New York’s Durst selected to develop Penn’s Landing over 76ers arena proposal
The approved plan calls for 12 new towers of homes, shops, and offices on either side of the four-acre park being planned over I-95, between Chestnut and Walnut Streets.
The Durst Organization of New York has been selected to redevelop Penn’s Landing, ending efforts by the Philadelphia 76ers to build themselves a new basketball arena there.
Under a $2.2 billion plan approved Wednesday by the key waterfront board, the family-run development group would put up 12 new towers of homes, shops, and offices on either side of the four-acre park being planned over Interstate 95, between Chestnut and Walnut Streets.
The decision by the board of the Delaware River Waterfront Corp. is the latest attempt in a decades-long effort to create a riverfront for Philadelphia, which the highway cleaved from the city center more than a half-century ago.
In choosing Durst’s 3.5 million-square-foot proposal, the board rejected a plan pushed by the 76ers that the team valued at $4 billion, but that would have required a big tax break. Two other bidders had also included some form of public support in versions of their plans.
Mayor Jim Kenney said in a statement later Wednesday that he welcomed Durst’s plan to complete its project “without the need for a taxpayer subsidy.”
“The Durst Organization’s thoughtful proposal prioritized minority participation and economic impact,” Kenney said. “This is a very large-scale project that will have a great impact on the waterfront for years to come.”
Of the four proposals reviewed for the site, Durst’s was also most consistent with the Master Plan for the Central Delaware, which DRWC has followed since its drafting in the mid-2000s to encourage development that enables pedestrian access to the river, said Alan Hoffmann, who chairs the agency’s board.
Under the plan, the government-affiliated nonprofit has invested heavily in public plazas, bike trails, and other communal spaces that are meant to draw private development dollars to the area.
The most significant of those investments is the $225 million park over I-95, construction of which is scheduled to begin next year.
Durst’s plan would see the construction of six high-rise buildings among grassy plazas along the waterfront between Market and Chestnut Streets, north of a 12-acre planned park spanning I-95.
The buildings would house about 1,800 apartment or condo units, 225 hotel rooms, and 94,000 square feet of space for offices of the waterfront agency, a supermarket, a preschool, and other shops and restaurants.
Six shorter towers with about 550 residential units and 26,500 square feet of commercial space would go up to the south, between Spruce and Lombard Streets.
The buildings would rise in four phases over about nine years.
“After considering four strong proposals, we came to the conclusion that the Durst Organization offered the best plan to meet the goals and criteria identified through the public engagement process for the Master Plan,” Hoffmann said.
The DRWC’s vote came after a presentation by the head of its selection committee for the site, William P. Hankowsky, which had recommended Durst as developer.
Hankowsky praised the Durst proposal for its smooth integration with the park planned over I-95, as well as the ample public space that would be included on the development parcels themselves.
Other major selling points for the Durst plan were that it would begin paying DRWC rent on the property soon after it begins earning revenue, giving the agency cash to fund and operate its public amenities.
DRWC did not immediately disclose the financial terms of Durst’s bid for the site.
The fact that Durst said its plan would not require public support also counted in its favor, Hankowsky said. The public has already made a contribution toward waterfront development through the parks and trails there that have been financed by taxpayers and philanthropists, he said.
“This proposal will take that public investment and put private investment up against it,” he said.
The Sixers proposal, which was to have included a 19,000-seat arena nestled among apartments, a hotel, and other commercial space, had drawn criticism over the public subsidy that the team’s owners planned to seek for that project.
Sixers owners Josh Harris and David Blitzer planned to seek support through a financing mechanism pioneered in Allentown known as a Neighborhood Improvement Zone, or NIZ.
The arrangement would have let them redirect $785 million to $885 million in new state and local tax revenue generated by their project to repay their construction debt, according to Hankowsky’s presentation.
Still, some state and local lawmakers had voiced support for the proposal after its backers briefed them on their plans to deliver jobs and business contracts to Black and other minority communities.
The Sixers said in a statement after Durst’s selection that they “were proud to put forward a proposal for Penn’s Landing centered around equitable economic development and growth.”
“As we continue to pursue our future home, we remain committed to a vision that anchors a world-class venue with transformative community development, job creation and economic empowerment for low-income and minority communities,” the Sixers said.
For its part, Durst’s proposal includes a commitment to give a minority-owned development firm an ownership stake of up to 20% in its Penn’s Landing project.
It also promised that up to 40% of its staff during construction and operation would be members of minority groups and that it would contract with a third-party consultant to track its adherence to that commitment.
The plan will support more than 28,000 construction and construction-related jobs, resulting in nearly $2 billion of new wages for workers, Durst said. This activity will generate additional tax revenues of $62 million for the city and $113 million for the state, it said.
Once built and operating, the development will sustain 1,850 permanent jobs, and will generate annual tax revenues to the city of $35 million, and to the commonwealth of $21 million, Durst said.
“We look forward to working with community members, elected officials, and stakeholders to finalize a design that ... creates economic opportunity and jobs for all Philadelphians, particularly disadvantaged businesses and people of color, and ... activates the Delaware River waterfront," said Durst Organization president Jonathan “Jody” Durst.
In addition to Durst and the Sixers, bidders for this site included a group led by Hoffman & Associates of Washington and another consortium that included locally based developers Keystone Property Group, Hersha Hospitality Management, and Toll Bros., and the Republic Family of Cos. of Washington.
The selection process for the site began last fall, when DRWC announced that it was seeking developers to construct residential buildings with ground-floor shops and restaurants north and south of the planned freeway cap.
The 7.4-acre northern development site, bounded by Market and Chestnut Streets, has hosted an ice- and roller-skating rink and, until its recent demolition, a hulking cement tower built for an ill-fated sky-tram to Camden. The 3.7-acre southern section consists mostly of a parking lot bounded by Spruce and Lombard Streets.
The solicitation search marked the agency’s first attempt to see Penn’s Landing developed since the early 2000s, when mall developer Simon Property Group abandoned plans there for a shopping-and-entertainment complex with a Cheesecake Factory restaurant and the Camden tram.
DRWC president Joe Forkin said at Wednesday’s board meeting that the agency will begin a community engagement process on the Durst proposal after a formal agreement with Durst is signed.
Durst is separately planning a 25-story tower with 10,000 square feet of retail space on a 1.6-acre parking lot just north of the Benjamin Franklin Bridge that it bought earlier this year from the DRWC for $10 million.
It also owns an assemblage of four nearby piers that include those occupied by waterfront restaurants Dave & Buster’s and Morgan’s Pier.
In New York, the company counts Manhattan’s One World Trade Center and 4 Times Square office buildings among its holdings.