Penn's Landing Feasibility Study: ECONOMIC IMPACT AND BUDGET
 

Over the past five weeks, we have demonstrated the depth of analysis and creativity that has gone into the design of the Penn’s Landing redevelopment project. This work includes an engineering analysis, solutions to connectivity issues, open space planning, and recommendations for the height and density of the surrounding residential and commercial uses. We hope you agree that the result is a proposal for Penn’s Landing that is both exciting and realistic! As well as proposing innovative design solutions, an equally important goal for the project was determining the probable cost of these improvements. It wasn’t until DRWC had an accurate understanding of the price tag that we could begin began discussions with possible funding agencies about making the project a reality.

As part of the Hargreaves team, the cost estimating firm Becker Frondorf analyzed the proposed public improvements and determined estimates for their construction. The initial public investment in the site will cost approximately $250 million. That cost includes the following infrastructure elements:

  • Complete cap over I-95 and Columbus Boulevard between Chestnut Street and Walnut Street: $125 million
  • Construct tilted park from Columbus Boulevard to the River: $100 million
  • Complete Delaware River Trail from Washington Avenue to Spring Garden Street along Columbus Boulevard: $10 million
  • Extension of South Street Pedestrian Bridge to Penn’s Landing Marina: $15 million

 

  • econ image 1 infra invest elements

A project of this magnitude requires funding from a variety of sources, including local, state, and federal governmental entities, philanthropic organizations, and private businesses. A public investment of $250 million will not only realize the most important infrastructure and public realm improvements, but also set the stage for private development. Contributions from the City of Philadelphia and the Commonwealth of Pennsylvania will generate larger returns, magnifying the impact of their initial investments. This “return on investment (ROI)” can be used as an overall framework for the project, which the public sector can use to evaluate and prioritize their funding. ROI in the public sector can be more complex than in the private sector, because returns may include not only ones financial in nature, but also other outcomes that benefit citizens, such as job creation, environmental stewardship, and quality of life.

To complement the design solutions outlined by Hargreaves and to provide insight on the overall impact and return of the $250 million project, DRWC hired Econsult Solutions, Inc., a Philadelphia-based economic consulting firm. Their final report on the economic impact of the Penn’s Landing redevelopment is included below. The overall findings of the analysis overwhelmingly concluded that the $250 million public investment will generate a substantial return for both the City and the Commonwealth. 

These benefits come both from the upfront economic and fiscal impact of the construction of the project itself, as well as the anticipated private development that would follow. Econsult concluded that an investment of $250 million in the construction of the highway cap and park, the Delaware River Trail, and the South Street pedestrian bridge will lead to a one-time creation of 2,780 new construction jobs and $176 million in additional economic activity in the area.

 
  • econ image 2 infra invest benefits
As explained earlier, market analysis of the City of Philadelphia and its region indicates Penn’s Landing could absorb as much as 3.215 million square feet of new development over twenty years. To model the economic impact of the proposed improvements, DRWC used a more conservative estimate of close to 2 million square feet. The construction of new residential and commercial buildings at the two development sites in Penn’s Landing (at Market Street and the Marina Basin) would require an investment of $706 million. According to Econsult’s analysis, that investment will lead to a one-time creation of 8,540 new construction jobs and $527 million in additional economic activity in the region. It will also lead to the one-time addition of $31.6 million in City tax revenue and $35.4 million in Commonwealth tax revenue.  
 
  • econ image 3 priv dev benefit
The operations and visitor activity created by the project will generate ongoing economic and fiscal impacts, and new private development will follow this increase in activity. Once the site is built out, the new development will provide an on-going impact of $287 million in additional economic activity, 2,420 new permanent jobs, $10.6 million in additional City tax revenues annually and $6.5 million in additional Commonwealth tax revenues annually. These figures are drawn from estimated direct expenditures associated with operations, new household income of and spending by new residents, and spending by hotel guests.  
 
  • econ image 4 on going operations
The project will also generate property value gains within the City, both by catalyzing new investment on-site and in nearby areas and by increasing the value of existing properties. In addition to the on-site development at the Market Street and Marina Basin sites, the area immediately surrounding Penn’s Landing (roughly Front Street to the River, Market Street to South Street) and the area connected to Penn’s Landing by the multi-use trail (roughly Oregon Ave to Allegheny Ave, I-95 to the River) were used to calculate the potential property value increase. Combining the incremental property value impact for existing properties near the project area and the property value impact for the new development on site, the project will produce an estimated total property value increase of $532 million. This growth will lead to a $7.1 million increase in annual real estate tax revenues, a $1.1 million annual increase in real estate transfer tax revenues, and a $1.3 million annual increase in use and occupancy tax revenues. 
 
  • econ image 5 property value
Of course not all benefits from the project can be easily monetized or quantified. In addition to the economic activity that it will catalyze, the investment will represent a major addition to the City’s recreational offerings, leading to improvements in health, reductions in pollution, and improvement of the region’s overall economic competitiveness. Additionally, the enhancement of Penn’s Landing will be a gain for all Philadelphians. One of the best parts of the current Penn’s Landing is its role as a civic space for the entire city and this project will only further that goal; indeed, ensuring equity of access to high quality amenities is an important aim of DRWC for all of its projects.  
 
  • econ image 6 nonquant benefits
In today’s dollars, the cumulative impact of the project over a 40-year period will be $403 million additional tax revenues to the City of Philadelphia, $231 million additional tax revenues to the commonwealth of Pennsylvania, and $118 million additional tax revenues to the School District of Philadelphia. In real dollars, the realization of the project and resultant development is expected to yield $1.6 billion in revenue. Once full build out of development has occurred, Econsult Solutions estimates that $45 million additional tax revenues will be generated annually for the City of Philadelphia, $21 million additional tax revenues will be generated annually for the Commonwealth of Pennsylvania, and $18 million additional tax revenues will be generated annually for the school district of Philadelphia.  
  
  • econ image 7 overall

 

These figures are in line with a large and growing literature exploring the positive impact that parks and open space have on the economic and social health of a city. When considering $250 million of public investment, it is beneficial to consider projects of a similar scale and purpose in other cities and in our own. Looking to other examples can help put this project in context in terms of cost and potential impact. We’ve chosen three here to highlight, but there are numerous examples across the United States and the world.  
 

Millennium Park, Chicago  

  • Cost: $475 million ($270 million from the City)
  • Size: 24.5 acres

“The park is responsible for $1.4 billion in residential development and increasing real estate values in the area by $100 a square foot.”  – The New York Times

“All of Millennium Park mirrors the rebirth of Chicago, not just the robustness of the real estate market, but the ambition of its patrons, the creativity of its artists and architects, and the ongoing miracle of its ability to transform a no place into a someplace that's extraordinary.” – The Chicago Tribune

 

Corktown Common/Don River Park (part of the West Don Lands), Toronto

  • Cost: $135 million CN (about $100 million US)
  • Size: 18 acres

“This $135 million structure… has paved the way for more than $2 billion in public- and private-sector investment in the vicinity of the West Don Lands.” The Toronto Globe and Mail

More information on the overall investment ($35 billion!) Toronto is making in its waterfront infrastructure can be found in this article from The Toronto Star and at the Waterfront Toronto website.

 

Schuylkill Banks, Philadelphia

  • Cost: $60 million (for current extension projects)
  • Size: 1.2 miles

“Investments made by SRDC were therefore partially responsible for an increase of over 150 percent in residential property value near the Schuylkill Banks since 2000.” Plan Philly