Bill to Cap Residential Tax Abatement Gets Approval

City Council gave preliminary approval Wednesday to a bill that would cap the 10-year tax abatement on new residential construction at $500,000 of value. The cap would go into effect in July 2015.

The committee took a rare roll call vote on the divisive issue, and the bill passed by a 9-7 count, with Councilwoman Marian Tasco absent. The bill, sponsored by Councilman W. Wilson Goode Jr., could face final approval on June 20.

During testimony on the bill, Goode and Symphony House developer Carl Dranoff had several testy exchanges on the merits of the current tax abatement, which does not have a cap.

The abatement has been credited with sparking a building boom - mostly in Center City and surrounding neighborhoods - but also has been derided as an unnecessary tax credit to rich homeowners.

Developers say the abatement helps offset the relatively high cost of construction in Philadelphia.

"The discussion has to be about what's best for all Philadelphians," Goode said. "This city isn't going to succeed or fail based on Center City development."

Dranoff, however, said the abatement attracts wealthy people from the suburbs and other cities to live - and pay other taxes - in Philadelphia.

"I think we can all agree the tax abatement program has drawn people to the city and reversed the population decline," he said. "Why would we want to cap that gain?"

Voting against the bill were Democratic Council members Bill Green, Kenyatta Johnson, James F. Kenney and Mark Squilla, and Republicans David Oh, Dennis O'Brien and Brian J. O'Neill.

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