Program Pairing Businesses with Community Organizations Set to Expand

At-Large City Councilman Wilson Good, Jr. introduced a bill last December to expand a key tax credit program for Community Development Corporations in Philadelphia. The bill could increase investment in CDCs by $30 million, according to the Department of Revenue.

The Community Development Corporation Tax Credit allows businesses to receive up to $85,000 in tax credits towards their local Business Income and Receipts Tax if they contribute the same amount to a local CDC. The agreement between the CDC and partner business lasts 10 years, and there are a limited number of slots for CDCs.

The bill would raise the cap to $100,000, where it was before the recession. The Committee on Commerce and Economic Development voted on January 22 to recommend the bill.

Alex Balloon, commercial corridor manager at Tacony CDC, advocated for the bill in a recent editorial on PlanPhilly. “The Community Development Tax Credit Program has been one of the most successful neighborhood economic development funding programs in the city’s history,” he wrote.

The program, Balloon added, has helped fund a slew of projects in his community, from planting new trees on Torresdale Avenue to refurbishing the storefronts of local businesses. Tacony CDC’s tax credit partner is Waste Management, the national waste collection and disposal company, which has a facility in Northeast Philly.

The Department of Revenue, which tracks city expenditures and tax revenue, supports the bill as well. Tilahun Afessa, director of policy for the Department of Revenue, testified in support of the bill at the committee hearing, where she outlined the costs of increasing the cap.

The total cost of the program in foregone tax revenue is $3.72 million per year. With the latest bill, she explained, the total cost would be $4.2 million per year once all CDCs in the program are receiving $100,000.

A number of CDCs already receive $100,000 because they entered into agreements with businesses prior to the cap being lowered in 2011. The original legislation passed by Councilman Goode in 2002 put the cap at $100,000. It also limited the number of CDCs that participate in the program to ten.

Subsequent legislation raised the number of slots, while keeping the same cap on contributions. Then the recession hit, and concerns about increasing the cost of the program tempered a 2011 bill to expand access to more CDCs.

“There were other Community Development Corporations that wanted access to the program a few years back,” Councilman Goode told Generocity.org. “But we were not yet fully out of the economic recession, so in negotiations with the [Nutter Administration] we agreed to increase the number of slots… but to reduce the amount from $100,000 to $85,000 so as not to increase the cost of the program.”

Goode added that the Philadelphia Association of Community Development Corporations advocated to him to restore the cap to its pre-recession level.

There are currently 42 CDCs in the program. The bill will add no additional slots.

“The money is sorely needed,” Goode said. “Without that support, it’s very hard to have continuous activities and programs that can sustain themselves.”  

Photo via Alex Vuocolo