The Lead

Philly Mayor Jim Kenney threatens to kill tax abatement bill

By: - December 5, 2019 1:29 pm

Vanessa Garrett Harley, Deputy Managing Director, Criminal Justice & Public Safety and Mayor Jim Kenney discuss preventive initiatives aimed at reducing gun violence and gun trauma (Philadelphia Tribune photo by Abdul Sulayman)

*This is a developing story and will be updated.

By Christina Kristofic

PHILADELPHIA — Mayor Jim Kenney has threatened to kill a City Council bill that would change the city’s 10-year tax abatement if Council doesn’t amend it to push back the implementation date until after the end of next year.

“I look forward to signing this Bill if it is amended with that later implementation date,” Kenney wrote in a letter he sent to Council today. “Please know that if Council were to pass this Bill as currently proposed I will not sign it, and it will not become law. If that were to happen, I look forward to working with you and the other members of the new Council on this issue in 2020.”

The current City Council bill has enough support to override a veto and make it law, but it doesn’t have enough time.

The current City Council’s term will end with the governing body’s last meeting on Dec. 12. City Council is on track to grant final approval to the bill at that meeting. Council does not have another meeting in which it could vote to override a Kenney veto.

Any legislation that is not passed into law before the end of this year will die and the new City Council that is sworn in next year will have to decide whether to revive it.

Council President Darrell Clarke assented to Kenney’s demands in a letter this morning.

“In the spirit of compromise, since you and your administration have moved off your initial, suggested date of implementation … Council stands ready to work with you on this request,” Clarke wrote. He went on to promise that City Council would offer an amendment to the bill with a start date of Dec. 31, 2020.

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“We look forward to your signing Bill 190944 with the amended implementation date, as promised in your correspondence to me today. The time to approve abatement reform is now.”

Clarke noted that the changes to the tax abatement are expected to generate $275 million in tax revenue, with 55% of that going to the School District of Philadelphia and the remainder being used to augment city services.

At least one council member did not take kindly to Kenney’s threat, and said she would vote against that amendment.

“It’s embarrassing for our Mayor and City to freak out about tax subsidy reform while residents are being displaced and schools crumble,” at-large Councilwoman Helen Gym tweeted.

She noted that the original tax abatement was introduced in the 1990s as a three-year abatement “and deemed a resounding success back then.

“It’s been a two decade free ride for development community on a 10 year abatement that is the most expansive in the nation,” Gym continued.

Gym said City Council met with Kenney in September to discuss changes to the tax abatement, but he did not suggest changes or otherwise offer to collaborate.

“Change won’t happen unless we make it happen,” Gym tweeted. “It will be telling if Mayor seeks to veto a modest phase in of the abatement for crumbling schools and out of control development… Development is more than profit. We are building a city that needs public safety, quality schools, decent transit and affordable housing in the poorest large city in America. Our developers should be partners in that vision.”

The tax abatement reform bill would essentially phase out the abatement for new residential construction. The owner of a new residential property would pay no property taxes in the first year, 10% in the second year, 20% in the third year, 30% in the fourth year and so on until they are paying 100% of the taxes on the property.

The current City Council bill would go into effect on July 1, 2020.

Kenney said in his letter that he has “significant concerns” with that start date.

“These concerns come from both the anticipated negative impact on development projects currently projected to move forward this next calendar year, as well as the real practical concern that the Department of Licenses and Inspections will not be prepared for the deluge of building permit requests they will receive in the run up to this date,” he wrote.

An implementation date set for after Dec. 30, 2020 “will give the Administration more time to plan for the proposed change and ensure a smooth transition to this new standard. If we want to make this change, we must ensure that we get it right,” he continued.

Kenney’s letter echoes comments made by Kenney Chief of Staff James Engler, finance director Rob Dubow, and representatives of the building industry during a City Council Committee of the Whole hearing on the tax abatement bill on Tuesday. Engler insisted then that City Council should set the start date for the bill for July 1, 2021.

Christina Kristofic is City Editor of the Philadelphia Tribune, where this story first appeared.

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