When the lease expires in 2006, it will exit approximately 600,000 sf in that tower. It plans to downsize by approximately one-third, and, prior to its agreement to buy a headquarters building here, also planned to send another third of its remaining staff to a suburban location. With purchase of this building, it will stay Downtown.

The aggregate cost of the Walnut Street acquisition, renovation and furnishings is $74 million. Ace will fund $52.5 million of the cost and will receive the remaining $21.5 million in public assistance from the state and the city. TIF designation for the property will generate approximately $8.5 million of that public financing.

Under the Pennsylvania TIF act, the city and school district of Philadelphia can designate a TIF district for underutilized or blighted parcels. Increased tax revenues generated by the redevelopment of the district are then made available to repay privately financed construction debt for the project over a 20-year term. In Philadelphia, only increases in the real estate, use and occupancy, city sales, and business privilege taxes are eligible for TIF purposes. As a result, the city and school district will receive base tax revenues on the property at the pre-development level and obtain increased revenue from new taxes, including wage and parking taxes there.

Philadelphia Industrial Development Corp. acts as the city's agent in administering the TIF program and worked with Ace, the city's commerce department, the City Council and the school district to manage the legislative process for TIF approval.