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March 9, 2015 • Volume 18 • Issue 5 • A bi-weekly email news service

Development News
Market East Transformation
In Sunday's lead story in The Philadelphia Inquirer, writer Jeff Gammage provides an overview of the projects under construction on Market East and east of Broad, suggesting that this area is poised to be transformed in the next several years into a vibrant district connecting City Hall to Independence Mall.

Citing the Brickstone Companies' development now being built on the 1100 block of Chestnut Street, NREA’s development of the 1100 block of Market Street, the arrival of the Century 21 department store and PREIT’s forthcoming makeover of The Gallery, the article highlights the demographic and market trends that are reinforcing these developments.

To read the article, please go to bit.ly/1KFQJHg.

Economic and Employment News
Report: Jobs Trending Toward Urban Centers
Nationally, the vast majority of jobs are still outside city centers, the result of decades of regional decentralization. But City Observatory analyzed a detailed subset of U.S. Census Bureau employment data to highlight the beginning of a trend toward revitalized cities adding jobs in the urban core faster than their surrounding metropolitan areas, the New York Times reported on February 24.

Philadelphia is a part of this new trend, as average annual employment growth in the urban core from 2007 to 2011 was +2.0 and -0.1% in the Philadelphia suburbs, the article noted.

In general, employment in city centers — within a three-mile radius of central business districts — climbed 0.5% between 2007 and 2011, while employment in the surrounding metropolitan areas declined 0.10%.

The strength of city centers appears to be driven by a combination of the growing attractiveness of urban living, and the relatively stronger performance of urban-centered industries (business and professional services, software) relative to decentralized industries (construction, manufacturing), the City Observatory report noted.

To read the New York Times article, please go to nyti.ms/1A54XqQ.

To read the City Observatory study, Surging City Center Job Growth, please go to bit.ly/1DVdXDz [PDF].

Nonmanufacturing Strong in February
Responses to the Federal Reserve Bank of Philadelphia’s February Nonmanufacturing Business Outlook Survey suggest that local nonmanufacturing activity vigorously increased in February in the region. More than 57% of the responding firms reported increased sales or revenues compared with 38% in January.

New orders were up for almost half (46.9%) of the companies, down for only 14.3%, and remained the same for 22.4%.

The number of full-time employees increased for more than one-fourth (26.5%) of the firms, decreased for 12.2%, and remained the same for 59.2%.

Looking ahead six months, 81.6% of the respondents expected businesses to improve and none anticipated a downturn; 4.1% foresaw no change.

To read the report, please go to bit.ly/1LDyeQG [PDF].

Eds and Meds News
Pennovation Center Plans Finalized
The University of Pennsylvania on February 26 presented the design for its new $37.5 million, 58,000-square-foot Pennovation Center on the 23-acre former DuPont property along the east bank of the Schuylkill River.

The Center will serve as a business incubator and accelerator that will provide lab space and a hub for collaboration, creativity and the exchange of ideas among researchers, students and entrepreneurs, in order to accelerate the formation of new, University-based business ventures, the press release noted.

The design was created by Penn, HWKN (Design Architect), KSS Architects (Architect of Record), Land Collective (Landscape Architect), Bruce Mau Design (Design Consultants), Ballinger (Structural and MEP Engineering), Focus (Lighting) and Atelier Ten (Sustainability). The Pennovation Center is scheduled to open in summer 2016.

To read the University’s press release, please go to bit.ly/1kcZaMr.

To read the HWKN release and view a rendering, please go to prn.to/1ziIXHD.

In partnership with the University of Pennsylvania, CPDC will soon be offering a behind-the-scenes look at plans for this initiative.

Residential Market News
Moving In, Moving Out
A detailed look at U.S. Census data, conducted by the online news site Billy Penn, documents the positive news that on average 50,000-60,000 people annually have been moving into Philadelphia from other domestic locations with most of the in-movers coming from the surrounding region, followed by New York City (the origin of 3,087 movers to Philadelphia), Washington, D.C. (939), Baltimore (670), and in sixth place, Los Angeles (482).

The median age of people moving to Philadelphia in 2012 who had lived in a different state the previous year was 24.8.

But at the same time, more Philadelphians moved to the suburbs and other cities than moved in. What accounts for the recent population gain? Local births and about 10,000-15,000 immigrants.

Almost one-fourth (22%) of the in-movers choose to live in Center City, largely reflecting the concentration of employment, as 55% of all jobs in Philadelphia are located in Center City and University City, according to the recently released report, Center City Reports: Housing, Sustaining Momentum, produced by the Center City District/Central Philadelphia Development Corporation.

To read the Billy Penn article, please go to bit.ly/1zUznem.

To read the CCD/CPDC report, please go to centercityphila.org/docs/CCR15_housing.pdf [PDF].

An Alternate Take on Millennial Preferences
In his article, "Urban Core Millennials? A Matter Of Perspective," published in New Geography, Wendell Cox, principal of Demographia, an international public policy and demographics firm, suggests that the millennial preference for the urban core has been overstated by the media. While the millennial population is increasing beyond the general population growth in the urban core across the country and makes up 24.4% of central business district (CBD) residential population, overall urban core millennials only make up 2.3% of the entire millennial population.

"More than 90% of this cohorts' growth took place outside the urban core in the major metropolitan areas. Overall, the millennial gains in the CBD were approximately 80,000, while the gains in the inner ring were approximately 240,000. By contrast, the millennial gains in the suburbs and exurbs amounted to more than 2.75 million."

To read the article, please go to bit.ly/1E2jgjN.

Retail News
Temple Opens Bookstore at Center City Campus
Temple University is opening a new Barnes & Noble bookstore and Starbucks café at its Center City campus at 15th and Market Streets, across the street from Dilworth Park, Philadelphia Weekly reported on March 3. The new additions to the campus are open to the public. The official ribbon-cutting will be held in early April, the article noted.

Hours are Monday through Thursday, 7:00 a.m. to 8:00 p.m.; Friday, from 7:00 a.m. to 6:00 p.m.; and Saturday from 10:00 a.m. to 4:00 p.m. Closed Sunday.

The bookstore also will offer Temple-branded merchandise, such as sweatshirts and T-shirts and should help to activate the public spaces between the Penn Center office buildings.

To read the article, please go to bit.ly/1DNN8xJ.

Gaming News
House Bill Would Enable Internet Gaming
Pennsylvania State Representative John D. Payne (R., Dauphin County) on February 26 introduced HB 649, which would legalize internet gaming.

Projected Pennsylvania tax revenues in the first year of internet gambling were projected at $120 million, The Philadelphia Inquirer reported. Casino operators were concerned and wanted the internet gaming to be integrated into the existing casino industry, the article noted.

The bill was referred to the Committee on Gaming Oversight, of which Payne is the chairman.

To read the Inquirer article, please go to bit.ly/1wbXRV1.

To read the bill, please go to bit.ly/1wbXOIV.

Arts and Culture News
Art Commission Has New Chairman
Emanuel Kelly, a Philadelphia architect, will become the new Chairman of the Philadelphia Art Commission, PlanPhilly reported on February 27. Kelly also is co-founder and President of Kelly/Maiello on Walnut Street.

Kelly succeeds Sean Buffington, who became vice president for planning and strategic initiatives at the Henry Luce Foundation in New York City.

To read the article, please go to bit.ly/1DAePfG.

Cultural Awards Increase by 34%
The Philadelphia Cultural Fund (PCF) has awarded grants totaling more than $2.49 million to 285 Philadelphia arts and culture organizations, a 34% increase over the total value of the grants awarded last year, the Philadelphia Business Journal reported. The awards were made on March 2 and 4.

Among the recipients were the Arden Theatre Company, Asian Arts Initiative, Athenaeum of Philadelphia, Center for Architecture, National Museum of American Jewish History, and the Painted Bride Art Center.

To read the article, please go to bit.ly/1Dm1Iil.

For the complete list of awardees, please go to bit.ly/1FUGkUD.

Hospitality News
PHLCVB Retains Marketing Company in China
The Philadelphia Convention & Visitors Bureau (PHLCVB) has retained the East West Marketing Corporation to represent Philadelphia and the Pennsylvania Convention Center in China, the Philadelphia Business Journal reported on March 4. East West Marketing, which also represents San Francisco, Houston, and Chicago, among other U.S. destinations, will work with tour operators to create itineraries that incorporate Philadelphia.

East West Marketing is based in Beijing, with offices in Shanghai, Guangzhou, Taipei and Los Angeles.

About 40,000 Chinese visitors came to Philadelphia in 2013 and spent $122 million, according to the latest available travel information, the article noted. Chinese spending was the highest of the international travelers.

To read the article, please go to bit.ly/1GT4WuN.

Transportation News
SEPTA Considers Change to Route 23 Bus Line
SEPTA is considering some bus route changes and among the possibilities is dividing the north-south Route 23, which bisects Center City on a north-south axis on 11th and 12 Streets and travels from South Philadelphia to Chestnut Hill, KYW reported on March 3.

Route 23 is SEPTA’s busiest line, carrying about 22,000 passengers daily. The proposal calls for retaining Route 23 from South Philadelphia to Center City, where it would loop around and head south. A new line, Route 45, would travel between Center City and Chestnut Hill. Only 8% of the riders using the 23 bus travel the entire length of the line, the article noted.

SEPTA will hold public hearings this spring on proposed changes.

To read the article, please go to cbsloc.al/1EOdkwm.

PPA Seeks Bids for Mobile-Payment System
The Philadelphia Parking Authority (PPA) announced on March 5 plans for an app that would allow drivers to pay for parking using their smartphones, The Philadelphia Inquirer reported. There would be an additional charge for the convenience.

The PPA is seeking proposals that are due March 30 for the mobile-payment system and would like to have the system operational by summer, the article noted. The new system should allow parkers to pay electronically with PayPal, Google Wallet, Apple Pay, quick-response bar codes, and other forms of payment, the Parking Authority stated in its request for proposals.

The system would be tested for six months at 1,775 parking spaces between Fourth and 20th Streets and Arch and Locust Streets, as well as on Delaware Avenue from Spring Garden to Race Streets, and the 110-space surface lot at 801 Chestnut Street.

The winning vendor is to be selected April 30.

To read the article in The Philadelphia Inquirer, please go to bit.ly/1wMf1t1.

Parks and Open Space News
Rothman Rink Big Success in First Season at Dilworth Park
The Rothman Institute Ice Rink at Dilworth Park, which closed after its very successful first season on February 22, provided 3.5 months of outdoor recreation with more than 46,000 skaters taking to the ice on the west side of City Hall. More than half of those skaters came to Dilworth Park between Thanksgiving and New Year’s Day.

The Rothman Rink made its debut on November 14, 2014, and remained open seven days a week throughout the season. The affordable rates at the Rothman Institute Ice Rink were made possible by $260,000 in generous sponsorship by the Rothman Institute, 6ABC, PNC, and Visit Philly.

The Rothman Institute Ice Rink will re-open in mid-November 2015. Next season the rink will be even bigger and the events even more exciting!

Dilworth Park will kick off a whole new round of activities on March 17 with Boot Camp, to get in shape during the park’s Spring Training programs. For more information, please visit ccdparks.org/dilworth-park.

Next Phase of Parkway Streetscape Work
Philadelphia Parks & Recreation has released a map showing the scope of streetscape improvements that will be carried out by contractors working for PennDOT, on the Benjamin Franklin Parkway between 16th Street and Logan Square in the next several months.

To view the map, please go to bit.ly/1EuXlEy [PDF].

Government News: City
Mayor Proposes Property Tax Increase
Mayor Michael A. Nutter on March 5 presented his $3.95 billion budget for fiscal year 2016 and proposed a 9.3% property tax increase that would raise the tax from 1.340% to 1.465%, which would bring in an additional $105 million to be earmarked for the Philadelphia School District, The Philadelphia Inquirer reported. In addition, the amount of property tax dedicated to the school district would increase from 55% to 59%.

Several Democratic leaders of Council quickly reacted that increasing taxes should not be the first option, while the chair of the Pennsylvania Intergovernmental Cooperation Authority (PICA), suggested the focus only on school funding ignored the larger problem of an underfunded pension fund.

Other highlights of the budget include $18.7 million for improvements to Philadelphia Parks & Recreation facilities, $20 million for the Streets Department to pave neighborhood streets throughout the city, and $31.9 million for the Office of Innovation and Technology to make citywide technology improvements.

The mayor's spending plan is nearly $90 million more than last year, in large part because of rising pension and health-care costs.

Hearings on the City’s FY2016 budget begin March 31.

To read the article, please go to bit.ly/1KteQZr.

To view the budget, please go to 1.usa.gov/1BLUtRS [PDF].

Council Offers Two Bills on Nonprofit Property Filings
Various nonprofits, churches, and church associations have reacted against the City’s and Philadelphia's Office of Property Assessment’s (OPA) new requirement that all charitable organizations in the city that own property classified as tax-exempt must provide documentation, including articles of incorporation, a statement of fund-raising activities, and a copy of the property deed, by March 31, or risk having the City treat the property as taxable, The Philadelphia Inquirer reported on February 26.

The legislation that created the new law was Bill #130123 (bit.ly/1Gzx8CS), sponsored by then-Councilman William J. Green IV, Councilman W. Wilson W. Goode, Jr., and Councilwoman Blondell Reynolds Brown, and passed unanimously on June 13, 2013.

In response to the concern recently expressed, on February 26, Councilman David Oh introduced Bill #150149 bit.ly/1zmJwQL) that would extend the deadline for compliance to June 1, and Councilwoman Jannie L. Blackwell introduced Bill#150144 ( bit.ly/1wvwm9t) that would do away with the filing requirement.

To read the Inquirer article, please go to bit.ly/1AShAYM.

Bill Would Lower Wage and Net Profit Taxes
Councilman Curtis Jones on behalf of Council President Darrell L. Clarke on March 5 introduced Bill #150167 that would reduce the wage tax for residents from 3.42% to 3.4102%, effective July 1, 2015, and the non-resident wage tax from 3.4915% to 3.4828%.

The same reductions would be made for the tax on net profits earned by sole proprietor businesses.

To read the bill, please go to bit.ly/1wbH8kS.

Tax Revenues Mixed in January
Tax revenues for January totaled more than $260 million, a 1.4% decrease over January 2014, according to the Philadelphia Office of the Controller’s Financial Forecast & Snapshot for January.

Wage, Earnings and Net Profit tax collections totaled $162.4 million, a 6% increase over last January.

Sales tax collected was $11.3 million, a 45% decrease compared to January 2014, and a result of additional funding being dedicated to the School District of Philadelphia.

Business Income & Receipts Tax revenues totaled almost $24 million, a $14 million increase over last January.

Realty Transfer Tax revenues were up by almost $2 million over last year, the report noted.

To read the report, please go to bit.ly/1FahY5X [PDF].

School District News
Wolf Names New Leader for SRC
Governor Tom Wolf on March 1 appointed Marjorie Neff, former principal of Masterman School, as chairwoman of the School Reform Commission (SRC), replacing Bill Green, The Philadelphia Inquirer reported. Green was appointed to head the SRC by former Governor Tom Corbett in 2014 and will continue to serve on the commission.

Green questioned whether Wolf had the legal authority to remove him as chair, the article noted, and indicated he would file suit in state Commonwealth Court.

Wolf had asked Green not to approve any new charters, but the SRC on February 18 approved five new charters out of a pool of 27.

The other members of the SRC are Feather Houstoun, Farah Jimenez and Sylvia Simms.

To read the article, please go to bit.ly/1DKYaq0.

To read Jeremy Nowak’s analysis of these developments in the Philadelphia Citizen, please go to bit.ly/1aVUecp.

Hite's New Plan for Philadelphia School District
Philadelphia School District Superintendent William R. Hite Jr. on March 4 presented his new Action Plan v3.0 for reorganizing the District that would add three new networks to the current eight groupings, The Philadelphia Inquirer reported.

The new classifications are a turnaround network for the bottom 5% or 10% of schools, an opportunity network for alternative schools, and an innovation, or research and development, network. Hite's plan would give full autonomy to the strongest schools beginning in 2016, pay those schools a set amount per pupil and allow the schools complete flexibility in their approach to education.

The district would hire three assistant superintendents for the fall to run the new networks. The goal is to have between 15 and 20 schools in most networks. Charter schools are included in the plan.

To execute the plan, the district would need more than $300 million in new recurring revenue from the City and state for the next school year and a total of $970 million over five years, the article noted.

To read the article, please go to bit.ly/1DQ8o67.

Government News: State
Governor Wolf Proposes $29.9 Billion Budget
Governor Tom Wolf on March 3 presented his $29.9 billion spending plan that would raise the state’s personal income tax, among other tax provisions, from 3.07% to 3.7%, a 20% increase that would bring in $2.3 billion, The Philadelphia Inquirer reported. The personal income tax affects small businesses as 80% of the businesses that pay taxes pay the personal income tax as opposed to the corporate net income tax, the Greater Philadelphia Chamber of Commerce (GPCC) noted in its weekly report.

Wolf also proposed to lower the Corporate Net Income Tax by 40%, from 9.99% to 5.99% by January 1, 2016, and further trim it to 4.99% by 2018, which would move the Commonwealth from the second highest corporate tax to the fourth lowest.

Other proposals include a phase-out of the Capital Stock and Franchise Tax on January 1, 2016; implementing Mandatory Combined Reporting that would tax a multistate corporation's total revenue, not just its Pennsylvania earnings; increasing the sales tax to 6.6% and closing some exemptions such as professional services; and imposing a 5% Severance Tax on gas shale drilling, which is projected to generate more than $1 billion for education across the state.

Other education-related items were a $400 million increase for basic education; $120 million for expanding access to pre-kindergarten; a $15 million increase in funding to community colleges; $80 million to restore 50% percent of the cuts to the state system of higher education, including Temple and Lincoln Universities; and a freeze on tuition at all state higher-education schools.

In addition, the budget provides $3.8 billion in property tax relief across the Commonwealth, beginning in 2016-2017. In Philadelphia, the Governor’s proposal would cut the wage tax from approximately 3.9% to 3.5% for residents and by a comparable amount for non-residents.

Budget hearings will begin on March 9 in the House and on March 16 in the Senate.

To read the Inquirer article, please go to bit.ly/17OLovc.

To read the Governor’s full budget address, please go to bit.ly/1NqLEBj, or to watch it on YouTube, please go to bit.ly/1A4wjgO.

The Excel spreadsheets for Basic and Special Education Funding and Property Tax Relief are available at bit.ly/1H7MChu.

Governor Appoints Seven to Port Authority Board
Governor Tom Wolf named Brandywine Realty Trust President and CEO Gerard Sweeney chairman of the Philadelphia Regional Port Authority Board, the Philadelphia Business Journal reported on February 25.

In addition to Sweeney, the Governor selected six other board members: Yassmin Gramian, Senior Vice President of HNTB; Robert J. Clark, Associate at Ballard Spahr; Michael Pearson, President of Union Packaging; Paul McNichol, Partner of McNichol, Bryne, & Matlawski; John Skoutelas, Vice President and General Counsel for the Eastern Group, Waste Management; and John Dougherty, Business Manager and Union Leader of the International Brotherhood of Electrical Workers Local 98.

To read the article, please go to bit.ly/1wssXZ8.

Six New Members for DRPA Board
Governor Tom Wolf on March 4 named six new members to the governing board of the Delaware River Port Authority (DRPA), which operates the PATCO commuter rail line and four toll bridges between Philadelphia and South Jersey, The Philadelphia Inquirer reported.

Wolf's appointees are Ryan Boyer of Philadelphia, business manager of the Laborers' District Council of Metropolitan Philadelphia and Vicinity; Elinor Haider of Philadelphia, vice president, market development, of Veolia North America, an energy and water company; Antonio Fiol-Silva of Philadelphia, a principal in the Wallace Robert & Todd architecture and development firm; Rohan K. Hepkins, mayor of Yeadon; Marian Moskowitz of Tredyffrin Township, a real estate developer; and Whitney R. White of Philadelphia, chairman of the Global Institute for Strategic Investment.

The appointees will replace members appointed by former Governor Tom Corbett.

To read the article, please go to bit.ly/1EV3GIi.