DN Editorial: Abate and Switch

THE NEWS about Center City and environs continues to be good. And since 55 percent of all the jobs in Philadelphia are located in the downtown area and University City, what's good for Center City tends to be good for the city generally.

A new report from the Center City District confirms that new housing continues to grow steadily. Last year, the CCD said, 1,983 new units were brought to market - of which 442 were single-family homes. The prognosis for continued growth over the next five years looks good, as more younger people move into the city or decide to buy homes.

The rebound in new housing began in 2013, after a four-year slump during the Great Recession - during which the low point was just over 400 new units, in 2010.

It looks like demand will continue to exceed supply. A healthy housing market is very good news for the city, but it also raises a question that has been asked more frequently:

Since demand seems to be fueling the market, do we still need to offer a tax incentive for buyers of new homes? In 1997, the city passed a tax abatement to encourage developers to convert office buildings into apartments; that spurred a population renaissance in Center City. In 2000, the city passed a law that allowed a 10-year abatement on most real-estate taxes for those who buy new or renovated housing anywhere in the city. (The buyer stills pays a tax on the value of the land.)

Clearly, the tax break spurred development, but Councilman Wilson Goode, among others, has argued that it's time to lower or even eliminate it, saying that it has served its purpose.

One idea that has circulated would keep the tax abatement on the 45 percent of the tax that goes to the city, but eliminate it for the 55 percent of the real-estate tax that goes to the Philadelphia School District.

It's an issue that deserves consideration and certainly some conversation, especially among this year's slew of candidates for mayor and City Council.

The abatement has never been popular among longtime residents of the city who wonder why the couple who bought the new $500,000 home down the street should be exempt from most real-estate taxes while they must continue to pay. During the recent change in the city's property-tax system, those resentments flared.

But, there is convincing evidence that the 10-year abatement gave a kick start to residential development, not only in Center City but in other neighborhoods as well. These homes, apartments and condos will eventually be added to the tax base. New residents pay the wage tax and the sales tax and contribute to the vitality of neighborhoods.

Population growth is good for the city and good for the city's tax base.

The CCD report also highlights the need for decent, reliable funding for the public schools, without which continued housing growth will be difficult.

For residents whose children are approaching school age, the availability of good schools looms large in their thinking about whether to stay or leave the city.

A steady out-migration from Philadelphia to the suburbs is proof of that. Many of these parents who moved from Philadelphia to Upper Darby, Abington and Cheltenham cite the search for good schools and safe streets as their motive for making the move.

Philadelphia's horizons will be limited without good schools. We can't have a boom town with a busted education system.