Part one of the press briefing for the Center City District’s State of Center City, 2012 report, downtown Philadelphia’s “annual report” that looks at all aspects of the downtown economy and makes recommendations to enhance the attractiveness and competitiveness of Center City. Download or order a copy at http://centercityphila.org/socc/

2. 70% see CCD staff “every time or most of the
time”
when in Center City
81% feel safe “most of the

3. 65% of survey respondents
Say Center City “much cleaner” than rest of the city

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

5. Track volumes by time of day

6. By day of week

7. Pedestrian volumes remain strong well into
evening hours

8. Remained strong seasonally as well

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

10. 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

11. 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

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

13. CCD streetscape investment:
a strategy of continuous improvement

14. Focused on small-scale incremental changes that add up

15. Continue to maintain 1,000 trees & 70 planters

16. Concentrated on retail streets

17. Added new planters at Café Cret

19. Continue to upgrade 683 pedestrian maps & signs

20. Maintain 233 signs for motorists

21. Steadily adding signs 108 entrances to underground

22. 2200 fixtures: Completed 2/3 of all streets in last decade

23. Supports the evening economy

24. 2011 Streetscape improvements

25. Distributed across the District

27. Significant increase in size of our projects

28. Renamed Collins Park 1700 block of Chestnut

29. Renovating Sister Cities Park

30. Philadelphia at the center of the universe

31. Names of Sister Cities

32. Height of water jet related to size of population

33. Children’s discovery garden: ages 2-8

35. Boat pond, discovery garden in background

36. Extensive programming in partnership
With Academy of Natural Sciences & Department of Parks & Recreation

37. Café overlooking the boat pond

38. Branch of the Independence Visitors Center

39. Opening May 10th

40. A new green space in Center City

41. $30.4 million in CCD funding leveraged $38.2 million

42. $50 million transformation of Dilworth Plaza

43. Create a new gateway to regional transit

44. Covered stairways to the concourse
To a new transit entrance room

45. New green amenities: opening spring 2014

46. Fountain on the north
La w n

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

48. Also overlook the fountain
P r o p o s e d F o u n t a in

49. Programmable fountain

50. $400,000 Knight Art Challenge grant: Janet Echelman

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

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

54. Highest wage jobs are contracting

55. Not retaining our regional share

56. Our regional market share is below national average

57. Same amount of occupied office space as 1990

58. 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 development
Despite 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

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

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

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

64. For decades taxes pushed people & business…

65. Across City Avenue
200,000 sf 2.6 million sf

66. 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 $26.93
Use & Occupancy Tax $1.30 $0.00
Business Privilege Tax $3.67 $0.00
Employer-Borne $30.82 $26.93 ($4.76/ft)
($3.89)
100,000 sf tenant; 400 employees
Saves $389,000 annually moving to the suburbs

67. 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 employees
Saves $775,000 - $1.2 million annually moving to the suburbs

68. Wage tax + BPT push jobs out of the city
18
Business Taxes as a Percent of Firm's 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.

69. Taxing wages & revenues depresses demand

71. Weakens major source of demand for retail

72. Weakens demand for hotel rooms

73. Mayor Nutter’s 2009 Task Force

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

75. Educational levels are very low
50% city’s HS 2.3%
students can’t
meet the
5.2%
State’s reading
& math
standards,
9.7%
33% 14.6%
never graduate
24% in poverty.

76. 80% of children in School District
Come from families with limited means & mobility

77. 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

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

79. Laptops and cell phone are far more portable
Eds & 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

80. 64% of local tax revenue comes from taxing
highly mobile wages & profits
55%
PICA

81. We tax the wrong things
Currently 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)

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

83. The theory of reform
Taxing salaries & profits depresses office rents, discourages
business formation, weakens demand for commercial space &
reduces the share of real estate taxes local government derives
from business properties across the city.
As the burden of wage & BPT (the cost of working & doing
business in the city) goes down, the demand for real estate
here will go up, increasing the share of real estate taxes that
can be derived from business properties.

84. Lowering business taxes encourages citywide
growth in business formation

85. “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.”

86. Restart wage tax July 1, 2012

87. Completely eliminate the BPT

88. Real estate burden on commercial office is low

89. Increase reliance on real estate tax
while buffering homeowners (Actual value initiative)

90. Cumulative impact on homeowners

91. 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

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

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

94. Thriving with day & nighttime activities
With a growing residential population

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

97. And getting the downtown economy
firing on all four cylinders