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Council Approves $33-Million Tax Break For Center City Hotel Project

By Mike Dunn

PHILADELPHIA (CBS) -- City Council today wrapped up its 2013 session by approving a big tax break for developers who want to build a new hotel complex in center city.

City Council gave final approval to a tax break called Tax Increment Financing ("TIF") -- worth about $33 million -- for a planned hotel complex at 15th and Chestnut Streets.

Developer Brooke Lenfest (center of photo) wants to build two hotels -- a "W" and an "Element" -- and he says the TIF makes sense for taxpayers because the project will generate more tax revenue than what's there now, a parking lot.

"The city is estimated during the term of the TIF to get an extra $175 million in taxes over what the current parking lot is paying. And the school district is expected to get an additional $12.3 million in incremental taxes over what's currently being paid by the surface parking lot. So I think it's a huge win for the city," Lenfest says.

The Council vote came after Lenfest reached a labor agreement with the hotel workers' union. Rosslyn Wuchinich, president of Unite Here Local 274, representing four thousand hotel and food service workers, was pleased with the labor deal.

"It's an agreement between us and the developer that will affect the permanent jobs at the hotel," she said, "and we're very happy that we've been able to come to an agreement and can support the project going forward. We knew we needed to get it done today, and we did."

Mayor Nutter pushed for the tax break, saying the city needs the extra 700 hotel rooms for the newly expanded Pennsylvania Convention Center.

"The public's investment, a $33-million TIF in a $280 million dollar project, is an investment that will be recovered by the city four times over in the additional tax revenues that will be generated by the city outside of the TIF," says John Grady, with the Philadelphia Industrial Development Corporation (second from left in photo).

The Council vote was 15-1, with Councilman Wilson Goode the sole "no" vote.

"In my view this is obviously not tax reform policy," Goode said. "It's simply excusing one project from its tax burden for twenty years. And tax reform for one is not tax fairness."

Lenfest admitted that if Council had not approved the tax break at the session -- its last meeting of the year -- he was ready to scuttle the project.

"I made it clear that if there was no vote today, that I was going to design something else for the site, and throw in the towel on trying to build this hotel that's going to support the Convention Center," Lenfest said.

Some hotel operators had also opposed the tax break, arguing it will cost other hotels much-needed customers.

The measure now goes to the mayor for his signature, which is expected, and Lenfest says he hopes to begin construction in 2014.

The site at 15th and Chestnut Streets once held an office building that was torn down after the 1991 Meridian fire (see related story).

In other action at its final meeting of the year, City Council approved:

  • a bill that creates what is known as a "Land Bank," creating a process that supporters say will greatly speed up the city's ability to sell vacant lots and abandoned properties.
  • a bill that allows city workers to cut the padlocks on locked vacant lots that need cleaning and remediation.
  • a proposal to change the city charter to allow incumbent city officials to run for another office without having to resign.  If approved by the mayor, the question will be put to voters in a ballot referendum.
  • a measure that requires Philadelphia employers to give "reasonable accommodations" to workers who are pregnant, including more frequent breaks.

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