One of the nation’s last true streetcar suburbs is riding toward two sets of tax increases as the future of its transit-oriented but vacancy-prone downtown remains up in the air.
Lawmakers say new taxes will prevent an imminent “financial calamity.” But increased costs have many scrambling for ways to bring more foot traffic, tenants and customers into Upper Darby’s main commercial district to ease the pain.
Bisnow/Noah Zucker
Upper Darby is getting a duo of tax increases from its municipal government and its leaders at the county level.
A wide array of landowners in Upper Darby face additional expenses after Delaware County passed a 23% tax increase last year. Many residents of the township will pay even more when Upper Darby’s new 1% earned income tax goes into effect on July 1.
Four different rail lines and more than a dozen bus routes converge at the 69th Street Transit Center, but retail vacancy is high, and foot traffic along the adjacent shopping district has dropped dramatically in recent years.
The H&M across the street had just 1,782 visitors last month, down from 4,393 in February 2020 and 7,431 in February 2017, according to data provided by Advan Research Corp.
That has put political officials and landlords in a bind.
“Urban communities within suburban communities are hard to revitalize,” said Philly Office Retail President Ken Weinstein, whose company owns an office building in Upper Darby. “People in the burbs live in the burbs for a reason. They have left Philadelphia or do not want to live in Philadelphia because they aren’t comfortable in urban communities.”
But without the additional income tax revenue, the township would be heading toward a “financial calamity,” said Upper Darby Council Vice President Andrew Hayman, a longtime supporter of the tax bill.
The lawmaker has heard complaints about the county property tax increase, but he said many constituents are understanding.
“I know 23% is steep, and I certainly know people aren’t happy about it,” he said. “Most people are patient and want to see these services provided.”
Vacancy And Lack Of Velocity
Philly Office Retail’s 80K SF building at 7200 Chestnut St. is just 30% occupied. The property tax increase means the company will be paying about $2,500 more to the county this year.
Weinstein has been able to make it work because the company bought the previously vacant building from Verizon in 2009 for just $1.1M during the peak of the Global Financial Crisis, but in 16 years, he has had no luck getting new tenants into the two upper floors.
“We’re pretty upset about it,” Weinstein said of the tax increase.
“It’s a big expense when you’re not cash flowing,” he added. “When you roughly break even, it doesn’t feel very good.”
Vacant storefronts are also a common sight along 69th Street, which is largely owned by New York City-based Ashkenazy Acquisition Corp.
Ashkenazy didn’t respond to Bisnow’s requests for comment but earlier this month published a press release celebrating two new fast-food restaurants opening on the corridor. The announcement came after the Gap Factory location at 40 S. 69th St. closed late last year. The Old Navy next door has since followed suit.
Those locations are on the same block as several other vacant buildings, including the former Studio Movie Grill and the famed Tower Theater, a live music venue that has been empty since the “Van Gogh: The Immersive Experience” exhibit moved out in 2022.
Bisnow/Noah Zucker
The new expenses come as vacancy has increased on 69th Street, downtown Upper Darby’s main commercial corridor.
One block south, a former Sears location at 150 S. 69th St. has been vacant and steadily deteriorating for well over a decade. A dilapidated parking deck at the site was torn down last summer.
The economic decline in downtown Upper Darby and other parts of Delco near the Philadelphia border has been progressing for decades.
“It’s been a slow and steady one since we’ve been here,” Villanova University professor and longtime Radnor resident Ed Liva said. “The same thing happened in Philadelphia and Chicago.”
But economic conditions in recent decades prevented a sudden wave of middle-class white flight from Upper Darby like the ones that hollowed out many American cities after World War II.
“Our economy doesn’t have the velocity it had in the ’60s,” Liva said. “I think it’s harder to pick up and leave.”
Doom Loop Or ‘Best Worst Decision?’
Republicans believe the tax increases could help them retake power in upcoming local elections. The party used to dominate Upper Darby and the rest of Delco, but Democrats have had solid control of the county and municipal governments in recent years.
There has certainly been some anger about the property tax increase expressed online and at public meetings, though Liva hasn’t seen much of that among his Villanova colleagues or his neighbors in Radnor.
“I haven’t noticed that much resistance,” said the academic, who teaches several tax courses. “I was not upset with it. I completely understand the property tax base is what funds our schools and our police and fire departments.”
Prior to the 23% tax hike passed last year, the county hadn’t implemented any significant tax increases in the postpandemic era. Neighboring counties had been incrementally increasing their rates over the same period.
The earned income tax in Upper Darby was more concerning to Liva. He said similar measures have contributed to economic decline in midsized cities like Chester, Camden and Newark.
“I think it’s going to end up stifling growth,” the professor said. “The only way you address deficits is to raise revenue and cut back on expenses.”
Philadelphia has a much higher income tax of 3.75% for its residents. The Tax Reform Commission, convened by Council President Kenyatta Johnson, recommended cutting that rate to less than 3% last month.
But Hayman, a longtime proponent of the Upper Darby income tax, said the township would be in deep trouble without it.
“It was the best worst decision we could make,” said the lawmaker, who is in the process of resigning and moving to Montgomery County. “I don’t think the alternative was better.”
That is partly because the township works more like a city than many of the nearby suburbs. Hayman said Upper Darby is one of just two municipalities in Delco that has a fully staffed professional fire department instead of a volunteer squad. The township also has to pay parking enforcement agents, public works employees and police officers.
Bisnow/Noah Zucker
The Tower Theater is one of several vacant buildings in the blocks surrounding the 69th Street Transit Center.
While Hayman appreciates the township’s municipal workers, they don’t come cheap. About 75% of Upper Darby’s roughly $90M annual budget is spent on employees with contractually obligated raises, he said.
Despite these big-city expenses, Upper Darby is firmly a bedroom community.
“We don’t have the business revenue that Philadelphia gets per resident,” Hayman said. “We’re not zoned to have any of that.”
The lawmaker also said that many other Pennsylvania municipalities have a similar earned income tax.
The 40% of Upper Darby residents who already pay an income tax via their jobs in another municipality won’t see an increase, as long as the rate they already pay is 1% or greater.
In most cases, 1% of the income levied in a different municipality will come back to Upper Darby. For example, Hayman works in Chester, where the rate is 2%. Half of that will return to his hometown.
The exception to that rule is Philadelphia, which state law allows to keep all of the income tax it collects from nonresidents, Hayman said.
Diversity, Density And OZs
Liva said federally designated opportunity zones, which provide tax breaks for investments in economically depressed communities, could be a good way to spur development in downtown Upper Darby.
“Once that happens, your base of residents starts going up,” he said.
Each state can only designate 25% of its low-income census tracts as opportunity zones. In Delco, they are mostly concentrated in and around beleaguered Chester. There are also two in Media, where the poverty rate is just 4.1%, compared to Upper Darby’s 14%, according to the Census Bureau.
Weinstein would like to see the local government and business community step up to the plate with their own incentive program.
“I think that there hasn’t been a coherent plan from the powers that be,” Weinstein said.
“They need to offer incentives to fill the storefronts, to rehab blighted buildings,” the developer added. “Something needs to jump-start Upper Darby.”
Hayman wants to see zoning changes around 69th Street. In many ways, downtown Upper Darby hasn’t changed much since the neighborhood was first laid out about a century ago, he said.
“It’s an area that was built up in the 1920s that wasn’t really thought out and wasn’t planned well,” Hayman said.
That is why he would like to see the code updated to allow more density in the neighborhood around the transit center, which the lawmaker thinks could handle residential towers as tall as 15 stories.
“It would relieve some of that [tax] burden on the residents,” Hayman said, adding that the high-density zoning wouldn’t necessarily need to impinge on the vast web of duplexes and single-family homes in Upper Darby’s outlying neighborhoods.
Hayman and Weinstein agreed that the township’s cultural diversity needs to be front and center. Twenty-one percent of township residents were born outside the U.S., Hayman said.
“It has an incredible ethnic population, and that has led to a lot of diverse and good restaurant choices,” Weinstein said.
The area around the H Mart at 7050 Terminal Square has been doing relatively well, for instance. The Asian supermarket with a food court and small shops on the second floor had 11,507 visitors last month, down from 15,444 in February 2020, according to Advan.
That is a drop of 34%, compared with the 59% seen at the H&M down the street.
“I would say Upper Darby needs more of that,” Weinstein said. “They should celebrate their diversity and use that to attract customers.”
But these restaurants need to be boosted by a larger anchor, he said.
“Something else has to attract people to Upper Darby,” Weinstein said. “Ultimately, people want to go to something like the Tower Theater and enjoy a good meal afterwards.”