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Tax abatement spurring city housing sales
Thursday, November 13, 2008

John and Nasrin Jordan were getting tired of driving from Downtown events back to their home in Upper Burrell.

"We have symphony tickets and theater tickets," said Ms. Jordan, a managed care consultant. "We're a lot Downtown."

When they heard about a tax break for new Downtown housing, it occurred to them that there might be an alternative.

"Being aware of the tax abatement is what brought us in to take a look," said Mr. Jordan, vice president of a different managed care consulting firm.

On Friday, that interest became an ownership stake when they closed on a condominium at 941 Penn Ave., and became among the first to benefit from a tax break created 17 months ago. It will shave $6,200 from their property tax bill for 10 years.

The 16 families that have bought at 941 Penn are the first to get the benefit Downtown; a handful of homeowners in other neighborhoods are enjoying it.

"We have to do a better job of marketing it," said Mayor Luke Ravenstahl, as he visited 941 Penn yesterday. "Long term, we're going to have families living here in Downtown and some of our other neighborhoods that are eligible for the tax abatement."

Under Mr. Ravenstahl's tax break, which won out over an approach by city Councilman William Peduto, people who buy new homes Downtown and in 26 distressed neighborhoods can get waivers of as much as $6,200 a year in city and school property taxes for 10 years.

The break aims to spur housing in neighborhoods where it would not otherwise occur, and lower the cost of Downtown home ownership to make condos there more marketable.

Developer Jack Benoff spent some $6 million converting 941 Penn and adding five stories. Despite the down economy, he has just one unit left to sell, and is now at work on a Strip District building that will benefit from the tax break.

At 941 Penn, where the condos range from $350,000 to $1.3 million, buyers get the full $6,200 off and the city still collects a substantial tax. In East Allegheny, where developer Al DePasquale is building $229,000 homes, nearly the entire tax bill is wiped out by the break. And in Hazelwood, where five less expensive homes eligible for the abatement await buyers, the break will shave some $200 a month from the mortgage payments.

"We're getting a lot of out-of-towners" who like the proximity to Downtown and the tax break, said Mr. DePasquale. "I don't think it would move forward as rapidly" without the break, he added, noting that he's now planning a 30-home project.

Outside of Downtown, 33 homes are approved for the tax break, including 12 in the Hill District, six in East Allegheny, five in Hazelwood, three in Upper Lawrenceville, two in the West End, and one each in Allentown, Bluff, Elliott, Perry South and Sheraden. Some of those are still under construction.

Mr. Ravenstahl said there's a "larger-scale development" under way in the West End that will use the program.

Jessica Smith Perry, the Urban Redevelopment Authority's manager of housing development, said it's not surprising that a tax break approved by City Council in June 2007 hasn't generated more applications yet. Developers apply after they get building permits, and the break starts when construction ends -- usually 18 months later.

She made presentations to developers outlining the city's various tax breaks in May, and did the same for Strip District interests last week.

Rich Lord can be reached at rlord@post-gazette.com or 412-263-1542.
First published on November 13, 2008 at 12:00 am
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