Long-planned South Philly project narrowly avoids disaster
The vast flat expanses of the Pattison Avenue area in South Philly – enormous parking lots punctuated by odd-shaped buildings, populated by thousands of blue-collar workers – was the scene of some high drama recently.
Citizens Bank Park? Nah – the Phillies won their National League Division Series out of town, in Milwaukee. The Linc? No drama there after the Eagles stopped scoring after the first five minutes, enroute to another listless loss.
Perhaps the Wachovia arenas? Not there either – whether it is Citibank or Wells Fargo that wins the tug-of-war for Wachovia Bank, the Center and the Spectrum will keep their current names and signs for the time being.
Rather, the biggest heart-stopper involved the Philadelphia Regional Produce Market, also known as the Food Distribution Center, currently a little further east from the stadium complex and readying for a move to a new 48-acre facility near the airport. Costing almost $220 million, the deal involves myriad forms of public and private financing and has been years in the making, after several major obstacles were crashed into and then overcome.
A couple of weeks ago, the complicated deal was perilously close to imploding in what would have amounted to a corporate punt – a direct result of the global credit crisis and the hefty involvement of the too-big-to-fail American International Group Inc.
The whole 11th-hour, high-wire narrative was captured nicely last week by Natalie Kostelni, a staff writer for the Philadelphia Business Journal. Less than two weeks after a ceremonial groundbreaking on the Produce Market’s new site at 67th Street and Essington Avenue (just north of Philadelphia International Airport and across the street from the Philadelphia Auto Mall), AIG’s near-collapse and subsequent rescue by the federal government caused blood pressures to soar for executives at O’Neill Properties Group, which is developing the new site.
AIG, it turns out, had not yet finalized a 40-year, $50 million mortgage that was at the heart of the deal. “As their plans seemed to be dying on the vine, anxiety spread through the participants like an early freeze,” Kostelni wrote.
All-nighters were pulled the weekend of Sept. 13th in the offices of the developer’s law firm, but a few days later, AIG’s federal bailout was announced. Not long afterward, the big loan was wired to O’Neill, with the same terms negotiated before AIG’s meltdown.
It may have just possibly been the last big chunk of change to escape down the city’s development rabbit hole before the credit markets cinched up tight, in anticipation of what happens next.
Previous PlanPhilly coverage (May 12, 2008): http://www.planphilly.com/node/3138#
Summary of Philadelphia Business Journal story (Oct. 3, 2008; full story can be viewed by Business Journal subscribers): http://philadelphia.bizjournals.com/philadelphia/stories/2008/10/06/story10.html
Philadelphia Regional Produce Market: http://www.prpm.org
O’Neill Properties Group: http://www.oneillproperties.com/company/AD.php
Posted by Thomas J. Walsh
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