With Philly’s construction tax ‘D.O.A.,’ Kenney proposes alternative

With one day left for Mayor Kenney to decide whether to veto a controversial new tax intended to pay for affordable housing, he is trying to reach a compromise with City Council.

Instead of imposing a 1 percent tax on new construction, Kenney wants to redirect real-estate tax proceeds from properties that have recently received the city's 10-year tax abatement.

In the first year those buildings come onto the tax rolls, Kenney would send money from them to the Housing Trust Fund.

That would raise between $52 million and $56 million for affordable housing over the next five years, according to an administration official.

Kenney is facing opposition from some council members over his alternative plan.

Councilwoman Maria Quiñones-Sánchez, who cosponsored the construction-tax legislation, said it would be "irresponsible" to spend anything less than $125 million over five years on affordable housing.

"It should be a really bold, high-number investment," she said. "This tale of two cities, we're watching it happen. Policy dictates what's going on. Gentrification and displacement is all about policy."

It is unclear whether City Council President Darrell Clarke, another cosponsor of the bill, would support Kenney's idea. A spokesperson for him did not respond to a request for comment late Tuesday.

Councilwoman Cindy Bass, who voted against the construction tax, said she has "a lot of questions about the proposal we've been talking to the administration about … because many elements of it, the dots don't connect."

Mike Dunn, a spokesperson for Kenney, said "discussions continue on a number of proposals, and it would be inappropriate to comment publicly while we are literally at the table with council members discussing this."

In June, lawmakers narrowly passed the construction tax in a 9-8 vote that pitted Clarke and housing-affordability activists against the city's powerful building trade unions. John Dougherty, a Kenney ally who leads the trades, said the tax "would have the net effect of ending the recent prosperous run of new construction that is transforming neglected sections of the city."

Under the city charter, a mayor has 10 days to veto a bill from its passage until the next meeting of council. Because the construction tax was passed on the last voting session before the summer break, the deadline is Thursday, when lawmakers meet for the first time since adjourning.

Kenney said earlier this year that he is "committed to increasing Philadelphia's affordable housing stock and to promoting equitable growth, but I have concerns about this particular piece of legislation," adding that "Philadelphia is already considered by many to have a pretty onerous tax system."

Regardless of whether Kenney wins support for his plan, it seems all but guaranteed that he will not sign the construction tax into law, several council sources said.

"The 1 percent [construction tax] is D.O.A., regardless," said one council source.