COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE OF THE WHOLE Room 400, City Hall Philadelphia, Pennsylvania Wednesday, November 13, 2024 11:10 a.m. PRESENT: COUNCIL PRESIDENT KENYATTA JOHNSON COUNCILWOMAN NINA AHMAD COUNCILWOMAN CINDY BASS COUNCILWOMAN KENDRA BROOKS COUNCILMAN MICHAEL DRISCOLL COUNCILWOMAN JAMIE GAUTHIER COUNCILWOMAN KATHERINE GILMORE RICHARDSON COUNCILMAN JIM HARRITY COUNCILMAN CURTIS J. JONES, JR. COUNCILWOMAN RUE LANDAU COUNCILWOMAN QUETCY M. LOZADA COUNCILMAN NICOLAS O'ROURKE COUNCILMAN ANTHONY PHILLIPS COUNCILMAN ISAIAH THOMAS COUNCILMAN JEFFREY YOUNG, JR. BILLS: 240966, 240967, 240968, 240969, 240970, 240971, 240972, 240973 - - -
This is the public hearing of the Committee of the Whole regarding Bill Nos. 240966, 240967, 240968, 240969, 240970, 240971, 240972 and 240973. I want to thank all of you for being here today. Mr. Christmas, will you please call the roll.
Present. I want to thank all of you for being here. A quorum of the Committee is present and this hearing is now called to order.
For the record, Councilman Phillips is present. Mr. Christmas, will you please read the titles of the bills.
Bill No. P. (the "76ers"), or another entity affiliated with the 76ers, under which ArenaCo or other 76ers related entity would sublease the Arena Site and cause an arena to be constructed on it, including a multi-purpose sports and entertainment facility and ancillary, accessory, and related amenities, improvements, and infrastructure (the "Arena") and agree to other related conditions; (5) upon the expiration or termination of the Sublease or other circumstances set forth in the Sublease, convey fee simple title to the Arena Site to PAID for disposition to ArenaCo; (6) grant, accept, amend, relocate and extinguish easements, agreements, conditions, covenants and restrictions encumbering or benefiting the Arena Site and any City owned property adjacent to the Arena Site for the benefit of the Arena Site to facilitate construction and operation of the Arena; (7) enter into a direct operating covenants agreement among the 76ers, PAID and the City, under which the 76ers agree to play substantially all of their regular season and playoff home games in the Arena; and (8) take all actions necessary and appropriate to accomplish the intent and purpose of this Ordinance; all under certain terms and conditions. Bill No. 240967, authorizing and approving the execution and delivery of a Service Agreement between the City of Philadelphia and the Philadelphia Authority for Industrial Development relating to the provision by the Philadelphia Authority for Industrial Development of certain project-related services to promote, among other things, the growth and expansion of business, commerce and tourism within the City of Philadelphia in connection with the development of a multi-purpose sports and entertainment facility, including an arena to accommodate National Basketball Association games, and family entertainment, community, retail and other uses; authorizing and approving the obligation of the City of Philadelphia to pay in full when due the Service Fee and other amounts payable under the Service Agreement and covenanting to make necessary appropriations for such purposes; and authorizing City officials to take necessary or appropriate actions to accomplish the intent and purpose of the ordinance, all under certain terms and conditions. Bill No. 240968, authorizing the revision of lines and grades on a portion of City Plan No. 307 by striking from the City Plan and vacating Filbert Street from 10th Street to 11th Street, under certain terms and conditions. Bill No. 240969, authorizing the revision of lines and grades on a portion of City Plan No. 307 by striking from the City Plan and vacating certain aerial portions of 10th Street between Market Street and Filbert Street, under certain terms and conditions. Bill No. 240970, authorizing CBL Arena, LLC. and its successor(s) in interest to construct, own, and maintain various right of way encroachments in the vicinity of 1001-19 Market Street, 1025 Market Street and 1001-25 Filbert Street, Philadelphia, PA 19107, under certain terms and conditions. Bill No. 240971, amending Title 14 of the Philadelphia Code, entitled Zoning and Planning, by amending certain definitions relating to signs; creating an "Arena Area" within the "/CTR, Center City Overlay District" overlay; and making related changes, including a master plan requirement and changes to accessory sign controls; all in connection with zoning rules for a proposed arena in Center City; and approving a master plan for the Arena Area; all under certain terms and conditions. Bill No. 240972, amending Title of the Philadelphia Code, 12 entitled "Zoning and Planning," by 13 revising certain provisions of 14 section 14-906, entitled "Market Street East Sign Regulations," all under certain terms and conditions. Bill No.
240973, approving the amendment of a neighborhood improvement district in the area generally bounded by, and including, 11th Street to the West, Filbert Street to the North, 8th Street to the East and Market Street to the South, with the exception of certain condominium units at 801 Market Street Condominium not included in the District, known as the Gallery Neighborhood Improvement District, to remove certain portions of such property generally bounded by Filbert Street on the north, 10th Street on the east, 11th Street on the west, and Market Street on the south from such District in accordance with the provisions of the Community and Economic Improvement Act, and under certain terms and conditions.
Thank you very much, Mr. Christmas. And before we proceed I would just ask everyone to please put your cell phones on silent. I would like for you also to step outside the chambers if you have any sidebar conversations. We also have a translator who will translate in Cantonese and Mandarin off to the left of us as well who will also be participating in this hearing today. We also want to make sure that irregardless if you are for or against this particular project that we are respectful of individuals' comments and statements that are made on the floor. In the event that things do get lively, to my left is the Office of Civil Affairs, Sheriff's Office, Philadelphia Police Department that may assist us if need be. Just want to state that for the record. But nevertheless, I expect us to engage in a very lively, robust but, most importantly, respectful discussion on this very critically and important proposal. I will ask Mr. Christmas to please call the first witness please.
Mr. Alex Kafenbaum, Senior Vice-president and Head of Development, Harris Blitzer Sports & Entertainment; and Mr. David Gould, Chief Diversity and Impact Officer, also with Harris Blitzer Sports & Entertainment. (Witnesses approached Witness table.)
Thank you very much. Good morning and thank you, Council President Johnson, Leader Gilmore Richardson and members of City Council. My name is David Gould and I'm the Chief Corporate Affairs Officer for Harris Blitzer Sports & Entertainment. With me is Alex Kafenbaum who serves as the Head of Development for our Real Estate Team. Together we are leading the development and approval process for 76 Place. We're very excited to be here today to detail why we believe 76 Place is the right development to serve as the new home for the Philadelphia 76ers and the right development for the city of Philadelphia. I know you have a lot of questions so I will keep my opening statement as brief as possible and submit my full testimony for the record. When we announced our vision for 76 Place, we were very clear the 76ers want to be in Philadelphia, our home for more than six decades, and we want to be a trusted and valuable partner to our neighbors. We have held over 100 meetings with stakeholders from Market East, Chinatown, Washington Square West and communities throughout the city, knocked on tens of thousands of doors and responded to scores of media inquiries and spent hundreds, if not thousands, of hours working with the Kenney and Parker Administrations to arrive at the agreement for your consideration today. Through that process we've gained valuable feedback and insights that improved our project and earned the support of more than 42,000 Philadelphians, community leaders and organizations from across Philadelphia and last, but certainly not least, organized labor. We never expected a rubber stamp approval. And as we will detail, we have made a number of important changes in response to feedback we've received. City Council has already made some changes to the agreement that we made with the Parker Administration, and we understand additional changes may be made. Because of the time it would take to develop on this site and as we approach the end of our lease at the Wells Fargo Center, we need to have certainty and approval by the end of this year for this project. We are ready to work with you over the next few weeks to get you all of the answers that we're able to so that you can make as informative a decision as possible. Our priority is to build a home in Philadelphia, which is why we're hopeful that we can gain Council's support. 3 billion development with no City taxpayer funding. We believe this is the largest private sector development of this nature in the City's history, if not the entire Commonwealth. 5 billion in new tax revenues for the state, City and School District. It is the first arena in Philadelphia specifically designed around access to public transit, which we're happy to discuss in greater detail. A structure that will provide the City with greater control over the development as well as a PILOT payment that is many times larger than those in place at South Philadelphia stadiums and larger than real estate taxes paid by nearly all of the private buildings within the city. Investments in traffic control to protect pedestrians and limit congestion, the largest Community Benefits Agreement in Philadelphia's history, $50 million for our neighbors and City stakeholders, which I know we will get to discuss in detail. The creation of thousands of jobs during construction and ongoing operations and real economic opportunity for communities of color, which too often are overlooked in these types of large projects. And last, but certainly not least, a historic Economic Opportunity Plan along with companion investments and commitments to ensure that we meet our shared goals. But those details don't in our opinion truly capture the full benefit of 76 Place as envisioned or why Market East is the best location in the city of Philadelphia.
We don't just believe you should approve this project because it's the only realistic actionable plan for Market East, but instead because it's the right plan, one that will directly benefit the City and we believe our neighbors. The Arena will sit at top the only public transit station served by SEPTA Regional Rail, PATCO, the Broad Street Line and Market-Frankford Lines. There's ample access to the site by bus as well. In combination with the location downtown, we believe, and the City's studies have confirmed, that it will be possible to meet our goals of having 40 percent of patrons get to games via public transit. Furthermore, we believe 76 Place will directly benefit SEPTA and PATCO by helping to correct the downward spiral of decreasing ridership. When it comes to economic opportunity, we want this project to be a model for future projects to come. That is why we've agreed to pursue aggressive goals in our Economic Opportunity Plan along with stringent oversight and enforcement. We have also made additional commitments such as a commitment for 40 percent of food and beverage businesses in the arena to be Black- owned given our city is roughly 40 percent African American. We look forward to working with Council and other communities through this process to expand on that commitment. We also know that goals without action and investment ring hollow. That's why even before announcing the project in November of 2021 we brought together other developers, unions and contractors to found Everybody Builds, an organization focused specifically on building diversity within the construction industry. We did this because we knew that if we waited until our project was approved or ready to start construction, we would not be successful in maximizing the economic opportunities for those communities who are often left out. As a founding Board member, I am proud of what we are building and what we can accomplish through that effort and is illustrative of the broader approach we are taking with 76 Place. In addition to that, we have committed $50 million for a Community Benefits Agreement, the largest in the City's history. I know that there are many questions about the CBA. Our goal is for that investment to truly benefit the City and surrounding communities and we're happy to discuss and answer questions. In closing, more than 60 years ago when the Syracuse Nationals relocated to Philadelphia, the team was rechristened the 76ers to honor the City's rich history and to tie it to its new hometown in a way that was unmistakable. For decades whenever anyone heard the Sixers, they thought of Philadelphia. Our priority is to build on that legacy in our hometown and we hope to gain your approval for a new state-of- the-art Arena of which we can be proud. Thank you.
Thank you very much, David. Will Alex be giving testimony?
Also, want to note for the record, we have Councilmember Isaiah Thomas who's also present and Councilmember Brooks I did see also is present as well. I have a couple brief questions and then I'll turn it over to my members to get started. When we talk about jobs, and you say this is a $1.3 billion project and we talk about jobs, give me an overview of your strategy when it comes to making sure that Black- and Brown- and women-owned businesses have an opportunity to participate based upon the numbers from the EOP which is the Equal Opportunity Plan, but specifically focusing on not only just the construction but also professional services, who gets the bond work, who gets the opportunity to provide the security, who gets the opportunity to provide the vending for the actual project, but also making sure that the project is diverse and inclusive?
Sure, absolutely. Thank you for the question, Council President. I'll start with the professional services. I'll also add operations to that as well. We're aware that often times smaller diverse companies get left out because they're not consulted with before contract opportunities become available. They're not consulted before contract opportunities are drafted and created. So one thing that our team has already done is we've done a lot of outreach both on the construction side, the professional services side and the operations side to local diverse businesses that we're aware of that serve in the capacities that we know that we will need. While we don't have contracts to offer them right now, what we want to do is gain a really solid understanding of their interest in the project, what their capacity is and also making sure we educate them on what the scope of work would be and what that could look like. And what we're trying to do through that process is get better-informed in terms of how we can prepare contract structures and make sure that we reach out to them when opportunities are available, work with them right now to make sure that they're prepared. So as an example for some food and beverage companies, also for some cleaning companies locally in the area, we've already introduced them to another venue that we own and operate in New Jersey to try to start to get them experienced working in an arena. So that by the time we have opportunities at 76 Place, we already have built a relationship with them. We're already familiar with each other and they're already familiar operating with us as a partner. The other thing that I would say in addition to the outreach is -- well, actually one more thing I do want to state, just something that I don't think we shared publicly before. Two firms that we're very proud to have here with us today we've added to our design team. One is a firm Populace. They are a preeminent architecture and design firm that focuses on entertainment venues. Also, part of our team is Moody Nolan which is the largest Black-owned architecture firm in the country that has a local Philadelphia office here. So that's just one example of how we're starting to build that diversity and being really intentional about it. But we also know that outreach is not the only thing. It also needs to come with investment and intentionality. That's why as I mentioned, we are creating a fund in partnership with the African American Chamber of Commerce to invest $2 million to help prepare those businesses for opportunities in the arena. A company with that fund has been a research effort that we've been working on with the African American Chamber of Commerce so that we understand where are businesses today, what is their interest, what are the potential gaps and barriers that they may face as they're looking to work in the arena. And then we'll use that to inform how those dollars are spent. One thing I also want to mention is that those are funds that are -- I'm sorry. The findings from that research study are not exclusive to the African American community. And so, the outcome of that research is going to inform how we work with communities across the board. And then on the construction side I mentioned in my testimony Everybody Builds. That's something that we're very proud of, and that is an effort that we're working with other developers and contractors and unions to invest in businesses and a workforce right now so that they are ready to work on the project when we have shovels put --
So let me separate the question as well. So let's go into -- you talked about the Building Trades and construction jobs. How many for the record --
-- when it comes to the construction and demolition of this project.
9,000. So obviously we're the poorest, biggest city in America. And in the event that this project goes forward, it could be very transformative. We want to make sure that the process is diverse and inclusive as it relates to everybody having an opportunity to have a seat at the table. I'm thinking about particularly African American young men between the ages of and 25, 10 the most vulnerable to get involved 11 in gun violence, right -- 12 (Applause.) 13
What my sole interest is, 15 and that's no secret to anybody 16 inside this room, is how do we make 17 sure that there's a pipeline, 18 right --
-- for young men to participate, right, in this process, right. We support unions. We support union construction. We also want to make sure that rather it's the pre-apprenticeship program, the apprenticeship program, any barriers to these young people having opportunity to participate are alleviated. So what is your plan and your strategy to make sure that happens because as a developer you're the most powerful person --
-- when it comes to projects moving forward. So how are you going to go about the enforcement but also making sure that promises made, promises are kept in terms of young people having a chance to participate in this particular project? And then, two, when you talk about contractors, right, again we support the union concept of union contractors and so forth. But also, how are we going to make sure that those small contractors that want to go from subs to primes also have that opportunity to participate their signatory as well? So what are your strategies around making sure that again this is diverse and inclusive for everybody?
Sure. Thank you again for the question. And the dynamic that you just described is exactly why we created Everybody Builds more than almost three years -- actually exactly three years ago when we initially had the conversation. So on workforce, we're very familiar that there are barriers to entry into the trades that young African American men as an example often face. That includes passing a drug test, access to a driver's license, the funds that you need to purchase a vehicle, because often times you need to have your own vehicle with the trades, or purchasing your own tools and things of that nature in addition to getting the actual technical skills, right. And so, what we've done with Everybody Builds is working with the different apprenticeship programs, with the unions and we have representation from the unions on the Board of Everybody Builds to ensure their buy-in. So we are working with them and working with them on outreach and recruitment to make sure that the recruitment of their pre-apprenticeship classes and apprenticeship classes are diverse. And secondly, really providing wraparound services for those individuals so that those things that I just mentioned are not reasons that people fall through the cracks. And that support will carry on throughout a pre-apprenticeship program and apprenticeship program and ultimately getting work on a project and getting hired by a contractor. One example that I would give is we were working with a contracting company on a project and the contractor was a woman-owned minority-owned contractor. There was trouble with payment which was creating financial challenges for the contractor and had to move off of the job. They also had an apprentice that they were working with, a young African American woman who actually was in jeopardy of losing her working there for apprenticeship because the contractor was having trouble. We worked with the unions, with contractors and with developers to make sure that, one, the challenges with the contract were rectified so that she could continue her work. And also while that was happening and the apprentice was losing work and therefore was looking for other opportunities, worked to get her work with another contractor so she couldn't fall through the cracks. That example that I just described happens all the time and we've heard many, many stories about it. But I think that in a microcosm that's probably the best way to describe what Everybody Builds is trying to do, but really do it on a broader scale.
The Sixers as a part of this particular proposal, what pre-apprenticeship and apprenticeship programs are y'all supporting directly as a part of this particular project?
Sure. So off the top of my head, and I will follow up to confirm just to make sure I'm not missing anything, but I believe we're working with the CARP Program with the Carpenters, we're working with Rosie's Girls through IBEW, WINC. I believe we're doing some work with the Finishing Trades Institute as well as Sam Staten Sr. Pre-Apprenticeship Program. (Applause.)
Do y'all directly fund any of these apprenticeship programs or do you fund Everybody Builds and Everybody Builds organizes it?
As of right now we're funding Everybody Builds to provide the support. There is some funding that Everybody Builds provides to the programs as well so I don't have the details on the breakdown, but also happy to follow up with that.
Let's go to contracting. What type of -- and I know you have Mosaic, right?
Explain to the public who Mosaic is that's participating on this project as the lead contractor.
Sure. I'm actually going to ask Leslie to come up here. I'll do my best, but Leslie from Mosaic is also here and I don't want to steal her thunder. But while she's coming up, I'll just say that Mosaic is a close partner of the 76ers. We've been working with them for the better part of four probably almost five years. They're a local Black-owned development company. I'll just say from our standpoint then we'll let Leslie describe Mosaic's work. We value our partnership with Mosaic and their role on this project for a couple reasons. One is because it creates an opportunity for us to support a local Black-owned developer that we believe is doing tremendous work throughout the city of Philadelphia. Secondly, Greg and Leslie in particular do tremendous work in terms of -- and have tremendous experience developing low- and mixed-income housing, working with communities to make sure that it's done in a productive and viable way. We have not only invested in their business but also invested in individual projects they've done within the city as well as throughout the Eastern Seaboard. And so, it's something that we are benefiting greatly from their expertise and capacity they bring to the table. And so, I'll let Leslie just speak a little bit more about what they do. (Witness approached Witness table.)
Good morning. I'll keep it very brief. Leslie Smallwood-Lewis, COO of Mosaic Development Partners. We've been working with the Sixers actually since 2020 when we worked with them to submit a previous RFP for their new home. We did not win, but what came out of that was a very strong relationship that has enabled Mosaic to allow investment into our core company which is a very difficult thing to accomplish. And my partner and I have been trying to do that for years and everyone wanted to consume us, everyone wanted to change us. Everyone wanted us to not prioritize our primary ethos of growing Black- and Brown- and women- owned businesses in the city. With our conversations with Josh Harris, he completely supported that and has enabled our company to really grow. We have increased our staff up to 8 employees. They have great salaries 9 and they are learning within the 10 development industry, which you 11 don't often see in development 12 companies. And we primarily hire young Black and Brown and female employees. So for us, we are I think an example of what can be, what can happen, how that growth and support can come from the involvement of the Sixers obviously in this project. We are excited to be a part of this. I am Philadelphia born and bred. I used to go to the Gallery, was excited to visit the Gallery. I used to take the 23 all the way down Germantown Avenue to it. But I see where Market East is now and it needs an infusion of activity and new life. And I do believe strongly that this arena can do that and for us to have an opportunity to work with and on a project of this size and scope and bring our EOP experience to the team, I think it will play a critical role. President Johnson, you know that we are working down at the Navy Yard. We are keeping your staff and Danielle Snead from the City up-to-date on a consistent and regular basis. We are exceeding our goals at the Navy Yard because we are intentional. We started from day knowing and understanding what you have to do to have success in having inclusion. From our master plan, we exceeded 50 percent of participation. You have to get creative. You have to know how to break down scopes of work and packages of work so that people of color and women can have these opportunities. We've been committed to this since we started our company in 2008. We have fought the good fight. We will continue to be an asset to this team and bring all of our experience and our creativity to make sure that people of color, Black and Brown, and women benefit from this project. (Applause.)
Just for clarification for the record, what's your specific role, Mosaic, at the Philadelphia Navy Yard?
Yes. We are the co-developer, and hats off to the Philadelphia Industrial Development Corporation when they issued the RFP. They were very forthcoming in saying that they did not just want diversity on the construction level, which is typically what has been historically done. They wanted diversity on the ownership level. With that -- and, look, I'm being very transparent. Our company by ourselves could never do a project of that size and scope, at least not yet. Our goal is to be that prime, but we've built our company on partnerships and we are partnered with Ensemble Investments down at the Navy Yard and we are lockstep with them developing at the Navy Yard for the next 15 years, but it was because PIDC really prioritized it that made this possible.
So let's talk about how your company will ensure and support smaller contractors to have that opportunity to participate on this particular project. And also, how will as a developer the Sixers go about -- I know we have some of the enforcement on the City side from this proposal, but how will the developer work with you as well for monitoring numbers in realtime and also enforcement in realtime to make sure we're accomplishing these goals?
What I can say is it's speaking from experience as to how we have addressed it thus far at the Navy Yard. You need to make it a requirement for your contractors, your general contractors, that they along with you work to make sure that these goals are met.
-- and we couldn't find anybody so we need to move forward?
Absolutely right. That's where the problem kind of lies, right, because the best efforts give people an opportunity to not commit. When you start putting provisions in the contracts with contractors, they will find a way because they want the job.
It absolutely is. That's what we've done at the Navy Yard and that is what I am promoting that needs to happen here because that makes people step up to --
When we did the Live Casino deal, one thing that made them unique was that when smaller companies needed funding for bonding, when smaller companies needed money for insurance, they came to the table and said, in the event that we're supported, the zoning to go down in South Philadelphia, but these are the things we're already doing to help Black and Brown businesses be able to compete. What's the plan from the Sixers as it relates to supporting those type of small businesses so it won't just be the usual suspects getting all this work?
This is where you have to get creative. And obviously, we have not finalized anything as of yet. But there are insurance policies, going through subcontractor insurance where the GC can purchase that, that can lessen the burden on smaller subcontractors with bonding. It is a critical issue for small contractors to get affordable bonding. That is a deterrent for them to be able to participate in projects like this. GCs get it at percent of the cost. They often times are at 4 percent of the cost, and that matters, right. So there are ways to lessen that burden. And I know that as a team we will put our heads together to make sure that we are effective in that way.
I would just add one more concrete thing that we have talked about, Council President. We also know timely payment can be a challenge for those smaller contractors as well. Something that we've talked about in consulta -- all three of us at this table have discussed. Also in consultation with Everybody Builds, establishing a pre-funded account so you massively limit the amount of time for contractors to get paid. So there's things like that like Leslie mentioned in the prefunding account that we're actively working on right now to ensure that these problems that typically you see especially on larger projects like an arena build don't create challenges for the contracts we want to get opportunity.
So our lease is up at the Wells Fargo Center in 2031. And so, we need to make sure that we have a place to play by the beginning of that season, which will be fall of 2031.
When will you be starting demolition and construction and when do you expect to be completed?
Demolition is expected to start in 2026. Take about 15-ish or so months, with construction starting in 2027, with completion in advance to --
Have y'all taken in consideration we're doing a celebration? Councilmember Thomas, when are we celebrating --
2026. Have y'all taken that in consideration? I just have to ask for the record.
No, it's a good point. We have. The beginning of the demolition process is interior. Obviously, we're building under a train station. So many of us Philadelphians remember that picture or video of Veterans Stadium when it got imploded. That's not what we are doing. It's got to be very meticulous. And so, we're very mindful of making sure that we're not being disruptive to the celebrations in 2026.
Let's talk about briefly the CBA and we know it expires after 30 years, but the sublease gives you an option to renew for 12 consecutive five-year renewal 13 options followed by 1 three-year renewal option. In the event that let's say this moves forward, are you willing to include in this agreement a provision that would extend some level of monetary community benefits if you exercise a renewal option?
Thank you for the question. It's a good one. It's one that we heard come up yesterday. The answer is that if we are going to extend, we would be willing to extend the CBA on a pro rata basis for those extensions.
When you talk about -- you know, there was a favored nations clause discussion that was going back and forth and we were trying to get clarity on it. The sublease includes a provision where the City would be required to give the 76ers any benefit that it offers another sports facility, and there was some confusion around it. So can you give us clarity and explain the circumstances where the City will be required to make a payment to the 76ers under this provision?
Absolutely. Thank you for the question. What we're asking for is a level playing field and to be treated equally amongst our peers. We are not asking for any City subsidies. We have not and we are not. What we think this does is give the City a reason and a tool to not provide subsidies in the future for arena construction --
Chair recognizes Majority Leader Katherine Gilmore Richardson.
Please don't take me out of the queue in my order for the record. Can you just please restate your name and your title for the record?
My name is Alex Kafenbaum. I'm the Head of Development for the Philadelphia 76ers Real Estate Team.
Thank you very much. So give me an example. The City provides a subsidy or tax break for renovation of the Liacouras Center at Temple University. The same would be required to pay in lieu support for the Sixers?
No. So what this applies to is private arenas with a set amount of seats and covered arenas.
Okay. Thank you. I just want to get clarity for the record. I am going to relax some of my time for the next round to my members. We will be on a three- minute clock. And so with that being said, I am going to acknowledge Majority Leader Katherine Gilmore Richardson.
Thank you. Thank you so much, Council President. And thank you all very much for being here. I only have three minutes so please allow me to state my questions and then we'll go to the answers after that. I'd like to start with the exhibits in Bill No. 240966, specifically the City of Philadelphia Economic Opportunity Plan under Section 4 of the EOP which is of the exhibit. It states, As required by law that the M/W/DSBE status of your equity owners now and what the anticipated rates would be upon the project completion. And so, if you could just state the number for the record of the percent of your equity owners who are minority, women, disabled or local right now?
Just to clarify, Councilmember, the percentage of equity that is owned by?
Thank you. For the record, can you please state what percent of your equity owners will be minority, women, disabled or local upon project completion as stated in the exhibit that we received that's of the Exhibit 112 of Bill No. 240966?
Thank you. If this project is supposed to be such a boom for people of color, women, people with disabilities, local businesses, why are none of these groups reflected in the equity ownership of this project? Did you all do any deliberate outreach to investors of color or women? If so, can you provide City Council with that information on those efforts? And what do you anticipate an equity owner in this project will see as a return on investment?
Sure. So I can answer the first piece. Then Alex can answer the second piece. I think the ownership structure of the project consists of the same individuals who are owners of the team. Also, related to NBA regulations it's pretty standard for the owner of an arena to also own a team. So there are constraints there, but we definitely take your point. And we --
So -- pardon me. I'm going to stop there. But I just wanted to note for the record as notated in this exhibit that right now we're at 0 percent of minority or women ownership for this project. And then upon completion of the project it still would be 0 percent. Meaning, that no minority would have an ownership stake in this project. And for those who are listening and who care about some of our philosophers, I know one by the name of Jay-Z said, Generational wealth, that's the key, my parents didn't have much so the shift much start with me. (Applause.)
And so, we're not shifting anything with these numbers. And so, that concerns me.
Thank you. First of all, I appreciate your question and agree with the premise of it and something that we've discussed. As I mentioned, there are some constraints in terms of the arena proper and the ownership structure there. But one thing that we also have plans for and we think that it will be a benefit of this project is by developing this project that creates additional opportunities along Market Street, especially on the south side, and those are parcels that we have plans to purchase or options to purchase and control and develop. And so, when it comes to those we have more flexibility. What you're describing is absolutely our goal and we've already been having conversations with folks. And we can get you the list of folks that we're reaching out to and identifying, to make sure that we do have local, minority, women-owned investors and equity owners in those types of projects.
I heard the bell. I'm going to respect the clock and my colleagues. I will submit additional questions on this particular matter for the record. I will come back on the second round to talk about not only additional EOP information that I'm very concerned about, but also I need to end on this for now, the Fund for Children. I was here back in the early 2000s as a young staffer for former Councilmember Blondell Reynolds Brown when the City negotiated with the Phillies and the Eagles and secured a commitment from each one of the teams of $1 million per team per year for 30 years for children. And so, when I hear you all talk about the CBA and your commitment around charitable donations, it does not align with what I know to be true what happened when I was here as an early intern. And so, my question is will you all -- and not would you consider, but will you be including $1 million per year for 30 years for children in the city of Philadelphia? And that would be through the contribution to the Fund for Children, not anything else that you all have already agreed to.
That is not something that we've discussed to date. I believe as the Administration mentioned yesterday as it pertains to the CBA, that they and we are absolutely open to conversations in terms of how that money should best be spent. And so, we would welcome a dialogue around what that would look like.
I just want to get clarification for the record --
No, no, no. And I respect you and you know that. But I want a yes or a no. Will you all commit to an additional outside of whatever it's been negotiated already. This is my ask.
$1 million per year for 30 years for children outside of everything else that you all have already discussed? Because I was not a part of those negotiations but I'm here now in my role as a member of City Council. This is my responsibility to represent my constituents of which I care about young people and children. So yes or no, will you all commit to $1 million per year for children for 30 years?
If it were to come in addition to the CBA, that's not something I can commit to today.
Thank you. Thank you, Council President.
You're welcome. Well, given the profound impact this stadium will have on the lives of Philadelphia residents, particularly in terms of perceived displacement of residents, noise, traffic and environmental changes, how do you assess the true value of these lives and communities in exchange for this development? Following up on Majority Leader's comments, how did you arrive to the $50 million agreement with the Administration and can you explain the analysis you undertook to determine that the 50 million was sufficient to mitigate the impacts? And as you have consistently heard from members all day yesterday, the number is insufficient. So just elaborate on --
-- how you got to the 50. Do you think it is sufficient based upon some of the indirect impacts that's being discussed?
And then also talk about the project in terms of how you think that those issues will be mitigated based upon the development if it does move forward?
Sure. Absolutely. So the way we landed on the $50 million number, we took a variety of factors into account. They included looking in --
Thank you, Council President. So how we arrived at the $50 million number, we took a number of things into consideration. It included looking at comparable projects and what they had been -- what they had provided in the past. We looked at what would be significant. We wanted to exceed what had been done in the past in the city of Philadelphia, and we also had to look at based on the economics not pursuing any local City funding, what we felt like the project could support economically. So taking those things into account, that's how we arrived at the $50 million number. And for the record, we did come out with the maximum that we felt like the project could support. Potentially shame on us for not starting lower and negotiating up. But just want to be clear about that. However, one thing I do also want to make clear is that we are very supportive of making sure that the factors and considerations that you just described are addressed and something that we're very sensitive to. And something that we are also supportive of is working with City Council and the Administration on the appropriate allocation of those funds to make sure that they address the issues that you described as well as looking at -- and we did a lot of research on this ourselves -- what other policy solutions could be, and I know that Mayor Parker and Councilmember Squilla and others in this room have been giving a lot of thought to what things that could complement that. And so, we think that the combination of a donation from a private developer as well as working in partnership with the City for policy solutions that -- you all have tools that we don't have. Those are very important things to bring to bear as we figure out how do we effectively revitalize Market East which is a priority we know for the City and it is also for us as well as protecting neighborhoods such as Chinatown, Washington Square, et cetera, from some of the concerns that may come with this project. And we look forward to working with this body to determine what --
And I do acknowledge Councilmember Mark Squilla for doing a hell of a job doing a deep dive on trying to address the issues of his immediate constituents. And I'll just wrap up before I call the next member. Do you know the value of this development after the zoning passes? What's the value that would be -- what's the current value of the 76ers? How much are they worth right now?
I do not know that number off the top head, but I can easily get it and come back to provide it.
And you don't know after this moves forward the value it would be?
Oh, like after the arena is built? I don't know that number off the top of my head either. But again, we can look at what that could look like.
Okay. The Chair recognizes Councilmember Isaiah Thomas. Thank you, David.
Good morning, Council President. Good morning, colleagues. Just a couple questions. Hopefully I can do yes or no too similar to --
-- what KGR did. First question: So $2 million -- I'm sorry. If we decide to vote for this arena, will the Sixers, the entity themselves, LLC or whatever company it is, will the company be moving back to Philadelphia? I don't care where you practice. I don't care about the practice facility. I'm not saying abandon that, but I'm saying the actual entity itself, will the city of Philadelphia be the location for where the parent company will be home?
For where the parent company will be home? We will have operations here and we'll be registered in and located in the city of Philadelphia.
So no. So if you all paid -- if you all were to relocate here and let's just say hypothetically speaking you paid about 3 million a year in wage taxes, agree or disagree over the 20-, 30-year time period of the contract, wouldn't those wage tax revenue be more than the actual CBA agreement?
For the record, Council President, I just want to be clear that if the Sixers were to relocate back to Philadelphia as an entity in the year 2031 if we were to grant them a stadium, the City itself would collect more money in wage tax revenue that they would pay than this actual CBA agreement. So if we're really talking about things that benefit the City of Philadelphia --
-- it would be great for the actual entity itself to be relocated to the city and I think that we should ask the Sixers to commit to that. That's number one. Number two, based on yesterday's testimony --
-- clearly it's not enough -- I'm sorry. Go ahead, Council President.
In terms of the CBA, could load management, would that be a part of the conversation just to --
So I was going to ask about tanking before we left, but okay. Next question, so are the Sixers based on the negotiations -- not negotiations because we haven't been privy to any negotiations. Based on what I've been hearing in hearings and dialogue, the CBA agreement is not enough. Would the Sixers be willing to increase the CBA agreement past the $50 million that's on the table right now, yes or no?
Okay. The deal with UNITE HERE is not complete yet. Do you think it's a good idea for you all to be coming before us with all of these red shirts in the audience, some of the folks in the city of Philadelphia who we fight for the hardest, do you think it's a little disingenuous to be here today to ask us to support an arena when you all haven't taken care of all of the unions yet? Is that a fair thing to ask us? (Applause.)
Because we're getting a lot of nos, right. We asked the Mayor yesterday would you all be willing to be a little flexible with the CBA agreement. That was a lot of pushback there. So we're saying, okay, well, if we can't get more revenue from the Mayor. Now, we're coming to you. We're pushing around Black jobs and Black businesses. We're pushing for union jobs on the construction side. We're pushing for union jobs as it relates to the professional positions. We're pushing for all this stuff, and I think part of the problem that we're seeing is that everything we're asking for everybody's telling us no. 5 So you're now asking us to take a vote on something where everything we're asking you is essentially a no. I heard the time meter. I'm going to put two things on the record and then I'll be done. And I'm not going to come back for a second round. Number one, I'm hoping that we can get a commitment from the Sixers to allow gaming and gaming initiatives, not sports betting gaming but gaming like video gaming to be a part of it. That's an economy that we're really pushing and we want to see some type of support for gaming. Council President talked earlier about 2026. Can we at least get a commitment that if we approve this project that you will not have any construction that take place in 2026 that will impact all of the tourism and different things that's happening in the city? Can we at least get that commitment?
The requirements of the site in terms of delivery in order to meet 2031 will require us to start in 2026. However, what we can commit to is a detailed and ongoing conversation and commitment around logistics minimizing and limiting any impact of street closures for pedestrians or autos and working with City Council, the City and various stakeholders during that time frame.
So that's a professional way of saying no. 22 Thank you, Council President. I appreciate you. And I just want to note for the record that everything that I basically asked outside of gaming was basically a no. Thank you, Council President.
David, clarify just for the record when there aren't sports games taking place, what's going to happen and what's y'all plan when there aren't sports games taking place?
Sure. So we play roughly 41 regular season home games every year, hopefully more with playoffs obviously and preseason games. Outside of that, there will be many other types of events and activities to make sure the site is active and well used. So that includes concerts, family shows, comedy shows, college and high school games, what we hope is WNBA games as well. And then beyond that one thing that we heard a lot of feedback from after we first proposed the project is what is going to happen on those nights when there's not an event. We expect about 150 events per year. When we initially proposed the project, the arena or the event level of the arena was on the ground floor so at grade. We actually made an adjustment and raised that up to the second floor, which allows for retail, pedestrian access, better access in the Jefferson Station so that the Arena site when it's not used should feel just like any other site in Center City, Philadelphia and bring activity, density to the area.
Thank you. The Chair recognizes Councilmember Bass.
How are you? So just a couple of questions. The first question I have is whose concept was this? Whose vision was this, 76 Place?
It was the organization's. I want to make sure I understand the question.
Well, who thought this would be a good idea? And the reason that I'm asking is because I'm suspecting that it's the owners of the Philadelphia 76ers, none of whom felt the need to come and discuss their vision or concept with us today, which is quite inappropriate and disrespectful and just really callous towards all of us. The first thing to do if you have something that you're trying to get done, you got to show up, right. The first thing you got to do is show up. And sometimes you step into a room -- listen, we're all members of Council, right. We all walk into rooms and sometimes that room is on fire, but nonetheless you have to walk into it anyway. And so, I just really wanted to make that point that it would have been appropriate and really the respectful thing to do to just show up. And --
I was going to say I appreciate that. We know that the Chair and one of our owners has met with -- David Adelman has met with many of you all in this room.
We also understand that Council has a decision to make based on the legislation put before you all. In terms of day-to-day activities, Alex and I are leading those. And so, we're in our opinion best-equipped to answer the questions that we anticipated getting today which is why we are here today, but we will bring that feedback.
Well, I don't want to get lost on the point. But I do want to say that if you took the time out to meet with 17 people individually, then you have a couple hours to come down here and just at least sit and be in the audience and be available for questions if they arise. (Applause.)
So let me ask you a question. Jefferson Station, let's talk about Jefferson Station and the work that needs to happen there. I had a briefing yesterday with SEPTA, and it's sort of like there's -- it seems like the City and SEPTA and the Sixers, there's like a little circular firing squad going on here. And so, I'm just trying to find out who is paying? Who is going to be the responsible financial party for ensuring the work that needs to be done at Jefferson Station actually happens? When I talked to SEPTA, they said that the Sixers said absolutely they are not paying for that, which would then be -- as I see it, that would be a burden back to the taxpayers if it's anyone other than the Sixers. So can you talk about that a little bit?
Thank you for the question. So we have always said and we remain committed to paying for any capital costs to Jefferson Station as a result of the proposal arena.
Okay. Beyond the capital cost, the operational cost. When there's a game after the let-out, who's paying for all of that? Is that going to be you? Is it SEPTA?
So we've seen the report that you're referencing. SEPTA shared it with us. We've asked a number of questions regarding some of their assumptions. We're not sure that all of them are accurate in relation to our plan, and that some of that information might actually be dated. And we're working with them to help inform that analysis. Things like assumed station closures or track closures or entrance closures or the need to run additional trains on non-event days. So those are all things that we're working with them to make sure that the proper assumptions are in their report.
Shouldn't they have been worked out before we got to this point? Here we are like a minute from a vote. Shouldn't they have been worked out by now?
We've been in constant contact with them and we'll remain in contact with them and --
That doesn't really answer my question, but okay. All right. I mean, here we are. We're ready to figure out what we're going to do here and some of these things really just should have been nailed down.