Philly mayor reveals Sixers arena details, including tax breaks and 33-cents-a-year rent

As promised when she made her initial announcement last week, Philadelphia Mayor Cherelle Parker released a pile of documents yesterday relating to the proposed 76ers arena that she now endorses. I’m still going through them, but here are some of the highlights:

The pieces making all the headlines, presumably because they’re the ones that Parker is calling attention to and that are easiest to understand, are:

  • a promise by the arena developers to use “best and good faith efforts” to hire diverse contractors and workers on the construction project, and
  • a Community Benefits Agreement under which Sixers owner Josh Harris would provide $50 million over 30 years toward various education and small business projects

While the CBA is being described as going primarily to “impacted neighborhoods” — read: Philly’s Chinatown, which overwhelmingly opposes the arena project — the only pieces that directly deal with the impacts of the arena are $1.6 million in grant to “assist small businesses impacted during the construction” and $3 million in loans (available starting in 2030) to “stabilize and help expand Chinatown businesses.” A look at the timeline in the CBA payment schedule shows that the bulk of Harris’ CBA spending would come in the year 2032; the irregular spending makes it hard to calculate how much it’s all worth in present-day dollars, but I’m going to guesstimate around $30 million.

Meanwhile, the potentially bigger piece is a Rube Goldberg device of nested property transfers, in which the city would acquire the Sixers’ mall property and lease it to the Philadelphia Authority for Industrial Development, which would in turn sublease it to the team. This is the same plan that Harris first proposed last year, and it would have a bunch of immediate effects, some more clear than others:

  • By putting the arena site in public hands, it would immediately become exempt from property taxes. Currently the site is under a tax-increment financing agreement that caps its property taxes at around $1 million a year; under the new plan, Harris would pay $5 million a year (scaling up by 10% once a decade) in payments in lieu of property taxes on the whole $1.55 billion development.
  • Sports economist and property tax superexpert Geoffrey Propheter, after a quick look at the agreement last night, calculates that Philadelphia would get a total of $109.3 million in present value from the future PILOTs, which he says is “pitiful” for a project that size.
  • Harris would pay $10 in rent for the entire 30-year lease term.
  • It’s not immediately clear if the city would be paying anything to Harris for the arena property, or if he would be handing it over for nothing in order to get the tax exemption and PILOT deal.

With this many moving parts, it’s tough to say exactly what the total public subsidy to the Sixers arena project would be, but it’s certainly more than the Sixers “financing [the] project with no city funds,” as Parker put it.

Parker is promising a month of public town halls on the arena proposal, the first of which was last night’s — which Chinatown leaders skipped on the grounds that it was a dog and pony show announced with little warning. (The civic association of the adjacent Wash West neighborhood also came out against the arena last night.) City councilmember Mark Squilla has likewise promised a 30-day public review period. Parker says she’ll submit the legislation to the council on October 24. That’s not much time to suss out the fine print of the arena plan, but it’s better than nothing: sports lease experts and Philadelphia journalists, time to get cracking.

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12 comments on “Philly mayor reveals Sixers arena details, including tax breaks and 33-cents-a-year rent

  1. I really genuinely do not care what Wash West thinks of anything. It’s a neighborhood of rich people in the richest part of Philadelphia. To me, they’re no different than the owners. Look at the average rent in that area sometime and tell me those people are regular people when they can afford to pay that.

    I don’t think you or many people commenting on this arena fully understand just how gentrified the entire city of Philadelphia is becoming -and how expensive. If Chinatown were smart, they would see what’s coming and realize that the arena is actually the best possible development in that location for their community.

    The city originally tried to turn the Gallery into another King of Prussia Mall. Chinatown is lucky that failed because that would have caused their community to eventually cease to exist thanks to bringing in even more luxury dollars.

    The next plan I’ve seen was Comcast’s idea for a biotech hub. Who exactly do people think that will bring in other than the richest people in the richest professions, and where do you think those people will want to live?

    The most obvious other proposal besides those two would be a hotel and luxury residences because that’s all they’re building in Philly anymore -especially in Center City. Maybe they’ll add a concert venue or some other small attraction so it’s not just housing and hotel. Again, who do you think that all will cater to?

    With an arena, they have a chance to squeeze a hefty benefits agreement and deal that would see their community benefit in a real way, and they won’t have to worry about a bunch of rich people moving in at the rate they would be with the other projects.

    It’s inevitable that something big and expensive that threatens Chinatown will be built there. Wake up and smell the coffee. They’re building apartment and condo towers on top of bars because rent and housing is becoming that expensive here.

    It’s much better to have your opponent be one sports franchise instead of a whole bunch of faceless rich transplants and the onslaught of money they will bring that Chinatown would be completely powerless against. Just ask Fishtown, Graduate Hospital or whatever they’re calling it these days, Fairmount, and a whole lot of West Philly.

    1. So if I understand your argument, you’re saying: 1) The opinions of people in Chinatown don’t count because they’re shortsighted, 2) the opinions of people in Wash West don’t count because they’re gentrifiers, 3) gentrification is inevitable, so better to get the rich people to throw a few dollars your way in the form of a CBA at least. That about the size of it?

      The history of sports projects and rezonings shows that they tend to accelerate gentrification, not slow them down. (I wrote a whole other book about this.) But I would agree — as I would hope residents around the proposed arena site would — that stopping the arena doesn’t change the problem of a certain class of Americans being able to spend everyone else into the ground for land and housing. That probably can’t be fixed until we get back to pre-Reagan income tax rates.

      1. 100% correct. The fools who went in front of the Salt Lake City Council claiming that a 600 foot luxury skyscraper near the Delta Center will increase affordable housing drank too much Kool Aid. Pouring $900 million into the Delta Center and a few nearby acres isn’t going to transform Salt Lake City, it might help bail Ryan Smith out of his foolish purchase of the Coyotes. Continuing to ignore the homeless and drug problem on the West Side is going to ruin Salt Lake City’s reputation nationally, it already has in the rest of Utah.

        1. Philly is not Salt Lake City. It is a mostly post industrial city where more people than the entire population of Salt Lake City are below middle class and need jobs that don’t exist anymore. It’s also a place where most kids aren’t even safe in their public schools or outside of them thanks to the deterioration of those communities.

          It’s also one of the fastest gentrifying cities in the country by far.

          Affordable housing is a joke, by the way. The average rent used to be between $3-500 with the average housing price below or at $100K. There’s no way to make what is considered “affordable” in these developments affordable to most people actually from Philly. It’s just a way for people to pretend their gentrification isn’t ruining other people’s lives.

          The only answer is keeping things affordable to begin with. That’s all I care about when it comes to any community -though I’d also love for there to be jobs and stability and safe communities without the drug trade.

          The time to fight gentrification was a decade ago. The fight is over. I accepted that awhile ago, and anybody saying otherwise is delusional or dishonest.

          Chinatown and a handful of communities that are still left can at least make it so they don’t get pushed out though.

      2. No, the opinions of Chinatown are the only ones that matter. I’ve said that several times.

        You do not understand what is happening in Philly. Fishtown was a working class neighborhood a decade or two ago. It now literally does not exist as a community anymore thanks to gentrification due to its proximity to Northern Liberties and Old City. Kensington is slowly going the same way. Grays Ferry. Fairmount. Most of West Philly. Almost all of South Philly. Large swaths of North Philly.

        Make no mistake. I care more than most you will ever meet about local communities. I was telling off white transplants for moving to Chinatown and raising rents a decade ago.

        You completely misrepresented my stance. My stance is that gentrification is inevitable in Philly because gentrifiers have no respect for boundaries or communities and keep flooding into the city in droves, and it is far better to have one rich sports franchise owner be the one tipping the scales against you than the BILLIONS with a b of money between the developers and gentrifiers that the other communities have been inundated with. At least one person can be dealt with and squeezed to benefit your community.

        Changing the tax rates will do nothing. Most gentrifiers are not billionaires. They do make near and above six figures though.

        The problem is Philly is a city with working class natives and upper class transplants.

        Ask yourself this. Why are none of the opponents pushing for rent control for both commercial and residential and tax freezes in Chinatown? Because they don’t actually care about Chinatown. The actual community obviously cares about itself but they’re too concerned with fighting this one big opponent to see the tidal wave of gentrification that will inevitably hit them. Chinatown is surrounded on all sides by money and gentrification, and the people doing the gentrifying and developing do not at all care about Chinatown being any kind of community. They just see real estate and dollar signs.

        1. I live in Brooklyn — I understand gentrification all too well. Most cities since the Great Inversion are “working class natives and upper class transplants,” though I agree that Philly is getting it worse than some.

          I still don’t follow why you think it’s better to have one billionaire developer target a neighborhood than thousands of millionaire gentrifiers (you can be a millionaire with a low-six-figure salary these days), but if you think that the best Chinatown can do is to take a few million in CBA dollars and run, I guess that’s one way of looking at it. It’s even more cynical than I can manage, which is saying something, but I can’t say it’s wrong.

          1. The absolute best Chinatown can do is get rent control and tax freezes so they don’t get squeezed out. Anything less is just delaying the inevitable.

            They have no chance of getting that outside of this big publicized fight with one billionaire owner and a major sports league.

            If they successfully defeat the arena proposal and let the transplants and gentrifiers who merely don’t want an arena use them like this, what comes next for Chinatown will be even worse.

            It happened to Fishtown, and Fishtown is nowhere near Center City and borders Kensington. All it will take is one or two apartment projects on either the northern or southern border of Chinatown for the full erasure of the neighborhood to start. The northern and eastern borders have already been chipped away through gentrification over the past decade.

            This whole thing slightly reminds me of the blowback to PHA’s Sharswood plan that gentrifiers tried to pretend was from the community but was really because they didn’t want anywhere their gentrification couldn’t happen.

        2. The problem is that “they” are not getting much of anything out of Harris in this agreement.

          Suggesting they “take what they can get” because the other options are or could be worse is not helping and is not a rational response.

          Parker has negotiated essentially nothing for the city she alleges to represent or it’s people in this agreement. Suggesting that next to nothing is better than nothing is precisely what has put us all in the welfare for billionaires basket in which we sit in North America (and elsewhere, let’s be honest… some places may do things better, but it’s broadly the same shell game everywhere).

          For the property owners in Chinatown (who are, I suspect, not generally the people living there and who will be given the bum’s rush by the coming process) the more general gentrification you seem to be arguing against might actually be some benefit. They would be bought out and not forced out.

          The Harris-Parker deal does nothing meaningful for the property owners or the renters/other locals.

          1. Hold up a minute here. We are not all in the same boat. Saying we are is completely disingenuous.

            I and many like me will likely never be able to afford to live in anything other than meh areas because we’re blue collar people or others from working class or lower income backgrounds. We will always be at the mercy of forces beyond our control. There’s a good chance I can never even afford to buy a house.

            There’s no benefit to gentrification for the locals. None. Being bought out or facing tax increases is no different than being pushed out by rent increases. You’re still being pushed out by newcomers with money. You just happen to be getting a few hundred thousand bucks for your troubles.

            I don’t think you know much about our Chinatown. It is very much locally owned. No Chinatown property owners are being forced out by the arena. It’s the redevelopment of a failed mall that isn’t even in Chinatown.

            The arena is by far their best option. It’s not even close.

          2. No-one has said “you” are all in the same boat. You ought not take affront at something that has not happened.

            Being bought out is dramatically better than being forced out under eminent domain (or increased rents due to increased tax assessments and/or greedy landlords).

            And if you don’t think the general move toward gentrification is going to continue once Harris gets his publicly funded playpen, then I don’t believe you have been watching what happens pretty much everywhere this process takes place (regardless of whether it is arena-welfare for Billionaires or just a bunch of douchebag tech bros who move in and drive up real estate costs).

            The likelihood is that the owners of the local properties adjacent to the arena will be able to sell for significant increases in value once the development is complete (or mostly complete, as these things often tend to be).

            They don’t have to sell. But if they want to, they can make significantly more.

            That may not help you or I, but it is a benefit to the local/adjacent property owners. If they choose not to sell, yes, they will face increased property tax burdens (which will be passed on in the form of increased rents etc).

            That’s because property taxes are directly reflective of what the value of the land & buildings are.

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