PHILADELPHIA | Highrise Development Thread IX

[Insoluble]

Originally Posted by summersm343

Philly Workers and Businesses Might Get a Big Tax Cut … In Two Years

I know this is the title of the Article, so this is not aimed at you Summers, but this is somewhat misleading. If you read through the article they are talking about balancing a cut to one tax that is predominately aimed at businesses with an equivalent increase in another tax predominantly aimed at businesses. This proposal has been around for a while now and I have yet to have anyone explain clearly why rearranging the deck chairs like this makes one whit of difference. Wouldn't the same businesses be paying the tax in either case?

[Urbanthusiat]

Originally Posted by Insoluble

I know this is the title of the Article, so this is not aimed at you Summers, but this is somewhat misleading. If you read through the article they are talking about balancing a cut to one tax that is predominately aimed at businesses with an equivalent increase in another tax predominantly aimed at businesses. This proposal has been around for a while now and I have yet to have anyone explain clearly why rearranging the deck chairs like this makes one whit of difference. Wouldn't the same businesses be paying the tax in either case?

No, the increase is on commercial property, which the landlord of a building pays, not the tenant of that building. Take the FMC tower for example. The owner of the building Brandywine Realty would pay more in taxes, but the tenant FMC and its workers would pay less. The reduction in wage tax helps the workers and the reduction in business tax helps businesses. If we assume that commercial land owners are wealthier than the general population (hint they are), then this is effectively a progressive tax. The reason why the big commercial land owners aren't against it is because it makes their office space more competitive and allows them to raise rents despite paying more in taxes. So for them it's neutral, but it a win for everyone else.

[1487]

Originally Posted by Urbanthusiat

No, the increase is on commercial property, which the landlord of a building pays, not the tenant of that building. Take the FMC tower for example. The owner of the building Brandywine Realty would pay more in taxes, but the tenant FMC and its workers would pay less. The reduction in wage tax helps the workers and the reduction in business tax helps businesses. If we assume that commercial land owners are wealthier than the general population (hint they are), then this is effectively a progressive tax. The reason why the big commercial land owners aren't against it is because it makes their office space more competitive and allows them to raise rents despite paying more in taxes. So for them it's neutral, but it a win for everyone else.

The general premise seems to be tenants will be much more accepting of slightly higher rents if it means taxes are reduced. The biggest losers in this are businesses that operate on large plots of land but don't really make a ton ton of profit. I recall reading that auto dealers would likely lose in this proposal. I would think the same applies to shopping centers in marginal areas where rents are low.

[Redddog]

Originally Posted by 1487

.....I recall reading that auto dealers would likely lose in this proposal. .....

Those guys do pretty darn well.

[3rd&Brown]

Originally Posted by Insoluble

I know this is the title of the Article, so this is not aimed at you Summers, but this is somewhat misleading. If you read through the article they are talking about balancing a cut to one tax that is predominately aimed at businesses with an equivalent increase in another tax predominantly aimed at businesses. This proposal has been around for a while now and I have yet to have anyone explain clearly why rearranging the deck chairs like this makes one whit of difference. Wouldn't the same businesses be paying the tax in either case?

Because it taxes the landlords (i.e. building space) as opposed to the actual business revenue.

It's about generating a healthier mix of revenue that is reliant on property and not business profits.

[3rd&Brown]

Originally Posted by Urbanthusiat

No, the increase is on commercial property, which the landlord of a building pays, not the tenant of that building. Take the FMC tower for example. The owner of the building Brandywine Realty would pay more in taxes, but the tenant FMC and its workers would pay less. The reduction in wage tax helps the workers and the reduction in business tax helps businesses. If we assume that commercial land owners are wealthier than the general population (hint they are), then this is effectively a progressive tax. The reason why the big commercial land owners aren't against it is because it makes their office space more competitive and allows them to raise rents despite paying more in taxes. So for them it's neutral, but it a win for everyone else.

Exactly. In theory it will help generate more demand for office space thus driving up rents, thus off setting the increase to the landlord.

It will also encourage the construction of new space.

[Hrytsyu]

Originally Posted by 3rd&Brown

Exactly. In theory it will help generate more demand for office space thus driving up rents, thus off setting the increase to the landlord.

It will also encourage the construction of new space.

As a résidential landlord, when the city significantly increased the taxes on my properties, I was forced to increase the rents.

Unless there are specific tax breaks for corporate rent expenses that exceed those for employment taxes I am unable, at this very late moment at night, see any possible benefit. HOWEVER, the greater influence to décision-making might me a function of marketing. Corporate types tend to be quite one-dimensional. They only perceive tax expense. Hence, market the lower tax rates.

They probably really are that limited.

Furthermore, I have no idea why my keyboard is entérine occasionne french versions of english words. French is not part of my language skill set.

[1487]

Originally Posted by Redddog

Those guys do pretty darn well.

selling new cars is low margin. They make profit on service or used cars. And selling cars in the city (or to city residents) puts you at a disadvantage because of the 8% sales tax.

[1487]

Expanding drug pioneer Spark mulls move from Philly birthplace

Hopefully they stay put, but I have a feeling they will end up in camden since NJ is paying companies to locate there. Its a shame NJ cant attract any outside firms.

http://www.philly.com/philly/business/ph...k_mulls_move_from_Philly_birthplace.html

[Urbanthusiat]

Originally Posted by 1487

Hopefully they stay put, but I have a feeling they will end up in camden since NJ is paying companies to locate there. Its a shame NJ cant attract any outside firms.

http://www.philly.com/philly/business/ph...k_mulls_move_from_Philly_birthplace.html

This has 3675 Market in UCity Square written all over it. Seems perfect for a company like that.

[tsarstruck]

Originally Posted by Hrytsyu

As a résidential landlord, when the city significantly increased the taxes on my properties, I was forced to increase the rents.

How nice of you to charge lower rents than the market would bear before the tax increase.

[summersm343]

Originally Posted by 1487

Hopefully they stay put, but I have a feeling they will end up in camden since NJ is paying companies to locate there. Its a shame NJ cant attract any outside firms.

http://www.philly.com/philly/business/ph...k_mulls_move_from_Philly_birthplace.html

Doubt it. They'll probably stay in Philly. Most likely they'll stay in uCity in a new building in uCity Square. Schuylkill Yards would be cool too though.

[summersm343]

U.S. DOT Workshop Explores Capping And Connectivity On Vine Street

http://hiddencityphila.org/2016/07/u-s-d...capping-and-connectivity-on-vine-street/

[br323206]

Originally Posted by tsarstruck

How nice of you to charge lower rents than the market would bear before the tax increase.

That's what I was going to say, but you beat me to it.

[3rd&Brown]

Originally Posted by Hrytsyu

As a résidential landlord, when the city significantly increased the taxes on my properties, I was forced to increase the rents.

Unless there are specific tax breaks for corporate rent expenses that exceed those for employment taxes I am unable, at this very late moment at night, see any possible benefit. HOWEVER, the greater influence to décision-making might me a function of marketing. Corporate types tend to be quite one-dimensional. They only perceive tax expense. Hence, market the lower tax rates.

They probably really are that limited.

Furthermore, I have no idea why my keyboard is entérine occasionne french versions of english words. French is not part of my language skill set.

So what? And as a business (i.e. tenant), you have a predictable expense because you are locked into a contract specifying your rent rate. However, the way business taxes are structured in Philadelphia, your revenue gets taxed whether you're profitable or not. You get taxed as you grow. As you grow (revenue wise), your tax liability increases rather than staying fixed, the way your rent would because it's locked in for a defined period.

A lot of running a business is managing risk. Philadelphia's tax structure makes it very difficult for companies, particularly small, entrepreneurial (very often unprofitable) companies, to plan for or around their future liabilities with respect to their tax liability. On the other hand, rent is rent. They expect to pay it no matter their location. Further, to the extent that Philadelphia's byzantine and outdated tax system is as is, some companies simply opt out due to the confusing nature of it all. How confusing is sending in a rent check every month?

[Hrytsyu]

Originally Posted by tsarstruck

How nice of you to charge lower rents than the market would bear before the tax increase.

I préfère to have décent tenants than high rents. I suppose I could charge much more but I want tenants to remain for years. My tenants have always cared for my houses, and I care for my tenants. I shall never be wealthy, but at least we have good relationships.

[Hrytsyu]

Originally Posted by 3rd&Brown

So what? And as a business (i.e. tenant), you have a predictable expense because you are locked into a contract specifying your rent rate. However, the way business taxes are structured in Philadelphia, your revenue gets taxed whether you're profitable or not. You get taxed as you grow. As you grow (revenue wise), your tax liability increases rather than staying fixed, the way your rent would because it's locked in for a defined period.

A lot of running a business is managing risk. Philadelphia's tax structure makes it very difficult for companies, particularly small, entrepreneurial (very often unprofitable) companies, to plan for or around their future liabilities with respect to their tax liability. On the other hand, rent is rent. They expect to pay it no matter their location. Further, to the extent that Philadelphia's byzantine and outdated tax system is as is, some companies simply opt out due to the confusing nature of it all. How confusing is sending in a rent check every month?

Have you ever renovated a building? I doubt you would ever consider the process "risk free". Meanwhile, taxes and mortages are paid during the rénovation. Where do you think the money originates for construction?

Furthermore, rent does not always arrive on the anticipated date. Thank goodness for online mortgage payent technology and the 15 day grâce period.

Meanwhile entropy does its best to foil the best-run property. And yes, we must estimate tax payments although the process is much more simple than other entrepreneurial structures. However, they don't necessarily pay exorbitant recrépit taxes and their losses can be transferred to other years. Real estate taxes are due whether there is a profit or loss.

[Knight Hospitaller]

Originally Posted by Hrytsyu

I préfère to have décent tenants than high rents. I suppose I could charge much more but I want tenants to remain for years. My tenants have always cared for my houses, and I care for my tenants. I shall never be wealthy, but at least we have good relationships.

Others may be cynical, but I think you get the "Lord of the Manor" thing in the best sense.

[3rd&Brown]

Originally Posted by Hrytsyu

Have you ever renovated a building? I doubt you would ever consider the process "risk free". Meanwhile, taxes and mortages are paid during the rénovation. Where do you think the money originates for construction?

Furthermore, rent does not always arrive on the anticipated date. Thank goodness for online mortgage payent technology and the 15 day grâce period.

Meanwhile entropy does its best to foil the best-run property. And yes, we must estimate tax payments although the process is much more simple than other entrepreneurial structures. However, they don't necessarily pay exorbitant recrépit taxes and their losses can be transferred to other years. Real estate taxes are due whether there is a profit or loss.

Yes. Multiple. I am also a landlord. Also, it sounds like you're a residential landlord. This bill is aimed at commercial properties, not residential properties. But good on you for thinking about how everything affects you first and not how it could be better for the city in the long run. Philadelphia receives something like only 25% of it's revenue from property taxes. Comparable cities get anywhere from 35%-65% of their revenue from property taxes (Boston, NY, DC, etc). They have lower business (revenue) taxes. Who's adding jobs the fastest? Not us.

[SJPhillyBoy]

Big news.

This means the Camden Waterfront development is happening.

Liberty Property Trust to sell 108 properties for nearly $1B

http://www.philly.com/philly/business/re...sells_108_properties_for_nearly__1B.html