City, State gift $8m to multimillionaires for hotel project

[billy ross]

These are among the richest guys in Philly, and they're getting subsidized. I wouldn't mind getting 25% of my financing from the gov't, with the majority of it outright grants.

Ground broken for a new Center City hotel

"Capital One Bank provided a $25 million construction loan and $10 million in New Market Tax Credits. State and city grants covered the rest.

Of the $60 million cost, $12.8 million was in government incentives, with $4.8 million to be repaid."

They're going to have a $25 million first mortgage on a $60 million building? How much do you want to bet that at the end of construction, when the project is up and running and making money, they pull out tens of millions of dollars by refinancing this deal?



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[raider.adam]

I just don't understand why we have to hand over tax money to build a hotel.

[billy ross]

I just don't understand why we have to hand over tax money to build a hotel.

What are New Market Tax Credits? That sounds like a subsidy too. Sometimes I support government getting involved in getting businesses up and running. However, hotels aren't exactly a new industry. If it were absolutely necessary that the government get involved in building hotels in Philly, I'd rather that they at least get paid back somehow. Depending upon how you read this, these guys might be getting $18 million in free money from the government. Wow. They're already worth hundreds of millions. At some point the term corporate welfare is a moniker that sticks.

What's a hotel room worth in Philly? If it's worth $250k (and I sorta think it is), this project is worth $61.5 million when complete plus the value of the commercial space, which is $2 million to $4 million, roughly (I don't know the exact numbers for that area). Also, these are studios and one bedrooms, apartments essentially, so they may be worth more than $250k apiece.

[eldondre]

looks like a piece of crap too.

[raider.adam]

What are New Market Tax Credits? That sounds like a subsidy too. Sometimes I support government getting involved in getting businesses up and running. However, hotels aren't exactly a new industry. If it were absolutely necessary that the government get involved in building hotels in Philly, I'd rather that they at least get paid back somehow. Depending upon how you read this, these guys might be getting $18 million in free money from the government. Wow. They're already worth hundreds of millions. At some point the term corporate welfare is a moniker that sticks.

What's a hotel room worth in Philly? If it's worth $250k (and I sorta think it is), this project is worth $61.5 million when complete plus the value of the commercial space, which is $2 million to $4 million, roughly (I don't know the exact numbers for that area). Also, these are studios and one bedrooms, apartments essentially, so they may be worth more than $250k apiece.

I could understand and not lose sleep if they gave tax credits or grants/loans if it was to help repurpose a building like the Family Court into a hotel. I just can't justify having to had tax money over to build a new hotel NEXT TO A CONVENTION CENTER when the hotel vacancy rates are already very tight.

[eldondre]

I could understand and not lose sleep if they gave tax credits or grants/loans if it was to help repurpose a building like the Family Court into a hotel. I just can't justify having to had tax money over to build a new hotel NEXT TO A CONVENTION CENTER when the hotel vacancy rates are already very tight.

perhaps it's a subsidy to use union labor

[mixiboi]

There is a reason why they are multimillionaires...

[billy ross]

perhaps it's a subsidy to use union labor

Of course it's a subsidy to use union labor. However, the convention center itself was massively subsidized. How much subsidy do we need? Now we've got to subsidize hotels because banks don't want to lend more than 50% loan to value? These guys are going to make out like bandits on this. This kind of deal is the old way of doing business in Philadelphia, where guys in the old boy's network used government influence to get government money to line their pockets with, as long as politicians got something out of the deal too. Philadelphia is leaving this kind of crap behind it, but clearly not 100% yet. I'm happy to see a hotel get built here, but the government could have structured the government money as a loan and not an outright grant. I understand that the lending market is broken. The government should step in to bridge the gap until the lending market is fixed. But that means the government should be a bank, not a sugar daddy. The government money should have been in the form of a loan. I'll be watching this deal to see how many tens of millions the Zuritzkys make off of this deal, and they will make tens of millions off of it. They would deserve to if the government weren't involved in the deal like it is. As far as I am concerned, the citizens should be equity partners or should profit in some way off of this deal, since the citizens are providing so much of the financing.

[Tartan69]

And the bleeding-heart limousine liberals wonder why fiscal conservatives want taxes lowered. It isn't that we hate poor people...it's because we don't trust how those tax dollars are going to be used. This is a perfect example.

[eldondre]

billy, I don't disagree with you one bit

And the bleeding-heart limousine liberals wonder why fiscal conservatives want taxes lowered. It isn't that we hate poor people...it's because we don't trust how those tax dollars are going to be used. This is a perfect example.

meanwhile there isn't $8 million dollars to allow disabled and elderly access to erie station on the broad st line and there isn't $8 million parks. you're right, the money isn't benefitting the right things anyway.

[raider.adam]

Curious if this hotel was able to do it without tax money.

Phila. office buildings being converted into boutique hotel - Philadelphia Business Journal

[BarryG]

Curious if this hotel was able to do it without tax money.

Phila. office buildings being converted into boutique hotel - Philadelphia Business Journal

They didn't arrange the financing yet... My guess is no but since it's a rehab rather then new construction, maybe. Did the Monaco get public money?

[billy ross]

Curious if this hotel was able to do it without tax money.

Phila. office buildings being converted into boutique hotel - Philadelphia Business Journal

The good news is that there will be two fewer derelict buildings in Market East. East Chestnut will be a really interesting place going forward, with alot of interesting rehabs going on in interesting old buildings there.

[BarryG]

The good news is that there will be two fewer derelict buildings in Market East. East Chestnut will be a really interesting place going forward, with alot of interesting rehabs going on in interesting old buildings there.

any news on the pool hall? What about the club the NIMBYs are taking to task? will the neighborhood fight the hotel plans? Are variances required at all?

[randomuser]

As far as I am concerned, the citizens should be equity partners or should profit in some way off of this deal, since the citizens are providing so much of the financing.

I agree 100%

And the bleeding-heart limousine liberals wonder why fiscal conservatives want taxes lowered. It isn't that we hate poor people...it's because we don't trust how those tax dollars are going to be used. This is a perfect example.

and I agree with this 100% The biggest way liberals and the suburbanites who try to label themselves conservatives without actually standing for anything are the same is the fact that both are outsiders to the things they try to talk about and both have their own biased viewpoints instead of seeing the situation objectively. The people who get screwed the most not just in the city but in this country are the working class and lower-middle-class, hands down. They're too proud to ever take government subsidies or live in Section 8 and they end up getting priced out of their neighborhoods when they get gentrified, whereas people who are on Section 8 can stay for as long as they're allowed to because they won't be feeling the pinch. They get the least back for their taxes but pay more than both the wealthy and the lower-income, and they are more likely to raise their kids the right way than either the wealthy or the lower-income people. They just continue to get pushed by two giant and more powerful book-ends, all while seeing so many of their jobs continue to dry up or if they're lucky seeing them start to come back in different forms.

billy, I don't disagree with you one bit

meanwhile there isn't $8 million dollars to allow disabled and elderly access to erie station on the broad st line and there isn't $8 million parks. you're right, the money isn't benefiting the right things anyway.

Agree with this also. My hope however is that once the tax abatements and subsidies for real estate projects aren't necessary or become less and less necessary, that money will be used to pay for our infrastructure and other pressing needs. I don't agree with a lot of the funding percentages but I do understand the motive for them being that way. Bringing more and more people and businesses not just into the city but into the state is the best thing for everybody after so many of them left over the past half-century, and it has to take precedent over everything else for the time being. We also have to look at how we fund things and what ways we can lessen the burden of government and of the taxpayer. Considering the fact that we have around 6 million people in the metro alone, we should be able to raise funds with tiny payments and fundraisers ourselves. Obviously adding more businesses will help with that as well because adding more and more people with the money to donate to our universities and hospitals and cultural aspects of the city to name a few examples should be a goal in even the best of financial times.

The plus to this is that when we do bounce Corbett and his cronies and get some of that funding restored, we will have a much more healthy and independently-funded non-government-funded aspect to our most important assets, including our universities as opposed to the more dependent character so many of them have currently. Probably the biggest problem is dealing with the outrageous pensions of government workers and certain unions. Too many of them get paid wayy too much for doing wayy too little. Not the civil servants who put themselves in harm's way and put in real, hard work every day but the higher-ups who have it way too easy and whose positions are expendable in some cases.

[Jayfar]

Probably the biggest problem is dealing with the outrageous pensions of government workers and certain unions. Too many of them get paid wayy too much for doing wayy too little. Not the civil servants who put themselves in harm's way and put in real, hard work every day but the higher-ups who have it way too easy and whose positions are expendable in some cases.

And then on the other side of it you have the firefighters union. Last I heard the city is still refusing contract provisions that the union won fair and square in arbitration a year or so ago.

[randomuser]

And then on the other side of it you have the firefighters union. Last I heard the city is still refusing contract provisions that the union won fair and square in arbitration a year or so ago.

Exactly. This situation screws certain unions while overpaying others.

People should be paid based on the danger and difficulty of their job, and on how much of a difference it makes, as well as their performance. Police working the toughest beats should be paid the most (and of course it would fluctuate depending on which is the toughest beat at what time), firefighters who work in more abandoned or poor parts of the city because they're often dealing with dangerous or even uninhabitable structures, teachers in the most difficult districts, things like that. The way things currently are, where higher-ups in every field get paid higher when they do the least amount of actual hard work, is ridiculous. People always say "those guys paid their dues" well then that's when they should've been paid, not after they paid their dues but while they were out there busting their humps and making a difference. There are certain exceptions, like a police chief who transforms the city in a huge and positive way to name one example, but they're called exceptions for a reason.

[thoth]

And the bleeding-heart limousine liberals wonder why fiscal conservatives want taxes lowered. It isn't that we hate poor people...it's because we don't trust how those tax dollars are going to be used. This is a perfect example.

If you should learn anything from living in Philadelphia, it's that decreased revenue collection ≠ better govt spending. They just jettison the truly important stuff first to keep the gravy train running. Hence no parks funding, but plenty of money for BS "economic development" in the most economically developed part of the city.

[Tartan69]

If you should learn anything from living in Philadelphia, it's that decreased revenue collection ≠ better govt spending. They just jettison the truly important stuff first to keep the gravy train running. Hence no parks funding, but plenty of money for BS "economic development" in the most economically developed part of the city.

Good point, although the more often that kind of thing happens, the better chance you have of the populace wising up and electing better candidates. Or the Feds stepping in...

[randomuser]

Good point, although the more often that kind of thing happens, the better chance you have of the populace wising up and electing better candidates. Or the Feds stepping in...

Except Feds these days screw things up even more. I want people like Corbett and the other Republican, pretend "conservatives" as far removed from Southeastern PA as possible. It's one thing for Corbett to try to take credit and grandstand for the cameras when somebody completely independent of him or his influence does something like bring a business or jobs to the area but I draw the line at his hypocritical, corrupt a$$ having any involvement with our finances or government whatsoever. It's bad enough that the majority of money in the state coffers comes from this area.