The Pennsylvania budget stalemate wreaking havoc on Philadelphia's school and social-service finances could soon claim another victim: the city's expanding skyline.
Officials in Harrisburg are holding back funds from a program aimed at helping transformative redevelopment projects until the eight-month impasse is resolved.
That has forced developers expecting funds from the Redevelopment Assistance Capital Program (RACP) to delay - and consider downgrading - their plans for the city.
"We're in the pack with other people," said Carl Dranoff, who applied for $20 million from the program for his SLS Lux hotel and condo project on South Broad Street. "We want to start in the summer, and we're not going to be able to do that unless this money becomes available pretty soon."
Philadelphia projects account for about $460 million of the $1.6 billion requested from the program statewide in 2015. They range from the Gallery at Market East redevelopment to the 3.0 University Place office building in University City, from the Chinatown Community Center mixed-use tower to the Viaduct Rail Park north of Center City.
"The RACP grants are often essential to make the economics of development work for certain kinds of projects," such as hotels and those with big public-space components, said Alan Greenberger, former deputy mayor for economic development and now a senior adviser to consultancy Econsult Solutions Inc.
Jeff Sheridan, a spokesman for Gov. Wolf, said the applications will remain under review "until there is an agreement on current and future revenue plans to fully fund state obligations."
Only a fraction of the applicants for RACP money will be successful, if past years' awards are any guide. Of the $1.1 billion in funding sought statewide in 2014, only $207.8 million was awarded.
Some developers holding out for grants said their operations have been unaffected by the delay. Others declined to discuss the issue publicly because they did not want to be seen as equating their troubles with those of the school districts and social-service agencies also awaiting funds.
But some did express concerns.
"We certainly would like to get the dollars, because it would allow us to realize our vision," said Joseph Coradino, chief executive officer of Pennsylvania Real Estate Investment Trust, which is applying for $31.5 million to aid its work at the Gallery.
The company has leeway on its final plans, since the project's demolition phase may take as long as a year, he said. But it can't wait forever.
"At a point, we're going to have to make a 'go' decision based on either having the money or not having the money, and that will help to define the project," said Coradino, who declined to elaborate on how a project with the funding would differ from one without.
Meanwhile, Denver-based Aimco, which is modernizing the Park Towne Place apartments on the Benjamin Franklin Parkway, has not been able to start work on a park intended as part of its redevelopment plan because it hasn't gotten expected RACP money.
Aimco was hoping for $5 million from the state for the three-acre public space, which includes performance stages, a sculpture park, and a walking path, senior vice president Patti Shwayder said.
"That is something that we were very eager to see, and the city and community were very eager to see, because there's a very empty space at the mouth of the Parkway where our property is," she said.
Susan M. Wachter, a real estate professor at the University of Pennsylvania's Wharton School, said the delay could have negative impacts on surrounding projects.
"Empty, undeveloped real estate has a negative effect on its surroundings," Wachter said. "Uncertainty is death for real estate projects."
For Dranoff, the funding holdup could be the difference between the SLS project's retaining its hotel component or not. With Philadelphia room rates too low to underwrite hotel construction without public funding, the project may be reconceived as a condo-only development if the cash doesn't come through, he said.
He hasn't yet considered whether that would mean more condo units in the planned 47-story tower, or a smaller tower that retains the anticipated 90 units.
"We're hoping all the chips fall into place at the proper time and we can just plow forward," Dranoff said. "If at a later date we have to look at our options, we will."