Sunday, November 29, 2015

Philly factories unite to fight fee; Cardone 'staying'

Angry factory and warehouse owners want Philadelphia to roll back its stormwater fee, which for some is higher than city property taxes

Philly factories unite to fight fee; Cardone 'staying'


Last year, the Philadelphia Water Department, prompted by federal water-pollution guidelines, imposed big changes in the stormwater-runoff fees it charges business-property owners for the privilege of getting rained on.

Used to be, you paid a stormwater fee based on how much treated city water you bought each year.

That made no sense, since city water mostly goes down the drain through the sewage system, for which you pay a separate fee. It's rainwater, not city water, that regularly overflows the city's cement drainage channels, water-retention basins and rudimentary stormwater-treatment facilities.

The new system, phased in over the next three years, charges a fee based on how much asphalt and cement your property contributes to actual stormwater run-off.

At least that's logical, though you can argue with the Water Department's assumption that rainwater only hits the tops, not the sides, of high-rise buildings.

Logical or not, this has radically changed who pays. And radical change creates losers as well as winners.

Hospitals and universities (Penn, Temple, Jefferson), apartment houses and office towers, and utilities like Peco Energy are now paying a lot less than they used to in stormwater fees. So are thousands of retail shops and other small businesses.

But hundreds of factory, warehouse and paved-lot owners - even cemeteries - are paying a lot more. Vacant-lot owners are also getting clipped.

In some cases, as I wrote here last fall, North Philly factory owners who used to pay next to nothing are now paying thousands of dollars more each month for stormwater-runoff fees, than they are in property taxes.

The outraged owners have found each other and organized. The result is a vocal United Business Owners Association of Philadelphia, which met Thursday with City Controller Alan Butkovitz after pushing at a City Council hearing earlier this month for relief, president Jeff B. Allen, of Allen Bros. Wholesale Distribution at 2d and Erie, told me.

Arty Elgart, owner of auto-parts and chemicals distributor Robert Elgart & Sons up at 10th and Butler, says the group is pushing for a slowdown in the Water Department's new system, so fees rise over a 20-year period, not the next three, giving owners more time to change.

“There aren’t going to be any rollbacks. We are still continuing to work with our loan program with the loan program and with site evalutations,” water department spokeswoman Laura Copeland told me.

But "something's got to change" or the city will loses businesses, Elgart told me. The longer it's frustrated, the more the association will meet with politicians and continue to develop as a political force, he added.

A rumor passed among UBOAP members claimed the city's largest remaining industrial employer, Cardone Industries, under newly-promoted third-generation CEO Michael Cardone 3d, was planning to leave Philadelphia to move to Texas, where it has opened new plants in recent years, citing the new stormwater fees as the last straw.

But no: "We're committed to Philadelphia. We're committed to staying here, and we're committed to job retention," Cardone spokesman George Zauflik told me. Though he agreed the stormwater fees will cost Cardone a bundle, boosting the cost of doing business here. Cardone has asked the chamber of commerce to lobby to ease the impact of the new fees.

Cardone employment has slipped to around 3,700, from 4,000 a couple of years ago, as the company increases production in Texas, where operating costs are lower, the company says. Cardone, which sells rebuilt auto parts for used cars, also has plants in Mexico and Belgium, and it's been selling more parts abroad as China has passed the US as a market for GM's Buick Lacrosse-type cars and other multinational vehicles.

Cardone says it feels an obligation to longtime employees, some with more than 30 years on the line. It's been keeping them busy in its warehouse and distribution units, as production shifts elsewhere. But employment here is slowly is falling as workers retire and aren't replaced.

Spreading out the impact of higher stormwater fees will help. But it won't make Philly cheaper than South Texas, so Cardone will keep expanding elsewhere.

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About this blog

PhillyDeals posts interviews, drafts and updates that Joseph N. DiStefano writes alongside his Sunday and Monday columns and ongoing articles about Philadelphia-area business.

DiStefano studied economics, history and a little engineering at Penn. He taught writing and research at St. Joe’s. He has written for the Inquirer since 1989, except when he left a few times to work at Bloomberg and elsewhere. He wrote the book Comcasted, and raised six kids with his wife, who is a saint.

Reach Joseph N. at, 215.854.5194, @PhillyJoeD. Read his blog posts at and his Inquirer columns at Bloomberg posts his items at NH BLG_PHILLYDEAL.

Reach Joseph at or 215 854 5194.

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