Without Pa. help, Philly gentrification relief could have unintended results

Madeline Shikomba bought her Southwest Center City home for $6,000 in the 1970s. As part of Mayor Michael Nutter’s property-tax overhaul, the city recently reassessed her house at $316,500, a tenfold increase over this year’s value.

Shikomba’s property taxes could go up by roughly $3,000 without any gentrification relief.

“I can’t afford to stay there at this rate,” she said. “None of us make that kind of money. So the various ethnic groups are going to be pushed out.”

A City Council bill would give a property-tax break to longtime homeowners in rapidly gentrifying areas. People who have lived in their homes for more than 10 years, and have seen their assessments more than triple, would be eligible for the gentrification relief. 

If it passes, Shikomba’s taxes could go up by about $300 to $1,270 next year — a big difference.

But the bill could lead to unintended consequences. Under state law, Philadelphia can’t use a “means test” to decide if a resident deserves the gentrification tax relief based on their age and income. That means wealthy homeowners could benefit from it. For example, a Council analysis found that one resident who bought a house for $725,000 would be eligible for the break.

In fact, 347 property owners who bought their homes for at least $250,000 before 2004 would be eligible, according to the analysis.

State Rep. Michael O’Brien, D-Philadelphia, has introduced a bill that could change that. It would allow the city to utilize a means test for gentrification relief. 

“We want to do means testing to ensure some degree of fairness,” he said. “I’ve talked to folks in my district … their property taxes have gone up $10,000. And these are folks who are older and retired, who have been in their houses since the end of World War II.”

A House committee is scheduled to vote on O’Brien’s bill this week. He said he’s “fairly confident that it’s going to move forward.”

Nutter has set aside $20 million for gentrification relief in his proposed budget. He and Council President Darrell Clarke are pushing for the state to give Philadelphia the authority to use means testing. 

“It makes sense to not grant relief to those who have the means to pay their property taxes, and who would receive relief simply because they were under-assessed in the past, not gentrified,” said Clarke spokeswoman Jane Roh.

Correction: A photo caption incorrectly stated that Ms. Shikomba’s block is in Point Breeze. As the report correctly noted elsewhere, it is in Southwest Center City. We regret the error.