Six months in, and Cherelle Parker has demonstrated the difference a mayor can make, no? She’s as upbeat and inspirational an orator as we’ve had, which makes a palpable change. We’ve gone from a sad sack town with a discernible heaviness in the air, to one with a pep in her step. How about this ad that dropped recently for her Clean & Green initiative? This is what leadership in a city can do — make you feel you’re walking lighter, because you’re called to a project beyond your own tired self.
Parker has gone further than mere (but vital) civic cheerleading. She’s also shown courage, spending political capital on controversial projects that might not sit well with her supporters. In Kensington, for example, we finally have a mayor eschewing the immoral strategy of containment, one who is willing to break from the harm reductionist wing and politically own the dicey responsibility of cleaning up an urban dystopia.
And she’s taken on her own bureaucracy, framing the dispute with city workers over her call for all of them to return to in-person work as an example of being “at war with the status quo.” Parker essentially borrowed the Alec Baldwin line from The Departed by not giving in to her protesting workforce: World needs plenty of bah-tendahs. It does raise an interesting question: Just why does the city still have 26,000 workers, roughly the same amount as when JFK was president … when we had nearly double the population?
A troubling sign of Parker’s otherwise principled stand was her contention that “We want to grow our municipal workforce. We need to strengthen it. It is an economic driver.” Cities who depend on employing their own way to economic growth are cities that don’t grow. (You’ve read it here before: Neither of Philadelphia’s two biggest employers — University of Pennsylvania and city government — pay taxes. And nine of our top 10 employers are nonprofits. No wonder that, as a metro area, we rank 26th of the top 50 cities in GDP growth.)
“Cities have to come to terms with attracting people who might be working from home, but they’re really happy to do so from South Philly, or people who are happy to commute to King of Prussia from South Philly.” — David Stanek, Econsult
It’s this last part that is a Parker cause for concern. Just what is the vision to grow a vibrant, inclusive economy? And where are the skills to implement it?
Regarding implementation, it wasn’t an encouraging sign that outreach teams got to that initial Kensington homelessness encampment sweep hours late. Or that there has been a troubling months-long delay in completing real estate assessments — and an amateurish tight-lipped response when asked about it. As for vision, cleaning every block is awesome, but it’s not a transformative economic strategy. Vision would be a comprehensive plan — with metrics, goals and timetables — to revitalize a city with 23 percent poverty and only 5 percent of residents earning $200,000 per year or more. How do you build a pathway to the middle class from that?
“Open for business?”
There are models. And it’s not just cities in the Sun Belt that are bouncing back. In Detroit, barely a decade after bankruptcy, the city is verging on boomtown status, thanks to Ford Motor Company and Dan Gilbert, founder of Rocket Mortgage, spending billions on erecting a new skyline. And, under dynamic Mayor Justin Bibb, Cleveland leads the nation in finding new uses for empty office buildings.
To her credit, Parker is trying to send a “we’re open for business” message — that’s what bringing all of the city workforce back to the office conveys, as does her PHL: Open for Business executive order, which promises to streamline the byzantine ways in which local businesses interact with municipal government.
But is that enough? Now comes a report evaluating which cities have directly engaged the work from home era by enacting a broad revival plan, and it turns out Philly is lagging behind.
The Volcker Alliance’s Doom Loop or Boom Loop looks at New York, Miami, San Francisco, Chicago and Philadelphia. Other than San Francisco, we have the highest post-pandemic percentage of folks working from home (18.6 percent), which translates into a $4.3 billion economic hit. (Second, not coincidentally, only to San Francisco.) Yet it doesn’t seem we’ve acted as proactively as other cities to adjust to the new reality of less office space and more WFH.
Chicago, for example, has come up with the nation’s most aggressive set of incentives to refuel growth, offering developers $150 million to convert a set of financial district office buildings into over 1,000 apartments, including some 300 with affordable rents. In New York, it became clear to lawmakers that affordable apartments in the $2,000 range couldn’t be converted from office buildings without public subsidy, so a 35-year, 90 percent property tax abatement was passed. Pittsburgh, which will host the 2026 NFL draft, has doubled down on sports as a driver of economic growth.
“We have a system where it’s every city for themself,” says David Stanek, Econsult Vice President and one of the report’s authors. “I think people see office conversions as somewhat of a silver bullet. My guess as to why Philadelphia doesn’t have something like this is that Philadelphia has already converted a lot of the office building stock to residential that was easy to convert. The issue with office buildings is that buildings of a certain vintage, the footprints and the type of construction, they’re easier to convert than something built in the seventies or eighties. And so Philadelphia has already converted a lot of those older buildings.”
What should we do?
So what should Philly and the Commonwealth be doing? How about exactly what the newly minted state budget doesn’t do enough of — invest in public transit such that you lessen the distinction from work and home? “You have to make the movement of people from their home to their workplace, regardless of what industry they’re in, easier,” says Stanek. “That means huge investments in public transit, in ways that we just traditionally have not done before.”
Now would be a good time to note that the just-passed $47 billion state budget, which funds education at a record level, allocates only $60 million in one-time funds for SEPTA, about $180 million short of the level the agency, and most observers, had identified as its “fiscal cliff.”
“Yes, SEPTA is going through a funding crisis right now,” says Stanek. “And, remember, most of our state doesn’t use SEPTA. So they’re, like, ‘Let’s just not fund SEPTA.’ To me, this is crazy. Because it’s the public transportation system that supports the economy of Southeast Pennsylvania, which is the economic driver of the whole state.”
So what can we do, regardless of the level of state subsidy? My instinct has always been to grow jobs by recruiting employers — poach from higher cost regions the way locales like Charlotte, North Carolina poach from us. But maybe my job creator-centric strategy is shortsighted in 2024.
This is a huge opportunity for a lower cost city such as Philadelphia that has healthy multi-family housing production to support its growing talent pool,” says Prema Katari Gupta, CEO of the Center City District. “The young, singles and empty nesters all want to live in the city, which, compared to peer cities, is still affordable.”
Funny, Gupta echoes the point made to me just recently by another civic leader. We were talking about the cratering office building market, and the fact that headlines like the one about the sale of 1760 Market Street —which went for one-third of its highest previous price — seem more commonplace. Maybe, this economic development expert suggested to me, the best growth plan is to be agnostic on where the jobs are — and instead focus on making the city livable.
“You have to make the movement of people from their home to their workplace, regardless of what industry they’re in, easier. That means huge investments in public transit, in ways that we just traditionally have not done before.” — David Stanek, Econsult
It’s a Jane Jacobs strategy: Eyes on the street begets public safety begets retail sales begets, ultimately, job growth. Stanek agrees that you can beget your way to growth. After all, roughly 40 percent of Philadelphians reverse commute to jobs in the suburbs.
“People still want to live in places like Philadelphia, particularly young people,” he says. “They like what the city offers, the amenities, the things to do as opposed to living in the suburbs. So I think cities need to double down on improving the quality of life for their citizens. That’s very broad, but the point is that cities have to come to terms with attracting people who might be working from home, but they’re really happy to do so from South Philly, or people who are happy to commute to King of Prussia from South Philly.”
Certainly, by zeroing in on public safety and clean streets, Parker is on the way to heeding such advice. But call me old-fashioned: Rather than just picking off talented tax-paying residents one-by-one, don’t you still need some type of, in effect, local industrial policy to economically compete with surrounding cities and regions? A plan for turbocharging Philly would include the premium Parker places of quality of life issues with some type of supply-side progressivism — doubling down on increasing the supply of essential goods and services like housing, healthcare and education, in order to make them more abundant and, thus, affordable.
How do you do this locally? Well, real zoning reform and forgiving medical debt would be a start. As would flooding Black and Brown business corridors with capital. We’ve covered some of those options before, like contributing to, or matching, the $100 million commitment of the GRIT Fund, a consortium of banks funneling capital to Black and Brown entrepreneurs through small, local CDFIs. Or amping up the partnership with Della Clark’s ambitious Black and Brown business equity fund. Invest, in other words. After all, what kind of ROI are we getting right now on our historic $6.4 billion operating budget?
“It doesn’t have to be either/or — why not both?” Gupta asks, referring to combining Parker’s quality of life approach with making thoughtful investments that grow untapped sectors of the business community while incentivizing and recruiting employers.
We’re kind of in a holding pattern on such an ambitious approach, though, as Parker and Council President Kenyatta Johnson have essentially put off that type of comprehensive game-planning while yet another tax reform commission does its work. Chaired by Richard Vague and Public Financial Management’s Matt Stitt, its recommendations are to come in the fall. (We’ve had two previous blue ribbon tax reform task forces in the last two decades, both of which made similar good-government recommendations — only to both be ignored by the political class.)
I’m told by City Hall insiders that, owing to his decade and a half in city government, Finance Director Rob Dubow has outsized influence over fiscal decisions beyond mere accounting. It’s never a good sign when the bean counters are making decisions above their pay grade. The Volcker Institute report is a reminder that the pandemic has permanently changed the local economy. It may be smart politics for Parker and Johnson to wait for the political cover of a commission to make growth-oriented policy decisions, but it just might lack the urgency this moment demands.
