State of Center City, 2012: Part 2

70% see CCD staff “every time or most of the time” when in Center City81% feel safe “most of the

65% of survey respondentsSay Center City “much cleaner” than rest of the city

New tool for measuring trends: 14 digital, non-recording cameras on banner poles

Track volumes by time of day

By day of week

Pedestrian volumes remain strong well into evening hours

Remained strong seasonally as well

Despite recession 56% says Center City’s atmosphere is “somewhat” to “much better” than before; only 3% say it is getting worse

T h is r e c e s s io n w a s d if f e r e n t , d u e t o d iv e r s if ic a t io n , d e n s it y , e d s , m e d s & w a lk a b ilit y … Philadelphia, city

D iv e r s if ic a t io n o f t h e d o w n t o w n e c o n o m y b u ffe r e d u s fro m th e w o rs t o f the s to rm

Since 2001: 28 bldgs, 2.76 million sf put to new use

CCD streetscape investment: a strategy of continuous improvement

Focused on small-scale incremental changes that add up

Continue to maintain 1,000 trees & 70 planters

Concentrated on retail streets

Added new planters at Café Cret

Continue to upgrade 683 pedestrian maps & signs

Maintain 233 signs for motorists

Steadily adding signs 108 entrances to underground

2200 fixtures: Completed 2/3 of all streets in last decade

Supports the evening economy

2011 Streetscape improvements

Distributed across the District

Significant increase in size of our projects

Renamed Collins Park 1700 block of Chestnut

Renovating Sister Cities Park

Philadelphia at the center of the universe

Names of Sister Cities

Height of water jet related to size of population

Children’s discovery garden: ages 2-8

Boat pond, discovery garden in background

Extensive programming in partnershipWith Academy of Natural Sciences & Department of Parks & Recreation

Café overlooking the boat pond

Branch of the Independence Visitors Center

Opening May 10th

A new green space in Center City

$30.4 million in CCD funding leveraged $38.2 million

$50 million transformation of Dilworth Plaza

Create a new gateway to regional transit

Covered stairways to the concourse To a new transit entrance room

New green amenities: opening spring 2014

Fountain on the northLa w n

Sitting in a café on Dilworth Plaza, looking up the Parkway

Also overlook the fountainP r o p o s e d F o u n t a in

Programmable fountain

$400,000 Knight Art Challenge grant: Janet Echelman

Center City’s economy is like a 4-cylinder Hand-crafted sports car Eds & meds Leisure & hospitality Housing Performing well

Only our largest sector lagged behind the region,losing small increments of jobs steadily since 2007

Highest wage jobs are contracting

Not retaining our regional share

Our regional market share is below national average

Same amount of occupied office space as 1990

The suburbs have delivered delivered 5.2 times ground up development compared to the CBD The suburbs have 5.2 times as much new as much new ground up developmentDespite only being only a CBD despite only being only a 38% larger market. compared to the 38 larger market. 9,994,353 SF 1,932,000 SF

Class A rental rates way below comparable cities & way below replacement costs

Rents below level required to support new construction $52/sf $27/sf

For more than a decade, reports have repeated: Taxes are barriers to job growth

For decades taxes pushed people & business…

Across City Avenue200,000 sf 2.6 million sf

2005: detailed analyses on impact of business taxes 14% premium for all Class A tenants: City vs Suburbs ?Cost Center City PA Suburbs (per SF)Inclusive Rent $25.85 $26.93Use & Occupancy Tax $1.30 $0.00Business Privilege Tax $3.67 $0.00Employer-Borne $30.82 $26.93 ($4.76/ft) ($3.89) 100,000 sf tenant; 400 employees Saves $389,000 annually moving to the suburbs

Business Privilege Tax for larger partnerships Imposes a 30% to 40% premium 10 largest partnerships: BPT = $12.42/sf Law, accounting, consulting, financial advisory firms Next 10 partnerships BPT = $7.75/sf 100,000 s.f. tenant; 400 employeesSaves $775,000 - $1.2 million annually moving to the suburbs

Wage tax + BPT push jobs out of the city 18 Business Taxes as a Percent of Firms Income 16 19% premium for businesses across the city to be in Philadelphia 16.18 14 14.36 13.60 13.47 13.36 13.23 12% of Income 10 8 6 4 2 0 Philadelphia Delaware Chester County Montgomery Bucks County Suburban County County Average Source: "Local Taxes and the Economic Future of Philadelphia: 2009 Report." Professor Robert Inman, The Wharton School, August 2009.

Taxing wages & revenues depresses demand

Weakens major source of demand for retail

Weakens demand for hotel rooms

Mayor Nutter’s 2009 Task Force

Philadelphia has to get smarter Despite the very positive trends downtownOnly 22% of Phila residents have college degree Among 100 largest cities = 25% 27% in NYC, 36% in Boston, 39% in Wash DC

Educational levels are very low50% city’s HS 2.3%students can’tmeet the 5.2%State’s reading& mathstandards, 9.7%33% 14.6%never graduate24% in poverty.

80% of children in School DistrictCome from families with limited means & mobility

Four Broad Tax Recommendations(1) Restart wage tax reduction(3) Restart business tax reduction(5) Change how taxes are apportioned to create incentives for businesses to locate & expand in Philadelphia(4) Shift from taxing what is mobile to what does not move

We have a tax structure for the industrial age When it was hard to move an assembly line Or a Baldwin Locomotive

Laptops and cell phone are far more portableEds & Meds institutions own real estate w/major capital investments Leisure & hospitality is tied to the attractions of the place Office firms are nearly all highly mobile tenants

64% of local tax revenue comes from taxing highly mobile wages & profits 55%PICA

We tax the wrong thingsCurrently 19% of city revenues Currently 64% of Philadelphia revenues come from real estate taxes: come from wage and business taxes, 41% New York City 34% New York City 36% Washington, D.C. 35% Washington, D.C. 64% Baltimore 49% Chicago 44% Los Angeles 0% Austin (high job growth) 17% Detroit 21% Charleston (high growth)

Why is property tax 3rd rail of Philadelphia politics?Because we place too much burden on residents

The theory of reformTaxing salaries & profits depresses office rents, discouragesbusiness formation, weakens demand for commercial space &reduces the share of real estate taxes local government derivesfrom business properties across the city.As the burden of wage & BPT (the cost of working & doingbusiness in the city) goes down, the demand for real estatehere will go up, increasing the share of real estate taxes thatcan be derived from business properties.

Lowering business taxes encourages citywide growth in business formation

“Only by making a wholesale shift & lowering the burden on people & businesses & placing a greater emphasis on land & improvements can we guarantee a future of growth.”

Restart wage tax July 1, 2012

Completely eliminate the BPT

Real estate burden on commercial office is low

Increase reliance on real estate taxwhile buffering homeowners (Actual value initiative)

Cumulative impact on homeowners

W h y n o w ? T h is r e c e s s io n w a s d if f e r e n t , d u e t o d iv e r s if ic a t io n ,d e n s it y , e d s , m e d s & w a lk a b ilit y … Philadelphia, city

But what has happened since the recession technically ended?Philadelphia needs to capture more market share as the economy fully rebounds

We have a highly successful, walkable downtown With a diversity of uses

Thriving with day & nighttime activities With a growing residential population

Re-infused with value in the post-petroleum age: Dense, diverse & walkable = sustainable

And getting the downtown economy firing on all four cylinders

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State of Center City, 2012: Part 2

by Center City District on Apr 26, 2012

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State of Center City, 2012: Part 2 Webinar Transcript