Bolster The Neighborhoods The Tax Breaks Go For The Wealthy And For Center City. Meanwhile Neighborhoods Are Going To Seed.

Posted: July 03, 1990

One look at Philadelphia's skyline will tell you much has happened in Center City over the last 15 years. New construction has literally changed the face of downtown.

But take any street and drive out of downtown and you will run into neighborhoods where the opposite has taken place. Abandonment and deterioration have literally changed the face of many city neighborhoods.

Public policy has been a tool in generating economic development in Center City. Incentives like land acquisition, federal and state funds and special service programs have been effectively applied to move certain projects along. However, the tax policy stands as the major incentive for luring investment. But Philadelphia's use of tax policy - particularly tax abatements - has been constricted and short-sighted with a heavy focus on downtown development.

A good example of this narrow view is the legislation, proposed by the Goode administration and approved by City Council last week, that would increase tax breaks for developers.

One bill will shorten the tax abatement period for commercial developments

from five to three years. Granted this change will certainly generate some new

revenues for the city. But it essentially maintains the same incentive for larger Center City developments. The difference is that now the abatement period will begin at the time of occupancy rather than when the building permit is issued.

The second piece of legislation lifts the ceiling that limited the tax abatement for residential developers to the first $70,000 of market value of a new home or condominium. Now all new residential developments will be exempt

from paying taxes for three years after construction.

Both bills bolster the current city policy: tax breaks for the wealthy and investment in Center City. What is wrong with this legislation and the city policy, in general, is that it ignores the possibility of encouraging development in Philadelphia neighborhoods and lacks a comprehensive tax policy approach to the issue.

As cities around the country have attempted new ways of encouraging development in their older neighborhoods, Philadelphia has continued to resist these ideas. Many cities earmarked the funds from repayments of federal Urban Development Action Grants (UDAG) specifically to foster neighborhood economic development projects. New York City is offering variances in zoning laws to developers who agree to build houses in certain low income areas. Boston has required developers to contribute to a neighborhood economic development trust fund.

It is certain that Philadelphia does not compare to a city like Boston when it comes to level of interest in major downtown developments. However, that does not excuse either the Goode administration or City Council for their lack of interest or commitment to providing neighborhoods the same kind of incentives granted to Center City development.

Over the past five years, community organizations have talked to both the mayor and City Council about using municipal tax policy to establish job training programs, to create affordable housing and provide incentives for investment in our city's working class and poor neighborhoods. In every case, those in power have turned a deaf ear. Witness the lack of attention given a recent bill that would provide property tax relief to homeowners threatened by displacement due to gentrification. That bill has languished in committee since the spring.

There is more to creating a good business climate than providing tax breaks for big developers. A trained work force, clean and safe neighborhoods surrounding Center City and an expanded tax base are also important ingredients.

We can continue to reshape our downtown with giant reflective skyscrapers and floating condos but the neighborhoods that must wait for the benefits to ''trickle down" will never get enough to truly change their situation. Creating a comprehensive tax policy that fosters even economic development and neighborhood stability throughout Philadelphia will not solve all our problems but most certainly will be a step in the right direction.

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