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February 4, 2013 � Volume 16 � Issue 3 � A bi-weekly email news service

Office Sector News
Offices Downsizing, But Vacancy Rate Stable
Throughout 2012, renewals and downsizings were the dominant trends as companies designed new workspaces to adjust to the expanding wireless and mobile work environment by reducing the overall space needed, according to CBRE's Greater Philadelphia Office MarketView for 2012's fourth quarter.

The downtown inventory (CBRE includes University City in the downtown) was 44,202,474 square feet and the vacancy rate remained stable at 14.7%, compared to a 22.2% vacancy rate in the Philadelphia suburbs and 19.2% in South Jersey. CBRE counts 369,616 square feet of space under construction downtown.

The average rental rate was $26.10, with Class A buildings averaging slightly more at $27.79, the report noted.

The Philadelphia Parking Authority signed a 50-year lease for 80,000 square feet at 701 Market Street. The lease is valued at $47 million for the first 25 years and has five, five-year renewal options.

Among the significant office building sales was that of Two Penn Center, a 20-story, 505,000-square-foot building at 1500 John F. Kennedy Boulevard immediately across from the Dilworth Plaza renovation. It sold for about $66 million and was 82% occupied at the time of the sale.

To read the report, please go to bit.ly/XSK1iX [PDF].

Economic News
Nonmanufacturing Firms Report Slight Dip
Nonmanufacturing firms in the region reported steady economic activity in January, though the general index fell to 20.6 from 31 in December, according to responses to the Federal Reserve Bank of Philadelphia's January survey of nonmanufacturing. January was the first time the index slipped after three consecutive months of increases, December's going up a robust 14 points. (The index has a maximum value of 100 and a minimum value of -100.)

More companies saw increased sales (41.2%) than saw decreased sales (29.4%). Also, 23.5% of the firms reported more full-time employees, while 17.6% noted fewer employees.

Looking ahead six months, 88.2% of the companies responded that they expected economic conditions to improve, and only 2.9% reported a negative expectation.

Eds and Meds News
Meredith Kindergarten at Capacity
The William M. Meredith Elementary School, a neighborhood public school at Fifth and Fitzwater Streets in Queen Village, filled both its fall kindergarten classes for a total of about 60 students, in just two days, The Notebook reported on January 24.

Kindergarten classes at the school usually are not fully enrolled until the summer, the article noted, but due to the extreme demand at Penn Alexander School in University City, parents did not want to risk being shut out. Neighborhood elementary schools give first priority to children in their catchment area and only accept students beyond their boundaries to fill vacancies. In the last decade, the growing number of families who are staying in Center City when they have children has altered this dynamic. Meredith is currently at 108% capacity, according to the article.

To read the article, please go to bit.ly/10ENZ0h. For information about Meredith and other Center City public elementary schools, please go to the CCD's website, KidsInCenterCity.com. To view the catchment areas of the schools, please go to KidsInCenterCity.com/schools/public-schools-boundary-map.

In related news, Christine Carlson, a public school parent and the founder of the Greater Center City Neighborhood Schools Coalition, wrote a February 1st op-ed article in The Philadelphia Inquirer, with a strong case-statement for strengthening neighborhood elementary schools.

To read the article, please go to bit.ly/XsUxP9.

$12.5 Million for Drexel's Entrepreneurship Program
With $12.5 million in recent gifts from the Charles and Barbara Close Foundation, Drexel University will establish the Charles D. Close School of Entrepreneurship, the university announced on January 30.

The Close School will approach entrepreneurship not just as a technical process to launch a new company, but as a set of personal and professional skills that foster the pursuit of innovation in business, personal and career contexts. The School also will seek to serve the regional entrepreneurial and business community through its thought leadership in entrepreneurship research.

Some programs within the school will begin in the fall, with official degree programs beginning in September 2014, according to The Philadelphia Inquirer.

Donna DeCarolis, associate vice provost for entrepreneurship and one of the visionaries behind the new school, will serve as founding dean.

To read the press release, please go to bit.ly/Xj7L0N.

Governor Announces Higher Education Spending Plan
Governor Corbett on Friday unveiled a $1.58 billion plan for funding higher education in Pennsylvania during the 2014 fiscal year. The higher-ed budget is approximately the same as for FY2013 and FY2012, and is linked to a promise from universities and colleges to strive to hold down tuition costs.

To read the governor's press release, please go to bit.ly/WkkXVM.

Retail News
Governor Announces Plan to Privatize Liquor Sales
Governor Corbett on January 30 announced his state liquor store privatization plan and said it would raise about $1 billion for the Commonwealth through the sale of 1,200 wine and spirit licenses, as well as allowing bars and restaurants to sell beer and wine to go. Money raised via the plan would be put into the Passport for Learning Block Grant (PLBG) and be used over the next four years to invest in public school safety, early learning, individualized learning, and STEM (science, technology, engineering, and math). The governor predicted additional revenue of about $80 million per year in taxes from liquor sales previously made in other states.

Tax credits would be provided to businesses that provide jobs to employees of the current state-run system, he said.

To read the press release, please go to bit.ly/12cZ9P3.

Gaming News
SugarHouse Agreement Reached
Owners of the SugarHouse Casino have settled a dispute over terms of their partnership, The Philadelphia Inquirer reported on January 31. Settling the disagreement over the casino's business plan will allow the expansion of the casino on the Delaware Riverfront, the article noted.

The $142 million expansion, which includes a parking garage and doubling of the gaming floor, will allow for a poker room, an additional 600 to 800 slot machines, and 35 to 40 more table games. The casino currently has 1,614 slot machines and 56 gaming tables.
There has been no announcement on when the expansion will begin.

To read the article, please go to bit.ly/W84zph.

Arts and Culture News
WPF Announces New Funding Guidelines
The William Penn Foundation (WPF) on January 31 announced its new guidelines and application processes for partnerships that align with the foundation's priorities.

WPF will have a strong focus on education, the environment, and cultural vitality. It wants to close the achievement gap for low-income children, protect the region's water supply, and enhance Philadelphia's cultural and creative assets.

Among the goals WPF is striving toward are quality education regardless of income level; a community that nurtures creativity and attracts employers and investment; and public spaces that expand and extend parks, trails, and riverfronts.

The announcement was made by WPF's Interim President, Helen Davis Picher. To read Capitalizing Change: Our Vision and Grantmaking Priorities, please go to bit.ly/Wk8WQj.

Orchestra Moves Its Offices
The Philadelphia Orchestra has moved its offices from 260 South Broad Street to 16,000 square feet at One South Broad Street, the Philadelphia Business Journal reported on Friday.

Post Brothers Apartments bought 260 South Broad and has begun work on converting the building into apartments and retail, the article noted.

To read the article, please go to bit.ly/WDgfSo.

Transportation News
City and US Airways Agree on Extension
The City of Philadelphia and US Airways announced on January 22 their agreement on a two-year lease extension that would end June 30, 2015, at Philadelphia International Airport (PHL).

The agreement will allow for $734 million in new capital investments at PHL, which is US Airways' largest international gateway.

Among the improvements will be a 1,500-foot extension of a runway, a redesigned Terminal B and C ticketing area; and replacement of the current rental car facility surface lots with a new, multi-story consolidated rental car facility.

To read the press release, please go to bit.ly/WKZaUm.

Governor to Announce Transportation Plan
Governor Corbett will present his proposals for increased funding for roads, bridges and public transit in the Commonwealth tomorrow, February 5, when he delivers his budget speech. Previously he had been expected to announce his transportation plan in late January.

The governor is expected to seek removal of the cap on the wholesale gasoline tax, called the Oil Company Franchise Tax, which is paid by gasoline suppliers and currently applies to only the first $1.25 per gallon of the wholesale price, according to the Pittsburgh Post-Gazette. Removing the cap would generate an estimated $1.85 billion in new revenue without changing the 153.5-mill tax rate, the article noted.

Spirit Will Offer Daily Flights to Las Vegas
Spirit Airlines on January 30 announced it will begin daily nonstop service between Philadelphia International Airport (PHL) and Las Vegas McCarran International Airport (LAS) on April 25.

Flights will leave Philadelphia at 7:45 p.m., arriving in Las Vegas at 10:13 p.m. The return flight will leave McCarran at 10:40 p.m., arriving in Philadelphia at 6:28 the next morning.

To read the press release, please go to bit.ly/UDosFu.

SEPTA Releases 'Sustainability Annual Report'
SEPTA on January 23 released its Sustainability Annual Report, which details progress on efforts to become environmentally, socially and economically sustainable.

The Sustainability Program was adopted in 2011, and put into action in 2012, with the goal of capturing wasted resources and putting them back into productive use.

Among the initiatives begun were capturing energy created by braking trains and reusing it at a power substation; recycling; and repurposing unused real estate to cultivate self-sustaining urban farms.

The report highlighted that the average SEPTA rider saves more than eight pounds of carbon per trip.

To read the report, please go to bit.ly/WtHkFs [PDF].

Government News
Public Hearing on Tax Relief
The state House Democratic Policy Committee held a public hearing at the National Constitution Center on a proposed package of bills that would offer property tax relief in light of the mayor's Actual Value Initiative (AVI) package.

The property tax relief package comprises four pieces: legislation providing Philadelphia with additional authority to collect delinquent property taxes; a constitutional amendment authorizing two classes of properties (residential and commercial) to be taxed at different rates in Philadelphia; a bill to give Philadelphia the ability to provide eligible Philadelphia homeowners with the option to make property tax payments in periodic installments; and a bill to provide relief for long-term owner-occupants.

Information offered at the hearing included: Philadelphia has low overall property valuations and a high percentage of owner-occupied homes; there are 39,900 properties delinquent in taxes valued at about $160 million; and owners of commercial properties have said they would accept higher property taxes in exchange for lower wage taxes and business taxes.

Of major concern to elected officials is the effect of AVI on long-term homeowners in gentrifying neighborhoods, who bought their homes for $30,000, for example, that are now worth $300,000 or more. Wages haven't always kept up with the increase in home values making it difficult for those people to stay in gentrified neighborhoods.

A multi-year process is required to make any state constitutional change and there is a general consensus among the city's business leadership organizations that any proposed change to the Uniformity Clause, which mandates that residential and commercial properties be taxed at the same rate, should be very carefully evaluated in a context that considers simultaneous mandatory decreases in wages and business taxes in Philadelphia.

City's Tax Revenues Improve in December
City of Philadelphia tax revenues for December totaled $194 million, an almost 16% increase from the same month last year, according to the Office of the City Controller's December 2012 Financial Forecast & Snapshot.

Wage, earnings, and net profit collections for the month totaled $130.2 million, an almost 12% increase compared to the same month last year. Monthly sales tax collections totaled $21.9 million, a 7% increase from December of last year.

After the first two quarters of Fiscal Year 2013, City General Fund tax collections totaled $922.1 million, a 5% increase, or $44 million over the same period last year.

This month's economic report includes a review of the rise in food-stamp eligibility in Philadelphia. From November 2008 to November 2012, those eligible for food stamps in Philadelphia increased from 348,545 to 477,878, a 37% increase.

To read the report, please go to bit.ly/UsXDE3.

Bill to Require Paid Sick Leave
On January 24, Councilman William K. Greenlee introduced Bill #130004, known as "Promoting Healthy Families and Workplaces," legislation, which would require employees in all types of firms to be given sick paid leave.

A similar bill passed in 2011, but Mayor Nutter vetoed it, according to The Philadelphia Inquirer.

To read the bill, please go to bit.ly/UHekfb.

Bill Would Tax Nonprofits' Unrelated Income-Producing Activities
Councilman Bill Green on January 24 introduced Bill #130009, which would allow the City to collect the Business Income and Receipts Tax from the for-profit activities of nonprofit organizations. The bill references income from activities that are not directly connected to the organization's religious, charitable, or education purposes. In a press release, Green said it was "an issue of fairness. These institutions benefit us, but they also benefit from City services that have a real, hard cost to taxpayers."

To read the bill, please go to bit.ly/WmVDwr [PDF].

To read the press release, please go to bit.ly/11u18cZ [PDF].

Sustainable Business Tax Credit Application Available
The City of Philadelphia announced on February 1 the release of the application for the Sustainable Business Tax Credit, created by legislation sponsored by Councilman James Kenney and passed by City Council in December 2009. Though the bill was passed in 2009, the ordinance's language says that the tax credit will be available for tax years 2012 through 2017, and 25 eligible businesses will receive a tax credit of up to $4,000 against the gross receipts portion of the Business Income and Receipts Tax. Businesses may qualify by obtaining B Corporation certification or meeting a list of criteria set by City regulations. The Sustainable Business Tax Credit Pending Regulations and Sustainable Business Tax Credit Application are available at phila.gov/green.

State Senate Priorities in 2013
Senate President Pro Tempore Joe Scarnati (R., Jefferson) on January 29 outlined priorities for the new legislative session. At the top of the list are pension reform, transportation funding, and negotiating the 2013-14 budget, according to Capitol Recap, a subscription service offering daily reports from the Capitol. Other items on the agenda include school safety and other educational initiatives.

Upcoming Events
Richard Saul Wurman to Lecture at Penn
On Wednesday, February 6, from 6:00 p.m. to 7:30 p.m., at Meyerson Hall Lower Gallery, 210 South 34th Street, PennDesign and its dean, Marilyn Jordan Taylor, will celebrate the return of Richard Saul Wurman, to the University of Pennsylvania campus for a special lecture.

Wurman has written, designed and published 83 books on topics ranging from football to health care. He created the ACCESS city guides, making places such as New York, Tokyo and Rome understandable to visitors. Perhaps most famously, Wurman created the TED conference in 1984.

Wurman's latest book is called 33: Understanding Change & the Change in Understanding, which brings together many of America's clearest thinkers in the fields of technology, entertainment and design.

To RSVP, please go to richardsaulwurman.eventbrite.com.

Book Talk
Urban planner Alexander Garvin will discuss his new book, The Planning Game: Lessons from Great Cities, on Wednesday, February 13, from 6:00 p.m. to 7:30 p.m., at the Philadelphia Center for Architecture, 1218 Arch Street.

The book covers planning at every level and presents the public-realm approach to planning — an approach that emphasizes the importance of public investments in what we own: streets, squares, parks, infrastructure, and public buildings. The book has an extensive chapter about Philadelphia, focused both on the role of Edmund Bacon and the Center City District's role in the last two decades.

The event is free and does not require registration.

Valentine to the Market
Tickets are now on sale for the Valentine to the Market party and fundraiser on Saturday, February 23, from 7:00 p.m. to 11:00 p.m. The event will feature live entertainment on two stages, delicious food and desserts from your favorite Market merchants, and an open bar serving up specialty cocktails, wine and beer.

Proceeds will benefit the Reading Terminal Market preservation fund and will be used to preserve and enhance the historic building for future generations.

Ticket prices range from $75 (for Young Friends) to $300. For more information and to purchase tickets, please go to partyticketsonline.com/valentine.

Design on the Delaware 2013
AIA Philadelphia is accepting program proposals for the 2013 Design on the Delaware conference October 29 – November 1, at the Sheraton Philadelphia Downtown Hotel and Center for Architecture. This multi-disciplinary conference features four keynote speakers, 36 education programs, three days of tours and a full-day design charrette for architects, landscape architects, planners, engineers, and other design and building professionals.

Program proposals are due April 8. To download the Call for Programs, visit designonthedelaware.com. Advertising, exhibit, and sponsor opportunities are also available. For more information, contact Pat Gourley at pat@aiaphila.org.

Corrections to the last edition of Developments
The regional offices of the U.S. General Service Administration (GSA) Region 3, currently housed in the Strawbridge Building at Eighth and Market Streets, will move into 135,715 square feet at Independence Mall West (The Dow Building) in late 2014. The square footage was incorrectly reported as 13,715 square feet.

In the item on The Pew Charitable Trusts' Center on the States' new study that looks at 61 cities across America and how their pensions and retiree healthcare provisions have emerged from the Great Recession, the best-funded cities were Milwaukee and Washington, D.C., which covered 113% and 104% of their liabilities. New York, which is the best-funded state, funding pension liabilities at 101%, was incorrectly identified as New York City.