The City of Wilmington is pressing pause on an effort to renew several tax abatement programs.
Three ordinances that would extend tax abatement programs meant to incentivize development in the city made it out of Wilmington City Council’s finance committee last week.
They were scheduled to be voted on at Thursday’s council meeting — but city officials asked they be held until concerns raised by council members can be addressed.
The legislation proposed by the administration would extend a program incentivizing the rehabilitation of historic properties and modify programs incentivizing residential and commercial development in certain areas of the city and on vacant properties.
At the committee meeting, City Councilman Vash Turner was among those advocating for a more thorough review of the programs. “When you hear these budget hearings, we always talk about, ‘the city’s broke’,” he said. “But then we just give everybody a free pass.”
The properties with tax incentives active through 2019 or into the future had a total of close to $900,000 in property taxes abated last year, according to data provided by the city’s Office of Finance. Together, property tax exemption incentive programs within the city have abated close to $11 million dollars in potential taxes since 2006.
Alfred Lance, a best practices and innovation specialist with the Mayor’s office, urged council members not to see the abatements as lost revenue. “That revenue is tied to the construction of new facilities and the rehabilitation of existing facilities that didn’t happen before,” he said. “So we have new permitting income, new wage taxes as well as when those properties expire, we’ll get the full value of those property taxes etc.”
“We’re a wage tax-driven city,” said Jeff Flynn, director of the Mayor’s Office of Economic Development. “If you look at our budget, a very large portion of it is driven by taxes … sixty percent.”
Council members also asked about regulations that would accompany an ordinance modifying the abatement program for rehabilitation of vacant properties— and raised concerns about enforcement.
“We should take our time to make sure that we do have those guidelines,” said Councilman Vash Turner. “I don’t know why we’re rushing, if we have no applicants as of right now.”
“Why is there not more time for the public to understand the topic?” asked self-described community activist Christian Willauer at the committee meeting.
Willauer, the former president of the Wilmington Land Bank, supports the vacant property rehabilitation incentive, but opposes another ordinance that would extend a program incentivizing residential and commercial development in some parts of the city. It would also expand the program’s geographic targets and reduce benefits in some areas. According to city officials, six commercial properties and three residential properties are currently approved for this program.
Willauer told committee members this “extremely generous” tax incentive program deserves a closer look. “If the growth of our city isn’t captured for the purpose of the tax basis of our city, we’re giving away a lot of potential for what growth could bring to our city,” she said.
According to the city’s data, two properties have received more than $2 million each in abated taxes over the course of their multi-year incentives. One is Pettinaro’s Christina Crescent building on the Riverfront. The other is a commercial building on Delaware Avenue owned by the Buccini/Pollin Group. Neither property’s incentive is currently active.
Lance says the proposed geographic expansion of the incentive is the result of careful planning. “There was an assessment of every single neighborhood in the City of Wilmington and a classification associated with it, and we targeted the neighborhoods that needed it the most,” he said.
“I, for one, am happy that you’re actually expanding the commercial areas,” said Councilman Bud Freel at the committee meeting. “Fourth St., Maryland Ave., Market St. — I think they deserve the same incentives that other areas were getting. So I think it’s a good thing.”
The third ordinance that advanced out of committee would extend an expired program incentivizing the rehabilitation of historic properties.
A spokesman for the Mayor’s office said officials will try to move the legislation along as “quickly as possible” — but noted the administration is also dealing with the process of budget hearings and approval in the coming weeks.