Construction tax bill moves forward

A bill that would levy a tax on new construction projects to provide funding for affordable housing has made a major step forward, and Philadelphians are torn over what it could mean for the city.

The bill, which passed the City Finance Committee in a 6-3 vote Wednesday, proposes putting a one percent tax on all new constructions or major renovation projects in order to raise the money for affordable housing projects. A separate bill, which also passed the committee Wednesday, would allow the Housing Trust Fund to establish a sub-fund to determine how the money is spent; it could be accessed by both non and for-profit developers to build for households making up to $105,000 a year.

Supporters of the bill, like the Philadelphia Association of Community Development Corporations (PACDC) have said the bill could raise $20 million per year or more for affordable homes.

In a press conference on the bill in April, City Council President Darrell Clark said the construction tax would put Philadelphians first.

He added that he knows Philadelphias are concerned about a “tale of two cities,” and expressed hope that the bill would help stimulate growth in neighborhoods outside of Center City.

The Building Industry Association (BIA) even came out in support of the bill, with Leo Addimando, the BIA’s Vice President saying it could incentivize developers to build more mixed and affordable housing.

“We as an industry group acknowledge that there’s growing need of affordable housing in this city,” Addimando said in April.

Councilwoman Maria Quinones-Sanchez, who co-sponsored the bill with Clarke’s office, called the tax a win-win for everyone, adding, “nobody wants to see economic and racial segregation downtown.”

Despite the support by some council members and community members, other groups stand firm against the bill and its language.

Earlier this week, the building trades union sent a letter to City Council members, arguing that they would prefer the city change or eliminate the 10-year tax abatement over implementing the construction tax, according to Philly.com.

John Dougherty, head of International Brotherhood Of Electrical Workers Local Union 98, who drafted the letter, also said he thinks the tax could deter major businesses, like Amazon, from setting up offices in Philly, according to Philly.com.

Max Ray-Riek, of the HIV/AIDS activist group ACT UP, took issue with the bill for another reason. He told PlanPhilly that the bill doesn’t set aside funding for people in poverty, but does allow developers to build for people making over $100,000 a year, according to the PlanPhilly article.

The bill will go in front of City Council for a vote later this month.

• Building trades sends fiery letter ahead of construction tax vote [Philly.com]
• Protest against construction tax planned even as amendments are in the offing [PlanPhilly]