At the Chamber’s 2017 Mayoral Luncheon, Mayor Jim Kenney addressed over 1,400 members of the Greater Philadelphia business community as he discussed the successes of our shared Roadmap for Growth, opportunities for economic prosperity, and how the business community can partner with the City to help overcome our challenges challenges and improve Philadelphia.
Mayor Jim Kenney’s Remarks
Thank you, John, for that introduction and for inviting me to speak. I would like to acknowledge the members of City Council who are here today, as well as Rob Wonderling, David Cohen and the Gustave G. Amsterdam winners: Fakira Awawdeh and Widchard Faustin.
Please also join me in thanking Comcast for sponsoring this event and all of the other Chamber board members, event sponsors and staff, including those serving lunch, for making this long-standing tradition possible. Let’s give them all a round of applause.
It’s an honor to be here today to deliver my second annual address to the Chamber of Commerce. When I came here last year, I laid out a very ambitious goal for a city that has found itself in a very unique position. After several difficult decades, Philadelphia has finally gotten its due.
Our crime rate is at a 40 year low, millennial and immigrant growth are on the rise, and we are at the top of the list for travel destinations and restaurant hot spots. But we are also at the top of another list: Philadelphia has the highest poverty rate of the top ten largest cities in America.
This poverty problem is so tremendous that it is impossible for government and the nonprofit sector to fix it on their own. So at this address last year, I asked all of Philadelphia’s citizens, elected officials, businesses, and nonprofits to look past our differences and work together to overcome poverty. I have to admit that even I feared that goal might be overly ambitious. But, over the last year, I’m pleased to say that I watched government and business repeatedly come together in the interest of Philadelphia.
The Chamber and David Cohen, specifically, were some of the earliest, loudest, and constant advocates for the many benefits of pre-k. Their advocacy made a tremendous difference in our successful efforts to expand pre-K to families across Philadelphia. The PNC Foundation also awarded a grant that will improve the financial literacy of pre-K providers, so that they can build their business, hire additional staff and increase wages. Additionally, the Chamber and a number of its members also partnered with the City to address chronic homelessness and panhandling through the Shared Public Spaces Initiative. Furthermore, many of the businesses in this room stepped up and contributed a total of $1.3 million to the Philadelphia Police Foundation. The Foundation is currently fundraising for a recruitment campaign that will help fill the Department’s vacant positions.
Roadmap for Growth
Our administration had a tremendous leg up in developing these public-private partnerships because of the great work that the Chamber did in 2015 to develop the shared Roadmap for Growth. The Roadmap ensured that our administration understood from the very beginning what role the business community wanted us to play in growing Philadelphia’s economy. Today, I’m pleased to announce that our administration has delivered on all four of the Roadmap’s objectives.
Roadmap – Leveraging Infrastructure
The Roadmap’s first request of the City was that we better leverage our infrastructure, particularly our port and our airport. To that end, Governor Wolf and the Chairman of Regional Port Authority Board, Jerry Sweeney, recently announced a $300 million investment in the Port’s infrastructure, warehousing and equipment. This investment, which will begin in 2017 and continue through 2020, will double container capacity and create thousands of family-sustaining jobs.
Our Airport also received additional investment this year. Terminal F’s Baggage Claim opened following a $160 million renovation project, we kicked off a $23 million project to transform Terminal B, and we added our first new foreign carrier in nearly three years, Iceland-air.
These are impressive infrastructure improvements, but they are not enough. Over the next year, our administration will launch a formal transportation and planning effort. The planning process will seek input from business, transportation and community partners on how we can improve the way we move goods, services and people around the City. At the same time, this effort will also examine how to increase equity, reliability and access to transportation for those who live in economically disadvantaged neighborhoods and explore how to move people more efficiently to our commercial corridors and job centers. Critical to this plan’s success will be sustained and even increased investment in SEPTA from the state. As all of you know, convenient and efficient public transport is critical to growing our regional and state economy. So when your companies go up to Harrisburg, I urge you to ask that they protect and increase SEPTA’s funding.
Roadmap – Developing a Trained and Educated Workforce
And that brings me to the second stop on the Chamber’s Roadmap: developing a trained and educated workforce. In order to fully achieve this goal, we still desperately need Harrisburg to live up to its responsibility to fund our School District fairly. Of Pennsylvania’s 500 school districts, 80 percent are able to spend more per pupil than Philadelphia. We spend $2,000 less per student than the statewide average. Many of you know businesses that have decided not to come to Philadelphia because of our schools. I need you to tell these stories to your friends in the Republican state legislature and make the economic case for investing in Philadelphia public schools. If the business community stood together on this issue, I have no doubt you would succeed, and the long-term benefit to your business and to our city’s economy would be immeasurable.
Despite the lack of sufficient state funding, Philadelphia’s education system has made progress over the last year. A year to the day after my inauguration, PHLpreK had its first day of school. In addition to dramatically improving the academic odds for its students, PHLpreK is already having tangible economic benefits. To date, 88 pre-k programs, 75 percent of which are minority or women-owned small businesses, have been able to grow. Just the other day, I was at Pee Wee Prep Educational Center in West Philadelphia, which hired 6 new teachers to help educate their 60 new PHLpreK students.
To ensure the academic gains made in pre-k are sustained throughout our students’ k-12 years, the City also launched its community school initiative. This initiative is currently active in nine neighborhood schools that serve nearly 4,500 students – approximately 75 percent of whom live at or below the poverty level. Each school has a full-time coordinator as well as support staff who bring services to the school campus that address the socioeconomic challenges our students face. Later this month, we will announce a comprehensive Out-of-School Time strategy, that will build on our community school efforts and ensure we are integrating early literacy into all of our city’s summer and afterschool programming.
Our administration also strengthened the City’s commitment to adult education and talent development. Under the leadership of Harold T. Epps at the Commerce Department and Mike DiBerardinis at the Managing Director’s Office, and with the participation of the Chamber of Commerce, the City launched a cross-sector Workforce Development Committee. One way this committee is working to strengthen our workforce is through a partnership with the Philadelphia Youth Network on their WorkReady Summer jobs program. Last summer, the City invested over $6 million to employ youths ages 12 to 24 and teach them critical skills that will help prepare them for future long-term employment.
To aid our current workforce, we also expanded the Mayor’s Commission on Literacy and reestablished it as the Office of Adult Education. They recently opened a new adult education campus in Southwest Philadelphia and created an online test prep course for adult learners with demanding schedules who need to refresh their skills to get a better job.
Roadmap – Improving Neighborhood Economies
The third objective on the Chamber’s Roadmap is one dear to my heart: improving neighborhood economies. We expect Rebuild, the city’s $500 million investment in parks, rec centers and libraries, to have a significant economic impact on neighborhood economies.
There are many examples of parks across the city driving demand for housing and business development after they have received relatively small investments: Clark Park in West Philly, Dickinson Square in Pennsport, Hawthorne in Bella Vista, Sturgis in East Oak Lane, Gorgas in Roxborough, and Liberty Lands in Northern Liberties – just to name a few With Rebuild, we have the opportunity to create this same catalyst for change in a way that serves the existing community. As we saw with the revitalization of East Passyunk, when neighborhood investment is community driven, the result is beneficial for both old and new residents.
Roadmap – Creating Opportunities for Business Growth
Rebuild also brings me to the fourth and most extensive objective on the Chamber’s roadmap: increasing business growth by expanding economic diversity, making capital more accessible and improving City business services. Rebuild will serve as a model for expanding economic diversity in the construction industry through two major avenues. First, Rebuild will provide an inroad to the building trades for a more diverse set of Philadelphians.
This is a promise that’s been made many times before, but now we actually have the resources, planning and enthusiastic partnership of John Dougherty, Ryan Boyer, Joe Ashdale, and others in the trades. We are creating a real recruitment strategy to attract applicants from low-income, high unemployment zip codes into an apprentice ready program. This program will be a partnership between the Trades and the City, in order to ensure these applicants learn the necessary hard and soft skills. And, since Rebuild will take place across seven years and we have the buy-in of the trades, these trainees will know that there is a job on the other side of their apprentice training.
Diversifying Business Opportunities
In addition to diversifying the trades, Rebuild presents an opportunity to grow minority and women owned contractors. We are currently working to invest in supports and services, such as assistance with cash flow, insurance, and bonding, that will allow businesses that have not always been able to bid on large publicly funded projects, to participate and grow throughout the duration of Rebuild.
To ensure we are also diversifying business sectors outside the construction industry, the City’s Office of Economic Opportunity has shifted its primary focus towards capacity building. In the past, many small women and minority owned businesses have been overlooked for City contracts because they do not have official WMBE certification, which requires a great deal of time and internal capacity to achieve. To address this challenge, OEO is creating a Pipeline Registry that would allow emerging businesses to be counted towards participation goals on contracts under $1 million.
We are also working to diversify our economy by better supporting immigrant entrepreneurs. The Commerce Department just launched Global Business Hours in partnership with Score Philadelphia. This free bilingual business consulting service is meant to encourage small business owners with limited English to take advantage of City services. While creating a more inclusive economy is key to expanding Philadelphia’s business growth, the Chamber’s Roadmap rightly points out the we also need to simultaneously increase the ease of doing business in Philadelphia.
Improving Licenses & Inspections
To that end, one of the first changes we made as an administration was to launch a multi-year initiative to improve customer service at L&I. We are increasing the building inspector corps by about 30%, which will allow the department to be more responsive and increase public safety. L&I is also opening two new districts for field inspectors near Temple University and the Point Breeze area, where new development is most concentrated. Thanks to these and other changes, permit applications now take half as many days to process through L&I’s accelerated review program – even with the development boom driving increasingly high demand L&I is also embracing opportunities to innovate. This year it released several open data sets which tech-savvy volunteers used to create new online tools, including one app that encourages developers to invest in currently vacant properties.
In addition to improving L&I, we also launched a comprehensive effort to modernize the City’s contracting and procurement policies. Most notably, City Council took a step towards implementing Best Value procurement, which – if approved by voters in May – will open the City’s marketplace to more opportunity for business than ever before. We were also able to reduce the average time it takes for the City to process a contract by 55 percent by doing things as small as implementing an electronic signature system.
Controlling Pension Costs
Our administration is acutely aware, that in order to better serve our businesses as well as our residents and city workers, we also have to get a handle on our pension costs. We have created a plan that will move our pension fund from less than 50% funded to 80% funded in thirteen years. This plan includes increased contributions by employees, moving to a combination defined benefit/401k for new City workers, dedicating additional revenue from the sales tax, and improving investment returns while lowering our costs. Soon, with Council’s help, half our city workforce will be under this plan. And, I’m hopeful we’ll be able to expand it to the entire workforce after negotiations with District Council 47, the Fraternal Order of Police and Local 22 – our firefighters – this coming year.
Lowering Tax Burden
We know that another way to make it much easier to do business in Philadelphia is to lower taxes. In our first budget, we continued lowering wage taxes and reforming business income receipt taxes. The Pew Charitable Trusts Research Initiative found that the cumulative effect of these cuts were that Philadelphia and the suburbs have the narrowest tax burden gap in 15 years. We also ramped up efforts to collect delinquent taxes, collecting more than $100 million in delinquent Real Estate Taxes for the City and School District last fiscal year.
To guide our tax policy moving forward, the Department of Commerce established a Tax Policy Committee. Their current focus is on several tax credits that could be converted to grants in order ease the implementation process on the City’s end and better serve businesses. The Philadelphia Re-Entry Program Tax Credit is currently being explored as a pilot. The goal is to have a minimum of five employers who would create 100 positions to be filled by returning citizens
Expanding Access to Capital
In addition to increasing the ease of doing business and creating a more inclusive economy, the Roadmap also asked the City to try to expand business growth by making capital more accessible. In response, the Commerce Department organized a Capital Consortium for small businesses, composed of over a dozen banks and lending institutions. To date, the Consortium has received 28 eligible applications, 22 of those businesses have been contacted by at least one lender and 4 loans have closed, totaling $385,000.
The Commerce Department’s previously established loan and grants programs also continue to be successful. Its InStore Program, which helps eligible businesses purchase materials associated with establishing a new location or expanding at an existing one, approved $300,000 in forgivable loans, last year. Additionally, the Storefront Improvement Program, which reimburses owners of commercial buildings and businesses who make storefront improvements, completed or approved 120 projects, totaling over $1 million worth of reimbursements.
To provide capital specifically to our start-up community, the City continued its StartupPHL “Call for Ideas Grant” program. The goal of this program is to make small grants, averaging $25,000, to start-ups that submit proposals that enhance collaboration in the startup community and encourage entrepreneurship. To give start-ups another boost, we also worked with the state to expand the boundaries of the Keystone Innovation Zone to include the growing tech community in Old City. In 2016, 36 companies in this zone benefited from a cumulative $2.4 million in tax credits. Thanks to these and other efforts, the U.S. Chamber of Commerce ranked Philadelphia among the top ten cities for its ability to take advantage of the digital economy, outranking both New York and DC.
Companies Committed to Philadelphia
Overall, I’m pleased to say that our efforts to make Philadelphia more business friendly have paid off. In 2016, several major companies announced their intention to remain or grow in Philadelphia with long-term lease commitments, including Aramark, Five Below, Yards, (Woo-She App-Tech) WuXi App Tec, GSI Health, Whole Foods, Target, and DiSorb. DiSorb, in particular, made a major investment to expand their production capacity, adding a $1 million high-speed assembly line. WuXi AppTec’s new laboratory facility has the potential to accommodate an additional 200 high-tech manufacturing and support jobs.
Our Director of International Business Investment – Lauren Swartz played a significant role in bringing the Frank Recruitment Group to Philadelphia. This British global staffing firm was attracted to Philadelphia because of our top notch universities – and they plan to hire 450 employees by the end of 2018. Overall, we’ve had a great deal of success in ramping up our outreach to international businesses. Given the uncertainty facing the world at this moment, Philadelphia’s relative stability and welcoming policies are strong selling points.In just the past two weeks, the Department of Commerce has held interest meetings with 10 companies from six different countries.
In other good news, Vanguard announced in November that they are planning to open a satellite office in Philadelphia that will serve as an innovation center for the company. To capitalize on this success and further attract young talent, the Commerce Department is establishing a new incentive program that will reimburse large-scale suburban companies up to $30,000 for setting up a temporary space with 25+ employees in the city.
New Development in the City
Several areas across the city also saw new development and investment this past year. Schulkyill Yards, which I know is near and dear to John Fry’s heart, is a $3.5 billion and 14-acre project led by Drexel University that will transform West Philadelphia into an innovation hub. Additionally, thanks in large part to Governor Wolf’s leadership, several major projects were awarded state development grants this year, including the Reading Viaduct, the Schuylkill River Trail, the Gallery, uCity Square, and Market East – all leveraging over $1 billion in private investment.
Sadly, for many Philadelphians, the economic successes I’ve just described feel like they are happening in another city. For them, their neighborhood school has always been struggling. Eviction is an ever-present threat, and good jobs are difficult to find and even harder to keep. And while we don’t all personally experience their struggle, we do all feel the stranglehold that poverty has on our city’s growth. I know many of you recognize this reality because last year the Chamber did not oppose the beverage tax, which is helping to create a stronger economy for all Philadelphians through pre-K, community schools, and the Rebuild initiative. I thank you for that support, and in recognition of all our businesses are doing for our children and our neighborhoods, I will propose to Council in my upcoming budget address that the City not levy any new taxes and that we continue to lower wage and business taxes.
In addition to these cuts, our second budget will aim to make Philadelphia a world-class city by ensuring all our residents live in first-world conditions. To start, we will do more for our homeless, and we will continue to look to partner with the Chamber on this issue. Last year, our Office of Homeless Services launched a 100-day challenge that placed a 108 mostly-chronically homeless people in permanent housing. The City also added 60 new Rapid Re-housing units that will allow for an additional 339 individuals to receive shelter.
But the opioid crisis and other factors are forcing more people onto the street every day, so we will need to invest more in stemming the tide of the recently-homeless. As part of that strategy, I will ask Council to allocate more of our upcoming budget towards treating drug addiction. Philadelphia is facing an opioid crisis so gripping that we lost 900 people to overdoses last year. Not to mention the unknown number lost to families and friends, living along the railroad tracks in Kensington or on the floor of a rundown building.
Our budget will also have to accommodate all the new challenges that we are now facing at the federal level. I don’t know yet how much that will cost, but I do know I will do everything in my power to protect the values Philadelphians believe in.
We will not turn our back on the immigrant business owners who have driven the majority of our city’s small business growth, nor will we turn our back on the longshoreman or Teamster whose job relies on healthy trade. We will continue to welcome with open arms our international college students, who bring with them hundreds of jobs from companies like the Frank Recruitment Group, who want to be in Philadelphia to capitalize on their talent. And despite whatever changes may come at HUD, we will never turn our back on families who need an affordable place to live. We will continue to implement the goals of the Affirmatively Further Fair Housing plan, and we will put in place a Community Development Impact Strategy by the end of this calendar year that will advance equitable development throughout the City.
Before the election, I attended a Chamber event where President John Fry talked about the need for more urgency in Philadelphia’s efforts to grow its economy. He pointed out that there are hundreds of cities, all like Philadelphia, on the verge of being one of the top 25 cities in the world, but only those who act urgently will make it. I could not agree more.
How Businesses Can Work with the City
Last year, I asked the business community to partner with us in overcoming poverty. This year, it is no longer enough to row in the same direction, we have to row quickly. So if you are not already actively working with the City, please do. And, I promise, I’m not just asking for your money. We want to hear from you. We have created a Small Business Advisory Council that is working on a business bill of rights – tell us what should be included that.
Develop a relationship with your Council Member so that you’re involved in their legislation from the outset. Host a summer job, so that our young people stay off the streets and learn the soft and hard skills they’ll need for their future. Hire a Philadelphian returning from incarceration, because the reality is that they likely never needed to be incarcerated in the first place, and they deserve a second chance. Create a strategic plan to increase diversity and inclusion in your workplace. The City just released its first ever report examining the diversity of our own workforce, so that we can develop a plan to be more inclusive alongside you.
But please, whatever you do, do not wait until next year or even next quarter to get involved. While our city has made progress over the last year, we are now approaching a new point of opportunity. These opportunities are what I hope will allow us to come together and give us courage to act quickly without fear or conflict.
Together, I know we can create a Philadelphia that works for everyone.