(The Center Square) – The Philadelphia 76ers will pay the entire $1.3 billion to build the new 76 Place at Market East Arena, but will benefit from not having to pay property taxes.
Instead, the team will use a payment in lieu of taxes model.
Demolition is set to begin on the arena land in 2026 with construction starting in 2028 until the arena opens in 2031.
The city council must still approve the deal, which requires the 76ers to pay $6 million annually in PILOT payments and just $10 in rent for the 30-year term of the lease.
The city plans to combine four parcels of land, creating an arena site and lease that plot back to the team for the arena and development.
The parcel will be created when the 76ers purchase the 1000 block portion of the Fashion District and the former Greyhound bus depot. Those will be combined with city-owned property that includes the 1000 block of Filbert Street, air rights related to the existing 10th Street bridge and parts of parcels related to Jefferson Station.
“This agreement presents an unprecedented opportunity to unlock long-needed redevelopment on the historic Market East corridor– creating jobs, generating tax revenue, and bringing vibrancy to a critically important commercial corridor in Philadelphia,” Philadelphia Mayor Cherelle Parker said. “Between the numerous commitments in the agreement to expanding economic opportunity, investing in our young people, and supporting adjacent communities, this is the right deal for the City, our residents, and our neighborhoods.”
It’s a complex deal allowing the 76ers to pay less for property taxes while holding rights to develop the area around the arena for minimum rent in exchange for paying for construction.
Geoff Propheter, an associate professor at the University of Colorado Denver, studies public subsidies and property tax policy.
“Sixers proposed PILOT suggests an effective tax rate around 0.6% +- 0.2%,” Propheter wrote. “For context, TD Garden’s ETR this year is 1.28% and Ball Arena’s is 2.25%. Both buildings are 25-30 years old.”
The deal also includes a $50 million community benefits agreement.
