W Hotel project seeks $75M in public assistance

The developer for a proposed W Hotel at 1441 Chestnut St. in Philadelphia is on the cusp of receiving tax increment financing for the $280.4 million project.

A bill was introduced by Darrell Clarke, Philadelphia City Council president, and Councilman Bill Greenlee, to designate the site at 1441 Chestnut as a “Headquarter Hotel Tax Increment Financing District” and deem the parcel as blight. The property sits across from City Hall and next to the Ritz Carlton.

If that bill passes, the project would receive $33 million in tax incremental financing (TIF), according to the bill. The tax incremental financing would go into effect Jan. 1, 2014, when construction of the project is expected to begin, and run for 20 years.

In addition, the project is seeking to receive a total of $75 million in tax-payer subsidies. The developer would put up $205.4 million.

It is not unusual for the city to arrange tax incremental financing for construction projects, especially if the work will give an otherwise blighted area an economic boost. However, the financing tool can be controversial since some TIFs are put in areas where development would likely have happened without them.

Chestlen Development, an entity controlled by Brook Lenfest, is the developer.

The project will consist of 780,000 square feet and 700 rooms of which 240 rooms will be dedicated under the W Hotel flag and 460 rooms under the Element by Westin flag. It will have 41,000 square feet of meeting and banquet space, an 8,600-square-foot restaurant, and a 185-space, below-grade parking garage.

Once the project is completed, its market value is expected to be $95.8 million. It is expected to generate $220.6 million in incremental tax revenues over 20 years and will represent an estimated $25.8 million net gain to the city and $12.3 million to the school district over those two decades.

The development is projected to create 1,800 construction jobs and 450 permanent jobs. If it gets kicked off next year, the hotel is could be completed by Jan. 2017.

Source: The Philadelphia Business Journal