Saturday, October 1, 2016

Gallery redevelopment now supported by $100M in tax subsidies



A partnership that has proposed to redevelop the Gallery into an outlet mall is now armed with a total of $100 million in public subsidies to help fund a significant portion of the project.


Macerich Co. (NYSE: MAC) and Pennsylvania Real Estate Investment Trust (NYSE:PEI) received another $10 million in taxpayer funds to support the project. This time the money came from Pennsylvania’s Redevelopment Assistance Capital Program.

As of April 2015, the project had received a total of $90.5 million in public investment from the state and the city through a variety of state grants, according to a break down from the Philadelphia Redevelopment Authority. Part of that sum came from the state, which had previously committed $15.5 million as well as $55 million in tax increment financing for the project approved by the city and the Philadelphia School Reform Commission.

The extra $10 million received from the state will be used for facade work, interior renovations that include the installation of new mechanical systems and the replacement of escalators and elevators.

The cost to transform the Gallery into an outlet retail center totals $325 million. Of that amount ,PREIT and Macerich plan to invest roughly $234.5 million while the other $100 million is coming from the public subsidies. Those expenses are in addition to $250 million that was spent to acquire control of the three-block complex.

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