Less than two months after unveiling plans to renovate The Gallery at Market East, the mall’s owners appear poised to secure a package of zoning and tax incentives from City Council.
On Thursday, Council’s Committee of the Whole heard testimony on a slate of bills that would allow the project to move forward. Among the deal-sweeteners is a $55 million tax increment financing (TIF) package, zoning changes that give the mall leeway for the size and design of signage, and continued yearly payments for the maintenance of publicly accessible areas. The city is also surrendering its ownership of parts of the property to the Pennsylvania Real Estate Investment Trust (PREIT) and its partner, Macerich Co., a mall manager based in California.
The Committee held the bills on Thursday without a vote pending negotiations among various parties. Councilman Wilson Goode, Jr., who will be leaving office next year, wanted to ensure that the jobs provided by PREIT would adhere to the city’s living-wage standards, which require a minimum wage of $10.88.
Goode also asked why the developers couldn’t require the mall tenants to follow the same standards, and Joseph Coradino, PREIT’s president, said tenants would simply stay away if those rules were in place.
Councilman Mark Squilla, who represents the area, said after the hearing that he expects amendments requiring living-wage rules for the PREIT jobs—maintenance and marketing and so on—as well as language clarifying that previous tenants of the mall will be offered space first when the mall reopens.
“I think we still have a couple concerns by some members that PREIT is willing to sit down and talk to and discuss, and hopefully we can have those amendments by Wednesday and hopefully have a vote at that time,” Squilla said.
(Council’s last meeting before the summer recess is in mid-June. It will need at least one meeting the committee vote and the full Council vote.)
PREIT says it expects to complete the project—which will involve interior renovations and the opening up of the Market Street facade to the sidewalk, allowing external as well as internal window-shopping—within two years of getting all of its approvals. The School Reform Commission has already approved the TIF deal.
It’s worth thinking about how much wealth and potential wealth are concentrated in the three square blocks between 8th and 11th, Market and Filbert streets. The properties on those three blocks—most of which will be under PREIT’s control after Council reaches a deal—are worth more than $300 million combined, according to city records. That’s more value than the Comcast tower; it’s more than the combined value of every property on both sides of South Street between Broad and the Delaware River. Just the properties owned by the Redevelopment Authority currently are worth more than $100 million.
Still, officials frame the deal as one that relieves the city of substantial liability.
“Think of it this way,” said Alan Greenberger, the city’s deputy mayor for economic development. “The value of the asset appears like what you said, but it’s not, because the asset needs work. … So its value is not nearly what people might imagine it to be.”
Greenberger said that the Nutter administration has been working to enliven that corridor for years, starting with the planning of Market East in 2009. He said the renovation planned by PREIT is exactly what he envisioned for the Gallery.
“This is a terrific deal for the city,” Greenberger said.
Former Councilman Frank DiCicco, who is now working as a lobbyist for the developers, said he tried a variety of initiatives during his time in office to get Market East under new development. Expanding the tax abatement to commercial properties didn’t do the trick, he said. Neither did the Market East Advertising District, which lets owners construct digital billboards in exchange for building improvements. Only the deal currently on the table can recreate The Gallery.
“I think it’s gonna be a win-win,” DiCicco said. “I wish I was still the Councilperson, because that was one of the last things I wanted to get done, but my successor, Mark Squilla, has done a fantastic job of bringing us to where we are today.”