. This city needs continual gentrification to truly entice people. I live in the nice part of the city and it can turn into a dump real fast. Even if removing the abatement would only SLIGHTLY slow down development that is far too much.

I just can't see any good reason to remove it. If Philly wants more tax revenue they should go after the delinquent properties they already have. That or provide a pro business/pro development environment to entice more businesses and professionals to live in the city, thereby feeding the coffers though wage tax (another abomination) and sales tax.
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  #38  
Old Posted Dec 19, 2013, 8:59 AM
BenKatzPhillytoParis BenKatzPhillytoParis is offline
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These are all issues but we still don't know the precise role abatements are playing, partly because we don't know what the price elasticity of demand for housing is in Philadelphia. There is inevitably an optimal point at which to set the abatement to maximize the combination of current and future revenue and the benefits of population growth. To have an abatement instead of a discounted tax rate, and at 10 years instead of any other year is arbitrary. We shouldn't be making public policy on such a flimsy basis. Let's at least get some better data to make the most informed policy choices possible.
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  #39  
Old Posted Dec 19, 2013, 4:03 PM
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Quote:
Originally Posted by BenKatzPhillytoParis View Post
Problem is there is virtually no statistically valid evidence that the abatements are necessary to induce the new residents. Of course developers act like getting rid of them would be catastrophic, but their point of view is completely biased.

I think there should be more study before getting rid of them since they could indeed be having an effect that's worth the expense. But it really needs to be up for debate because we're potentially losing a huge amount that could be invested in our underfunded school, transportation, and parks systems and there's never been a rigorous cost-benefit analysis. It's complete speculation that the abatements have been worth the cost.
I'm pretty sure Econsult did a study on this not so long ago and found some impressive quantifications of the abatement program.
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  #40  
Old Posted Dec 19, 2013, 9:17 PM
apetrella802 apetrella802 is offline
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tax

the more you tax something the less you get it and visa versa
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