Thursday, August 27, 2015

Some for-profit businesses pay city voluntarily (seriously)

Last year, the city reaped more than $500,000 from "payments in lieu of taxes" from for-profit businesses getting tax breaks. Developers like John Westrum, Dyott Street and Berks Street Corp. are a few of the contributors.

Some for-profit businesses pay city voluntarily (seriously)

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Last year, the city reaped more than $500,000 from "payments in lieu of taxes" from for-profit businesses getting tax breaks. Developers like John Westrum, Dyott Street and Berks Street Corp. are a few of the contributors.

Why would a business pay the city voluntarily?

Pennsylvania gives state and local tax breaks to businesses that set up shop in blighted areas known as "Keystone Opportunity Zones."

Christine Bak, an attorney with the city's Law Department, says local government must give approval before businesses get accepted for the breaks.

 The application process can be difficult, she says.

"Probably there's some incentive for these businesses to work with us based on that," she says. "So if they forgot to cross some 't' or dot some 'i' on their application, we'll certainly look more favorably on helping them" if they pay PILOTs.

Is this a fair way for a cash-strapped city to raise money? Or does it undermine the tax-break program, launched in 1999 to spur development?

Erik Arneson, spokesman for state Senate Majority Leader Dominic Pileggi, says the city's PILOT program might lead to fewer businesses' applying for the Keystone Opportunity Zone tax breaks, and thus create fewer jobs.

But Kevin Gillen, vice president of the economic adviser Econsult, points out that businesses that sign up for the PILOT plan still get a net tax break under the program.

"It must still be worthwhile for them because otherwise they wouldn't do it, right?" he asks. "I'm sure their accountants crunched the numbers."

This "It's Our Money" article also appeared in today's Daily News, along with an article on the city's dwindling voluntary payment deals with nonprofits.

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Every year, city government spends slightly more than $4 billion. Where does all that money come from? More importantly, where does it go? Are we getting the most bang for our tax buck? “It's Our Money” is a joint project between Philadelphia Daily News and WHYY, funded by the William Penn Foundation, designed to answer these questions.

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