76ers Up The Ante: Offer To Hand Over Land, Pay More Taxes To Get Arena Project Done

Faced with intransigent opposition to its Center City arena proposal, 76 Devcorp is sweetening its offer to the city of Philadelphia.

The development arm of the Philadelphia 76ers publicly offered to give the land underneath its proposed arena to the city on Thursday in a deal it said could produce an additional $1B in tax revenue. 76 Devcorp would also opt out of a tax increment financing deal that applies to the site through 2035.

Public ownership of the arena site would give the city more control over the arena design and power to enforce the terms of a community benefits agreement, for which 76 Devcorp has promised to spend at least $50M, the company's announcement said.

76 Devcorp also offered to use a payment in lieu of taxes program for the site, which it said is the same deal already in place by the three stadiums in the South Philly Sports Complex. The PILOT would be a better tax deal for the city than the TIF in place at the site now, which helped finance the redevelopment of the Fashion District Philadelphia mall, the announcement said.

"Working with our consultant MuniCap, a tax and municipal finance expert, we anticipate 76 Place will generate significant increases in tax revenues for the City and School District," 76 Devcorp spokesperson Amanda Olszewski told Bisnow in an emailed statement, adding the additional $1B would be made up of new property and PILOT wage taxes; business income; liquor and amusement sales; and transfer, use and advertising taxes.

"Some of these are currently capped by the TIF and others simply don't currently benefit from the taxable activity anticipated by 76 Place," Olszewski said.

The team's internal projections estimate an additional $200M in tax revenue for the city's school district and $800M for the city itself. 

“The new 76ers arena will be one of less than five arenas developed across the country over the last 20+ years that are privately financed, a stark contrast from all of the stadiums in the current South Philly Sports Complex that took city taxpayer funds or land for development and construction," 76 Devcorp CEO and 76ers part owner David Adelman said in a statement.

"With these proposed agreements, our project will significantly add to the city tax base, while maintaining the status quo would simply provide a financial benefit to Wells Fargo Center and its parent company Comcast.”

The 76ers' offer comes a week after the city picked a group of consulting firms to evaluate the arena proposal: BJH Partners and Sojourner Consulting to assess the community impact and CSL to assess the economic impact.

"As we have said from the very beginning, the City has an obligation to complete its due diligence in understanding the impact the proposed downtown arena may have on the surrounding communities before any plans move forward," city spokesperson Joy Huertas said in a statement released in response to the public offer. 

The three deals put forth by 76 Devcorp would likely fall under the purview of consultant CSL's analysis, Huertas said.

The bulk of the arena site, bounded by 10th Street on the east, 11th Street on the west, Market Street on the south and a property line past Filbert Street to the north, is occupied by the western third of Fashion District. Mall REITs Macerich and PREIT co-own Fashion District, with Macerich holding the controlling interest.

Macerich and 76 Devcorp have agreed in principle to work together on the arena plan, which would include selling the part of the mall that would need to be demolished and redeveloping what remains. The team's formal announcement did not include details about the plan to transfer land to the city, including whether 76 Devcorp would then need to sign a ground lease for its arena, which has the working title of 76 Place.

But Olszewski said that should the arena project get approved, the 76ers would transfer the portion of the Fashion District included in the project footprint to the city after demolition.

"Having the land be under public ownership is not only consistent with how other arenas in Philly function, but also allows for the city to have greater control and influence of the arena as a community asset," she said.

Yet even if the city experiences the economic windfall touted by the 76ers, it would not address the central issue for the coalition of community organizations that has mobilized to oppose the arena.

Those groups are more concerned with the site's position on the southern edge of Chinatown and the potential erosion of the neighborhood's cultural fabric an arena could cause. 

Those opposition groups have begun to focus their energy on swaying District 1 Councilmember Mark Squilla, who has the power to stop the arena plan in its tracks thanks to Philly's tradition of councilmanic prerogative, according to WHYY.