But while Center City is doing as well as comparable areas of downtown Chicago or New York (better in some places), it is an island of affluence more than an engine of citywide improvement. Venture just a few blocks north or west of the cafés and hotels and well-lit streets, and you are in a dangerous place.
In fact, a very dangerous place. Virtually every year in the past decade, Philadelphia has suffered from more violent crime per capita than any of the other ten largest cities in America. In 2006, it recorded 406 homicides. New York City, with a population more than five times as large, recorded fewer than 600. In 2009, with a new administration focused intensely on crime, Philadelphia managed to reduce the homicide count significantly, to 302, and held it to 306 in 2010. At the same time, however, San Diego, with nearly the same number of people, came in at 41 in 2009 and only 29 in 2010.
The vast majority of killings in Philadelphia aren’t random attacks on innocent people. They tend to involve drug dealers shooting one another in lawless neighborhoods. If those neighborhoods were somehow farther in the distance, on the outskirts of town, it might be easier for those in the center to ignore them. As it is, they are just a little too close for Center City to put out of mind. A walk down any of the streets of Kensington, Frankford, or southwest Philadelphia, row-house neighborhoods built for working-class families that long ago abandoned them, is a walk through squalor that exceeds what one finds in even the poorest neighborhoods of New York and Chicago.
If, as this book maintains, American cities are coming to resemble their European predecessors of a century ago rather than their American counterparts of the past generation, then Philadelphia represents a striking piece of evidence. It is a fashionable center surrounded on two of its four sides by a periphery of seemingly endless poverty. The one distinctive element is that the periphery is much closer to the center than it is almost anywhere else. Philadelphia, says Feather Houstoun, president of the city’s William Penn Foundation, “is as close to a European city as you can get in the United States.” That statement is true in a way that neither Houstoun nor almost anybody else would wish. Center City is a pleasant playground that might as well have a medieval moat around large parts of it.
To be fair to Philadelphia, there has been a significant amount of gentrification in recent years in some of the areas surrounding Center City, especially in the once overwhelmingly Italian neighborhood of South Philly. There has been a noticeable influx of middle-class newcomers even in some districts north of the center. But the fact remains that demographic inversion in Philadelphia is still plagued by the existence of a partially abandoned no-man’s-land, some of it not too many blocks away from the pleasant sidewalk cafés of Walnut Street.
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IT’S IMPORTANT to remember that Philadelphia, like a handful of the oldest American cities, has always possessed a significant downtown residential culture. For most of the city’s history, this was largely a working-class culture, tied to jobs along the docks of the Delaware River. The narrow streets at the end of Center City are the same ones that Benjamin Franklin walked in the eighteenth century as a printer and irrepressible civic activist.
As late as World War II, this culture was more or less intact. But in the postwar years, in Philadelphia as in virtually every corner of urban America, downtown began to fall apart. Residents, corporations, and retail businesses all left for the suburbs. The docks were no longer economically important.
Philadelphia responded to its urban decline more boldly than most other cities. Under the leadership of urban planner Edmund Bacon, it developed two huge projects on Market Street: Penn Center, a nest of eleven towers containing five million square feet of office space along with retail units on the site of a demolished railroad station; and, a few blocks away, the Gallery at Market East, an indoor festival-style mall with 125 retail units and eating places.
Edmund Bacon was so widely admired that TIME magazine ran an elaborate spread on Penn Center while it was still in the construction stage. The project ultimately did slow down the exodus of office jobs to the suburbs, but only to a modest degree. Between 1956 and 1974, Philadelphia lost seven of its fifteen Fortune 500 headquarters. Penn Center never really made it as a shopping destination, and the Gallery, meant to be a gathering place for Philadelphians of all ages and classes, slid inexorably downscale. Its retail courtyards pointed inward, with nothing to face Market Street in many places but a blank brick wall. It sucked life out of the streets instead of fostering it. Workers and shoppers parked in attached garages and went home promptly once their working day or shopping trip ended.
By 1990, both projects were recognized as failures, or at least as inadequate to accomplish any serious reversal of the city’s fortunes. City Hall, the fulcrum of Philadelphia’s urban life for virtually the entire twentieth century, was encircled by hundreds of thousands of square feet of empty office space, and a plaza frequented mostly by homeless people. “Center City is being despoiled,” The Philadelphia Inquirer editorialized in 1989, “by litterers tossing candy wrappers, panhandlers shaking plastic cups, muggers snatching shoulder bags, shoplifters fingering the merchandise, and street people doing their business in public stairwells.” No market-rate housing had been built in Center City in the previous twenty years.
Only two pockets of affluence remained, on the fringes of the center. On the western side, closest to the University of Pennsylvania, parklike Rittenhouse Square retained its dignity, held its property values during the leanest years for downtown Philadelphia, and remained a residential enclave for what was left of the old white Protestant elite. On the opposite edge, near Independence Hall and the river, the city recruited architect I. M. Pei in the early 1960s to build Society Hill Towers, three modernist residential high-rise buildings of thirty-two stories, with 624 luxury apartments. The towers project was a commercial success (it converted to condominiums in 1979) and sparked the revival of the larger Society Hill neighborhood around it. Society Hill became a gentrified district of eighteenth-century redbrick townhouses and new ones designed to blend in. By the 1990s, Society Hill had been a fashionable residence for young professionals for thirty years. But it was an aberration. By and large, Center City continued to be a dreary place to live and work.
That changed very quickly, however, in the closing years of the decade. It changed in part because of demographic trends but also because of an experiment in tax policy. Understanding this requires a brief digression into the intricacies of Philadelphia’s perverse revenue code.
Philadelphia derives less of its budget from property taxes than any other large American city. Instead, it collects roughly 60 percent of its money from a wage tax, established in 1939, that imposes a heavy burden on the paychecks of employees and employers working within the city. In other words, it takes in funds from mobile sources—individual residents and proprietors who can flee the city anytime they wish—and treads lightly on the immobile source, the homes and apartments that stay rooted to their urban locations. The main reason there was no residential development in Center City for two decades was that the wage tax depressed the demand for houses, condos, or even rentals within the city limits, and especially downtown, where construction costs were highest.
Repealing the wage tax was politically impossible, because home owners still living in the city would not accept the higher property taxes that it would require. But in 1997, the administration of Mayor Ed Rendell did the next best thing: It enacted a ten-year tax abatement on virtually anything built in Center City. New condominium projects or conversions of old office buildings to residential use would be taxed for a decade as if they were still unimproved property. All of a sudden developers could open up high-end residential units and price them low enough that the benefits outweighed the burden of the wage tax.
The impact was dramatic. By 2004, fifty-three office buildings had gone residential. Their estimated value was $110 million. The value of their tax abatements was $29 million. In the old CIGNA insurance b
uilding, a twenty-story Art Deco structure on Arch Street north of City Hall, all the residents combined were paying a little more than $200,000 total in property taxes on the units they owned. Without the abatement, the figure would have been close to $1 million.
Not everyone thought tax abatements were such a wonderful idea. Although the abatements were extended citywide in 2000, they primarily benefited the development industry and affluent professionals who bought into the buildings the developers built or renovated. They did next to nothing for owners of smaller existing properties, especially the row-house home owners who still populated many of the city’s outlying districts. As the program entered its second decade, there were continuing debates in City Hall over ways it could be made more equitable, such as focusing the subsidy on neighborhoods rather than downtown. But on one issue there was no real disagreement: The policy had been instrumental in creating a Center City where people who had choices wanted to live, shop, and work. “Without tax abatements,” says John Kromer, who was Rendell’s housing director, “Center City would have improved, but it’s hard to imagine it becoming the success that it became.… You could buy a condominium within a newly restored, historically noteworthy building in the Rittenhouse Square area, and pay a fraction of the taxes you would have paid” for a similar property in another city.
Tax abatements made the new Center City not only attractive but affordable, but this too was a double-edged sword. Because it was subsidized, it didn’t price very many customers out of the market. It wasn’t expensive enough to generate the excess demand that had pushed newcomers into outlying neighborhoods of New York and Chicago and served to revitalize large portions of those cities. As the first decade of the new century unfolded, most of Philadelphia (62 percent, according to one study) was still mired in blight. In the words of John DiIulio, a University of Pennsylvania political scientist and lifelong Philadelphian, “Center City has never looked better. The old neighborhoods have never looked worse. End of story.”
Every big city has dangerous neighborhoods, but Philadelphia is one of the few in which those places still form a barrier against the expansion of central-city affluence. The physical decay and social disintegration of communities only a short distance from downtown are an immense obstacle. Not far from Center City, a whole ring of neighborhoods looks to be simply too far gone to attract professionals and office workers who might otherwise be tempted by the convenience. “These areas hem in the city,” says one longtime observer. “There’s a feeling of pushing against the frontier that you don’t have in other cities.… There’s some places in North Philadelphia that it’s hard to imagine anyone doing anything with in our lifetime.”
IF YOU RIDE the Broad Street subway north just a couple of stops past Temple University, you’ll find yourself in a world of abandoned houses, rotting factories, and drug-gang turf wars. “For miles on end,” the Metropolitan Philadelphia Policy Center reported in 2001, “the fabric of the city has worn clear through, creating a landscape of rubble punctuated by a few houses. One of Philadelphia’s greatest assets during its twentieth-century heyday was the abundance of small homes for working people. But the exodus of people and prosperity to the suburbs during the past fifty years has left the city with a huge surplus of houses and few resources to maintain them.”
One can simply look at the jobs-to-residents ratio and get a glimpse of the problem. Boston has almost an equal number of people and jobs. Even Pittsburgh, which suffered through the collapse of the steel industry, its economic lifeline, has close to an equal number. Philadelphia has a population of 1.4 million and a little more than six hundred thousand jobs. And the greatest effect of that imbalance has been felt in the old row-house neighborhoods that spread north and west from Center City.
Philadelphia’s neighborhoods were not merely places to live; they were all-purpose communities wound tightly around manufacturing employment. They were lunch-pail neighborhoods. The breadwinners in those small homes walked to their factory jobs in the morning, carried their sustenance with them, and walked back home again later in the afternoon to open a beer and glance at the evening paper. The factories closed up in a period of just a few decades: In 1950, 45 percent of the city’s jobs were in manufacturing; by 1980, according to Pew’s Philadelphia Research Initiative, that figure was down to 20 percent. In 2008, it was less than 4 percent. As the factories closed up, the working-class home owners departed as well, leaving behind obsolete enclaves that no longer could support most of those who remained. The people who stayed behind were primarily older people too settled or too infirm or exhausted to move, and younger people who made their living primarily through illicit activities.
Kensington is a classic example. Its residents worked at the Navy Yard, just to the east along the Delaware River, and the winding down of the Navy Yard in the 1990s was in many ways the act that sealed Kensington’s fate. But the neighborhood’s breadwinners also made Phillies cigars, Stetson hats, and Disston saws. They held down skilled machine jobs in smaller plants that made things whose origin few consumers bothered to think about: zippers, tuxedos, patio furniture.
Kensington is a close-in neighborhood with easy transportation access to downtown and a scattering of houses that could be saved and sold. But both the neighborhood and the areas around it lack the job base to provide a stimulus for saving it. Emerging from the Somerset El station in the heart of Kensington, one first sees the abandoned hulk of the five-story Orinoka Upholstery mill, whose business declined through the second half of the twentieth century, and which closed altogether in the 1990s. There are only a few factories left in Kensington now; ironically, some of them produce luxury hardware for the apartments and condos of Center City. Many of the abandoned industrial buildings serve now as drug markets. Drug dealers also own some of the functioning buildings on Kensington Avenue.
Southwest Philadelphia, in the shadow of Philadelphia International Airport, is in even worse shape—the most dilapidated neighborhood, many believe, in the entire city. It doesn’t have the history that Kensington has. Its row houses were mostly built in the 1960s for workers who earned a living at the nearby General Electric plant and an ARCO oil refinery. Cut off geographically from most of the city, it always bore the burden of being a “white-trash” neighborhood, a place known as much for its waste dump and junkyards as for any sense of community it could develop. Still, says John DiIulio, who grew up there, “it was a paradise in its way. A working-class paradise.”
That changed almost overnight when General Electric shut down in the 1980s. White residents fled, poorer African Americans replaced them, and southwest Philly became a textbook case of social disorganization, with scarcely anyone residing there who possessed any attachment to or roots in the community. Its reputation today is as a haven of violence and foreclosure. It seems moderately plausible to envision Kensington, in a future housing boom, making at least a partial comeback. It is harder to imagine in the case of southwest Philadelphia.
IRONICALLY, IT IS ONE OF PHILADELPHIA’S most deeply entrenched sources of civic pride that has contributed most to the decay of its neighborhoods: its physical character as a row-house city. Philadelphia was never a city of apartments the way New York and Chicago were. It was a place where an ordinary working-class family could afford a small redbrick investment of its own, fifteen feet wide and no more than forty feet deep, but a badge of pride for anybody who worked on the ships at the Navy Yard or on the assembly line at General Electric. Many of the city’s banks, unlike those in other cities, were perfectly willing to lend money for the purchase of a home this small. And so people were home owners in Philadelphia who would have been renters almost anywhere else.
For decades, the row-house phenomenon contributed to the rootedness—one might say the parochialism—of many Philadelphia neighborhoods. Many longtime residents almost never ventured downtown, even if downtown was only three or four miles away. A city that was the most cosmopolitan in America in the eighteenth century evolved int
o perhaps the most provincial over the course of the twentieth. Whole communities linked themselves to individual industrial companies, or to individual unions that thrived there. A ship-workers’ neighborhood and a carpenters’ neighborhood could easily develop intense and long-lasting rivalries. A typical row-house block in Kensington might have as many as sixteen houses on it. The small size and sheer proximity of the living quarters—sixteen families each joined to one another by a common set of walls—made an undeniable contribution to community and solidarity. But when jobs disappeared and families began to leave, each block was left with a special set of vulnerabilities. An apartment building with thirty-six units is, in a certain sense, too big to fail. A landlord nearly always has an interest in keeping it in operation, even if at a low level of maintenance. A fifteen-by-forty-foot row house is an easy thing to abandon when all of one’s friends are leaving the area and the resale value is next to nothing. In the words of Alan Greenberger, the city’s economic development commissioner, “Lots of individual houses fail because the occupant is unable to deal with it. Then it spirals. The easiest thing to do is to leave it there until it deteriorates.”
Walking down a block in Kensington today, one encounters what real estate brokers like to call the 60/40 problem. Sixty percent of the homes have been abandoned and are more than likely boarded up. Forty percent are still occupied. Each unit is individually owned, and even if a developer could be found who wanted to build on the block, the 40 percent of occupied houses would have to be acquired piece by piece, or the owners evicted by public action, which is in many cases politically impossible. This is a primary reason Kensington in particular, almost literally within the shadow of Center City, has attracted virtually no investment. It is just too hard to put a decent-size piece of land together.
The Great Inversion and the Future of the American City Page 15