The Walgreen's in question is supposed to be like the Duane Reade they opened last summer on Wall Street and they are putting in in Boston and Chicago...It's supposed to be really upscale.

If and only if the rumors prove true it's an okay idea. Personally I think they will since the Walnut Street Swarovski rumor's proven true, there's a big SWAROVSKI COMING SOON sign next door to Le Pain Quotidien.

The Walgreens is more interesting than you are giving it credit--CHicago, New York, Boston all have the flagship Walgreens that they are proposing here...take a look at the pictures below from the NYC and Chicago store...actually really cool:

http://www.boston.com/business/galle...town_crossing/

Plus, as far as anyone knows, this deal is far from finished.

You also forgot a Target to ME, potential Wal Mart to South Broad, and a Fossil coming to Walnut. No Gucci's, but QOL stores to folks living in/near center city to be sure.

Very interesting idea for a real estate tax structure but I think it would cause some tremendously bad side effects. First, if you take away the building in the assessment you are going to see a massive surge in taxes that residents pay while business oriented parcels are going to feel a big tax relief. Since the cost to hold land will become so high and the majority of residents live in 2-3 floor townhouses couple with a tax bill that is ballooning until title to the land is transfered it will be very likely that when the time comes to pay the tax it will make more sense to just walk away from the property. Take for example a grandparent owns a house and has the increasing tax ballon that is due when the house sells. The grandparent dies and the house is worth 100k but has been accumulating the tax ballon over a 50 year period and the tax liability is now 107k as the person getting will the property I would just not turn in the new deed and the property will sit in limbo. Add to this the fact that you are asking the city to operate without these taxes for an extended period of time and it will drastically affect the services that can be provided.

In the ideal real estate tax world all properties would be assessed to their market value. The city then determines the amount of money needed to run its budeget each year. For example say it is $10 million dollars. So now the city needs $10 million dollars that it has to raise through real estate taxes and the total market value of real estate in the city is 1 billion dollars. This means that for every $100 of assessed market value there is a real estate tax of $1. Say you own a commercial building with a market value of $27,550,000 you would pay $275,500 for real estate taxes for that year. Under this system everyone pays their fair share and if someone doesn't pay their taxes for a couple years in a row the city taxes the property and auctions it off in order to get the taxes paid.

If you want to fight blight you do it by L & I fines. If you want to spur investment you get rid of the wage tax.

I'd have to think more carefully about your ideal system, but at first glance it would appear that there's no mechanism in there to encourage efficient , effective operation by the government (unless you are just resigned that that is not possible). In addition, it would be possible to structure different structures for commercial/investment property vs. residential property.

You are right, this could happen, but there are probably mechanisms that could be put in place to prevent extreme outcomes of this type (e.g., placing a time or dollar limit on the deferral period).

In addition, if one has had the privilege of deferring unrealized capital gains on the house, then one should be comfortable paying out those capital gains at the point of liquidation (sale, estate settlement, etc.). From a present value perspective, the value of the deferred payments over time or at the balloon due date are the same. Financially it's a wash to the owner, but they get to live in security and stability whilst residing in the property. Such a structure would eliminate many of the social fears and frictions generated by gentrification. Old timers would no longer need to fear newcomers and would be able to welcome, rather than fight, improvments to the community.

I think it would be very possible to securitize deferred tax payments, just as it is possible to securitize just about any other cash flow with a large enough sample size. 1000s of property sales transactions each year could be modeled statistically with a fair degree of precision and thus would likely be able to be securitized to give the city necessary interim operating funds well in advance of anticipated sales.

Anyway, it's all a pipe dream. We are pretty much guaranteed a dysfunctional system based on what we've seen from the Mayor and Council so far.

The Walgreens looks cool.

But is Target at ME remotely close to being real? I have heard no such confirmation.

Where'd you get the info about Fossil and Swarovski (isn't Swarovski in Liberty Place too?).

Fossil's going in that spot that just went vacant in 1616 Walnut. They were looking for a variance from the Art Commission before the previous tenant had even vacated the space!

Swarovski was from someone on Philly Speaks...I heard about it about a month before the COMING SOON signs went up. I'm guessing they'll be closing their spot in Lib Place when this one opens.

There is no way a tax system is going to regulate the level of efficiency in which the goverment operates. That is what elections are for. The tax aspect is the how the money is raised and ideally should not effect the where and in what manner the goverment operates.
I just do not see what is gained by the city from deffering payments. It only opens the city up to a situation where the property has more liabilities then assets so once the homeowner dies the person who would get the property will refuse to take ownership of the estate. This means that the city has to go through sherrif sale and get pennys back on the dollar. Add in the amount that is lost to inflation and it becomes a lose lose for the city.

The problem here is that even if you do securitize the deferred tax payments you already put the city at a revenue loss because the future payments will be discounted. Then add in the risk of default and the inability to determine when these ballons payments are made and you have an asset that would trade with a massive discount to present value. Also, through this whole practice you are now requiring a city that is so inept it is unable to provide basic services to function as an investment bank/clearing house. Did you already forget about the billions the city lost the last time in got involved in swaps and bundled securities?

I think this is a load of BS. Given the way taxes were handled in this city until this annoucement residents had absolutely nothing to fear from gentrification yet it was still brought up all the time. People fight change and cling to any excuse that they can. The people that opposed gentrification are still going to oppose it. There is no proof that gentrification displaces people from their homes. It is just a way for certain residents to hold developers hostage and stop change in their neighborhoods.

Under a market rate assessment system as market values appreciate the mill rate will decrease to offset the rise. What this means is that taking our example from before say our commercial property appreciates from $27,500,000 to $35,000,000. The services the city provides stay the same and expenses thus should stay the same meaning the city still needs $10,000,000. Our total city assessment was $1 billion before. Assuming that everything in the city appreciated at the same rate as out property or 8.3% the total assessed value for our city will now be $1,083,000,000,000. Now our city needs $10,000,000 to operate so our new taxe rate is would $.785 per $100 dollars of assessed value as opposed to $1 per $100 from before. Meaning the amount paid in taxes should stay the same.

Very good points. Not sure I agree with them all, but all very good nonetheless.

The real wild card here is the fact that the city depends on wage and business privilage taxes for some of the revenue that it currently generates. If the city was to get rid of the business and wage tax and collect all of its tax revenue through real estate taxes it will be a major shift in who incures the cities expenses.

With the current tax system in place lower income home owners are favored at the expense of high income renters and businesses. The high income homeowner will also have a breaking point in which the real estate taxes saved do not offset the amount spent on the wage tax. This creates as situation that pushes out any income producing business or resident that has mobility to escape the wage tax while inviting in any lower income person. This tax policy provides incentives for the lower income person to become a resident and for the higher income resident or business to relocate if at all possible. By having a wage and business tax Philadelphia has made it most beneficial to be a low income homeowner.

By getting rid of the wage and business privilage tax and instead raising the money through real estate taxes the city changes who it is most beneficial to locate here. This means that the demographic benifiting the most would be businesses and high income residents. Thus, luring rich residents back into Philadelphia. The downside to this is for most lower income residents it would no longer be advantagous to own a home and they would then be better off renting unless the amount gained in assessed value from new residential and commercial construction outweighs the revenue lost from getting rid of the business tax.

What I mean by this is that commercial properties usually are tax revenue positive for a city as opposed to residential properties that are usually tax revenue negative or neutral. To put into perspective Comcast Center will provide more tax dollars generated then it uses in city expense to provide it services. On the flip side a 3 bedroom townhouse with 2 kids in the school system is going to be a negative tax generator when looking at taxes raised versus the amount paid to educate the kids. In the current system the business and wage tax makes up the difference. In the new system the added commercial buildings will have to offset the money that was raised through the business and wage tax.

What this means in real life terms is that if Philadelphia was to get rid of its wage and business taxes with straight real estate taxes there would need to be a massive influx of commercial development and high priced per sf residential development otherwise low income residents will suffer massive increase in the amount they contribute to the tax revenue meaning they are more likely to become a renter versus a homeowner.

The other thing to not is that switch from a wage or business tax to a real estate tax will make holding vacant or blighted land considerable more expensive then it currently is. Under the current system a vacant property is gaining an advantage from artificially low real estate takes in two ways. The first is the significantly lower carrying cost which enables a speculator to hold onto the property while incurring smaller expenses. The second aspect is that there is less incentive to be gaining active income from the property. If carrying costs are higher in order to comebat this a land owner will need to improve the property and make sure that it is occupied in order to offset their carrying costs. Under the current tax system any income generated will be taxed through the business tax and wage tax giving a disincentive to improve the property as you would be further subsiding other speculators who do not develop. By eliminating the disincentive to actively earn income through a property speculators will improve the property in an attempt to lower the ratio spend on taxes. This means investors will look for active income through renting or using the property instead of speculating on making money through future appreciation. This added improvement incentive by investors and speculators would hopefully offset the lost of business and wage revenue and eliminate the need to shift the cost to the lower income earners.

Cro your're so disingenuous it makes me want to vomit.

A) GTFO cause we don't want your kind.

B)The house your talking about is valued at $700000. If you can afford this house your yearly earnings are greater than $200000.(Hello 1%) Your mortgate is around $3000. The RE tax adds $1000 per month. You're take home earnings before tax is more than $16,000 PER MONTH. Your total RE laibilities are 25% of total. We'll look at that 25%...hmmmm where have I seen that before. OH YEAH the rule of thumb for about the last 1200 years on salary to RE cost ratio! Boo hoo woah is me.

The 1% won't make or break this city. The 99% will.

I thought the Walgreen's was dismissed by the city as not appropriate for that location in addition to it being in violation of zoning codes.
Actually Swarovski Boutiques are not that unique or prestigious. There are almost as many in the Pittsburgh area as in Philly and in fact there is 1 in each airport, 1 near Allentown and 1 near Lancaster. The only thing that would be unique about the Walnut location is that it would be the only one in PA that is not in a Mall and only the 2nd (after Liberty Place) in a city center. So it's quite possible Liberty Place Swarovski will continue as is..

Mr. Real Estate Insider, I implied it once before, so it won't hurt a second time: you are clueless, not to mention a sorry wise ass. Kind of cheesy too.

No way the house in question will go for more than the low 5s. Sorry, just a crazy assessment what can I say. No way I could afford a $700K house in any event, and I won't buy anything that ropes me into paying more than $5000 a year RE tax.

As for the rest of what you are talking about, I have no idea. 1% and 99%???

I hate to break this to you but the top 1% are essential to the city. Drive out everyone making over $450,000 (the true 1% not the 200,000 which is the top 5%) then the QOL will dramatically decrease. The tax revenues from the top 1% through 5% are the reason the city is able to provide services to those other 95%. Given how the city has a wage tax and a business tax those high income earners are the meat and potatoes of Philadelphia's tax revenues.

Secondly, you make up a salary for the home owner of that house and then say "Oh, its only 25% of your income. Everyone has always paid 25% of their income to housing cost so why are you complaining." You are the one that made up the income level based off of the mortgage to get the $200k salary. Your example is just as bad as Cro's was to start off with.

Also, you completely forget the wage tax which is the biggest expense factor to the high income earner living in the city. I will say 3/4 times that person is going to have to pay it anyway as they most likely work in the city but just completely ignoring it is disingenuous. Maybe not enough to make us vomit but disingenuous non the less.

A Useful Analogy
 

Maybe I can add some input from an objective (if at all possible) perspective. The problem with municipal tax regimes stems not from the degree of the tax burden they impose - that's an ancillary issue. The problem stems from context: what are the respective tax burdens imposed by surrounding areas within the geographic/product market of the City of Philadelphia.

Since I work a lot with the antitrust laws, I'll make an analogy. When a company sells widgets at a certain price (say, $100), and people have a demand for them (and can effectuate that demand), they will presumably purchase the product. Now if a competitor is selling the product for $90, then two scenarios are compelled: (1) The original company lowers their price for the widget to compete with its rival, thereby benefiting consumers; or (2) they keep their price where it is, and if the rival's widgets are similar to theirs, everyone will buy the $90 product. If, on the other hand, people perceive the $100 product as of a better quality, etc., then they will eat the extra $10 and stay with the more expensive product. This is called elasticity of demand. This is how Apply is able to sell similar products at much higher prices.

Back to Philly: Philadelphia's tax burden is higher than the surrounding communities. For those that perceive Philadelphia as enabling them to live a higher quality of life will stay in the city and incur the extra taxes. Those that do not will move out (elasticity). This is how New York is able to keep their taxes high and not see huge attrition of demand.

My point: Philadelphia's tax structure must comport with the quality of life the city provides to the extent the burden is higher than their suburban counterparts. The current tax structure is appealing to the poor (who pay no or very little taxes) and the relatively well-off (who are willing to incur the extra tax burden for quality of life purposes). This is why we're seeing a shrinking middle class in the City.

Philadelphia has an Apple price structure while selling a Samsung Tab computer. The City either needs to (1) use the revenue we get from higher taxes to improve quality of life or (2) lower the tax burden so that it is aligned with present quality of life.

The intra-regional tax market is not cartelized (that is, municipal tax regimes within the Philadelphia region are not fixed at the same level). We live in a competitive tax market. Couple that and the fact that the revenue we receive is not spent wisely (high union contracts, inefficient educational/housing/etc. systems), and that is the basis for most of the City's plight.

Don't be a dick. Debate if you wish but this crap is uncalled for.

It seems like much of what you and Jelly Roll say dovetails in many ways. It's certainly true, no matter what kind of tax structure exists in this city, it has to be viewed in the context of the types of tax structures that exist in the region. This is probably true for states as well, particularly near the borders.

The value of American citizenship, associated "freedoms", and stability via rule of law is so strong by comparison to most other countries that I think the elasticity of demand to remain here is virtually limitless with respect to marginal increases in taxes on the very wealthy. My guess is that only the tiniest group of very toppermost rich might essentially be able "internationalize" their wealth to such a degree that perhaps they don't care what country they are a citizen of. But most of the substantially, if not, extremely (say, 0.001%) wealthy want the protections this country has to offer. They would not migrate to Russia, China, Brazil, say, in order to bribe their way to lower taxes, because their wealth (and their lives) would be less secure in such countries despite the short-term gain to be had by a lower tax regime.

Once within the US, though, I assume such somewhat wealthy or potentially wealthy folks are very mobile and will find the cheapest place to reside so as to preserve and grow their wealth. Presumably, Philly falls pretty far down the list of places to preserve your wealth if you are wealthy, accounting for the relative lack of very wealthy people within the city limits. The city has certain QOL benefits that are attractive to us quirky few middle class and upper middle class people, but we are a kind of unique and masochistic bunch. Philly has so many QOL negatives that unless you are diehard about the place, there are fairly weak draws to keep people here (vs, say, NYC, London, Paris, etc.).

The myopic cave dweller-populated political class in this city blows my mind. They have the mentality one might more likely associate with terminally ill, near death upstate industrial town than a big coastal city. Most of them have an old school blue collar mentality and rarely set foot outside of their own urban hamlets to understand the implications of "professional class" mobility.

Nutter is a rare politician in Philly in that he seems to have a more global perspective than the others. But if his plan results in adding a very large tax increase to middle and upper middle class folks along the lines suggested by that unfortunate overtaxed house I pointed out, he is demonstrating unbelievable shortsightedness.

Hopefully, as has been suggested, that assessment is a fluke and is more than double what it well end up at if is appealed. As Jelly Roll suggests, most "professional" class people will grin and bear a higher, but still somewhat reasonable RE tax. But not one along the lines I pointed out. Let's just hope it is a fluke.

I was at the aquarium in Camden today and noticed a tall mobile crane that looked like it was near Arch west of City Hall, does anyone know what this was for?

I heard there is some development interest in Camden from Dranoff... could this be true? Could this be a project by him?

I should clarify that the crane was in Philadelphia but visible from Camden.

Summer, he was the one who redeveloped the Victor building and I believe he owns the gutted factory next to it.

Family Court Development?