---

---

Philadelphia is exploring a 20-year property tax abatement to incentivize office-to-residential property conversions as a response to high office vacancy rates (around 20%). The proposed legislation, part of the written report issued by the city’s recently formed Tax Reform Commission, aims to make these property conversions financially viable by doubling the existing 10-year property tax abatement for struggling buildings, though the governmental program would expire after 5 years to encourage quick property development.

While some hope that property conversions could help address the city’s affordable housing crisis, most past property development projects have catered to high-end renters. The high cost of such property conversions, particularly for large properties like the Wanamaker Building, may require significant public subsidies that Philadelphia may struggle to provide.

The proposed legislation has garnered support from business leaders, who argue that property tax incentives are essential to repurposing vacant office buildings. Property developers cite high interest rates, rising construction costs, and economic uncertainty as major barriers. However, Philadelphia’s complex tax structure and high wage tax have long hindered business development, pushing companies to suburban areas like Devon, Valley Forge, and Malvern, which are thriving in contrast.

Critics worry about lost tax revenue and budget challenges, particularly as President Trump’s second administration is expected to reduce federal funding to the city. Some advocates argue that shifting tax burdens onto homeowners could be politically and economically risky. The proposal remains advisory, requiring further discussion and approval from Mayor Cherelle L. Parker, City Council, and even Harrisburg lawmakers before it can take effect.

If you have questions about property tax abatements, please reach out to Alan Nochumson at 215-600-2851 or [email protected] or Alex Goldberg at 215-399-1346 or [email protected].