The Kenney Administration Left Money on the Table in Provident Mutual Building Sale

The saga of the old Provident Mutual Life Insurance Co. building at 4601 Market continues, as Jacob Adelman reports the city has found a tenant who's proposing a new public health campus on the property.

To recap, the City sunk about $50 million into renovating the Provident Mutual building into a new Police headquarters. Then the Police leadership turned it down—or more accurately, Mayor Kenney let them turn it down—and now the City is renovating the old Inquirer Building for the Police instead.

The Kenney administration then put out a Request for Qualifications to redevelop the property, which includes the 90-year-old neoclassical Provident Mutual building itself, and also a big expanse of additional land and under-built structures that could accommodate some higher density housing or commercial space right next to the 46th Street El station. The property is zoned CMX-3 for mid-rise mixed-use—an appropriate designation for land right next to the El.

It recently came to light that there are actually significant restrictions on the redevelopment of the two parking lots on the site, related to their having been built using tax-exempt bonds for the Juvenile Justice Services Center across the street. Still, the lots take up just two of fifteen acres on the site, and the existing zoning is reasonably accommodating for dense redevelopment.

But the zoning here could be even more accommodating for reusing the site to its fullest potential—an opinion held by none other than 3rd District Councilmember Jannie Blackwell.

She introduced a bill in Council to designate the 46th and Market station with a Transit-Oriented Development zoning overlay back in November of 2017, but has since parked it in the Rules Committee for almost a year. (Because of the Councilmanic Prerogative tradition where District Councilmembers let other District Councilmembers decide all land use issues within their individual Districts, Blackwell alone decides whether the bill advances or not.)

There are also the Mixed-Income Housing density bonuses that were passed by the full Council in June, which will be especially attractive in a CMX-3 zoning district such as this once Mayor Kenney finally signs the bill. 

The combined effect of these two pending bills would be to increase the allowable height and density on the site, and cut the required parking in half. These additional development rights have a money value for the buyer, but unfortunately, since the bills are still pending, Kenney and Blackwell have chosen to forfeit that additional money.

This is a great example of Allan Domb's point that we should upzone publicly-held properties before we sell them—not after—in order to capture any additional value that the government adds to the land in rezoning it.

If you sell first and upzone after, the buyer underpays the City (aka us) for the land, and then receives the additional value from rezoning as a windfall later on.

Since the property has already been sold to Iron Stone for an unknown sum, they're going to get a nice windfall from these bills when they pass, hopefully this Fall, which they would have had to pay the City extra for if Mayor Kenney and Councilmember Blackwell had waited just one more month to get these bills signed and in effect prior to the sale. 

We don't yet know what fraction of the $50 million the Kenney administration will recoup from the sale, but what we do know is that they left some very easy money on the table.

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