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Posted Jun 15, 2008, 2:33 PM
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Registered User
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Join Date: May 2008
Location: Center City - Phil-a-delphia
Posts: 347
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Not a huge update - more of what we've generally been talking about the past week. Still here is an article in this sunday's inquirer:
Quote:
Tax break could move major firm to Phila.
By Marcia Gelbart
Inquirer Staff Writer
With just a few weeks left before city and state lawmakers recess for summer, Gov. Rendell and Mayor Nutter are pushing for new tax breaks to coax a major financial firm, BlackRock Inc., to move here - and add its 1,100 well-paid employees to Philadelphia's job base.
If they succeed, the move would represent a historic influx of professional workers into the city - with each currently earning an average annual salary of $125,000.
Moreover, it would provide a chief tenant to anchor a proposed sister office building to the three-year-old Cira Centre, which in turn would help create a mini-neighborhood and close the gap between Center City and University City.
"As far as new companies moving in," said Deputy Commerce Director Duane Bumb, "I'm pretty sure this is the biggest thing the city has seen in at least 20 years, and probably longer."
To go forward, BlackRock and Cira Centre developer Brandywine Realty Trust want the city and state to quickly pass legislation that would, in essence, exempt BlackRock from paying any taxes, except the city wage tax, through 2025.
Specifically, a provision of the bill would grant a seven-year extension of tax-free benefits already enjoyed by tenants of the Cira Centre, located near 30th Street Station in what is designated as the West Philadelphia Keystone Opportunity Improvement Zone. The new office tower would also be in that zone.
But the tax-free benefits that apply to the zone are set to expire in 2018, seven years before the end of the 15-year lease BlackRock is seeking. For that reason, the legislation seeks to extend the tax break for another seven years to "unoccupied" property in the zone - that is, the new building.
Even with the loss of city tax revenue, the deal is worth it, according to Bumb's calculations.
In a review of one of two possible locations within the zone where the new tower would be built, at 2930 Chestnut St., Bumb estimates that the city would forgo $211,559 a year in real estate taxes, based on a 2008 assessment. Over the seven-year extension period, that would amount to a loss of nearly $1.5 million - far less than what the city stands to gain from a potential $4.3 million in wage tax revenue, he said. That does not include other revenue from wage taxes paid by other potential building tenants.
One of the world's largest investment management companies, BlackRock is actively looking to relocate its Plainsboro, N.J., office before its lease there expires. Besides Philadelphia, other sites in New Jersey are in contention.
"It would obviously be a real coup for the city and the region to land a group like this," said Phil Hopkins, director of research for Select Greater Philadelphia, which markets the 11-county region to firms.
Rendell has been quietly working to reel in BlackRock since early last fall. It has since become a priority for Nutter, too. In Harrisburg last week, he pressed lawmakers to approve the legislation.
To be sure, BlackRock's executives have been clear: No extension, no negotiating.
"Without the extension, this will not be a viable option for the company," Tom Callan, managing director of BlackRock told a City Council committee last week. Approvals are needed from both the city and state.
At Nutter's urging, the deal is quickly moving through Council, with seemingly no opposition. A final vote is expected Thursday.
Likewise, related measures are winding their way through the General Assembly. "There is a very strong effort to bring the [Keystone Opportunity Zone] changes to a conclusion this month," Erik Arneson, a spokesman for State Senate Majority Leader Dominic Pileggi, said.
While the creation of such tax-free zones has stirred significant controversy in past years, there seems to be only muted opposition to the effort this time.
For instance, in 2004, when Liberty Property Trust sought designation as a Keystone Opportunity Zone for the recently opened Comcast office tower at John F. Kennedy Boulevard and 17th Street, a group of Center City landlords successfully fought it.
The same landlord group had also opposed the original designation awarded to the Cira Centre, which led some large law firms to trade their Center City offices for tax-free space.
But, unlike Comcast and those law firms, BlackRock would move here from out of the city, and state.
Another reason for the relative quiet is that several business and civic leaders privately voice a reluctance to jeopardize the possible addition of such a high-profile company to Philadelphia's landscape.
Even Dave Campoli, who led the fight against the Comcast designation, said he didn't oppose the extension for BlackRock.
However, he said the landlord group is lobbying state lawmakers to amend the legislation on several fronts, including to limit the extension so that only non-Philadelphia companies that move into the zone can receive the tax breaks.
"Our obvious concern here is the ability to take tenants from existing downtown locations which have no possibility of getting any type of deal like this," said Campoli, vice president with HRPT Properties Trust, one of Center City's largest office owners.
He also believes the city must rethink its strategy for recruiting and expanding businesses here. "Right now, there is no overall policy to keep or grow the downtown businesses unless they move to a site selected by the government."
Brandywine chief executive Jerry Sweeney has also suggested that a review of sorts might be needed - but not yet.
"While we all agree that comprehensive citywide tax reform is crucial for the city's long-term success," he told Council last week, "opportunities such as the one presented to us today require more immediate action."
"Our experience in developing Cira Centre confirms the enormous value-potential of the University City area and why it should be considered a strategic growth opportunity for the city."
BlackRock Inc.
Business: Investment management
Chairman and CEO: Laurence Douglas Fink. Fink has run BlackRock since 1988. He was previously a managing director at First Boston Corp., an investment bank.
Client assets: $1.4 trillion, mostly in bonds, stocks and cash, also private equity and real estate.
2007 sales: $4.8 billion
2007 after-tax profits: $1 billion
Share value: BlackRock went public in 1999 at $14 a share, and now trades at around $204. BlackRock's total stock market value is $24 billion.
Owners: Merrill Lynch & Co., New York, 44 percent; PNC Financial Services Group, Pittsburgh, 37 percent; CEO Douglas L. Fink, 1 percent; other investors, 18 percent.
Employees: 4,200 at New York headquarters and offices in Boston, Chicago, Florham Park, N.J., Philadelphia, Plainsboro, N.J., San Francisco, Seattle, Wilmington, and other U.S. cities; and 1,800 in Edinburgh, Hong Kong, London, Melbourne, Munich, Singapore, Tokyo, and other foreign cities.
SOURCE: BlackRock 2007 SEC Form 10-K; Inquirer research
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http://www.philly.com/philly/business/ho...eak_could_move_major_firm_to_Phila_.html
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