Philadelphia Budget Proposal Full of Real Estate Nuggets

Philadelphia’s real estate industry will be paying close attention to the city’s budget process over the next few months.

Mayor Cherelle Parker revealed her 2025-26 budget proposal on Thursday, Bisnow reported, spending a few minutes of remarks to talk about real estate. A number of components of her budget proposal directly impact the industry.

Parker proposed the city borrow $800 million over a five-year period to build and preserve 30,000 housing units across Philadelphia. The costs could be funded by several tax increases, including upping the real estate transfer tax from 3.28 percent to 3.58 percent, and increasing a document recording fee by $3.

Parker also called for the elimination of a 1 percent construction impact tax in hopes of getting more shovels in the ground. It’s unclear how much of the tax was actually an inhibitor to development, because it only generates $3.5 million for the city per year.

The proposal calls for $11 million in additional funding for the Philadelphia Department of Planning and Development to assist the hiring of 32 employees. Parker also pitched a reduction of the city’s wage tax and business income and receipts tax.

Notably omitted from the budget proposal was the extension of a 10-year tax abatement for conversion projects, pitched by the Tax Reform Commission last month. Finance Director Rob Dubow said the city prefers to simplify its tax structure by eliminating certain taxes, rather than altering abatements.

The city’s next big housing moment is only days away, when Parker reveals her Housing Opportunities Made Easy Initiative at a special session, a hearing she’s herself described as a “D-Day for housing.” That hearing is scheduled for March 24.

The coming fiscal year, meanwhile, begins on July 1, so the City Council needs to negotiate and adopt a budget before then.

— Holden Walter-Warner