Philadelphia City Council's Finance Committee will hear public testimony on two housing-related bills on June 6. Bill No. 180351 would create a construction-impact tax that could generate $20 million or more per year for affordable homes; Bill No. 180347 sets up a new sub-fund of the Philadelphia Housing Trust Fund that would administer the new construction-impact tax revenues and determine how they are used. The Philadelphia Association of Community Development Corporations (PACDC) and other affordable housing advocates are urging passage of these bills to increase the number of affordable homes available for low income Philadelphia residents.
The primary revenue-generating bill would levy a 1% construction-impact tax on all construction or renovation (not ordinary upkeep and maintenance) that qualify for an existing ten-year tax abatement. Since 2000, developers and buyers of newly constructed properties have benefited from the 10-year property tax abatement for any improvements that are part of new construction or a significant rehab. The construction-impact tax proposal represents roughly one year of the abatement subsidy, and the resources from the tax would be dedicated to a new sub-fund of the Philadelphia Housing Trust Fund.
A portion of the sub-fund would be used for a new down-payment assistance program called “Philly First” to help low and moderate income homebuyers purchase homes. Other approaches that creatively and cost-effectively create more affordable rental and homeownership opportunities would also be eligible for support, including subsidies to help take advantage of 4% Low Income Housing Tax Credits, lease-to-own projects that help renters become homeowners, and others.
PACDC is closely monitoring the legislation and advocating for a final package of bills that provide the maximum benefit to the renters and potential buyers most in need of assistance; create long-term affordability; provide transparency and accountability in how the new sub-fund decisions are made; ensure that Philadelphia’s affordable housing non-profits can put these funds to work in their programs and projects; and ensure that the new fee will not burden publicly subsidized affordable housing developments.
“Council President Darrell Clarke and Councilman Mark Squilla have been leading the efforts to create the construction-impact tax, and Councilwoman Maria Quiñones-Sánchez has been a strong advocate for mixed-income communities and more resources for the Housing Trust Fund,” said PACDC Board President Maria Gonzalez. “They should be applauded for their leadership; their efforts deserve support from other members of Council and Mayor Kenney.”
For more information about PACDC or the construction-impact tax, contact Beth McConnell, policy director at PACDC, at [email protected] or 215-732-5829 ext. 110.