Jan. 7–Many charming localisms adorn the speech of Philadelphians: “down the shore,” “cheesesteak ‘wit’ ” — ordinary words or phrases that have special meaning when we say them here.
And I’ve just discovered a new one. Turns out the words “economic development” mean something entirely different in Philadelphia than they do in the rest of the English-speaking world.
Elsewhere, the phrase denotes some general increase in commerce, industry or living standards.
Here it means fatter paychecks for local lawyers.
What else can you conclude from the news — tactfully released the day before Christmas, when it was least likely to draw much attention — that two big Center City law firms will be first in line to receive “economic development” tax breaks worth millions of dollars?
You may have been busy opening presents that day — ho ho ho! — so I’ll recap for you. Dechert L.L.P. and Woodcock Washburn L.L.P. — two of the city’s largest and richest legal outfits — said they had leased space in a new office tower being planned next to 30th Street Station.
The two firms plan to occupy close to half the building, meaning that construction of the Cira Centre, as it’s called, can begin in the next few weeks.
This would be great news — expansion in downtown Philadelphia, near the region’s rail-transportation hub and all that — except for one thing:
It’s all made possible by a huge tax subsidy, with everyone else in Philadelphia picking up the bill.
Last year, local officials gave the Cira building a special status, calling it a “Keystone Opportunity Improvement Zone.”
Firms that locate there can skip paying most city and state taxes until 2018. These costs that burden almost everyone else — and hold back economic growth generally in the Philadelphia region — can be lowered significantly.
You may recall that Keystone zones were originally sold as a way to help underdeveloped areas. You might think that would mean bringing in new jobs and new investment — not simply moving companies from one part of town to another.
You would be wrong.
Dechert will be vacating the Bell Atlantic Tower. Woodcock Washburn will move from Liberty Place. A hedge-fund now in Bala Cynwyd will be the third new tenant, but the space it will occupy is tiny compared with the two Center City law firms.
This isn’t what promoters of the Cira building said would happen when the project was announced in mid-2002. The prospect of office space right next to the Amtrak station was supposed to attract new firms to the city from up and down the East Coast.
Indeed, the developer, Brandywine Realty Trust, has been widely and aggressively marketing space for the last 18 months in and out of the region, according to president Jerry Sweeney.
But times are tough in the real-estate business. Suburban office parks are going begging for tenants. And to finance its new construction, Brandywine must charge significantly more in rent than other Center City office buildings now receive.
Enter the taxpayer. With the Keystone designation in place, tenants at Cira can pay Brandywine’s above-market rents and still save money.
How much money? We don’t know, and don’t expect the firms or their new landlord to tell us. But one real-estate lawyer at a rival Center City firm last year estimated that the move could put an extra $50,000 per year in the pocket of each Dechert partner.
Now, some may find the idea of Dechert and Woodcock lawyers saving $50,000 a year in taxes outrageous.
I actually don’t.
The real outrage is that the rest of us don’t qualify for similar treatment. It’s that our so-called “economic development” officials think that anything goes as long as it enriches lawyers and makes jobs for union construction workers.
The real outrage is that their “Keystone Opportunity Zone” doesn’t extend from one end of Pennsylvania to the other.
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(c) 2004, The Philadelphia Inquirer. Distributed by Knight Ridder/Tribune Business News.
