Established Philly hotels are in a tizzy over the prospect of a newcomer to the scene receiving about $33M in tax increment financing, in addition to other public subsidies, with the combined amount coming out to around $75M. The Philadelphia Industrial Development Corporation (PIDC) argues that if the hotel produces about $17M of wage tax revenue for the city during its first 20 years in operation, the $33M in tax breaks will be worthwhile. For the most part, City Controller Butkovitz agrees, but has a few reservations.
Though the PIDC claims that its estimates for how much the city will make on wage taxes come from estimates for the number of employees that will work for the W Hotel, and from estimates about their average salaries, the City Controller's office isn't sure that the estimates are correct.
As it turns out, most Philly hotel workers work a 30 hour week instead of the full time hours which are assumed by the PIDC's calculations. Additionally, the PIDC seems to be assuming that workers at the W Hotel will be making top tier wages for the Philly hotel industry. If they don't the wage tax revenue for the city will fall short of the estimates put out by the PIDC.
Nevertheless, it looks like the controller is throwing cautious support behind the project, and not just because of potential wage tax revenues for the city. The hotel will provide a large, "marquee" hotel in the direct vicinity of the Pennsylvania Convention Center, it will create long-term revenue for the city, and it will create construction jobs. Whether or not other Philly hotels are opposed to these tax breaks, it looks like the new W Hotel just might get them.
· Controller's Economic Impact Statement [Philadelphia Controller]
· Phila. controller releases study on W Hotel subsidy [Philadelphia Business Journal]
· Are Older Philly Hotels 'Just Jealous' of Tax Breaks for New Ones? [Curbed Philly]