The purpose of this message is to inform the membership of the Greater Philadelphia Chapter of NAIOP of current events in Philadelphia City Council.
As you may recall, in 2018 there were several considerable proposed changes to Philadelphia’s real estate tax structure that will have and would have had a major impact on the commercial real estate industry. These included considerable increases over a two year period in the assessed value of office and multifamily properties (+38% and +66% on average, respectively); corresponding increases in Use & Occupancy Taxes for tenants as a function of these increases; a proposed real estate tax rate hike (did not pass); a proposed 1% Construction Impact Tax (passed in Council, was not signed by the Mayor); discussions around the 10-Year Tax Abatement (no movement in Council last session); developer bonuses for affordable housing; an increase in the Real Estate Transfer Tax (passed); and a curtailing of City Wage Tax reductions (passed). NAIOP hosted both a public forum for the commercial real estate community that drew attendance of over 350 people to discuss these issues, as well as private meetings with multiple members of City Council over the course of the year.
As expected, lack of resolution on the 10-Year Tax Abatement in 2018 has brought this issue to the forefront again on the leading edge of an election year for many members of City Council. On Thursday, January 24, City Councilwoman Helen Gym introduced two separate pieces of legislation to reduce the City of Philadelphia’s 10-Year Tax Abatement on new construction and the improved value of existing structures. The first bill (Bill 190013) proposes phasing out the Abatement gradually over 10 years, reducing it to 90% in year two, 80% in year three, and so on. The second bill (Bill 190012) affects only residential housing, capping the abatement at a value “not to exceed the Federal Housing Administration mortgage limit for a one-family dwelling in Philadelphia.” We expect more proposals for changing or eliminating the Abatement to be put forth in the coming weeks. Please see below for samples of current press coverage:
Philadelphia Business Journal: Philadelphia Councilwoman offers strategies to phase out tax abatement on development
PlanPhilly: Helen Gym floats 10-year tax abatement fixes
The Executive Committee and Government Affairs Committee of the Greater Philadelphia Chapter of NAIOP are actively formulating our organization’s position on this issue and our perspective on the potential impacts to commercial construction. I would be glad to hear from any of our members on this topic. Please don’t hesitate to reach out.
We will continue to update the Chapter as this legislative session unfolds.
President, NAIOP Greater Philadelphia Chapter
Co-Chair, Government Affairs Committee – NAIOP Greater Philadelphia Chapter
SVP – Research, JLL
firstname.lastname@example.org | 215-399-1829
No responses yet