Something stinks in Fishtown

In May, Forbes magazine declared Fishtown “America’s Hottest New Neighborhood.” Its real estate market is on fire as well as its cultural capital, thanks to gentrifying hipsters and savvy businesses who live by the motto “location, location, location.”

It’s world headquarters of La Columbe, boasts two Steven Starr restaurants, and a Live Nation venue that hosts the hottest acts in town.

No doubt about it: Fishtown is booming.

The timing couldn’t be better. Schools are in a desperate state with officials scrambling and scrimping to find money to remove toxic lead paint and asbestos in addition to hiring enough teachers. A booming Fishtown is a key opportunity to collect millions in new school tax revenue.

So why is the City giving away millions in tax breaks to developers and the well-off? Let’s take a step back.

Like most states, Pennsylvania employs tax exemptions to spur economic activity in areas that are in the doldrums. Sometimes it’s because there are rural locations way outside the beaten path that businesses wouldn’t typically consider operating from or areas reeling from urban blight, long neglected and just not ready for prime time.

The Commonwealth’s Keystone Opportunity Zones offer property owners exemptions from local real estate taxes, use and occupancy tax, sales tax, business income and receipts tax, in addition to state sales and corporate income taxes. The tax exempt status can be renewed after a decade.

For the right kinds of businesses and neighborhoods, it’s a win-win incentive program, generating jobs and tax revenue where there would be none. Little to lose, much to gain.

It is under this program that Philadelphia City Council’s Finance Committee approved 81 KOZs, the vast majority of which are in Kensington and Fishtown. 

Considering the outcry about long overdue market value assessments of Philadelphia properties earlier this year, the doling out of lucrative and tax-free parcels of booming Fishtown is stunning and deeply troubling.

If Fishtown is so hot, why is City Council looking to give away millions in tax revenue for no apparent reason. At best, this is bad fiscal stewardship. At worst, something is rotten in Fishtown. 

This budget season, Council balked at a nominal property tax increase saying that residents couldn’t afford it, even with expanded homestead exemptions. But with supply lagging demand, developers and speculators are carving up Fishtown at a brisk pace and will reap tidy fortunes on exploding property values alone.

It’s not hard to see who’s actually capitalizing on these opportunities and who’s paying the price. The question is why is this allowed to happen at all?

While it’s troubling that the Finance Committee “quickly and quietly” approved the 81 KOZs sites, we hope City Council will make sure that businesses that can afford their due taxes pay their fair share.