Tuesday, November 01, 2005

More tax mullings

City Council is continuing to consider -- and the city to fret about -- how to handle the new property tax reassessments (see previous here (last item) and here). Their hearing on the matter yesterday involved testimony from residents in up-and-coming neighborhoods who fear punishment for helping turn the city around.
Councilman Frank DiCicco, whose district includes many of the South Philadelphia, Center City, and river ward neighborhoods where values have shot up recently, pushed for the hearings in order to help figure out ways to protect retirees, longtime residents, and others from the effects of tax increases.

Among the possible solutions are plans that would cap tax hikes, phase in new assessments, or allow hard-pressed residents to defer some payments until they sell their houses - at which point, thanks to the same high sales prices, they could afford the bill.
Obviously, recent buyers knew what they were getting into, but people who have lived in one place while the properties around them quadrupled in value want to be able to stay where they are too.

Interestingly, these discussions have cast a spotlight on the 10-year property tax abatements that are credited with spurring much of the building and renovation in recent years: they essentially reward the folks who are driving up property values, while shifting the tax burden onto the folks who were already there. Councilman Daryl Clarke intends to introduce a resolution calling for a second look at these tax deals.
Clarke initially planned to introduce a bill to replace the current abatement for an exemption on improvements that provides the Full Monty the first year, and declines by 10 percent a year thereafter. It would take effect in January 2007, Clarke said.

But Councilman Frank DiCicco, who authored the existing tax-abatement laws, persuaded Clarke to hold hearings instead. DiCicco is afraid that a bill would kill a goodly number of projects that are in the construction pipeline.
There's certainly an element of unfairness to the results of the tax abatements, but I'm not sure that retroactive rollback is fair either, and this could have the effect of setting long-time residents and newcomers against one another. Expect some fascinating discussions to come out of all this!


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