If I had $20 million to spend on helping poor people, I wouldn’t spend it on capping property taxes for house-rich-cash-poor homeowners in appreciating neighborhoods. I’d spend it on a sales tax cut. That’s because the big difference between house-rich-cash-poor-people and poor-poor people is that real poor people don’t own expensive assets they can trade for a big pile of cash.
Philadelphia City Council sees it differently, and they passed a new LOOP “gentrification relief” program capping property taxes at no more than triple the current assessment for low-earners who have owned their properties for more than 10 years. Like the 10-year property tax abatement for new construction, the cap lasts 10 years.
A family of four who make under $118,000 will be eligible, and this comes on top of the $30,000 homestead exemption Council already passed. People do have to apply for it by January 15 (possibly later), so it’s not clear how much money the city will actually end up spending on this, but City Council budgeted $20 million for it.
In the context of an almost $4 billion budget, that’s not really that much money, but my problem with this is more about political framing.
In the NIMBY framing of the issue, land price appreciation caused by growth in nice neighborhood amenities is something you need “relief” from. The political response is clear: growth is bad for long-time residents, so stop new buildings and businesses from coming in. That seems to be the operating idea behind the Point Breeze Organizing Committee’s political program. If you just don’t let people build market-rate housing or open businesses that yuppies like in the neighborhood, then the land values will stop going up and so will property tax bills. Why not take it further and start throwing your garbage on the streets so people really won’t want to come live there?
Those politics are perverse, and that’s why I want to replace the LOOP program with a Gentrification Dividend, where near neighbors get a check in the mail from the city every time a new building comes on the tax rolls in the neighborhood.
The money would come out of the tax increment the city gets from new construction, and the program wouldn’t be means-tested, the idea being that everyone should share in the benefits when neighborhoods get more nice amenities. This framing points to a less dysfunctional politics, where people see a direct connection between new mixed-use construction and more money in their bank accounts and city coffers.
The 10-year tax abatement on new construction would complicate this, since the increased revenue from new buildings comes in on a 10 year lag. But with the first round of abatements starting to expire next year, the city could dedicate some of that money toward paying small dividends to near neighbors on the assessed value of new buildings.
The cost to the city from NIMBY anti-development politics is high. Lots of time and money are spent dealing with appeals and lawsuits, we don’t get the tax revenue from the building proposals that neighbors kill, and most importantly, we don’t get the tax revenue from the projects that don’t get proposed at all because national and international developers don’t want to spend the time figuring out how to do development politics in Philadelphia.