Real estate mogul and freshman at-large City Council member Allan Domb has crunched the numbers and believes he's found an answer to fixing Philly's blight while increasing the city's revenue: Double Philly's 10-year tax abatement to 20 years for properties valued at less than $250,000.
That's the gist of a bill Domb proposed on Thursday. He believes extending the tax abatement an additional 10 years will benefit neighborhoods outside of Center City, where homeowners and developers have most benefited from the current abatement.
"This tax abatement has clearly worked and has had really great benefits in many sections of the city," Domb tells Curbed Philly. "But not all parts of the city have participated outside of the core areas."
The current abatement states that owners who make physical improvements to a property do not have to pay taxes on those specific upgrades for 10 years. That means developers or homeowners who build new construction on say, a vacant lot, only have to pay taxes on the land for another decade.
Since the bill went into effect in 2000, the city has seen an immense amount of new development. Proponents often point to a 2014 study by researcher Kevin Gillen, which found that the Brewerytown Square development earned the city $2 for every $1 in property tax revenue forgone due to the tax abatement.
So why haven't areas like the River Wards, Northwest Philly, or West Philly taken advantage of the abatement? Domb says one reason might be that there's still not enough incentive for folks who may not be able to afford homes valued at more than $250,000.
His proposed bill aims to spread the wealth to these neighborhoods and encourage both long-time residents and millennials to invest in Philly. "This isn’t so much for builders and developers," Domb says. "The real reason to do this is that someone can fix a blighted home and change a neighborhood from both an economic and lifestyle standpoint."
He cites a fictional situation to make his point: "One blighted home on a block of 30 homes can bring down the whole neighborhood's value. If an abatement on a property is $100,000—which might be high—then the city will lose $1,400 a year from not receiving taxes on that abatement."
But fixing the blighted home, Domb continues, could increase the value of the other by $8,000 each. "That means the city will receive $240,000 over 20 years."
His proposal also comes as the recently formed Philadelphia Land Bank continues to add city-owned vacant land and blighted buildings to its inventory for private owners to purchase.
Domb's proposal needs approval from the Pennsylvania State Assembly, though he says, "I’m open to adjustments. I'm just looking for something that will incentivize the area that benefits and help those neighborhoods dramatically."
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