Administration Releases Report On 10-Year Abatement, While Council Debates Its Curtailment
The Kenney administration has released a study that reinforces the continued economic benefits of the city’s 10-year property tax abatement, which some lawmakers have proposed eliminating or curtailing.
The report, conducted by Jones Lang LaSalle, found that the 11-year-old abatement program is still spurring development and generating jobs in the city. The study analyzed 10 scenarios that could alter or eliminate the abatement program on residential properties, which make up 98% of those with the tax breaks, and found that any change to the abatement program would lead to a negative impact on development and its related tax revenue.
While the report makers clear that the curtailing or eliminating the abatement program would result in loss of development and tax revenue, Councilwoman Helen Gym has introduced bills to eliminate the school district portion of the abatement and to examine whether its use should be prohibited in certain neighborhoods.
The study also comes as council enters the home stretch on Mayor Kenney’s budget proposal, which calls for a 4.1% property tax hike at a time in which property owners saw soaring assessments and subsequent automatic property tax jumps.
Another recent study by the City Controller noted that due to low incomes and low sale prices in many neighborhoods, the economics of construction don’t currently work in about 70% of the ZIP codes in the city, but the 10-year abatement helps close the gap in at least four ZIP codes.
Retail Plaza With CVS Planned On North Broad Street
Developer Bart Blatstein’s Tower Investments plans a one-story retail structure to be anchored by a CVS Pharmacy at Broad and Spring Garden streets in the large barren plaza that has surrounded Tower Place apartments, the former state office building. Citizens Bank also has a signed lease for one of the structure’s six storefronts facing Spring Garden between Broad and 15th streets, and deals are being negotiated for a Starbucks cafe and Sprint cell phone store in the retail space, according to a brochure from brokerage MSC Retail.
The proposed development comes about five years after the opening of the Tower Place apartments, because Blatstein used federal historic tax credits to help finance the conversion of the 60-year-old building and he was prohibited from altering the property for five years after its return to use. The original development also relied on the city’s 10-year tax abatement.
Office Sector News
Converting Traditional Office to Flex-Space
The Duane Morris building at 30 S. 17th St. has converted its 13th floor into flexible office and meeting spaces in a $10 million renovation. Convene, the company that carried out the conversion, previously occupied 15,000 square feet on the 14th floor.
Convene operates similarly to co-working space and provides offices that can handle up to 60 people and under short lease terms. Convene acquired the Hub, a similar office and meeting space operator, in February 2016. It has two other locations in Philadelphia, in Cira Centre and Commerce Square.
Substantial conversions are also eligible for the 10-year tax-abatement.
Plans Announced For Second Hotel At Navy Yard
A second hotel is planned for the Navy Yard, where developers will convert a 155,000-square-foot building built in 1919 and vacant since 2000. The area benefits from a Keystone Opportunity Improvement Zone, which abates not only real estate, but also business and use & occupancy taxes at the city level.
Philadelphia Industrial Development Corporation is under agreement with Phoenix-based Ensemble Partners LLC. Plans call for the conversion of a Colonial Revival-style complex that once served as a Marine Corps barracks and later housed naval administrative support services. Construction is scheduled to begin in late 2019, with an expected opening in 2022.
Eds and Meds News
IBC, Rothman Sign New 5-Year Deal
Independence Blue Cross and Rothman Institute have signed a new five-year deal that makes Rothman the first large independent physician group to join Independence’s facilitated health networks model. The new agreement becomes effective July 1.
Independence, the region's largest health insurer, and Rothman, the region's largest orthopedic medical group, will work together to ensure that IBC members are having their procedures and care performed in the "most appropriate, high-quality, and cost-effective settings," the groups said in a joint statement. Rothman Institute has also agreed to expand its bundled payment arrangements for specific procedures performed on IBC members.
Philadelphia Beats National Stats Of Law Grads Landing Quality Jobs
Philadelphia law schools beat the national average of graduates who secured quality jobs in 2017, according to data from the American Bar Association on its 204 accredited schools.
Far exceeding the 75% national average of 2017 law graduates who secured jobs that required a law degree within 10 months of graduation were the University of Pennsylvania Law School (95%), Temple University’s Beasley School of Law (86%), and Drexel University’s Kline School of Law (81%). About 32% of local law graduates in 2017 stayed in Pennsylvania to practice law, up from 30% in 2016.
Residential Market News
The Alexander Opens At 1601 Vine
A mixed-use high-rise dubbed The Alexander has opened at 1601 Vine St. The 483,000-square-foot building features 264 rental apartments, ground floor retail and three levels of underground parking totaling 140,000 square feet, extending the development begun by the Mormon Temple on the north side of Vine Street, and helping to narrow the gap created by the Vine Street expressway.
The residential portion is a 31-story cast-in-place concrete tower over a three-story podium and three levels of underground parking. The podium includes 13 three-story townhouses and ground floor space occupied by The Learning Experience, an early education program. The project benefits from the city’s 10-year tax abatement.
Phase 1 Of Waterfront Development To Finish By End Of Summer
A new townhome development on the Delaware River waterfront near Penn Treaty Park is on track to complete first part of its construction at the end of this summer, with a total completion date planned before the end of the year.
New York developer Gotham Bedrock LLC bought the 1.5 acre parcel of land in a $7 million deal last spring. The development will feature 19 townhomes ranging in size from 4,000 square feet to 5,500 square feet.
Reports: Dearth Of Moderately-Priced Housing Fuels Exodus From Cities
The latest census population estimates suggest that high housing costs in U.S. coastal cities are pushing people to suburbs and smaller metro areas with relatively lower home prices and low-tax policies drawing more employers.
A new report from The Pew Charitable Trusts notes that 2017 marked the first time since 2007 that New York City did not lead the pack in population growth. Population growth in 2017 slowed in most cities of more than a million people, except San Antonio and Philadelphia.
According to CCD/CPDC research, Philadelphia’s recent population gains are due to births and immigration, as well as the influx of millennials into Greater Center City, but the suburban exodus continues among residents of working class and middle income neighborhoods outside the downtown, where an average of 40% of workers are already reverse commuting to the suburbs.
Council Mulls Requiring More Parking With Residential Construction
City Councilwoman Jannie Blackwell has revived a 2016 bill mandating developers to provide more parking with new residential construction. The most recent version of the bill, scaled back from Blackwell’s initial proposal, would require that projects of more than 10 units in a single-family district, and in the most common rowhouse-style multifamily district (RM-1), would be required to have three units of parking for every 10 homes.
Developers, whether they are building affordable housing or high-end condos, and industry groups overwhelmingly say the bill would add more costs to projects without delivering any benefit to the city as a whole. The Philadelphia Association of Community Development Corporations opposes the bill, as does the Building Industry Association (BIA).
Survey Finds Philadelphia Has Best Quality Of Life For The Cost
Philadelphia has the best quality of life for the cost compared with any other U.S. city, according to a survey from San Francisco-based mobile banking startup Varo Money Inc.
The survey, conducted in April for the fin-tech company by Propeller Insights, found that 56% of Philadelphia residents said the city offers the best quality of life for the cost, and 73% were most likely to say they could generally afford the lifestyle they want. About 66% of survey respondents in Philadelphia said they own their homes, more than any other U.S. city.
Federal Donuts To Open East Market Spot This Fall
Philadelphia-based doughnuts and fried chicken chain Federal Donuts is the latest food establishment to join a growing list of commercial tenants at the East Market retail district in Center City. National Real Estate Development announced that Federal Donuts signed a lease for 1,180 square feet of space and will open in the fall.
The concept is from restaurateurs Michael Solomonov and Steven Cook of CookNSolo Restaurant Partners, which also owns and operates Zahav, Dizengoff, Abe Fisher and Goldie. The East Market project is owned by National Real Estate Advisors, JOSS Realty Partners, Young Capital and SSH Real Estate.
California-Based Eatery Pokeworks Announces Center City Location
Southern California-based poke shop Pokeworks announced it will open this summer at 1037 Chestnut St. The company said the Center City location is one of five new locations it plans for Philadelphia, but has not yet named the others.
The fast-casual chain, featuring make-your-own salad bowls and burritos, is only a few years old but already has 20 locations open across the country.
Amtrak Resumes Search For 30th St. Development Overseer
Amtrak is resuming its search for an overseer to begin redeveloping its vast University City land holdings around 30th Street Station. The effort was put on hold last year amid signs that city officials intended to propose nearby sites to Amazon for the e-commerce giant’s second headquarters.
The renewed call for a master developer identifies improving the rail station’s retail offerings, office space and mechanical systems as the first steps toward completing a decades-long initiative known as the 30th Street Station District Plan. The plan envisions a 35-year redevelopment of 175 acres — including capped rail yards — between Walnut and Spring Garden streets, east of the Drexel University campus.
Design Work Underway For I-95 Central Access Philadelphia Project
Over the next several decades, PennDOT will be reconstructing a six mile of segment of Interstate 95 in Center City and South Philadelphia, between Spring Garden Street and the Spring Garden Bridge. Planning and preliminary design work is underway, with project goals that include fitting I-95 into its urban context, and increasing multimodal transportation access to the Delaware River.
The earliest construction phase is scheduled to start in 2021 with the expansion of the existing cap over the highway to span the entire area from Chestnut Street to Walnut Street, from Front Street to Penn’s Landing (including Columbus Boulevard), as well as the extension of the existing South Street Pedestrian Bridge over I-95 to the southern end of Penn’s Landing.
Project information and resources on commuting alternatives are available at 95revive.com.
Philadelphia Tops Other Cities On Food Access, Lags In Absenteeism
Philadelphia is more walkable and has greater access to healthy food than other large American cities but continues to struggle with higher rates of violence and chronic school absence than peer cities, according to the latest City Health Dashboard, a joint initiative by NYU’s Schools of Medicine and Public Service, the National Resource Network, ICMA and the National League of Cities. The dashboard tracked health data for 500 of America’s largest cities
Among the positive findings: only 22% of Philadelphia residents experience limited access to healthy food — that is, live farther than a half-mile of a grocery store — compared to an average of 62%. On the negative side, nearly a third of public school children are chronically absent, compared to a national big-city average of 17%.
Manufacturing, Service Industries Continue Growth in May
Manufacturing continued to grow in the region in May, according to responses to the Manufacturing Business Outlook Survey conducted by the Federal Reserve Bank of Philadelphia, with new orders up for 48.4% of firms, down for 7.7%, and remaining the same for 42.4%. The number of employees increased for 36.7% of the companies, decreased for 6.4%, and was unchanged for 55.1%.
Looking ahead six months, 48.3% of the firms expected conditions to improve, 9.6% anticipated a downturn, and 30.1% predicted no change.
Business activity continued to expand in the region’s service sector in May, according to responses to the Nonmanufacturing Business Outlook Survey, with new orders up for 44.9% of firms, down for 8.8%, and remaining the same for 16.9%. The number of full-time employees increased for 15.4% of the companies, decreased for 7.7%, and was unchanged for 70.4%.
Looking ahead six months, 51.7% of the firms expected conditions to improve, 5.9% anticipated a downturn, and 38.2% predicted no change.
Manufacturing report: philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2018/bos0518
Nonmanufacturing report: philadelphiafed.org/research-and-data/regional-economy/nonmanufacturing-business-outlook-survey/2018/nbos0518
Philadelphia Shipyard Announces 275 Layoffs
Philadelphia Shipyard Inc., which is looking for new customers to keep its workforce employed after its last ship is completed early next year, has notified the Pennsylvania Department of Labor that it plans to lay off 275 employees by July 20.
The company, whose majority shareholder is Norwegian holding company Aker ASA, has laid off about 250 employees and contractors in recent months, reducing its workforce to 950. With the new layoffs, the workforce will drop to 675. The company has said that layoffs will continue this year as it completes work on two 850-foot-long cargo vessels, the largest container ships ever built in the U.S.
Philadelphia Budgets $500K For Outside Firm To Locate Missing $27M
The city of Philadelphia is planning to pay up to $500,000 to an outside accounting firm for reconciliation work on the city's main bank account, in order to find $27 million that is currently unaccounted for.
Larry Platt, co-founder and co-executive director of The Philadelphia Citizen, has published an opinion piece about the missing funds, the firm chosen to do the reconciliation work, and the city’s overall response to the budgetary problem.
PICA: General Fund FY2018 Year-End Balance Projected At $208.3M
The city’s FY2018 year-end General Fund balance is projected to grow to $208.3 million, $131 million higher than projected in the city’s Revised Five Year Financial Plan, according to PICA’s Quarterly City Managers Report for the third quarter ending March 31.
The report projects year-end revenues and obligations to increase respectively by $64.1 million and $37.2 million, and it shows actual revenues and obligations through the third quarter of FY2018 increased by approximately $230 million and $250 million, respectively, compared to the same period last year.
Plan Advances For Creation Of Callowhill BID
The proposal to create a Callowhill Business Improvement District has advanced in City Council. The authority would operate similarly to Center City District for the area that surrounds Phase 1 and the proposed Phase 2 of the Rail Park and could extend further east across the Callowhill Industrial District. The group will begin a planning and feasibility phase this summer to determine preferred services and proposed boundaries.
City Council’s Rules Committee voted unanimously in favor of the proposal, which was introduced by Councilman Mark Squilla. The legislation will now advance to the full Council for a final reading and vote before being sent to Mayor Jim Kenney for his signature. If the planning process is successful this summer, the group could present a final plan and budget to property owners and City Council either this fall or in early 2019.
CCD News and Events
June 14: Rail Park Ribbon Cutting and Grand Opening Event
Please join us for the official public opening of the Rail Park at 11 a.m. on June 14. The Rail Park will provide a much-needed green space to the Callowhill and Chinatown North neighborhoods, along with stunning 360-degree views of the city.
Center City District has been overseeing all of the fundraising and managing the design and construction of this transformative project, which broke ground in October 2016.
Philadelphia has bumped up two places, to 30th, in a national ranking of parks in the 100 largest U.S. cities. The data released by The Trust for Public Land said key to the city’s strengths are its good distribution of facilities around the city, strong volunteerism, and amenities in its parks.
William Penn Foundation Grant To Help Bring Pulse At Dilworth Park To Life
The Center City District Foundation has been awarded a $325,000 grant from the William Penn Foundation to enable this summer the first phase of activation for Pulse, a playful and engaging work of site-specific public art created for Dilworth Park by internationally recognized sculptor Janet Echelman.
Inspired by Center Square’s historic associations with water and transportation, Pulse traces the movement of the SEPTA subway lines below in real-time. This summer, the artwork’s green Subway-Surface Trolley Line’s line will be activated in the park.
To learn how you can support Pulse, please visit centercityphila.org/foundation/our-work/pulse-at-dilworth-park
Does Pittsburgh Manage Congestion Better Than Philadelphia?
Join us for a presentation and discussion with Karina Ricks, Director of Pittsburgh’s Department of Mobility & Infrastructure, at the next Central Philadelphia Transportation Management Association meeting on Friday, June 8 at Thomas Jefferson University, Room 207 Jefferson Alumni Hall, 1020 Locust St., from 8:30 to 9:45 a.m.
This discussion is especially timely as Philadelphia is preparing to address congestion and is rolling out new bike lanes, while SEPTA is rethinking its bus routes. What can we learn from Pittsburgh about how to organize the management of city streets, plan for the impact of ride-sharing, delivery trucks and autonomous vehicles?
RSVP: Romina Gutierrez at email@example.com or 215.440.5543.
Keep Philadelphia Moving, a recent CCD/CPDC research report, investigates the increasing difficulties with congestion and parking throughout Greater Center City and examines possible solutions.