SEPTA Saves on Taxes, Opens TOD Potential

SEPTA and the City of Philadelphia have come to an agreement on the transportation agency’s outstanding property tax bill.  In exchange for the City forgiving $22 million in back taxes and forgoing any future property taxes, SEPTA has agreed to make $53.5 million of improvements to transit concourses and become wholly responsible for their cleaning.  This agreement is set to last 30 years, and save the city over $1 million a year in cleaning costs alone.

This agreement is great news for the cash-strapped people mover.  Not only does SEPTA not have to dip into its shallow existing coffers, but it opens up dramatic potential for development at its stations within the city.  New commercial projects on SEPTA property within the city will also be covered by the agreement, helping to make Transit Oriented Development (TOD) more attractive to the organization.

TOD has been sorely neglected opportunity concentrate housing and retail at transportation junctions.  Paring the two helps encourage residents to walk and use public transportation, rather than drive, to get around the city.  SEPTA owns a lot of property in close proximity to transportation routes, and could benefit financially from commercial development of these properties.

The agreement between the City and SEPTA benefits TOD by reducing development costs.  Money that would have gone to paying taxes can instead go into improving the quality of the project or reducing rental costs. Proceeds from development could also be used to improve adjacent stations, or even other parts of SEPTA’s antiquated infrastructure.  Together, TOD and infrastructure improvements could help support the City’s growing population while reducing its environmental impact.

But wait! Isn’t SEPTA a non-profit and aren’t they already exempt from property taxes?  Not according to the Pennsylvania Supreme Court.  A 2003 ruling stated that SEPTA owes the City property taxes for commercial activities – such as shops and restaurants – on its property.  This agreement supersedes the ruling, and clears tax liability from commercial activities on SEPTA property.

This agreement has created some controversy, however, as much of the delinquent tax bill would have gone to Philadelphia Public Schools.  The schools are facing their own financial issues, and some feel the money would have been put to better use plugging the school system’s budgetary hole.

For more information on the agreement, check out this article on Philly.com