Big tax break for downtown project approved

YONG KIM / STAFF PHOTOGRAPHER Council president Darrell Clarke supported the tax break.
YONG KIM / STAFF PHOTOGRAPHER Council president Darrell Clarke supported the tax break.
Posted: December 13, 2013

NESTLED BETWEEN Philly's tallest buildings and some of its greatest landmarks, the parking lot at 15th and Chestnut streets for years has felt out of place in Center City, a waste of prime real estate in an increasingly bustling downtown.

That's about to change.

City Council yesterday green-lighted a controversial $33 million tax break for a $280 million new building with two high-end hotels that proponents say will boost business at the struggling Pennsylvania Convention Center.

A group of Philly hotel owners opposed the measure - a 20-year tax increment financing bond - arguing that downtown hotel capacity has already topped out. But Council president Darrell Clarke and Mayor Nutter, who are rarely on the same page these days, both supported the measure.

Some Council members said they wouldn't vote for the project unless the developers, Brook Lenfest and Jeffrey Cohen, agreed to a labor peace agreement with the hotel workers union, Unite Here Local 274. Those negotiations went to the eleventh hour yesterday and almost sank the project.

Clarke, whose district includes the site, yesterday held up Council's last meeting before a five-week holiday vacation for hours as the two sides met in his offices to hash out the agreement, which sets parameters for how the hotel workers will unionize.

"I feel like I just climbed Mount Everest," Lenfest said after the negotiations ended. "I made it clear that if there was no vote today, I was going to design something else for the site and throw in the towel on trying to build this hotel."

A groundbreaking ceremony will take place in the next few months, said Lenfest, who is the son of Gerry Lenfest, part owner of the Daily News' parent company. Construction of the two hotels - a W and an Element - is expected to last three years.

In the end, the measure passed 15-1, with Councilman W. Wilson Goode Jr. dissenting.

Goode said he supports the project but not the tax arrangement, which allows the developers to borrow $33 million for construction up-front with the promise of equal city tax breaks over a 20-year period.

"It's wrong because it's a special tax break carved out for a specific project," he said. "This is obviously not tax reform policy. It's simply excusing one project from its tax burden."

Nutter said yesterday that the addition of the hotels will be well worth the price: "1,800 construction jobs over a three-year period of time, 450 permanent jobs and a signature headquarters hotel right in the heart of Center City."

"It's a big winner for the city," Nutter said.

Along with the Residences at the Ritz-Carlton, completed in 2009, the hotels will stand at the site of One Meridian Plaza, where three firefighters died in 1991 while fighting a blaze in the 38-story high-rise.


On Twitter: @SeanWalshDN

Blog: ph.ly/PhillyClout

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