Tax break off the market?

Al Perry describes housing sales in South Philly with one word: "Phenomenal."

The Realtor for Century 21 Advantage Gold, 2010 Oregon Ave., partly attributes the allure of the area to a 10-year property-tax abatement on new construction. Since the inception of the tax break, certain communities have tripled in value, he noted.

"I don’t think you’ll find a Realtor in South Philly that will complain about anything other than a lack of inventory," said Perry, also president of the Greater Philadelphia Association of Realtors.

Before the incentive became law in 2000, Perry said, he "can’t recall a significant redevelopment going up where you were taking down rundown housing and putting new housing in its place."

As Mayor John Street weighs whether to end the abatement, developers and Realtors say such an action could stifle the area’s housing boom.

"He really is just flirting with the idea," said mayoral spokesperson Deborah Bolling. "He was just acknowledging that it was a reasonable consideration."

The mayor is eyeing the $22 million in annual abated taxes as he grapples with the city’s budget and a state-required five-year spending plan.

But the surge in new construction has developers hoping that Street will seek other resolutions to the city’s funding woes.

Last year, the Metro Development Co. began transforming the former Curtis Publishing Co. building, 1101 Washington Ave., into condominium residences called the Lofts at Bella Vista. Construction should be completed by year’s end.

Next month, construction will begin on the former site of Trinity Christian Elementary School, 19th and Porter streets, to make way for 12 luxury homes – appropriately titled Trinity Estates.

The tax incentive is an appealing tool to lure all types of buyers, said Anthony Marotta, developer of Trinity Estates.

"I think it’s attractive to all facets – from young professionals, to people starting families, to empty-nesters," said Marotta, originally of 17th and Wolf streets.

Capozzi Real Estate began installing the infrastructure for condominiums and townhomes at the Regency and Villas at Packer Park last month.

The real-estate firm is also the exclusive broker for the Reserve at Packer Park.

Barbara Capozzi, president of the Packer Park Civic Association, noted that her firm made 87 settlements in a nine-month period.

"Those 87 settlements would not have happened without the tax abatement," she said.

As a marketing tool, Capozzi said she often advises young couples who purchase new properties in the city to put the money they save from the tax abatement in the bank.

"What I always tell them is figure out your savings, get a savings account and at the end of 10 years, they can say they really have something," she said.

THE LEGISLATOR WHO introduced the abatement bill in 2000 does not necessarily believe its demise would be a death knell for development.

"I don’t think anyone can say with certainty that would be the effect of eliminating the abatement," said First District Councilman Frank DiCicco. "There has not been one developer who has come into my office with a plan that had said, ‘but for the abatement, I would not have been able to do this project.’"

Yet DiCicco also credited the tax abatement for attracting new city residents and, along with them, contributions to the city’s wage and sales tax.

"Over 65 percent of people who are moving into these new units in the city of Philadelphia are non-Philadelphia residents," he said.

The councilman also constructed a companion bill in 2000 allowing existing homeowners to reap similar benefits.

"It says you can make all of the improvements that you want, but you won’t be assessed for the value of improvements for the next 10 years," he said.

The city will start benefiting from a surge in real-estate tax revenues within the next seven years as the first round of abatements reaches the 10-year mark, he said.

"For me, it’s an investment in the future of our city," DiCicco said. "It’s a win-win situation and I don’t think it’s something we should be messing with yet."

The spike in housing development also grants job security for union workers, said Diane Lucidi, a South Philly resident and executive vice president for the Greater Philadelphia Association of Realtors.

"The tax abatements bring in more jobs because the unions are hiring more people," she said. "If this is working, why would they change it?"

Brett Mandel, executive director of the tax-reform advocacy group Philadelphia Forward, lauded the tax abatement and the country’s historically low mortgage rates, noting that it has served to offset "Philadelphia’s tax burden."

Phasing out the abatement might be a possibility, he said.

"What the mayor is suggesting makes perfect sense, but not without fundamentally changing the tax structure," Mandel said. "We should keep it in place for now. If we implement the recommendations of the Tax Reform Commission, we can look at other taxing tools and see if they shouldn’t be eliminated in the future."

Economic expansion in Center City has spurred development in all parts of the city, including South Philly, said Bob Previdi, spokesperson for City Council President Anna Verna.

"I certainly think that nobody can argue the success of this program," he said. "Unless someone comes up with some evidence to show differently, it’s probably a good idea to keep the tax abatement going, given the success the city has had with it."

Century 21’s Perry can find no positives in eliminating the abatement.

"I don’t see any benefits, other than a short-term Band-Aid for the budget."