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Controversial construction tax bill passes council

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The bill narrowly passed following public comment both opposing and supporting it Thursday.

New construction underway on Girard Avenue in Fishtown. Photo by Melissa Romero

A bill to levy a one percent tax on most new constructions and major renovations narrowly passed City Council last week, though not without its fair share of heated debate beforehand.

The construction tax bill, which passed in a 9-8 decision during the council’s final meeting before the summer recess Thursday, was met with boos from some of the community members who attended the meeting.

The reaction is not surprising, given the history of the bill, which has drawn both ardent support and opposition, since council member Maria Quinones-Sanchez and council president Darrell Clarke proposed the bill and first made its details public in April.

The bill puts a one percent tax on new construction and major renovation projects—save for properties in the city’s Keystone Opportunity Zones—and puts the money toward affordable and mixed-income housing projects. A companion bill, which also passed council in a 13-4 vote Thursday, allows the Housing Trust Fund to establish a sub-fund to determine how the money raised by the tax is spent. It can be accessed by both non and for-profit developers to build for households making up to $105,000 a year.

The bill has been a big topic of debate for the past few months. Groups like the Philadelphia Association of Community Development Corporations (PACDC) and the Building Industry Association have come out in support of the bill, with the latter noting a need for more affordable housing in the city.

In an open letter ahead of the decision last week, The Philadelphia Coalition for Affordable Communities (PCAC) also expressed support for the bill, but noted their concern that, “there is no guarantee in the new sub-fund for households making 30% or less of AMI (area median income).”

However, the issue is a divisive one, and several groups have come out in opposition—most notably the Building Trades Union, which penned their own open letter to council members earlier this month. In the letter they said the bill would dissuade potential developers from coming to Philly.

Frank Keel, spokesperson for the union said earlier this month, “The Building Trades remain opposed to the 1% Construction Impact Tax and any and all proposed amendments.”

Council members faced more of that opposition Thursday as members of the public came out in droves to speak on the bill—most of whom disagreed with its wording and potential ramifications.

Many of the people who spoke Thursday took issue with how the money from the bill will likely be distributed, arguing—like the PCAC—that there’s no guarantee the bill will help lower income households. One speaker suggested amending the bills to ensure that half of the money produced by the tax goes to households making 30 percent or less of AMI.

Others argued that the bill was no longer the affordable and mixed-income housing bill it was once meant to be.

“Somehow it turned into affordable housing-slash-home improvement bill,” one speaker said, though he went on to voice his support for the proposed construction tax.

For some speakers, one percent is too low of a tax.

“I feel as if these bills are peanuts,” one woman said. “We’re talking about one percent—that’s not a lot of money.”

Despite the passing of the bill, its fate is still up in the air. PlanPhilly wrote last week that council sources say Mayor Jim Kenney may veto the bill, and that his administration has criticized it in recent weeks. The mayor told PlanPhilly last week that the 9-8 vote is “pretty close” and that his office is looking at alternative affordable housing plans over the summer.

  • Amazon headquarters would be exempt from new construction tax [Curbed Philly]
  • Construction tax bill moves forward [Curbed Philly]
  • Construction tax’s fate uncertain as City Council wraps up for the summer [PlanPhilly]