This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.
If Philadelphia immediately ended its 10-year property tax abatement, the School District would reap an extra $61 million annually, according to a new report from the Our City Our Schools coalition and Philly POWER Research.
Our City Our Schools is calling to end the abatement and invest the resulting tax revenue in the School District’s crumbling infrastructure, which has been plagued by mold outbreaks, collapsing roofs, malfunctioning climate-control systems, and a lack of air conditioning. It’s part of a broader effort to bring in an additional $300 million in annual revenue for the schools without taxing working people.
The group proposes ending the abatement for new construction and revoking it from current buildings even if their 10-year term has not expired.
“[The report] sheds light on the impact that these abatements have on starving our schools and our city of the public resources and services we need,” said Kendra Brooks, an organizer with the coalition. “We must push City Council and the mayor’s office to end these unjust tax abatements for luxury developers and provide that money to teachers, nurses, janitors and students to teach, learn and thrive in our city.”
The coalition is collecting petition signatures to support ending the abatement. Members of the coalition delivered copies of the report to Council members on Nov. 15. They plan further visits to Council offices on Nov. 29, Dec. 6, and Dec. 13.
The report sorts the projects that receive tax breaks by Council district. Council President Darrell Clarke’s district, which includes parts of Center City, has received the most in tax breaks – $36 million, which is $8 million higher than second-place Councilman Mark Squilla.
The most expensive property to receive an abatement in Clarke’s district is a high-rise apartment building at 20th and Market Streets. It’s worth $121 million, of which $109 million is exempt from property taxes. Without the exemption, the portion of this building’s taxes that would go to schools would be more than $800,000 every year. Each apartment in the 300-plus unit building earns nearly $5,000 each year in tax exemptions. Yet these apartments are only affordable to the city’s most affluent residents.
And 486 other properties in Clarke’s district are worth over $1 million – more than any other Council member.
Seth Kulick is the parent of an 11th grader at Academy at Palumbo, the site of a recent ceiling collapse that caused flooding in the upper floors of the school.
“Palumbo is considered one of the schools in not-so-bad condition,” Kulick said. “If Palumbo’s not in bad condition, what does that say about the other schools in the School District?”
Money gleaned from ending the abatement “wouldn’t pay for everything, but it would pay for a lot,” he said, adding that the School Reform Commission sought to “divide teachers and students and parents as much as possible.” He thinks things are “changing for the good” with the Board of Education, which assumed control of the District in July.
Members of the new school board recently criticized a series of proposed state tax abatement locations, the Keystone Opportunity Zones. Those abatements ultimately passed the board with two dissenting votes.
Because the District receives a larger portion of local property taxes than the city, the $36 million in tax exemptions in Clarke’s district alone mean $20 million less for the School District. That’s enough to pay for the salaries of 290 teachers, 266 nurses or 278 counselors. The report used District employee data to calculate the average salaries.
But Clarke’s district is not entirely affluent and it extends up into North Philadelphia, where Ben Franklin High School is in need of over $50 million in repairs and every student comes from a household below the poverty line. In recent years, the school has had problems with lead paint, damaged asbestos, and lead in the drinking water.
The largest tax abatements have been given to the most affluent area of Philadelphia – Center City. The three Council districts that overlap Center City are home to the large majority of abated property taxes, totaling $47 million. Those are the districts of Clarke, Squilla, and Kenyatta Johnson.
“While we focus on luxury development in Center City for this report, we know that the 10-year tax abatement touches and affects every single neighborhood here in Philly,” Brooks said.
The most expensive property to receive the 10-year tax abatement is the Sugar House Casino in Squilla’s district. The casino is worth $307 million. Without the abatement, it would be sending $2 million to the School District every year.
Tonya Bah, a City Council candidate in the Eighth District and a longtime activist for the rights of children with special needs, spoke about the abatement from her perspective as a resident and parent of two children in public schools.
“This city doesn’t always prioritize the things that are most important,” Bah said. “I live in a rowhome in North Philadelphia, where I pay more property taxes than Comcast pays for their skyscraper. And my neighbors have to choose between heating and eating. That’s a problem. It’s why I’m running for Council.”
Bah is running against incumbent Cindy Bass, who recently came out against the 10-year abatement, though she still supports the state tax abatements recently debated by the school board.
There are now three bills in City Council, one introduced by Bass, that would end the 10-year tax abatement in one way or another. But none has had a hearing.
The $61 million that Our City Our Schools says is being lost to the abatements could pay the salaries of 912 teachers, 814 nurses, or 848 counselors, the group calculated. Aging school buildings have an average repair cost of $14 million, according to the District’s 2016 report on the condition of its facilities. Using that average per-school figure, the coalition says that ending the abatement would allow the School District to fully repair four schools each year.
The mayor and Council have been resistant to reducing or eliminating the abatement, saying that it has been a successful incentive for a building boom.
The city Department of Revenue commissioned a study of the abatements’ costs and benefits that was released in May. It took the long view, concluding that changes to the incentives would generate more revenue for the School District for the next 18 to 22 years. After that, the study predicted, lost development would lead to a decline in revenues.
The city’s study used a different methodology, leading it to conclude that ending the abatement would only generate $9 million in the first year. It estimated the number of jobs created by the construction industry, estimated the associated taxes those jobs generate, and subtracted those tax estimates from the additional real estate tax revenue that ending the abatement would generate.
Dan Symonds, a teacher at Science Leadership Academy and a member of the Working Educators caucus, spoke about the moral imperative of fixing the city’s school system.
“I’ve got a radical belief,” he said, laughing along with the crowd who clearly did not think a well-funded public school system was a radical idea. “This city should work for everyone. The money in this city belongs to the people of this city. That the people who work day and night, who go to school, who pay taxes, who take care of their family members, who ride SEPTA, who are paying for rising rents – those who actually count on getting their paycheck on time, they deserve their fair share of the basics.”
“These ideas are not radical. I’m saying that schools need enough money. The money’s right there in that building,” Symonds said, pointing to a luxury high-rise on the corner of Broad and Green Streets. “This is the wealthiest nation in human history. We have the money for public schools. What we’re missing is the courage of elected officials who are happy with the status quo.
“It takes just a grain of empathy, a drop of common sense, and one human heart to oppose the tax abatement. We’re telling City Council the time is now to end the toxic, school-robbing tax abatements. City Council is on notice: We will see you in the election.”