REPORT: Councilman Allan Domb’s Tax Abatement Profits.

By Posted in - Uncategorized on April 18th, 2019

‘Let Them Eat Lead’:

How Allan Domb Profits off the 10-Year Tax Abatement and Bankrupts Philly Schools

Prepared by Philly Power Research for 215 People’s Alliance

April 2019

Download the Report Here

Introduction

For years, education and housing justice organizations have called for the end of Philadelphia’s ten-year tax abatement. The abatement rewards luxury real estate developers at the expense of schools, affordable housing, and other essential public services Philadelphians deserve. Last fall, the Our City Our Schools Coalition, in partnership with Philly Power Research, released a report arguing that ending the 10-year tax abatement would have provided $61 million for the schools in 2018. Those funds are badly needed to cleanup toxic lead, asbestos, mold, rodents, faulty electrical systems, and poor ventilation in the city’s public schools.

Facing mounting public pressure, city council will almost certainly make some changes to the abatement in the coming year. But will City Council go far enough to fund the schools, affordable housing, and public services that Philadelphians deserve? Or will they bow to the city’s luxury real estate developers who depend on the tax break to boost their profits?

There are now five bills in front of city council offering different paths for reforming the abatement. The least-comprehensive bill by far was introduced by “condo king” turned City Councilmember Allan Domb. His bill proposes reducing–but not significantly changing–the abatement by “winding down the benefit in 25 percent increments over its last three years, effectively reducing the subsidy by 15 percent.” Essentially, it would turn the ten-year tax abatement to an eight and a half-year tax abatement.

It is unsurprising that Domb has been an outspoken proponent of the ten-year tax abatement. Indeed, as both a major property owner and a luxury real estate broker, Allan Domb has a vested interest in ensuring the City of Philadelphia maintains some version of the ten-year tax abatement.

Our investigation found:

  • Allan Domb has a vast real estate business that includes development, ownership, and brokerage. As a City Council member, Domb has an obligation to do what is in the best interest of all the people of Philadelphia, which conflicts with his interest as a developer and broker in maximizing real estate profits. This raises real questions about his ability to fairly represent Philadelphians when it comes to issues such as the ten-year tax abatement.
  • In addition to the hundreds of properties he owns, Allan Domb has business relationships with dozens of luxury condominium buildings as a real estate broker. In 2018 alone, condo buildings in which Allan Domb Real Estate rents and sells luxury units received $12.3 million in abatements, $6.8 million of which would have gone to the School District of Philadelphia. That $6.8 million is more than 10% of the total amount ($61.2 million) the school district lost out on last year due to the ten-year tax abatement.
  • As one of the city’s biggest property owners, Domb profits from the ten-year tax abatement. From 2008-2019, Domb’s personally owned properties received at least $541,000 in abatements, about $300,000 of which would have gone to the School District of Philadelphia.
  • Allan Domb Real Estate has commercial relationships with three of the city’s top five abated properties from last year. In 2018, the properties that received the highest total abatements were The Residences at the Ritz Carlton (1414 S Penn Square), the Sugarhouse Casino (1001-99 N Delaware Ave), 10 Rittenhouse Square (130 s 18th Street), the Murano (2101 Market Street), and 1706 Rittenhouse Square (1706 Rittenhouse Square). Combined, they received about $14 million in abatements, about $7.7 million of which would have gone to the school district. Of those five properties, Allan Domb rents and/or sells apartments in three–the Residences at Ritz Carlton, 10 Rittenhouse Square, and 1706 Rittenhouse Square. Those three properties received $8.4 million in abatements, $4.6 million of which would have gone to the school district.  Additionally, Domb owns seven properties at the 130 S 18th Street address, four of which received tax abatements last year totaling about $18,000 combined.
  • Allan Domb is one of the biggest landlords in Philadelphia. We identified 437 properties currently owned by Allan Domb or related LLCs, including a mix of commercial, single-family condominium, and multi-family properties.

Luxury condo buildings that Domb’s brokerage firm works with took $6.8 million from the schools last year — 10% of all tax abatements

Domb doesn’t just own real estate, he is also a real estate broker. He rents and sells luxury apartments and condos in almost 50 Center City buildings. The buildings with which he has business relationships as a broker are among the top beneficiaries of the ten-year tax abatement. Of the 48 buildings that Domb’s brokerage firm claims to work with, 23 contained units that were abated last year.

In 2018, condo buildings with which Domb’s brokerage firm does business received $12.3 million total in abatements, $6.8 million of which would have gone to the School District of Philadelphia. That $6.8 million is more than 10% of the total amount ($61.2 million) the school district lost out on last year due to the ten-year tax abatement.

Allan Domb’s brokerage firm has commercial relationships with three of the top five abated properties from last year. In 2018, the properties that received the highest total abatements were The Residences at the Ritz Carlton (1414 S Penn Square), the Sugarhouse Casino (1001-99 N Delaware Ave), 10 Rittenhouse Square (130 s 18th Street), the Murano (2101 Market Street), and 1706 Rittenhouse Square (1706 Rittenhouse Square). Of those give properties, Allan Domb has commercial relationships with three properties–the Residences at Ritz Carlton, 10 Rittenhouse Square, and 1706 Rittenhouse Square. Those three properties received $8.4 million in abatements, $4.6 million of which would have gone to the school district. Additionally, Domb owns seven properties at the 130 S 18th Street address, four of which received tax abatements last year totaling about $18,000 combined.

As a real estate broker, Domb is not directly pocketing these abatements. However, his commercial relationships with these luxury condo buildings raise questions about conflicts of interest. As a city council member, Domb has an obligation to do what is in the best interest of all the people of Philadelphia, which conflicts with his interest as a developer and broker in maximizing real estate profits.  

Allan Domb-owned properties have taken at least $300,000 from the schools since 2008

It is well known that Allan Domb owns a significant amount of Center City real estate. Our original research found that Domb and LLCs affiliated with his real estate company currently own at least 437 properties in Philadelphia, making him one of the city’s largest property owners. Of those 437 properties, 378 are designated as “single-family” (primarily condos), 6 are designated as “multi-family,” 10 are designated as “mixed-use,” and 43 are designated as “commercial.”  

From 2008-2019, Domb-owned properties received at least $541,000 in abatements, about $300,000 of which would have gone to the School District of Philadelphia (see “Methodology” below for more on how we calculated how much would have gone to Philadelphia schools). That is more than twice the amount Domb contributed when he donated his city council salary to the schools in 2016. This number does not include properties that Domb may have owned between 2008 and 2019 but sold before 2019, as property assessment data from previous years is not readily available.

Last year, 16 of the 437 properties Domb currently owns were abated. They received $54,985 total in abatements. These properties are all in what are considered to be luxury buildings. For example, a Domb-owned unit in The Warwick that he purchased for $2.2 million in 2009 received the tax break last year.

Recommendations

Based on this clear conflict of interest, we have two main recommendations.

First, Allan Domb should remove himself from voting or issuing bills on the tax abatement since he has a direct financial tie with the policy. We are deeply concerned at Allan Domb’s ability to create and vote on legislation that is fair to a vast majority of working class Philadelphians when millions of dollars of his own money rely on him upholding the status quo.

Second, should he refuse to recuse himself from this issue, Allan Domb should be required to provide a full account of how his real estate firm and key business partners profit from tax abatement, and then donate those profits to the City and the School District. 

Methodology

Methodology to identify Domb-owned properties:

This analysis relies on the Office of Property Assessment’s “Properties” dataset published on Open Data Philly. We used the city’s data set to identify properties owned by Allan Domb and any LLCs associated with his firm and related entities.

Data source: “Properties (CSV),” https://www.opendataphilly.org/dataset/opa-property-assessments

Methodology to calculate abatements of Domb-owned properties:

This analysis relies on data obtained and purchased from the City of Philadelphia

Office of Property Assessment (OPA) in January 2018 and October 2018. OPA provided lists of all certified properties making use of the 10-year tax abatement program from 2000-2019. We used OPA parcel numbers to compare our list of Domb-owned properties with the OPA’s lists of properties making use of the 10-year tax abatement. We then used the City’s property search tool (https://property.phila.gov/) to confirm when Domb had purchased the properties and thereby began to profit from the abatement. This methodology does not account for properties that Domb may have owned between 2008 and 2019 but sold before 2019. It only includes properties that Domb currently owns, because historical OPA property records were not easily attainable.

Assumptions:

Methodology to calculate abatements of properties with which Domb has commercial relationships as a real estate broker:

This analysis relies on data obtained and purchased from the City of Philadelphia

Office of Property Assessment (OPA) in January 2018 and October 2018. OPA provided lists of all certified properties making use of the 10-year tax abatement program from 2000-2019. To determine which buildings Domb works with as a real estate broker, we used two lists found on his firm’s website. We then compared the list of properties Domb identifies on his website the OPA’s 2018 lists of properties making use of the 10-year tax abatement. Our totals include every abated unit in each building.

Data Sources: “Our Properties,” https://allandomb.com/our-properties/ and “Center City Condo Buildings,” https://allandomb.com/buildings/.

Assumptions:

  • Philadelphia real estate tax rate = 0.6317% (City) + 0.7681% (School District) = 1.3998% (Total)

All datasets available upon request.