Are tax abatements just for yuppies? A study put out by researcher Kevin Gillen says no. The study finds that while the tax abatement has increased development of rich people fancy-pants housing, it has also made it easier to build affordable housing. Yes, for all the vitriol directed at yuppies, (and really, who doesn't love satisfying round of pin the blame on the yuppie,) tax abatements do not exclusively apply to them, and do not encourage them specifically. In fact, the Philadelphia Housing Authority is the holder of the most tax-abated properties: tax abatements have also encouraged the construction of affordable housing.
Contrary to popular belief, tax abatements are not just for new construction; they allow for "improvements" to a property to go un-taxed for ten years. This is obviously most beneficial to owners of new construction (because the whole structure is an improvement, leaving them only with a tax for the value of the land they own,) the tax abatement has also encouraged renovation and rehabilitation of older properties.
And, as tax abatements begin to expire this year, the city will be able to collect more revenue than ever before, (supposing the city manages to actually collect taxes.) Tax abatements can seem like door prizes for gentrifiers, and in some cases, they do encourage new construction takeovers of neighborhoods with high vacancy. However, tax abatements are also great for increasing the city's tax base, and they offset high construction costs in Philly, and they apply to all improvements, not just glossy new condos with roof decks.
· Study fuels debate over Philadelphia tax break [NewsWorks]
· Philadelphia's Ten Year Property Tax Abatement [Full Study]