PhillyDeals: Dranoff hits setbacks - only minor, he says
Developer Carl Dranoff made news last week by detailing his plan for a 47-story South Broad Street hotel-apartment-retail tower. Dranoff was also in the news the next day, in three separate stories, none that would likely please him:
Developer Carl Dranoff made news last week by detailing his plan for a 47-story South Broad Street hotel-apartment-retail tower.
Dranoff was also in the news the next day, in three separate stories, none that would likely please him:
Gov. Corbett's administration is cutting $12 million in aid proposed through the Redevelopment Assistance Capital Program for Dranoff's apartment development in downtown Ardmore.
The state said money in that program should go to public projects, like the nearby Ardmore train station. Not for apartments.
Dranoff's 13-year loan, funded by the Delaware River Port Authority for converting the old RCA Nipper Building into the Victor Lofts apartments in Camden, is under scrutiny in a federal investigation of the agency's long-standing practice of using drivers' toll money to fund development.
City Councilman W. Wilson Goode is calling for suspension of the construction tax abatement Dranoff was counting on to make his Broad Street tower financially viable.
The city needs taxpaying development to fund its ailing schools more than developers need an easy ride, Goode said.
Of course, Philadelphia developers have counted on public money to sweeten big projects for many years.
Ask them why, and they will cite the math: Rents, property values, and other income from real estate is lower in Philadelphia than in New York, Boston, or Washington. But operating costs - labor (including union health and retirement benefits), utilities, and taxes - are not lower. So the many interests who benefit from big buildings have gotten used to asking for, and getting, public assistance.
Dranoff calls the seemingly sudden multiple criticisms a coincidence. Each project has its rationale, he would argue:
He and DRPA knew the Camden apartments would be a tough sell. He says he still has to put money into the project each year instead of pocketing profits. But other developers weren't going to Camden at all. So the loan made room for his unusual patience by offering unusual forbearance.
"The first 61/2 years [of the loan] were interest-free," Dranoff said. "The last 61/2, it [would have paid] interest, if the cash was available. Otherwise, the interest accrues. It's all due in 2015. When it's due, it will be paid."
The Ardmore funding cut "was out of the blue," Dranoff claimed. Officials from Democratic-run Lower Merion and Montgomery County thought they had made a strong case that Dranoff's apartments would boost the aging Lancaster Avenue business district. They are urging Corbett's office to reconsider.
City construction-tax abatements are "the most successful program the city ever had for economic development, as Wilson Goode is well aware," Dranoff said.
He says he's not worried. "Potholes and speed bumps," he said, are business as usual. The buildings will rise. The public will pay its piece.