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[Testimony] The Chamber provides recommendations for Philadelphia’s middle neighborhoods

Posted Tuesday, June 20th, 2017

Advocacy, Action Teams, Roadmap for Growth, Testimony & Correspondence

COMMITTEE ON HOUSING, NEIGHBORHOOD DEVELOPMENT, AND THE HOMELESS
PHILADELPHIA CITY COUNCIL
PUBLIC HEARING

Tuesday, June 20, 2017
City Hall, 1401 John F. Kennedy Blvd., Philadelphia, PA 19107

Testimony by: Yvette Núñez, Vice President of Civic Affairs, The Chamber of Commerce for Greater Philadelphia

Good afternoon, Chairman Domb, Councilwoman Parker and members of the Committee on Housing, Neighborhood Development and the Homeless. I am Yvette Núñez, Vice President of Civic Affairs at the Chamber of Commerce for Greater Philadelphia. Thank you for offering the opportunity to testify on Resolution No.170252 and offer insight on strategies that the private sector, non-profits, and the City can use to revitalize Philadelphia’s middle neighborhoods.

The Chamber’s mission is to attract, retain and grow jobs for the city and region. We follow principles of economic competitiveness to guide our public policy. We believe that government at all levels must operate in an efficient way to maximize the services that it provides, and the Chamber will work with other organizations to advance an agenda leading to economic growth and prosperity.

The Chamber represents over 600,000 employees throughout the region, advocates for public policy to grow Pennsylvania’s economy, create jobs and put the Commonwealth on a fiscally sound path for the future. In Philadelphia, the Chamber leads this work through its Roadmap for Growth Action Team, which engages government as well as neighborhood and civic associations on a shared job creation and economic growth agenda with a focus on neighborhood economic development.

According to a recent report by The Reinvestment Fund, middle neighborhoods are defined as relatively stable and affordable communities that offer a reasonable quality of life but are at risk of falling into decline if strategic intervention or investment isn’t used to preserve neighborhood quality of life[1]. In terms of demographics, 41% of Philadelphia’s total population lives in middle neighborhoods. These areas also saw an increase in population by 5% between 2000 and 2015. The average home price is roughly 50% above and below the citywide median of $96,500 with a range of $49,674-$148,248. Philadelphia’s middle neighborhoods are home to a growing immigrant population.

We support the following:

Increased focus on small business by offering support to those in middle neighborhoods

Of the 1,076 Chamber members in Philadelphia County, 87 members, or eight percent are located in middle neighborhoods, representing 18,831 employees. Citywide, there are 17,789 companies with 19% based in middle neighborhoods. While examining employment data across various industries 23% of employees working in middle neighborhoods are employed in education and health care professions, 21% are employed in hospitality/leisure, and 20% work within vocational trades or a similar profession. Many of these jobs within middle neighborhoods pay lower than the citywide median wage of $38,253/year.

Companies located in middle neighborhoods tend to be smaller than those located in central business districts. Small businesses, by definition, do not have as many employees as larger firms, but they are more numerous and account for a significant proportion of jobs in the city. Since many large employers are increasingly owned by companies outside a region, small business development is a way of fostering economic benefits that stay within the region.

As a joint venture between the Chamber of Commerce for Greater Philadelphia and the City of Philadelphia, PIDC has been committed to driving growth to every corner of Philadelphia for nearly 60 years.  Today, PIDC offers a wide range of financing, real estate, and business support services to businesses of all sizes and types, developers, and non-profits.  PIDC’s newest loan products for small businesses – a working capital and equipment loan and a contract line of credit – do not have any geographic restrictions and can be deployed throughout the city. Over the last 5 years, PIDC has made more than 360 loans to small businesses in 94% of zip codes around Philadelphia, investing more than $117 million dollars. PIDC’s loans have helped stable and growing businesses throughout the city’s neighborhoods invest in new equipment, improve storefronts, buy property, refinance higher interest debt, and support their cash flow needs. A recent example includes:

  • Magaly Spa, located in Oxford Circle, is a seven-year-old S corporation owned and operated by Alida Guarin, a licensed cosmetologist with more than two decades of industry experience.  The owner of Magaly Spa used PIDC funds to finance a portion of the acquisition of 6406 Castor Avenue. Much of the company’s inventory is sourced from South Florida, South America and Latin America and is generally difficult to find in Philadelphia, making it a unique retail presence for the growing Hispanic community in and around the Oxford Circle neighborhood.  Magaly is a minority- and woman-owned company, employing English, Spanish and Portuguese speakers.  Ms. Guarin’s daughter, a licensed massage therapist, is among the business’s three full-time employees, which also includes a hairdresser and a makeup artist.

Collaboration between local government and CDCs

A top priority for the Chamber’s Roadmap for Growth Action Team is Neighborhood Economic Development, focusing on how to support growth within Philadelphia’s many neighborhoods outside of Center City. This work may include encouraging growth along commercial corridors and in business improvement districts, improving the quality of life for residents, promoting resources available for small business owners, reducing barriers for immigrant entrepreneurs and dovetailing this work with local workforce development efforts. Channeling the growth potential in Philadelphia’s neighborhoods may help move the needle on its high poverty rate and keep neighborhoods stable. Collaboration between local government and civic organizations has the potential to improve and strengthen commercial corridors. An example of this would be local government coordinating with CDCs to improve sidewalks, lighting, landscaping and blight — ensuring these corridors are attractive to businesses looking to relocate.

Development incentives and financing

State and local governments offer incentives to attract or retain business on the theory that the incentives will lead to business investment and thus to new jobs. Those investments and jobs, in turn, will produce an increase in demand for goods and services. In turn, that demand will result, through a multiplier effect, in demand for an additional round of services.

Philadelphia has the capacity to offer more Tax Increment Financing (TIF) as an incentive to spur economic growth. TIF, a method of financing redevelopment activities directly tied to the success of those activities, can be used to leverage public funds to promote private-sector activity in a targeted district or area[2]. While the widespread use of TIF in major metros reflects its success as a key tool to finance public improvements, Philadelphia has used them sparingly and typically only for individual site development. Since TIF programs tend to favor larger projects in areas near those with strong real estate performance, the creation of additional TIF districts on underutilized commercial corridors in middle neighborhoods should be given consideration.

Continued support for SEPTA’s Capital and Operating Budget

A recent report from Center City District used U.S Census data to map the commuting habits of Philadelphians across the city. There are 295,000 jobs in Center City. 41% of jobs are held by city residents living north of Girard Avenue/south of Tasker Street and west of the Schuylkill River. 25% of workers commute to jobs in Center City and another 6% commute to University City. 39% of Philadelphians commute to the suburbs for work and 50% of households earn below the median income and lack access to a car[3]. These statistics show how important it is to have stable transit options for residents in middle neighborhoods as they commute outside their neighborhood for work.

As new employment hubs are being formed across the City, having quality transit options are essential to employees living in middle neighborhoods. SEPTA services Philadelphia and the surrounding counties providing greater connectivity for those working in Center City and reverse commuting. During the most recent City Council hearing for SEPTA’s FY18 Operating Budget, SEPTA is committed to maintaining stable transit options for residents working in the Greater Philadelphia region. The testimony provided was able to highlight initiatives which include:

  • New paratransit vehicles, busses, and railcars to replace aging infrastructure
  • Trolley modernization
  • Broad Street and Market-Frankford Line Station accessibility projects
  • Bus Rapid Transit on Roosevelt Boulevard

As Philadelphia continues to grow as a regional economic hub, local and state governments should offer continued support for SEPTA’s Capital Program budget.

Improving Philadelphia’s business climate

Most economic development policies and business attraction strategies are aimed at reducing the costs to business. City government can help retain businesses by reducing those costs with financial incentives, waivers of fees or taxes, or in-kind services. Business attraction and retention can also be achieved with a strong understanding of what businesses value and addressing “quality of life” factors that make a community an attractive place to do business. While the city has little control over location-specific cost factors, like energy and labor, they can foster a more favorable business climate through careful consideration of tax and regulatory burdens.

Conclusion

As the City beings to review possible strategies to jumpstart growth within the economies of middle neighborhoods, we recommend the following:

  • Increased focus on small business by offering support to those in middle neighborhoods
  • Collaboration between local government and CDCs
  • Identify development incentives and financing
  • Improved business climate
  • Continued support for SEPTA’s capital programs budget

We are happy to serve as partners in the process. Thank you for the opportunity to testify on Resolution No. 170252.

[1] Philadelphia’s Middle Neighborhoods: Demographic and Market Differences by Race, Ethnicity, and Nation of Origin, May 2017

[2] A Civic Vision For the Central Delaware: Implementation

[3] Center City District, Getting to Work: Transit Density and Opportunity, June 2016

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