Post-Refinery Futures
Economic Development
Big Mess, Big Opportunity
When a major explosion shook the Philadelphia refinery in June 2019, it was not the first time. Nor, when parent company Philadelphia Energy Solutions declared bankruptcy, was it the first time that the refinery seemed on the verge of financial collapse. Each time the complex was brought back from the brink—not just by corporate investment, but by deals brokered and sweetened by City and State governments. The reason of course was jobs: in a city suffering from more than half a century of a shrinking industrial economy, the refinery offered almost 2,000 jobs paying an average wage of $107,000: almost unheard of for work that in most cases did not require a college degree. This became the baseline and the single most important metric for considering alternatives: the essential defense for a land use that was otherwise indefensible in the heart of a densely populated city.
We Can Do Better
It was almost a shock, then, when the bankruptcy court awarded the sale to Hilco Redevelopment Partners, a company focused on redeveloping complicated and contaminated heavy industrial sites into contemporary light industrial and logistics centers. Hilco soon released a site plan calling for up to 15 million square feet of building space, much of it within the type of long, low logistics warehouse more commonly seen along exurban interstates than in historic urban cores. It wasn’t a refinery, that was for sure, but was it the best use of 1,400 acres of urban land, as big as Philadelphia’s Center City? What kind of jobs would it create, and how many? Could anybody hope to earn the kind of pay the refinery had offered?
Logistics Economy
Our team began digging into the debate on labor and logistics, but soon realized that we had taken Hilco’s plans at face value. Did they really plan one big logistics center, or was the plan a placeholder for an unknown, speculative future that might unfold over decades? Was there even a market for 12-15 million square feet of warehouses in the middle of Philadelphia? Through conversations with developers, planners, and local policy experts, as well as some market research of our own, we determined that logistics is a viable use for the refinery site—and others like it—but that it is unlikely to fill that much land anytime soon. The scale of development exceeds Amazon’s entire inventory in the metropolitan area, most of which lies on cheaper land near less congested highways outside the urban core.
Life Sciences
We also learned of a different possibility, particular to Philadelphia but also emblematic of the opportunities and complexities of other urban refinery sites. Philadelphia is a center for the rapidly growing life sciences industry, anchored by its research universities and increasingly concentrated in the city proper, both in University City just to the north of the refinery and the former Navy Yard just to the south. Few locations have the space necessary to accommodate both the full life cycle of a company, from startup to maturity, and of a product, from lab to manufacturing to distribution. The refinery site does.
What about jobs? Logistics offers higher wages than much of the contemporary unskilled service economy, but lower than the refinery or other skilled and often unionized manufacturing. It also may offer higher job density—more jobs per acre—than many types of modern manufacturing. As the public discussion about Amazon has made clear, working conditions can be problematic, and job insecurity as a result of automation is a long-term concern. Life sciences development hosts a much broader range of jobs. Labs create jobs for PhDs. Manufacturing is more accessible but also requires specialized training. This underscores a major point that emerged from our interviews: simply offering jobs does not create equity. Training and placement assistance are needed to combat structural issues, and both the private and public sectors can play a role. At the same time, indirect jobs may be the bigger opportunity for the city: not just the consumer goods and services supported by wages, but the business to business contracts that new industries bring. Focusing procurement on local, diverse businesses can have a multiplier effect for job equity.
What Next?
But we are getting ahead of ourselves. When we speak of redevelopment, we start to imagine wholesale redevelopment atop a blank slate. Yet the footprint of even a robust, all-encompassing life sciences development is much smaller than logistics, and even though these two sectors are among the fastest growing, the rate of market absorption precludes an all-at-once development. The refinery site will be built slowly, incrementally, and the market winners of today may have faded before this work is complete. Therefore, we must ask not just whether logistics or life sciences is good, or how to make them better, but what is the physical and policy framework that will sustain equitable and just development over the course of decades?
This framework must address not just the future, but the past and the lingering present of ongoing fossil fuel operations. Site soils and groundwater are highly contaminated, and the sources of this contamination have not entirely disappeared. Portions of the site are slated to remain as tank farms and clusters of pipeline infrastructure. Can the jobs and businesses of the future coexist with fossil fuel transport and storage? And what about the residents who were promised something better?
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