Property-tax abatements prompt anger

Mayor Nutter's proposed budget would add hundreds of dollars to the property-tax bills of most home-owning Philadelphians - but not all.

For the 9,000 who own new or renovated homes and buildings with 10-year property-tax abatements, the impact of Nutter's tax increases would be negligible: $35 next year, for example, on one typical abated $400,000 home.

A growing number of Philadelphians are fuming over such figures, and they are letting the mayor and City Council know it, in protests, in phone calls and letters, and in angry outbursts at town hall meetings.

Yesterday alone, attendees at an evening budget hearing vented their anger at the notion of paying more while abated neighbors are barely nicked. Earlier in the day, two dozen protesters - some bedecked in plastic top hats - rallied outside the abated luxury Residences at Two Liberty Place.

Among the demonstrators was retired nurse Junette Marcano, 66, who would see the taxes on her $109,000 Olney home increase $206 under Nutter's proposal. She was standing beneath a condo sales banner that declared, "The cream does indeed rise to the top."

"The people who are struggling have to pay a tax, and people who can afford to live in these multimillion-dollar condos, who can afford even to carry little puppies in their pocketbooks like Hollywood celebrities, don't have to pay taxes for the next 10 years," Marcano said. "That is simply not fair."

The abatement program was introduced in 1997, when development in Philadelphia was at a virtual standstill. Although owners of abated homes and commercial buildings still receive property-tax bills, the typical amount owed is tiny relative to the value of the real estate. Improvements to any Philadelphia property - say, a new structure on an empty lot, or a gutted and renovated row home - are eligible for 10-year tax breaks. The discounts apply only to the improvements, not to the land, but they can be huge, particularly for upscale Center City condos.

That is particularly galling when the mayor is asking Philadelphians to kick in an additional 19 percent in property taxes next year, said Marie Banks, 69, of North Philadelphia.

"They're rich. We're poor. Why should I have to pay if they don't?" said Banks, who was among the Two Liberty Place protesters organized by the community advocacy group ACORN.

The Board of Revision of Taxes has not yet calculated the abatements for the newly occupied condos at Two Liberty, but given the prices they are fetching - $7.7 million for one unit, reputedly a record for a condo sale in Philadelphia - the discounts are sure to be large.

The public outrage is putting considerable political pressure on City Council, which must approve or reject Nutter's budget. To make property-tax hikes politically viable, some members predict, the abatement program will have to be at least revised.

"I'm not sure there's much Council support for property-tax increases, period," said Councilman Darrell Clarke. "But it might make the property-tax hikes a little more palatable if we take away some of the abatement."

His office, he said, was being bombarded by calls from constituents angered at the prospect of higher taxes unaccompanied by a rollback in abatement benefits.

The same sentiment is consistently on display whenever a community meeting is held to discuss the city's budget woes.

"The tax abatement has got to go," North Philadelphia resident Madeline Shikomba said last night to laughs and cheers at a City Council budget hearing at Temple University.

Even before Nutter formally proposed higher property taxes, the volume of grumbling over the abatement program was up.

At a series of February budget workshops organized by the University of Pennsylvania and WHYY, attendees said they opposed higher real-estate taxes largely because of the abatements, said workshop leader Chris Satullo.

"A lot of people see the tax abatement as a sop to rich people from somewhere else. They see it as not fair to people who've lived here their whole lives," said Satullo, a former editor of The Inquirer editorial page. "They think their taxes built the streets and the schools, and they're still paying taxes while people who make a lot more money than they do are not paying taxes."

Despite the clamor, Nutter remains a staunch supporter of abatements. When questioned about the discounts last week at a dinner with residents in Tacony, Nutter said he understood their "sensitivities" about the program.

"I get it. People think, well, 'I've been here forever, and I'm paying taxes. But so and so down the street just moved here, and they're not paying,' " the mayor told them. "I understand that can get on your nerves a little bit."

But, he added, the program is in the long-term fiscal interest of the city.

"We're essentially trading off the 10 years upfront for forever. I'm willing to take that," Nutter said. "We're in the worst real estate market in recent history. No one is building anything anyway, so I think it would be the absolute wrong time to take away that tool."

However, the administration is signaling some willingness to revise the program.

A Council hearing today on a bill that would tie abatements to "green" building standards has caught Nutter's interest. Although his administration has some objections to the bill - introduced by Councilman Curtis Jones Jr. - the mayor supports its premise, said Mark Alan Hughes, Nutter's chief policy adviser.