Philadelphia’s neighborhoods may experience a new wave of real estate development if Mayor Cherelle Parker’s administration successfully revives the original tax abatement program.
This initiative aims to stimulate investment in parts of the city that have lagged in development.
John Mondlak, the deputy director for development services with the city’s Department of Planning and Development, highlighted the administration’s interest in discussing the potential return of the tax abatement.
“It’s gonna have to be a discussion, but the idea would be that we do bring it back to 100% in certain parts of the city and not all of the city,” he stated during a recent budget hearing.
This discussion aligns with Parker’s ambitious $2 billion housing plan, dubbed the Housing Opportunities Made Easy or H.O.M.E. initiative, which aims to create or preserve 30,000 housing units over four years.
Legal considerations are paramount in executing any new tax abatement, with Mondlak noting that the city’s Law Department will assess its legality, particularly in relation to the state’s uniformity clause.
The uniformity clause restricts municipalities from taxing real estate at varying rates, and thus any new proposal must provide an adequate rationale for its implementation.
“We’ve had initial conversations where the Law Department has kind of indicated that if you can establish definitively how you came to this rational reason for coming up with this strategy, that it should work,” Mondlak explained.
The original tax abatement program, initiated in 2000, allowed residential property owners to pay no property taxes for ten years, significantly incentivizing new development in Philadelphia.
However, the program faced opposition from critics who argued it benefited property owners in neighborhoods that no longer required public assistance, leading to changes in the program over the years.
The current version, rolled out in 2022, offers a 100% abatement for the first year, with a gradual reduction of 10% each subsequent year for the remaining nine years.
With a potential new abatement program being discussed, its role in the Parker administration’s H.O.M.E. initiative remains unclear.
The initiative focuses on providing affordable housing alongside revitalization projects, and it will require City Council’s approval to move forward.
The mayor has emphasized the goal of facilitating new housing development while also ensuring access to mortgage loans and preventing housing instability.
To fund the H.O.M.E. initiative, the administration proposes borrowing $800 million in bonds, marking an unprecedented investment aimed at bolstering housing opportunities within the city.
The proposed housing plan entails constructing 13,500 new units and preserving an additional 16,500, with most units affordable for families earning less than $100,000 annually.
Moreover, over 20,000 planned units aim to serve families with incomes at about half that threshold.
During the budget hearing, some lawmakers voiced concerns that the plan may not adequately address the needs of the city’s lowest-income residents, particularly those earning less than $31,000 per year.
With nearly a third of Philadelphia’s households—about 200,000 families—earning under $30,000, Councilmember Rue Landau has pushed for increased investment for the most vulnerable residents.
“That’s where I want the largest investment of funding to go — the have-nots and the have-a-littles,” she stated, expressing her support for the administration’s plan but also her desire for more resources directed toward the poorest households.
Jessie Lawrence, the director of the Department of Planning and Development, reiterated that the administration’s proposal aims to foster economic opportunity across all income levels, not exclusively for those at the bottom rung of the socioeconomic ladder.
This includes assisting working-class families aiming to purchase their first homes or existing homeowners who are struggling with essential repairs.
“We’re trying to provide some kind of upward mobility, not just for those at the lower incomes but also for the moderate incomes as well,” Lawrence explained, emphasizing the administration’s comprehensive approach to economic growth.
The Philadelphia Housing Authority (PHA) is seen as better positioned to serve the city’s lowest-income residents through its “Opening Doors” initiative, a $6.3 billion project designed to preserve, redevelop, build, or acquire around 20,000 heavily subsidized units.
If Parker’s housing proposal receives City Council’s endorsement, a significant portion of the $800 million will support multiple initiatives, including affordable housing preservation, workforce housing projects, and home repair programs.
The Basic Systems Repair Program, renowned for providing free home repairs to qualifying households, is poised for expansion under the H.O.M.E. initiative.
Currently available to those earning up to 60% of the area median income, the program may now welcome households earning up to 100% of the area median income, which is projected to serve 7,500 households over the initiative’s lifespan.
The existing waiting list for the program currently stands at around 8,000 households.
In addition to expanding existing programs, the Parker administration aims to enhance the Turn the Key initiative, which seeks to build 280 new homes on city-owned properties and eliminate its backlog of approximately 800 projects.
Thurman, the mayor’s chief of staff, emphasized the intent to expedite Turn the Key’s processes during the hearing.
“The mayor wants to put Turn the Key on steroids,” she remarked, indicating the importance of the initiative in the broader housing strategy.
Moreover, the administration is reviewing the land bank’s disposition process to improve efficiency, as current critiques highlight its complexity and delays.
Council President Kenyatta Johnson questioned whether the assessment of the land bank might stall housing production, expressing the need for timely action to meet the immediate housing goals outlined by the administration.
“We probably should have already hit the ground running,” he lamented, pointing to the urgent necessity of housing production in the city.
In response, Thurman assured lawmakers that the assessment process would be completed in under a year.
The H.O.M.E. initiative encapsulates nearly 40 distinct programs and initiatives, with half being new to the city’s housing strategy.
The administration is aiming for a simultaneous approval of the H.O.M.E. initiative and the city’s upcoming budget, which is anticipated to exceed $7 billion.
The goal is to secure approval before the onset of the next fiscal year, set for July 1.
Finance Director Rob Dubow indicated that the city expects to borrow the $800 million in two installments, with the first scheduled for the fall and the second slated for 2027.
Dubow clarified that the initial funds will likely support existing programs, the new initiatives expected to receive funding starting next July.
As the administration navigates legal considerations and seeks to align its ambitious housing goals, the future of Philadelphia’s neighborhoods hangs in the balance, with eyes on the City Council as key decisions loom ahead.
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