Philadelphia officials are on track to sell a longtime health clinic for low-income residents along the Avenue of the Arts to a developer who is determined to add a new tower to the South Broad Street skyline.
Philadelphia Industrial Development Corp. (PIDC) tentatively selected The Goldenberg Group, which has partnered with E-Z Park Inc. and the minority-owned firm The Badger Group, to develop the city-owned District Health Center No. 1 at 500 S. Broad St. in two phases. The sale price is $16.1 million.
Seth Shapiro, executive vice president of the Blue Bell-based Goldenberg Group, says his team wants to convert the historically protected three-story health clinic into retail and entertainment spaces, and build a residential tower on the adjacent parking lot.
In a sneak peek of the proposal last week inside PIDC’s offices, Shapiro said the project would pull the energy of Center City farther south.
“In order to make it more of a 24-hour destination, you need the volume and the footprint where you can bring bigger draws, bigger anchor-like retail,” he said.
Thomas Dalfo, vice president of PIDC, said the proposed development would complement the arts and residential setting on South Broad Street.
“It made really good sense to feed that into the continuing development pattern that has been emerging on the Avenue of the Arts,” Dalfo said.
The development has the potential to transform the entire block where the health clinic now sits, which is between Lombard and South streets and Broad and 15th streets.
E-Z Park Inc.’s Harvey and Robert Spear own the adjacent parking lots. The developers also own 512 S. Broad St., a three-story building that housed a former charter school. The developers, however, do not control a handful of row houses located on Lombard Street.
Not yet a done deal
PIDC’s selection alone does not ensure The Goldenberg Group wins the property.
The City Council must pass legislation approving the property transfer from the city to PIDC, which would later sell the property to The Goldenberg Group.
Councilman Kenyatta Johnson, who represents the 2nd District where the property is located, proposed legislation two weeks ago to begin the transfer process.
Johnson said on Monday in an email that he fully supported PIDC’s selection for development of the city-owned property.
The proposal’s inclusion of a Black-owned partner, Johnson said, and the developer’s pledge to ensure minority-owned businesses get retail space would equitably generate jobs and boost the economy.
“Their vision for a vibrant mixed-use development in partnership with The University of the Arts will solidify South Broad Street as a premier performing arts district,” Johnson said.
“In a city as diverse as Philadelphia,” he added, “we need to see diverse development teams leading the way on real estate projects.”
A City Council committee will publicly review the proposal for the first time during a hearing at 10 a.m. Tuesday in City Hall.
Council members must pass the bill before the end of the year. If the transfer is not approved by Dec. 31, council members will have to reintroduce the legislation in 2020.
Potential hurdles ahead
The proposed development comes at a time when the City Council hones in on changing the 10-year tax abatement, a program that exempts owners from paying city and school property taxes on property improvements for a decade.
Asked how the elimination of the abatement program would affect the project, Shapiro said, “We will still move forward with the acquisition of the building and we will do our best to develop it. It will be a struggle.”
The first phase, which is estimated to cost $150 million, will be done in partnership with The University of the Arts and will encompass 300,000 square feet of space.
The proposal would set aside 10% of new retail space for local Black- and minority-owned businesses, Shapiro said. The developers also would offer those business owners, who traditionally have difficulty accessing credit, financing opportunities.
“We’re going to orchestrate this such that we can be more lenient on a bunch of those things that provide obstacles so that we maintain a healthy supply of those smaller, independently owned businesses,” Shapiro said.
The developers continue to assemble retail businesses and stakeholders for the project, Shapiro said.
Paul Badger Jr., president of The Badger Group who did not attend the meeting at PIDC’s offices, said during a Monday interview that development projects benefit when a diverse group of people were included.
“We all have unique backgrounds and life experiences,” he said. “We all bring that perspective to the table.
“All of those life experiences can be reflected at the table if all are present. This project will represent that and will be an example of how a diverse development team can produce the best outcome for a location and for the city as a whole,” he added.
A rendering of the first phase of the project showed the health clinic’s facade remaining unchanged. Beside the clinic, a four-story glass-encased structure sits at the base of the first few stories of a residential tower.
The project is expected to open in October 2023, pending approvals by city officials and agencies.
Shapiro declined to share many details about the tower that would be built in the second phase, saying it is still just a “preliminary concept design.”
But he said it would include retail, dining, entertainment, residential units and possibly a hotel.
Skidmore, Owings & Merrill LLP, the architectural firm behind One World Trade Center in New York City, were designing the project.
The project will require a city Economic Opportunity Plan, which will mandate a percentage of minority-owned contractors be involved in the construction process. The city’s Office of Economic Opportunity will ultimately determine those requirements.
The clinic and its patients
The building at 500 S. Broad St. previously housed a city-run health clinic, sexually transmitted disease clinic and the city’s health lab. The health clinic, which was built in 1959, was added to the Philadelphia Register of Historic Places in 2017 shortly after the city began the process to sell the property.
The city began transitioning patients last year from the South Broad Street’s health and STD clinics to Constitution Health Plaza at 1930 S. Broad St.
The city’s health administrative services at the site were relocated to 1101 Market St., which houses the bulk of Philadelphia’s health services, at the start of 2019. The city’s public health lab remains at the current site.
An estimated 9,928 patients used the District Health Center No. 1 through the first six months of this year before the services were moved, according to the city’s Department of Health.
Dominique Casimir, deputy commissioner of the real estate management division of the Department of Public Property, says relocating the health services will increase efficiencies for the city and improve access for patients
Choosing The Goldenberg Group
PIDC, who is managing the transfer and sale of the 2.5-acre property, began seeking suitors for the city-owned property in 2017 and later received requests for proposals in the fall of 2018.
The selection committee, comprised of PIDC and other city agencies, considered numerous criteria for the development, including the inclusion of minority-owned partners on the project, and whether the development would use minority-owned contractors and set aside spaces for minority-owned businesses, Dalfo said.
The selection committee also took into consideration the development experience of the companies, overall design of the proposals, their financing capabilities, and their purchase price for the property.
“There was an effort and commitment to trying to integrate the project in a way that creates some spill-over social impact benefits,” Dalfo said about the selection committee’s considerations.
Dalfo said five companies submitted proposals for the nearly 40,000-square-foot property — none are Black-owned.
Dalfo described The Goldenberg Group’s proposal as the “most aggressive offer,” but declined to reveal the other financial offers.
The four other companies to submit proposals for the property were Dranoff Properties, LCOR, Scannapieco Development Corp. and Linden Lane Partners.