Quote:
Originally Posted by eixample
This is a good article. I thought that other editorial was pretty ridiculous and I also thought 1487 made a lot of good points. I would also wager that for every one of those upwardly mobile young professional new arrivals who is pissed that their abatement went away in some sort of bait and switch, there are two others who don't live in abated properties and are glad that the city is making them pay a little more of their share.
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It was a good article .
However, in addition to glossing over the essential fact that blight speculators have yet to be hit with big fat assessments - ironically, the foremost objective of a land tax . . . but they'll be reassessed soon we are told . . .
- it misses a few other key points :
The abatements are
not a moral issue, some kind of unfair freebie to buyers. They are a financial transaction. And the City has decided unilaterally to walk out on its side of the deal to raise revenue.
The bait and switch is very real, and it's this:
When someone buys a tax abated house, they pay a premium to buy it. I.e., hypothetically if you sell two identical houses (in quality, location, etc.), one with an abatement and one without, the one with the abatement will sell for the price of the unabated house plus the present value of the ten year tax abatement. If the tax abatement is worth, say $5,000 per year, that's probably worth, say, a $40,000 price premium.
Incidentally, anyone who resents those with abatements can get an abatement too by selling his/her house and buying an equivalent abated one. But guess what: the transaction will be a wash because you will sell your house for less than the one you buy, so all the benefit of the new abatement will be ploughed into the higher purchase price for the new house.
The same applies to all people who bought abated houses: they
paid for that abatement. The builder pocketed the money, but presumably used some or most of the premium to build a nicer product than might ordinarily have been possible . . .
which was, by design, exactly what the City wanted: an inducement to get builders to build more decent, market rate housing in the city. Which, in theory anyway, improves the whole neighborhood as well as the QOL for everyone where this is happening.
So what the City has done is say to abatement holders: now that we snagged you into subsidizing builders to undertake urban redevelopment that benefits everyone, per the design of the abatement program, we are coming back to take away some of what you paid for: you paid $40,000 for an abatement that, surprise, we are making worth only $20,000 now. Because we can. And you can't do anything about it! Ha ha ha!
That is bad faith dealing, the worst kind. Bait and switch all the way. Not a good way to win the loyalty of a new class of young professionals whom this city desperately needs to keep living here, paying all sorts of taxes and supporting all kinds of businesses, schools, and neighborhood improvements.
Yes, these are a relatively small portion of the population, but it is disproportionately made up of exactly the kind of people the City needs to be welcoming, not — off with sleazy old school Bob Brady/John Dougherty/Darrell Clarke backroom —.
If you want to create bad blood with these people, this is the way to do it. And it's very bad for all of us who have an interest in this city becoming better educated, more professional, and more economically balanced and sustainable. Remaining an impoverished city of primarily uneducated people heavily reliant on government support is the default. This action by the City is a great move to help make sure we stay that way (one of many Jim Kenney and our dynamic Clarke-led City Council seem to be contemplating going forward).
This — for anyone who lives in a decent neighborhood and who wants to see it get better, regardless of whether or not s/he has an abatement.
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