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.
As it relates to the operational costs, our expectation would be that we would be treated the same as all of the other teams and private companies and businesses in the city and the region.
Okay. All right. Well, we want everybody treated fairly, right. Okay. But what you're doing is quite extraordinary and what you're proposing to do is quite extraordinary. And so, for a project like this is unprecedented. So we can't just sit back and say, oh, well, the precedence of the past is acceptable at this time. It's really not. And so, there are going to be additional asks. There are going to be additional expectations and requirements. And so, we certainly hope that the Sixers with this vision would be willing to step up to the plate on that. I know the bell has rung. I just have one other thing I just want to put on the record for my second round. So when I come back around, maybe you can have these questions answered. I'd like to know how many community-related projects has the Sixers done. That's with all of our basketball courts, our rec centers, our neighborhood programs. What have you done? Former Councilwoman Blondell Reynolds Brown used to say, the best predictor -- Kathy, help me with that. The best predictor of future behavior is your past behavior. So give us some insight as to your past behavior with what have you done with our kids in our neighborhoods and produced.
Just an additional point of information and follow-up or personal privilege, David, and just being transparent, also could you just add the number of Sixers -- and I asked you this -- but I also got to do my job publicly, transparent, Sixers camps, suburbs versus in Philadelphia. Just want to get the numbers on that.
Absolutely. Absolutely. Just answer that now or when we come back?
Well, it's up to the Council President. If he can -- you want him to answer now or should I come back on my second round?
He can answer now. Okay. Before you do that real quick, the other thing I wanted to just put on the record and I don't know if you can answer now, but on the second round minority participation in Economic Opportunity Plans. Some of this stuff is getting ready to shift. Let's keep it real. Some of this stuff is getting ready to shift. We understand, you know, on a federal level that there are going to be things that are in place right now that are likely not going to be in place in a half minute. And so, are you going to be willing to stick with your commitment regardless of what changes happen on the federal level to ensure that there is minority participation and support and Black and Brown workers on these jobs? And I'm talking about not just your commitments, you know -- and, David, it drives me crazy when I hear, when you said earlier food and beverage and the cleaning contracts because it's kind of like Black and Brown people, like that's kind of like those are Black jobs we kind of always have been --
-- hurdled into. And we've had that conversation before, so there's got to be more to it than that.
Agreed. As far as our community work, this isn't comprehensive and we actually have a report that is near finalized that we can get to you that encompasses all of our community work throughout the community, so we'll make sure to get that to you. But I do have some numbers here now to share. So last year or I'm sorry since 2020, we've engaged with and worked with and supported over 800 diverse businesses throughout the region. We've donated more than $1.5 million in assets to support those businesses. As far as workshops and internships go, we have done more than 770 hours of marketing support and training through the Marcus Graham project. We've done nearly 70 internships. We have --
As well as philanthropic donations for things like homeownership, gun violence, court renovations, et cetera. The exact details and numbers we will absolutely follow up with you --
So I would just say this in closing, again back to the previous point that I made, here we are we're getting ready to do something big here, right. And you don't have all the facts together, you don't have all your information together. This is something that really should be touted, shown, promoted. Let me show you what we've done, but you don't really want to show what you've done if you haven't done a whole lot. And in my opinion, you haven't done enough. The connection with the community is missing. It's missing. It's glaringly missing. So thank you, Mr. President.
I'm looking forward to that. Thank you, Mr. President.
Thank you, Council President. I want to start off by saying that yesterday some people in this chamber and some folks who were watching had a problem with the question that I made around the EOP, right. And that is because they assumed that I was against supporting or promoting or including the growth of Black-owned businesses. I want to go on the record to say that I do not have a problem with that. I think that it is extremely important. But what I do have a problem with is being excluded because Latinos are one of the fastest-growing minorities in this city and we're not going anywhere. We're only going to grow. And so, my expectation is that when we are having conversations that Latinos and other minorities are included at the beginning of the conversation and not as an afterthought. If you look around this room in this legislative body, there's of us. I am the 14 only Latino here and I will not 15 apologize to anybody on this 16 legislative floor or anybody 17 watching for asking how Latinos are going to be represented in projects and in opportunities. Because when the Mayor was running, she said economic opportunities for all. And I expect for Latinos to be included and others. Because when I go to battle with my colleagues, I stand with them regardless of who we're fighting for, right. And the expectation is that they stand with me. And so, I'm going to ask you very directly is there two EOPs? And if so, what is your assumption of which EOP is the priority or is there one EOP and are you expecting to use the agreement that you have with the African American Chamber to deliver on your commitments with the Administration?
Sure. Thank you for the question, Councilmember. And I would just say that you've been very consistent in the conversations that we've had with exactly what you said where you're supportive of Black communities but also very clear that Latino communities need to be represented and included as well. There is one EOP, and then there's an agreement and commitment that the 76ers made directly with the African American Chamber of Commerce that predated the EOP or our conversations with the Parker Administration. So in terms of your question of which one has the greatest priority, they're both extremely important to us. And I would also go even further to say that when we came to the agreement with the African American Chamber, we also reached out to all of the Diverse Chambers, the Asian American Chamber, the Independence Business Alliance as well as the Hispanic Chamber of Commerce. We were only able to come to an agreement and, therefore, a commitment with one of them, but we absolutely stand ready and willing and committed to work with those communities and those organizations to make sure that we have similar commitments to other communities as well. (Applause.)
Thank you for that. I'm going to quote the Mayor, right. I hear what you're saying, but I'm going to be watching what you're doing, right.
As it relates to the SEPTA station, across the city SEPTA stations all need investment. And so, how do you all and in your conversations with SEPTA, how have you guys discussed prioritizing the station that you all need to be invested in over those stations that everyday Philadelphians who may not be interested in coming to use the arena, how do you prioritize this project over those in the neighborhood?
Sure. Thank you for the question. I think as Alex mentioned, right now we are focused on building the site where it will be located. And so, as Alex mentioned there will be some and we're working very hard to minimize the physical impacts of Jefferson Station. To the extent to which there are physical impacts on Jefferson Station, those are things that we feel responsible for and would cover. Beyond that, we're not making monetary investments in that station. But we are working closely with SEPTA to ensure that our plans are aligned and we know that they're facing a lot of fiscal challenges and want to be good partners to problem-solve.
What happens if they decide that they are not going to pay for it? You're not paying for it. They're not paying for it. The City says they're not paying for it. What happens now with the project?
Again, we are very sensitive and aware of the fiscal challenges that SEPTA face. And it's not just a 76ers challenge. I think as a region we all have things that we need to be worried about and mindful of given what is facing our public transit system right now. Again, for the things that we would be responsible for impacting the station, those are things -- and just to be very clear and for the record that we are comfortable and willing to and committed to paying for and addressing. Beyond that, again we want to be good partners working with SEPTA and our expectation has always been that we would be treated similar to the other teams who require additional service down to South Philadelphia and other private entities and companies within the region that SEPTA covers those costs as part of their normal operations. (Applause.)
In that station there are businesses, there are jobs, right. What is going to happen with those businesses and those employees that could potentially be displaced as a result of this investment? What's happening? Are you guys engaging them? What's the plan?
So a few things. There's a long and ongoing conversation with all of the tenants in the mall in order to make that those that want to stay and be part of this project in the future have that opportunity. During the construction I think is maybe your more direct question, how are those companies impacted. And we're going to make sure that there's a constant flow of traffic and pedestrian flow and access through to SEPTA and the SEPTA areas and all of those retail spaces that exist in their space as well. We don't envision a long-term impact.
If it ain't in writing, it doesn't exist, right. And so, I think that if we want to -- we're trying to give them economic opportunity, right. If we're going to make these changes there and we're going to force them out of those spaces, then somewhere there needs to be a commitment that says, we're going to displace you from here but we're going to ensure that you are going to be relocated elsewhere and that those jobs that are there are also secured, right. But if it's not in writing, it doesn't exist. And I think that's irresponsible of us.
Understood. Thank you for the point. Just to be clear, we are not forcing any businesses out of SEPTA's space. We are not displacing anyone from SEPTA's space.
Thank you. The Chair recognizes Councilwoman Nina Ahmad.
Thank you, Council President. Thank you for your testimony, David, good to see you, regarding the 76 Place and the economic justification for Philadelphia and its future. I am happy to note in your testimony that the home team pride, its commitment to Philadelphia and most importantly, your acknowledgment that additional changes may be made. So you already testified you're not going to change the CBA, correct?
So just saying not reflecting that changes could be made. So I have a few questions. I'm a dog with the bone. In the absence of the key document, the sublease and development agreement, SDA or Arena lease, a topic that has come up many times yesterday I will reframe my approach by asking you to please walk us through the following sections of the SDA, which we have not seen or reviewed. A term sheet does not do that. Let's be very clear. But we've only seen it being referenced in the ground lease between City and PAID. The Arena lease falls within the definition of contracts involving significant public interest. Hence, my queries. So the first one, Ground Lease Article 8. Assignment, subletting and easement refers to Section 9 of the Arena lease related to permitted transfers. Please tell us the details of this section that relate to the tenants, meaning the 76ers, permitted transfer rights. You need to know who you can give stuff to. The circumstances under which it can do so and limitations and approval requirements for such transfers, including limitations of future users. We have fought against gambling, for example, in the city of Philadelphia near that space, so that's what I mean by future users. Any recovery of the City's investment to date, foregone revenues under PILOT, so this is one. I have a few. Do you want to answer them as I go or --
That way we just make sure we recall the question. So why don't we do the first one first. Alex will speak to that.
Sure. So the references to transfers and permitted transfers, the 76ers are signing a binding commitment to play at this site for 30 years. The transfer provision allows for the team to be sold. It does not allow for another tenant to play there, another tenant to be there. And in relation to gambling, there is actually a pre-existing deed restriction on the site that prohibits gambling on the site. So even if we wanted to, we're not allowed to.
So that means you're bound for 30 years and then that's the end of the agreement, correct? And then it reverts back to the City?
That's the end of the play covenant, and that's based on the general useful life of arenas right now. At the end of the play covenant if we were to decide to stay and extend, we would stay. If we were to decide to leave, we would terminate the agreement and because we are purchasing the land and donating it to the City at the end of that agreement, the land would be transferred back to us.
So you would have the land access to do what you wanted to do post those 30 years?
Okay. Let that be noted. Go ahead. You have recovery of the investment, City's investment to date.
I would just want to make a note that should the lease expire and we take over the land, it wouldn't be that we do whatever we want. We'd still be bound within the zone requirements of the site just like any other site or parcel within Center City.
Okay. Thank you for being on record on that. And then any adjustments for foregone revenues or any of that if those transfers were to occur before?
Oh, if we were to leave or break the covenant before the lease is over?
-- that is not something that we're allowed to do. If we did break that covenant, then the City would have the right to sue us for specific enforcement.
Okay. In the interest of time, Ground Lease Article 10, mortgages, estoppel certificate, non-disturbance refers to Article 12 of the Arena lease relating, right to place leasehold mortgage and inform the City after the mortgage has been placed. So please tell us if there are any limitations on the debt portion of the capital stack and basically maximum loan-to-cost ratio or the LTC and minimum equity requirements from the tenant? We don't have all this information.
Great question. All things that would be governed by the private debt markets. The lenders are only going to give us a certain amount of debt that the Arena can prove it can support. The equity will be required to make up the difference of that.
So do we have more information on what that stack would look like and who's participating in it?
The capital stack and the financing will evolve as the process is. We are not in a position where we're seeking debt financing right now. We wouldn't be able to get it without an approval or where the current status of the project is. So that would happen closer to the start of construction which is typical for real estate development.
So it's just a timing issue, right. It's a timing issue. You kind of said we're under the gun, so these are important documents for us to see where your head is at in terms of how this capital stack would look. So just putting that on the record that we need that. Details of default and remedies to the lender, the right to cure, right. What are those like? Those are details we would need as well --
Yeah, last piece and then I'll put the rest in writing. Are there any provisions under which the tenant can invoke transfer other than Arena lease maturity or default, right? That was similar to the question I asked earlier.
Any provision under which the tenant can invoke transfer other than Arena lease maturity?
The play covenant in the 30-year commitment remains and supersedes everything. We can come back to you with specifics.
So there will be significant penalties if that were to -- thank you, Council President. I'll put the rest of my questions in writing.
Or you can also if you want to finish those questions during the next round, I'm more than willing to call you if you want to get them now as opposed to submitting them in writing. Councilman Mike Driscoll.
Thank you, Mr. President. And thank the members of the organization, all of you for being here, David, Alex. I know this has been going on for several years and we appreciate that. I know you negotiated with the Kenney Administration. I know you negotiated with the Parker Administration, but we're a separate branch of government. We're not the executive branch. We are the legislative branch. This isn't going forward unless you get a majority of the votes of the people in this room. And I don't think we're trying to move goalposts here. I think we're trying to articulate some serious issues that we want to get to yes. Some of them, for me in particular, Council President has charged me with Chair of Public Transportation and I've heard from SEPTA. And I know that SEPTA is not satisfied. And as Councilmember Bass pointed out, the hour is late. So I ask today for you to commit to have some serious conversations with SEPTA so that we can all get a higher comfort level before moving forward?
Councilmember, first, thank you for the question and appreciate that and absolutely appreciate and respect the role of City Council in this process. And we knew this was coming. We know that there were changes that will be made through the legislative process. As far as SEPTA goes, yes, you absolutely have our commitment on that. The report that many of you saw we only received very, very shortly before it was shared with you all. We're still waiting on details and the assumptions that we can directly engage with SEPTA to really understand what's behind those numbers and compare them to our plans and make sure that we can move forward. But to your point, we have a similar sense of urgency to have those conversations and get those resolved and we're looking forward to our next conversation with SEPTA to make that happen.
And I will just add we're committed to being partners with the City, with SEPTA, with the state, with you all in problem-solving and work problem- solving through this.
Well, thank you for that. I also want to endorse Councilman Isaiah Thomas' request that the corporate entity consider locating here in the city where it does business. It's very important I think to all of us.
Member Driscoll, I have a point of information from Councilwoman Jamie Gauthier.
I just wanted to pause and make sure that we knew -- I heard you say you made a commitment. But I wanted to pause and make sure that we had clarity on the specifics of the commitment that you were making. What is the commitment?
Yeah. So what I understood Councilmember Driscoll to be asking was a commitment for us to meet and discuss and come up with solutions with SEPTA with urgency. And correct me if I got that wrong, so that was what I was referring to and responding to.
So I just wanted to clarify because I met with both of you last week and you specifically said that the 76ers did not have the capacity to "subsidize SEPTA's operations." Are you changing that position?
No. Again, I was just responding to Councilmember Driscoll's request for us to commit to meet with SEPTA and come up with solutions with some urgency, which is something that we are comfortable committing to doing.
Is what you said in our meeting a relevant statement or is that not what you meant?
No. Correct me if I'm wrong, my understanding is they are two different things. Councilmember Driscoll was asking for urgency for us to meet with SEPTA, and I believe you are requesting for us to subsidize SEPTA's operations; is that correct?
I'm asking what are you meeting with them about if you already have been explicit that you do not have the capacity and will not be covering the cost. What is the commitment that you're making at this table? Are you meeting SEPTA to tell them that or what are you --
Member Gauthier, you can save this for your round of questioning because it's questioning as opposed to just points of information.
Oh, I'm sorry. I was just confused and I wanted to make sure it was clear for the record.
Yeah. Is the question what we're meeting with SEPTA -- I just want to make sure I'm straight. Is the question what are we meeting with SEPTA about or is the question around what commitment we made to Councilmember Driscoll?
I think what she's saying is, right, just to summarize it -- and I'm going to give the time back to Councilmember Mike Driscoll before we break -- you had a meeting with her and you said y'all didn't have the capacity or you weren't going to subsidize the SEPTA operation because of the increase of ridership. That's the conversation you had with her.
And she's saying if you're committing to Councilman Driscoll who asked for a serious conversation with SEPTA, I guess it begs the question -
-- if I was in her mind, what is that conversation going to be about if you've already told me that we're not going to subsidize SEPTA. Correct, Councilmember Jamie Gauthier?
Correct, that's what I'm saying. Thank you so much.
Like what's the point of meeting if you already said --
We think we can be helpful and be a problem- solving partner to SEPTA and the City and the state in this conversation.
And just as an example and as I mentioned before, some of the numbers that SEPTA shared with many members in this room and that I know folks are concerned about are big numbers. They were big numbers to us as well. When we asked them what were the assumptions that went into those numbers and was the economic impact or the fiscal impact going to be as big as they are anticipating, we do not believe that it will be because we don't think that they had all the information from us to make those assumptions and make those estimates. So part of what we're meeting with them about is making sure that the information they have and the assumptions they have will be accurate so that we can problem- solve together to figure out what is really needed.
So we can infer that when you do have the meeting with SEPTA, you'll be comparing their data versus your data as y'all try to find some level of resolve. But your current position is to Councilwoman Jamie Gauthier is that at this moment we wouldn't subsidize --
Thank you, Mr. President. Just a couple quick points. I think you heard in the testimony from many of our members yesterday that point to the business disruption figure in the agreement of 1.6 million. My first read of that I thought that was woefully inadequate and I continue to believe that. So I know you're talking about just shifting money within the agreement. I would suggest that you consider perhaps outside the agreement because those impacts of businesses are real. I was a small business owner here in the city and when there were public projects, that money adds up quick and I think we all want to be sensitive to that. So I'll just put that on the record.
And then lastly, I know you're committed to this as the developer, but we're all working really hard for 2026. We have the Major League All Star Game coming here. We have FIFA World Cup coming here. We have a big golf tournament coming here. We have July 4th, the 250th Celebration of Democracy, the Semiquincentennial. All of our hard work is going into this, and the last thing we need is business interruption in Center City. So I know you're committed to not having that. I just want to make sure that that is a true commitment because that's real big. If we shine in 2026, I think our tourism is going to go through the roof. I think we're going to have major businesses looking here and you're going to get more customers. So I'll leave you with that.
Point of information. The Chair recognizes Councilmember Thomas for a point of information.
Not line of questioning. Point of information.
-- information. No questioning. Point of information. I want to be clear they did not commit to saying that traffic in 2026 will not impact the things that Councilmember Driscoll talked about. So I want to be clear on the record that they did not say, yes, we will not interrupt traffic. It was a robust answer that did not lead to a yes. So if it's not a yes, it's a no. So that's just the point of information I want to make sure that we're clear on as it relates to 2026 traffic congestion and disruption. Thank you, Council President.
Thank you, Councilmember Thomas. Councilmember --
The requirements of the construction schedule for this site would dictate that we have to start the demolition in 2026. What we are committed to doing is working to ensure that impact of whatever construction has started is minimized, maintaining lanes of traffic, minimizing sidewalk closures. All of those things that do, I think what you're looking to do which is make sure that visitors to the city have a pleasant and good experience. And I think we can do both, correct.
Members, please speak into the microphone for the record.
I'm sorry, Council President. So I just wanted to be clear because that means my point of information is wrong. That means that they're saying, yes, they're committed to there being no traffic disruption based on the construction that's going to happen in 2026. You're saying, yes, there will be no 18 traffic disruptions?
Council President, for the record minimizing impact is very different than a yes commitment. Minimizing impact means we're going to try to do our best. We're not asking them to try to do our best. We're asking them to say, yes, you will not have an impact. So for the record, that's two different things. Thank you, Council President. Sorry, Councilmember Driscoll.
Thank you very much. Very lively discussion. We will recess until 1:45. (Lunch recess.)
This hearing is now called back to order. The Chair recognizes Minority Leader Kendra Brooks.
The Chair again recognizes Minority Leader Brooks.
Thank you, Council President. I was in la-la land for a minute. Good afternoon, everyone. I want to thank the Sixers organization for finally making the time to talk to all of Council. I do want to state these conversations, that they should have started many months ago, if not years ago, because of this body's approval over the plan. And I look forward to this discussion today and has been pretty robust so far. I want to go directly to my first question. It was pretty clear yesterday that City Council is not prepared to approve this legislation without further discussion of the CBA. And there has not been a lot of discussion about what the total cost of this land could net in property taxes. So an independent analysis has said that the land could bring in $450 million. And the $50 million CBA doesn't even come close to this. So what's stopping you right now from committing to this City Council from working with us to develop a new CBA that we can bring in at least $250 million, which is still far short of the $450 million proposed around this land?
Councilwoman, thank you for your question. I have not seen the study that you're referring to but understand what the numbers are. The land right now, I believe the mall generates -- between the mall and the Greyhound station?
A little over a million dollars a year. And the way that this would work is there is a state law that governs how professional sports venues are taxed in the state of Pennsylvania. That law is what results in the PILOT payment. Our PILOT payment would be multiple times more than any of the other professional sports venues in the city. And so, that is what we are looking forward to contributing to the City and to the School District. And then I believe part of your question was specifically around the amount of the CBA; is that correct?
Okay. As I stated before and I think Council President asked the question in terms of how we got to the $50 million number. It was a combination of what the project could support, looking historically at what other venues had contributed as far as a Community Benefits Agreement goes, especially other ones that actually did receive local public support which we are not pursuing. And so, that's where we're at. And 50 million is the number that we can support. We currently can't go above that.
Okay. So when the Sixers announced their intentions to include the Community Benefits Agreement when they started publicly proposing the stadium, the number that they used was 50 million. What changed in the Community Benefits Agreement between the initial proposal and the one that is under consideration for City Council now? Specifically, what input did we have from the community?
Yeah. No, great question and thank you for that. When we announced the project in July of 2022, we probably spent the first six to nine months almost exclusively reaching out to engaging with stakeholders in Chinatown to, one, build relationships, secondly, to understand what concerns were and, three, to share more information about the project. Through that process we had conversations around what a Community Benefits Agreement could look like, and we even made some offers and some examples about what that could look like. We never received a formal response to any of those. And so, really where we ended up in terms of the Community Benefits Agreement that's in front of you, that was in conversations with the Mayor's Office and ourselves. And a lot of the stakeholders that we were engaging with in Chinatown got to a point where they didn't feel comfortable engaging directly with us because they were concerned that they would be misperceived as endorsing the arena when they weren't really sure about where they stood on it yet or experience other things that they weren't really comfortable with in terms of those perceptions. And so, they felt more -- they asked us respectfully we don't feel comfortable continuing to meet with the 76ers. We prefer to work through our District Councilmember Councilman Squilla. And so, we know that Councilman Squilla has had conversations with those individuals from the neighborhood and they felt most comfortable for City Council I guess between Councilman Squilla and as a whole to represent their interests as far as the Community Benefits Agreement goes. So the short answer is we never had a formal Community Benefits Agreement because folks didn't feel comfortable transacting with us because of a lot of the pressures and controversy around the project.
Can I keep going? I still have more? I have another one. Can I go?
Okay. So the PILOT only pays about $2.5 million to the School District. That basically covers the per people cost for about 150 students per year based on School District's 2023 budget. If we do not let billionaire owners avoid property taxes, the School District could get 224 million in funding over the next 30 years. Do the Sixers think this is a good deal for Philadelphia students who are facing school closures, asbestos and lack of basic items like air-conditioning in schools?
I'm sorry. I missed the last part of the question, Councilmember? Do you think this is a good deal for school students? Sorry. Do you think it's a good idea, a good deal for school students being as though we're losing so many tax dollars around this?
Understood. I think the way we look at it is again based on how professional sports venues are taxed according to state law in the state of Pennsylvania. We have negotiated a PILOT agreement that again is multiple times more than the other sports venues as well as more than what is currently being generated by the sites that we would be building on. So, yes, we think it's a good thing that we are significantly increasing tax dollars to the School District through this project.
And if I can add, I think it's important to look at the project in the totality. It's not just about the PILOT, but the very -- all of the additional tax revenue streams that would be generated from the project. And when you look at that projection, that's $200 million over the course of the 30 years that goes to the School District. That's a new revenue, revenue that wouldn't happen without this project.
You're welcome. Councilmember Nicolas O'Rourke.
Thank you, Mr. President, and good afternoon. Good afternoon, Mr. Gould and Mr. Kafenbam. Did I say your name correctly?
Kafenbaum. I apologize. So we've been told repeatedly that no public dollars will be used for this project. And --
Excuse me, Member O'Rourke. Could you speak into the microphone please?
And still key aspects of the deal's impact on vital public services are still apparently being negotiated. If available, will the Sixers take any state dollars to support this project and can you answer this one clearly because we know the City of Philadelphia is in the Commonwealth of Pennsylvania, so Philadelphia taxpayers pay state taxes and solving our biggest problems requires help from Harrisburg, which means that Philadelphia citizens pay those state taxes. Can you confirm again if the Sixers are taking any state dollars to support this project?
Currently, we are not. Although as we've said since we announced the project, we are open to funding from the state and federal government if there are things that allow us to further enhance the project and bring more resources from the state back into our city.
So then you can confirm then that the Sixers or you all as the representatives or others have had meetings with state officials about the possibility of state funding opportunities for the arena?
We have had very preliminary conversations. Some of them have been in sort of like the normal course of business through other things that we're talking to them about, but there's nothing definitive that's been discussed.
Nothing definitive. Just kind of preliminary conversations. No hard answers from anybody?
As you may have heard, yesterday the Parker Administration told this body that the Sixers would be footing the bill for many additional costs associated with this proposal. I won't spend much time talking about SEPTA. We've talked about it quite a bit. The members have covered it. But let's talk about some of the outstanding costs still there, and these are a couple questions I have. If you could give a yes or no, that'd be super helpful.
Are you planning to cover the costs of police manpower and overtime?
Our understanding is that the teams pay for police presence within their property within the sports complex, and the outside of the sports complex is paid for by the City. The City yesterday testified that that was not their understanding. We're still looking for more clarity from them. Our request as with everything is to be treated fairly and equally with our peers.
Do you plan on covering the cost of any new signage and wayfinding required for the new arena?
Any signage and wayfinding on the arena and the ancillary properties that we control, yes.
What about new technology required for ambulances to switch the red lights and move faster and all that?
Yes, as part of our TIS proposal, the mitigations that are proposed in there would be our cost.
Okay. The first one concerns me. The other ones are a little bit firmer. But if we don't have firm commitments from the Sixers to pay for these added costs, as has been expressed, our fear is that the cost will fall back onto the City at a time, mind you, when we can't afford to be siphoning off any of our public dollars away from our priorities. And furthermore, I'd like to say frankly and with regard like Member Lozada, I also caught a little flak yesterday on the Internet, was described as rude and disrespectful in my line of questioning, so please hear my heart.
It's disingenuous to keep calling this a project with no public money when costs are piling up for this project and no one is committed to picking up the tab and when we talk about getting state funding knowing that Philadelphia taxpayers end up paying that. So I want to talk about the Sixers-sponsored study through Municap, Inc. in 2023. I know there's a representation from Municap with us today. And for the record for our colleagues on the floor, the detailed report and assumptions from the Sixers study has really never been publicly released. So I wanted to ask this question: Using that study, the Sixers first claimed that the arena will bring 12,000 construction jobs. Since then, as you testified this morning, I believe it's been revised down to 9,000. For reference, the entire U.S. economy added 12,000 jobs in October 2024. That's the entire US of A. And the City's economic impact study forecast only 260 full-time construction jobs. I don't want to spend more time talking about this and I think it would be helpful, actually at this stage is imperative, that you show your work on this. Are you prepared to release today the full Municap study?
A few questions in there I'll take. So there's Municap work. There's Econsult work. Jobs, tax revenue, those were two different studies that we conducted. In relation to the 9,000 versus 12,000; 9,000 direct full-time equivalent jobs; 12,000 indirect and induced full- time equivalent jobs.
I'm sorry. Just to clarify, 12,000 is indirect plus direct. Not 12,000 indirect total.
Correct. Yes, sorry. So 9,000 jobs direct, additional 3,000 indirect and induced total 12,000.
Are you prepared to release today the full Municap study?
That study has been given to the City for their use and has informed their consultants report that was done independently.
Are you prepared to release today to the public, you all?
I have other questions, Council President. Should I wait for the second round?
Thanks for being here. Thanks for coming back. I want to underscore, summarize a lot of what we heard in the first session quickly that I would say we mostly all agree that we want more money in the CBA. We think it's not enough. We want greater support for the operations, including everybody who's being hired. We want more money for SEPTA. And I will now get into some questions. The first question is I just wanted to follow up on one thing you asked about SEPTA. You said you were going to pay for the capital work that is needed for SEPTA. Can you describe what that is because my belief of what that is, is changes that need to be made in the station that benefit the arena but not changes that need to be made in the station that benefit all of Philadelphia?
Okay. And my next question is SEPTA will be here to testify next week. Will you be here on the same day -- will you please come to be here on the same day that SEPTA testifies?
Thank you. Next question: Will they -- so my understanding is that last year Sixers generated $371 million in revenue. This is 22-23 season. What was the profit from that year?
I don't know those numbers off the top of my head, but we're happy to see what we can share and get back to you, absolutely.
Okay. According to Forbes, your operating income was 120 million. Your gate receipts were 117 million. Your top players are paid 50 million. So based on those numbers is $50 million to the City of Philadelphia over 30 years sufficient?
Again, we'll need to look at the numbers just because I'm not as familiar with them, but we'll absolutely check in and get back to you on those, Councilmember. But per my earlier comments from Council President Johnson, also Councilmember Brooks, that is what we believe the project can support. And I won't repeat myself. But, yes, we think that is the right number for this project, especially considering that we are not pursuing any local taxpayer funding.
Next question is -- these are just little ancillary questions to other things that I heard. You said there's no gambling allowed in the deed restriction for the site. You also said that you are going to purchase the properties across the street with this package. Is gambling allowed on the parcels across the street?
I would have to defer to our zoning attorneys in terms of what uses are allowed. I don't believe they are, but we can come back to you with a firm answer.
Yeah, we have Herc. I'm going to ask Herc from Klehr Harrison to come up.
So the question is whether or not the parcels across the street would be deed-restricted to not have gambling like the arena itself would be?
Deed restriction is something that exists today. My deference to Herc was on what is allowed.
My understanding is the sites are zoned CMX-5. Hercules Grigos --
Hercules Grigos, Klehr Harrison. I'm zoning counsel to the project. My understanding is the properties across the street are zoned CMX-5. And in order to have a casino you would need a zoning change to the -- there's a special district for casinos.
One is what will happen if you don't receive the state and federal funding that you're anticipating?
We don't have any specific numbers as of right now in terms of anticipation, so the project is not predicated on those.
Thanks. You mentioned before there's another opportunity that the 76ers would have for the arena. One I'm very personally invested in is whether or not to get a WNBA team here. And would you do everything in your power to commit to that to make sure the WNBA can come, a franchise can come to Philadelphia?
Yes. And we are -- there's only so much we can say in terms of being part of an active bid process or a potential bid process. But what we can say is that that is something we are very interested in and committed to pursuing and we would love to have a WNBA team in Philadelphia playing at this new arena. And we believe that the arena will help make our bid more competitive as a state-of-the- art facility.
Last one. Just for now, will you be responsible for all of the operations necessary for any of these other events that happen, whether it's WNBA, Disney on Ice? Any other event that comes, are you doing trash cleanup, security, all of the things for all of the other events?
Yes. Anything that would be happening at the facility would be our responsibility.
Thank you. Just real quick point of personal privilege around the issue of public safety that was kind of mentioned. So who's heading up your public safety plan and strategy for the immediate area?
Yeah. Our public safety consultant is Maureen Rush who is here today. And if there are questions, would be --
Can you bring Maureen Rush up to the table please?
I've spent 45 years in law enforcement. with 4 the Philadelphia Police Department 5 going up the ranks. Went over to 6 the University of Pennsylvania. And 7 for the last -- I retired in 2022. 8 And for the last 20 years of my 27 9 years, I was Vice-president for 10 Public Safety and Chief of Police. 11
Okay. Just real briefly 17 real quick because Members talked 18 about this. We have $50 million CBA, right, and not asking for any local public dollars, but there will still be costs overall as time goes along regarding the project where the City will have to chip in some way somehow indirectly. But around the issue of public safety, what is the strategy around that immediate area? I'll actually go from I guess I could say 8th to 13th Street, and Councilman Squilla knows better in terms of being the author of the Special Services District, but also from I guess it would be Pine Street to Spring Garden the strategy around making sure individuals are safe particularly around the arena area, Chinatown area as it develops, your plan, your vision?
So for the last couple of years I've been working with the stakeholders in Market East, not just Market Street East. Center City District obviously has done a great job with both east and west and most recently put a whole bunch of CCTV cameras along Market Street about a year ago. Philadelphia Police obviously will be very involved. Jefferson Hospital now has a police department. They will be involved as will SEPTA police. So in meeting with all of those folks, and the people who run the Reading Terminal Market, the Convention Center, what were the needs and what were their issues. And we put that into a comprehensive plan where we're looking basically at -- well, if I may say, a lot like we did in University City which became very successful, so making sure that there's good lighting, that there is good technology in closed circuit television, which lighting's already great in that area thanks to the Center City District. We would also create safe corridors. So when, you know, hoping that -- not hoping but people will take a lot of public transportation, so working with SEPTA police in a safe corridor handoff for people. Also, people are going to come out after a game and they're going to go to restaurants and making sure that the safe corridors are designated to where they will go to after the game.
What's your strategy and plan to deal with scalpers? I'm an old-school South Philadelphian. So you go down to the stadium, try to sell you a ticket to see WWF for like 100,000 to go see the game --
-- because we have to also be realistic. In the event let's say this moves forward and more traffic, right, also brings individuals who are looking to do -
That's just the reality. I mean, remember Market Street in the early '80s, right. And going downtown, I think somebody got me with a (inaudible) coming from school, took my little $15. I think he was from North Philly too, but that's a different story. But with more traffic, right, you also have people popping up scalping tickets, pickpocketing, preying on individuals who are from out of town, right, how are we being forward-thinking in terms of paying attention to that?
So I'll let Maureen speak specifically to the broader public safety strategy. I'll say just on the scalper piece, that is not something that we typically see at our games because our tickets are almost exclusively digital at this point. And so, often times back in the day when you see scalpers because they had 10, 20, 30 physical tickets they would sell you as opposed to going to the Box Office. That's not something people are able to do anymore, so that specific concern I don't believe would apply to the new arena and we don't see much of that where we currently play now.
So we would be working and contracting with Philadelphia police. They have a unit with the Center City District Bike Patrol. So events at the arena, whether it's basketball or concert, whatever, we would staff up for those events. Working with also the Center City District, they actually employ Allied Universal as their security ambassadors and we would contract through them to enhance not only just around this the arena but again safe corridors where you know people are going to travel to. Our hope is -- first off right now there's nothing down there at night. Even during the day it's very difficult, and the constituents I spoke with, you know, last week a GIANT Heirloom Market just closed and it's panhandling, it's mental health, it's homelessness and it's -- retail theft has gotten better with the new plan under our great Police Commissioner Kevin Bethel. That has become under control but it still is -- the area needs infusion of people, people walking. A destination location, which will draw more stores, more apartments, more activity. And right now if you go down at night what you're seeing is no one. After dark everybody's gone. Jefferson Hospital has people working around the clock. They don't feel safe. It would also enhance their safety.
Okay. Thank you very much. Chair recognizes the author of the legislation, Councilmember Mark Squilla.
Thank you, Mr. President. And thank you guys for being here. As we talk about security, one of the issues was to collocate a location around 11th and Market. And from what I understand, and maybe Maureen could answer this question, as SEPTA, PATCO, City of Philadelphia, Jefferson and the Arena folks would collaborate at that location to be able to better, I guess, judge how we as a City will look at safety during these events, but also that public safety headquarters would be there I'm assuming even when there's not events. And how would that operate at that point?
So Jefferson Hospital as I said created a police department a couple years ago. They are currently developing a public safety headquarters, which will be right at 11th and Market. So they're going to have all their uniform officers reporting into there. We would like to work with them and have a security hub that would be staffed perhaps by security officers, but it would be a stop-in for all officers, PATCO, SEPTA, Philly, Jefferson. Jefferson also has a pretty large public safety arm that does the same thing. I'm talking about around safe corridors for their people to come back and forth to Jefferson Station. So we envision that area will be covered by all these entities working together. The other important thing I didn't mention is the cameras that are up and down right now on Market Street, which was put in by Paul Levy right before he left in the Center City District. Those cameras and any additional cameras that we put in will be the kind of cameras that are made to be able to report into the Philadelphia Police DVIC Center, Delaware Valley Intelligence Center, where they can watch cameras. So in addition to people and uniforms and lighting, the technology won't just be after the fact. It will be virtual patrols is what we call it, and virtual patrols will be done at the DVIC Center and also at the security hub station alongside Jefferson police.
Okay. So there will be somebody I guess at that headquarters to be able to monitor that also?
Okay. Thank you. The other question I wanted to piggyback off Councilman Johnson, what he had said earlier because we had mentioned this yesterday during the hearing about if this legislation were to pass and after 30 years there would be an automatic renewal, 13 five- year renewals, and I believe you did say that you would be willing to support change in the legislation to allow a renegotiation of the CBA at that point; is that correct?
Yes, we're willing to commit to a pro rata continuation of the CBA as it relates to the extensions if they were to be elected.
Okay. So if we do amend the legislation at that point that would be something that would be supported by you guys?
All right. Thank you. I'll come back. Thank you, Council President.
Thank you, Councilmember Squilla. Councilmember Harrity.
Thank you, my brother. Good afternoon. How are you today?
Just have a couple of questions here. How does 76 Place activate the street surrounding the arena to spare development and can you tell us about your tax projections in regards to the City?
Sure. I think those are two separate questions. I'll take the first one about street activation and spurring development and I'm going to ask members of our design team also to come up and help answer that. In terms of spurring development, the investment that we're talking about, private investment, is as Maureen said going to bring activity. It's going to bring dollars to the area which is going to help build and give a reason for other developments that have long been stalled on the surrounding areas to build something of their own. Right now as you walk down Market East not only do you see the store closures that are happening, but you also see long vacant parking lots, DisneyQuest, you see the boarded-up retail that's there. And this is right in between City Hall and Independence Hall. And so, there's a reason for that and it's because there's not enough people there. And so, the anchor destination of an arena provides that spur development. In terms of activating the street and how that design speaks to that, I'm going to ask our design team, both Jonathan Mallie and Jonathan Moody.
Good afternoon. Jonathan Mallie, Senior Principal and one of the Global Directors of the architectural design firm Populace. We've worked on over 3500 projects across the world. And when it comes to urban arenas, over half of those have been arenas and stadiums. We really take a look at the street activation and how to enhance it. And I think the points that were made from a security standpoint before, when you have a venue like this that draws people to it, you activate the street and you bring it alive. But then how do you take the building materials of the actual venue and enhance that: Transparency, glazing, retail activation. And in this case, the fact that the team is incurring the cost of lifting the basketball court up in the air off of the street to further activate that whole ground plane, I've never seen that before in any of our projects to this extent, and this is something that will be special and unique to the city of Philadelphia.
Good afternoon. Jonathan Moody. I'm President and CEO of Moody Nolan, African American-owned architectural and design firm. Building on that, this is truly a unique experience. Typically, the rule of thumb is exiting is the priority. And basically exiting means you have your biggest exits of the main bowl section at grade. And in this case, the priority was different. The priority was to say to lift it up to allow as much of the community, and that was through feedback and other conversation to say that this can be a way to activate the city and activate all the adjacent streets. So it's not a block or a node or something that prevents, but something that actually activates and enhances the street presence.
Okay. And as far as -- sorry. As far as -- what can you tell us about your tax projections in regards to the City? What are we looking to get from taxes from you guys?
So we did a robust analysis of the project with Municap. I'm going to ask Max LeVee to come up and speak to -- the net result of that is a billion dollars of net new taxes projected for the City and School District. 800 for the City, 200 for the School District. And I'll let Max explain exactly what that means from a net new perspective and what was included in that. MR. LeVEE: Yeah. Thank you. My name is Max LeVee. I'm the Vice-president with Municap. Municap is a registered municipal advisor. We have both municipal entity and developer clients across the country. We manage over 400 public financing districts. We were engaged by the 76ers to look at estimates of tax revenue resulting from 76 Place. We analyzed a variety of scenarios, including a net new impact scenario to the City and School District of Philadelphia. We took what we call a reasonably conservative standard in our approach to the analyses. Specifically what I mean by that is we looked at direct impacts resulting from the Arena and Fashion District projects. We did not look at indirect or induced impacts or any other multiplier. Impacts, we relied on a variety of industry sources and third-party reports to prepare our tax calculations. And as Alex said, we showed that the project over the 30-year team-play agreement will net to the City about $775 million in tax revenues and to the School District about $200 million in tax revenue.
Okay. And I know my time is up, but I just -- one more thought let's say. So the Chinatown Collaborative or whatever it is, is saying that there will be about 600 businesses in that area affected, directly affected. You guys say that there will be only 40 businesses that will be affected directly during construction time at a stadium. Talking to people in Chinatown, some of the business owners and going over some numbers with them, I came up with a number closer to 120 businesses that would be directly impacted by the construction, mostly mom-and-pop shops, restaurants, a variety of different little stores, clothing stores, stuff like that. In the Community Benefit Package, there's 1.6 million going for that. That's nowhere near enough. If you look at it just on a a simple thing, and I'm a simple guy so I try to look at things in a simple way, with 120 businesses if we were to say that we were going to give them a grant program in order to try to survive through the construction process, just at a minimum of say the 120 businesses could apply within the five-year period for say $10,000 a year to get them over that hump. For 120 businesses, it's $50,000 over the five years total per business, that's 6 million just off the top of my head. There's a big difference there in numbers. And I get it that you guys are negotiating in good faith, and you have to not only deal with us but you have to deal with the Mayor's Office, but I would just ask that when we continue these conversations that you keep in mind that these are residents that are trying to make something for themselves. They're trying to succeed. And what me and my colleagues are, you know, for me it's different. I see the thing -- I'm a union guy, so I see the value in all these jobs that are going to be created. I see the value in the fact that we're going to be hiring other union people to run the shop. But that being said, we also have to think about those little mom-and-pop shops that quite frankly are hurting already. And even at the point where they said low interest loans, I'm not an economics guy but I know that giving somebody that's already struggling another payment is not going to work. We need to look at grant funding. And quite frankly, it needs to be more than 1.6. It's closer about $6 million just on a short, you know.
Thank you, Councilmember, for that question and comment. We'll just reiterate that based on the testimony of the Administration last year I know there's an openness to discuss the allocations to the CBA. We'd welcome dialogue around that. We're very sensitive to the dynamics that you're talking about. We've spoken to a lot of business owners and heard similar concerns, also heard some business owners were excited about what the potential could be after opening and these are dynamics that we need to balance, right. We take that seriously. It's not something that we take lightly. As far as the CBA, we welcome additional conversations about that. We also are welcome to conversations about how we as the 76ers just in our core business could also be supportive of those businesses moving forward as well. So we would love a discussion to learn more and figure out what a solution would look like.
And I appreciate that. And there are some excited people in Chinatown because traffic is a good thing for their businesses, especially restaurant business. So looking forward to trying to get that up, but I don't want to develop a property and not take the existing people with us. When we move, let's move together.
I was just being devil's advocate. Let's just say hypothetically let's say it was built, would more people go down -- I'm vegetarian/vegan, right. Wouldn't you go down there to eat after the game and get something to eat and kind of hang out or some great Chinese cuisine after the game or before the game? And I haven't taken a position one way or the other. I'm just looking at it in a variety of different ways. That's why people sometimes say if you build it they will come but, you know, who am I. I'm just observing, taking it all in.
Council President, we had that conversation when I met with some of the members of the Asian community from Chinatown, friends of mine that I talk to all the time. That was kind of their feeling, you know what I mean. The way it was put to me is an average cost medium range for a Sixers ticket's about $100 a person. If you're taking a family of four, that's 400 bucks. And the way the guy phrased it to me he said, Jimmy, if you're paying $400 to go to a Sixers game with your family, are you then going to go to say Capital Grille and spend another $400 or are you going to go to Chinatown and spend $80, you know what I mean. There's pros and cons to everything, Council President. And I just want to make sure that we're thinking about those small businesses.
Oh, we are, absolutely. I'm sure Councilman Mark Squilla has done a yeoman's job in making sure that his constituents in Chinatown are supported and did a robust job in terms of advocating on their behalf with the Administration. So just being objective and paying attention. At this time I would like to call on Councilmember Jeffrey Jay Young.
Thank you, Mr. President. And good afternoon -- Mr. Kafenbam?
Kafenbaum, thank you. It's nice to meet you. And, Dave, it's always good to see you. First question -- well, statement first. I really just think that from listening to the questions of my colleagues and their responses, I think that what is missing here is that there are two separate co-equal branches of government, right. And I think that you guys negotiated an agreement with one branch and not the other branch. And I really think that is kind of a slap in our face when we are the ones that have to go through the motions of voting on this, putting this out there. It's our face that's up there. As my colleague yesterday pointed out, it's our futures on the line here when it comes to this legislation. And so, for you not to talk to us when we have a clear leadership structure and the Council President, I think is a slap in our face and you're not willing to even negotiate that CBA. I mean, to me, right, when I've been in the public to say there's not enough money, to me you're telling me right there you don't want my support. That's clearly what you're telling me, right, if you're not willing to move the needle on that. And I just really think that the process of how that played out, although you've been going through this for a couple of years, I just think that how that played out, how that was negotiated, I don't think that was in good faith as far as this body goes. So I just wanted to put that on the record. First question is why the rush? Why does this have to be passed on December 12, 2024 versus January 30, 2025?
So it's a good question and an important one. The imperative date is 2031 and working backwards from that which is when our current lease expires at our current facility. We need a place for the team to play in 2031. And when you work backwards from that with the construction schedule, the demolition schedule, the design schedule, that's what gets us to the end of this year. In all honesty, we're already behind in terms of starting that. But that's kind of our drop- dead date of needing to be able to start the design process, which is about two years to enable us to get to be able to start the demolition, which is about months, to enable 12 us to start the construction which 13 is about 36 months. And there's 14 some overlap of those along the way. 15 But when you add them all together, 16 that's what backs us up to where 17 we're at. 18
Can I get a point of information just real quick. I thought I was under the impression that part of the timeline was based upon the bankruptcy deal with the Gallery? And this is something different than what you're responding to. So to answer his question, regarding Member Young's question regarding the timeline, can you give me clarity on the difference between the two? Because I was under the impression that the bankruptcy of the Gallery, Fashion District which y'all are about to purchase, actually is they're going to go through the whole bankruptcy process in order for y'all to purchase the building, yada, yada, yada, there's a timeline. So give me an idea on which one it is in terms of what we're dealing with.
It's a good question, Council President. So there was a time -- because we had pushed for getting legislation introduced even earlier because there was a time when that was a legitimate and serious concern in terms of working with the current owner of the mall. That has been addressed, it did come at a cost, because we wanted to make sure that this continued to push forward and remained viable. The deadlines that Alex just described that we're talking about right now are purely around the delivery date and what it takes to actually design, construct or demolition and then construct the project. That deadline would have always been there. We were dealing with an earlier deadline that was unrelated to that that we were able to get around. I don't know if you want to -
Thank you, Mr. President. So that one month will throw your entire schedule off when it comes to construction? There's always, always overruns and time, things like that. It just happens. It is the nature of the business because you can't control weather, you can't control a lot of things that happen. So that one month really throws this entire deal off?
I think what you just said is exactly the issue that we're protecting against. There are unknowns during the design, demolition and construction process and we need to provide for those realities. And so, we are already behind on where we would need to be for this site. But I also want to just clarify something that David said in response to Council President's question. The requirements of the transaction in terms of purchasing the various assets, the sites are under control subject to receipt of the approvals, which means that those buildings, the mall, are in this purgatory right now. They're not able to lease. They're not able to start the demolition. And so, the transaction agreements and structures also require us to come to a decision in a timely manner.
Thank you, Mr. President. Do you agree that -- have you done an analysis on the value of the team after this asset is acquired?
I believe -- I forget who it was, Councilmember Landau or somebody else who asked that question. I don't know that answer or if we have a definitive number off the top of my -- I don't have it off the top of my head. I have to check to see what we have, but happy to follow back up with that information.
So there's no one here testifying in front of this City Council today that can tell us about valuations of the team, valuations of this particular deal and valuations regarding what future projections are? You guys decided not to bring anyone that can talk to us about that?
I want to make sure I get you accurate information. And so, we will make sure that you have that information in a very timely manner.
All right. Well, Forbes says you're worth $4.6 billion, so I'm just going to put that out there, right. And so, if you have a $2 billion project that you're constructing, I'm just going to assume you guys have great accountants. You're going to figure out the tax liabilities and all that to do some write-offs. But I'm going to say once you acquire a $2 billion asset, your value is going to rise by $2 billion, right. And so, if you're getting $2 billion and the City's only getting $50 million, I think that's a huge disparity, huge disparity. And I understand there are other costs associated with development and things like that. But the moment you get your CEO for your building, your value rises exponentially higher than any one of us in this room probably can fathom, right. And so, I just want to make clear that I really think that having negotiations with one branch of government for $50 million when I'm on the record to say based on my analysis and talking to other folks that this deal could be worth potentially $300 million to the City, right, because -- and that's based on the lack of revenue that other cities have seen when it comes to arenas and stadiums, right. It's because no arena, no 15 stadium has ever brought forward the tax revenue that the projections say it would bring in. So based on that, based on facts, based on the value of the increase of the team, that's where I derived that number from. And so, as an organization will you commit to putting funds in escrow, maybe 5 or percent, of the projected tax revenue in escrow just in case the City doesn't meet those yearly projections afterwards, right, so we can reap that money that you say we're going to get a billion dollars? So would you put some money in escrow, $50 million in escrow every year to make sure we reap the benefits of this particular arena?
Sure. Thank you for the question. One thing I just want to clarify, we are not getting $2 billion as a result of this project. We are investing. So we're investing $1.3 billion so I just want to make sure that's clear for the record. In terms of --
I understand you're investing. But again, once you only -- let's just say it cost 300,000 to build a house. You're not going to sell it for 300,000. You're going to sell it for a profit, much more. So you're investing that money there, that's great. But when it's time to make that return on that investment, right, because you own the land after 30 years, you can say, you know what, we're done, we want to sell this land. You own that land. That's a win-for-all for the Sixers, right. So the value -- again once it gets appraised and all that other stuff, when Blitzer and Adelman want to sell, they're going to get the whole team appraised for the value of all the assets, including that particular arena, and that asset is probably going to be worth about $2 billion at that time. And so, that's where I'm coming up with that particular number. So I understand you're only investing 1.3 in the construction. But again, with the good accountants you have you're going to figure that out, right, to make sure that y'all good on that from a liability standpoint, right. So that's where that number is coming from. So just want to make that clear. So again, will you be willing to provide some money in escrow in order to help the City meet this loss of revenue if we don't meet those tax projections?
Sure. I would say we are not aware of any precedent where any business has been required to or would be required to do that. We are not asking for any City taxpayer dollars as a result of this project. As Max mentioned, the financial projections that we are putting forth are intentionally conservative. And a lot of the estimates that you were referencing include the generation of revenue outside the site in ancillary. We're just looking at things actually on the site. So we actually think the benefit of the City will be much greater than what we're proposing. And so, I mean the short answer is, no, we're not prepared to do that. But I just wanted to provide some context as to why, Councilmember.
So the City's estimate is more conservative than yours and that's about 700 million or something like that, whatever the number was. But again, we can't guarantee that these numbers are going to come to fruition because they have never, ever, ever come to fruition in any other scenario across this country. And so, if you want us to agree to a deal, I have to be comfortable that we're going to be -- it's an equal bargain. And right now it's not an equal bargain on both sides. And I know, Council President, I heard the time a long time ago, but thank you so much. I reserve the rest of my questions for the second round.
Yeah. So one thing I just want to make sure we're clear on, all your points are really good ones, this is all net new revenue to the City. So this is not revenue that is otherwise occurring. It's not revenue that's already happening. It's only net new revenue that would happen as a result of our project. So in regards to the City's more conservative analysis compared to our analysis, I think the City would agree and I believe they testified yesterday, both assumptions are valid and industry standard. They just took a more conservative view, but they still found that it's a net positive to the City.
Thank you. So even though, yes, it's a net. You say it's a net positive to the City, but your argument is that that's the incentive for us to do this, that the City will get all this money, that's your incentive. But if we don't get it, what's our incentive then? If we don't, what's the incentive? And that's what I'm trying to protect, protect that incentive for us to do this.
Chair recognizes Councilmember Jamie Gauthier.
Thank you, Council President. On the 76 Place website in your statement about how Philadelphia's experience with the arena will be different from what happened in Washington D.C. where their Chinatown was essentially displaced, you say "We are committed to investing in the preservation of local businesses and affordable housing options so that Chinatown retains its character, remains a cultural hub and that existing residents have the option to remain in place." First, can you say whether the Sixers still agree with that sentiment? And if so, as the entity leading this development and as the entity whose project will have both positive and negative impacts on the City and its neighborhoods, can you give an opinion on whether or not the measures proposed in the CBA provide adequate anti-displacement measures for the neighborhood surrounding the arena? Specifically, do you believe that the current allocations in the CBA provide an effective safety net for Chinatown residents and businesses? And I'm looking for an opinion here. I'm not, you know, I've heard you say we're going to have conversations, we're going to consider, we're open. I'm looking for an explicit opinion on this as the entity that's leading this project.
Sure. Thank you for the question, Councilmember. So the short answer to your first question is, yes, we are committed which is why there are line items in the CBA that include support for programs that address the things that you just referenced. In terms of whether or not is it adequate, I think it is definitely supporting the goals that you stated. I and -- we've had this conversation. I think our position is that there is no single developer that will be able to guarantee fully if it's solely their responsibility the preservation of any neighborhood. We are very excited and supportive and look to collaborate with how we can leverage the funds that are in the Community Benefits Agreement with the tools that the City has as its disposal to best protect and preserve Chinatown.
I think I want you to talk more specifically. You said you think. In general, the allocations in the CBA reflect the goals that I mentioned. Can you speak more specifically about how the allocations in the CBA will guard against displacement in Chinatown for residents and businesses?
Sure. So there's an allocation in the CBA for affordable housing. There is an allocation in the CBA for a business readiness fund, a business support fund I believe. I have to look at the additional line items.
Do you think those allocations are enough? As a developer, what's your opinion on whether $3 million over three years is enough to support affordable housing in a gentrifying community? Do you think that's enough?
Again, if you're asking if $3 million is enough to guarantee the preservation of all affordable housing in Chinatown indefinitely, no, I do not.
I guess what I'm struggling with is I hear this project being talked about, right, as this big bold thing and it is. I hear this project being marketed as something that will save Market Street, as something that will save the commercial office market, as something that will bring increased vitality to our city and Black and Brown jobs. All of those things may be true and that would be great, but I'm struggling with how you can claim the positive things, the big vision, the changing of Market Street, but not claim the things that were identified as negative impacts in our own impact study. What's your opinion on that? Does that feel like a conflict to you?
I don't believe it's a conflict because those are things that we're committed to supporting. And again, I would say I think we have to look at the totality of what the investment through the Community Benefits Agreement looks like in combination with things like Councilmember Squilla is proposing to ensure the community is protected. We did do a lot of research on this and so happy to bring Lee Huan from Econsult up to share more about what we learned, if that would be helpful.
I think what I'm looking for before I ask my last question is a more hands-on position from the Sixers about what you think needs to happen to protect vulnerable communities from displacement in light of this big, bold project that could also have a lot of positive impacts. I'm going to be personally looking to hear that throughout the rest of this process. I think that a lot of the conversation that we've been having and struggling with, right, around traffic, SEPTA, anti-displacement remedies are about the site, right. And so, I just wanted to ask for the purpose of conversation please shed light on why this site, why this site as opposed to other areas of the city? Why Market East for the arena as opposed to the Navy Yard or other places? And what was your process in landing on this site?
Sure. Thank you, Councilmember. There were a variety of considerations when looking for a site for the 76ers. Our priority was to look for a site within the city of Philadelphia. We also needed a site that was accessible. And one of the reasons we do like the site is because of its connectivity to public transit, as it sits right on top of Jefferson Station as we've referenced. And we also needed to find a site that was available, whether it's publicly- owned land, although we're not taking publicly-owned land, or whether it's a site where there is a willing partner ready to transact with us. We believe this site is also not just good for us and our fans and our players and the team, but also good for the City because we know that Market East is in need of investment. We know that that used to be the most vibrant commercial corridor in the entire city. We know that it used to be -- it was really the birthplace of department stores. I think we used to have nine there. A lot of us who grew up here used to spend a lot of time in the Gallery. If you go down to the stretch of Market East that we're looking to invest in right now, you see I believe an unacceptable amount of vacancy and blight and boarded-up retail, and that's not just like an eyesore, but that has specific impacts on our city. That is a deterrent for tourists. We've talked to people at the Convention Center who talk about conferences that don't want to come here because the experience that people who visit and scout locations have when they walk along Market Street. We have the Marriott who doesn't even have their doors open on Market Street. We need a revitalized Center City and not just for the folks that live in Center City or shop in Center City but for working-class Philadelphians across Philadelphia. One of the things that we're very proud to have is SEIU is supportive of this project, a union that represents a significant amount of Black and Brown working-class Philadelphians across the City. And they're supportive of the project not just because of the jobs that they're going to get in the arena because it's not that many for them, but because their job base for their members depends on a vibrant Center City to work in the office and residential buildings down there. And so, those are all the reasons that we think this is a project that is good for the Sixers as well as good for the City. We understand that there's also concerns around what the impacts could be in the surrounding community. And I think that what we are very much looking forward to do is collaborating with the City to make sure that we can accomplish those things and revitalize Market East. And I think a lot of the concerns that you raised will be raised regardless of what the development is. But we want to collaborate to make sure that we are revitalizing Market East and protecting and preserving the gems that should be protected in the surrounding neighborhoods.
Well, if you want to collaborate with us, you can't be hands off about the negative impacts that we're bringing up. We want to collaborate with you too, but we want to protect folks. Thank you, Council President.
You're welcome. The Chair recognizes Majority Leader Katherine Gilmore Richardson.
Thank you. Thank you very much, Council President. I wanted to sort of pick up where I left off. I have a few things I just wanted to review. First, relative to the overall agreement, and I think we talked about this yesterday, wherein you have the initial lease term that states that you have the initial 30 years and then the five-year 5 renewals. Okay. 6 And there was a section 7 in Bill No. 240966 around the ground 8 lease agreement, Section 3.3 renewal 9 terms, that mentions that you all 10 would give the City in writing 10 11 days prior to the expiration of the 12 secondary term or the then current 13 renewal term that you all may or may not renew. And so, based on -- and you're in real estate. Do you think 10 days is enough notice to the City if you all would exercise the option not to renew? Additionally, relative to the CBA that we're discussing, and I know you all know that many members have consternation relative to the CBA specifically, but the CBA only covers the first 30 years. There are additional five-year renewal terms, plus that last three year. I didn't miss that. That's in there too. So what would happen relative to the CBA after the initial 30-year term? And then also, if you could address the 10-day notice regarding potentially vacating the facility?
Sure. So 10 great questions. Regarding the CBA, 11 we said earlier that we would be 12 willing to commit to extending the 13 CBA pro rata with any extensions that we decide to exercise in the future. If that requires an amendment to the legislation, that's something we'd be amenable to. In regards to the notice periods, I don't have them directly in front of me. I trust that what you're looking at is correct. The notice period because of the structure of this transaction and that we are going to be purchasing the land, donating it to the City and then upon the termination that would be transferred back to us, we would ultimately be the owner of that land at the end of the day. Part of what Councilmember Squilla has required of us is a provision of what happens if the Sixers move out. We don't want a big vacant empty arena sitting on Market Street in 30 years and you all saying that you're not going to take it down. And so, he has required us to include provisions to --
I apologize for the interruption. I wanted to make sure that you had that information because I did bring this up yesterday. It's in the ground lease agreement. It's Section 3.3. If you look down at about maybe the 8th or 10th sentence in that paragraph is where it talks about giving the City 10-day notice. And because of the size of this project and just the potential size of the arena, that concerns me greatly because the City would need more than days' notice 8 that you would potentially be not 9 renewing the terms of this ground 10 lease agreement. And so, I wanted you to have it so we can have a real discussion. I heard the bell and I do want to honor the clock, but I think that's important.
What I was saying in regards to the transfer, one, if we were going to leave, we would need a new place to play.
If we were going to leave, we would need a new place to play. That would obviously take us more than days. 8 So I think that there would be 9 certainly advanced notice around 10 what our future plans are. But because the land reverts back to us and because we're purchasing it upfront, we have a vested interest in what happens there and the value that's going to be created there, not just now but in the future. And if it is at the end of the arena's useful life, hopefully what we're saying here has come to fruition and now it's surrounded by a lot of great new development and everything that already exists today. And so, we would want to continue that and see how we can now take that asset into the next generation.
Sure. And Councilwoman Lozada said this earlier, and it was something that my mentor and former boss would say all the time. If it is not in writing, it does not exist. And so, I think that's something that we do need to address and ensure that that information more accurately reflects what we know to be true regarding your intention around this specific project. Council President, if I may just put one additional question on the record?
Thank you very much for the accommodation. I wanted to go to the term sheet, and I know we had talked about this so you all know that I have some relative concern here relative to the conditions, precedent to conveyance and construction of the Arena facility on . You know we talked about this. This is a section list that the requirements must be met before the arena can be constructed. One of these is evidence of financing commitments sufficient to meet ArenaCo's obligations to construct the arena facility or ArenaCo's election to use its own funds to construct the arena. So could you tell me where I can find the evidence of your financing commitments regarding this project? And you know we're asking that for multiple reasons, including SEPTA. And have you all submitted these materials in writing to Council as a part of the public process and public record for these proceedings?
Thank you for the question. The reason why that's in there is the City in the negotiations wanted to ensure that we were not able to transfer the land to them and make it the City's obligation to own this land prior to being able to have shown proof that we have the funds in place to be able to build what we're saying we're going to build. They didn't want to get stuck holding the bag. And so, the process for getting the financing in place happens closer to construction as the design progresses, as the construction pricing has been finalized and as we're able to go out to the various private lenders and provide them with the documentation that's needed to procure the loan. And so, that's why it's not here today. It's a requirement for us to proceed to the next step in the transaction document.
So the question is if you will be able to submit the information that you shared initially for the record for these proceedings. And then if this should proceed, then also agree to submit all of your financing commitments to this body for the record? Because I think it's a fair question to ask relative to how you all are financing the project in its totality, one, because you're stating you will not need any City support, two, because of the challenge we know to be true with SEPTA and, three, so that we have relative assurity that, as you stated, as a City we are not left holding the bag. Is that something that you all could commit to share with us your financial projections? I'm sure you all have done something in advance of all of this to show that this project would be financially feasible to you or else you would not be moving forward with this project. So is there anything that you all could share with us on the record as a part of these proceedings that help us understand your financial projections?
So we have not shared with the City anything to date in that regard. So in terms of can you share with us what you've given them, I just want to be clear there's --
There's nothing that we have given them. We would have to come back to you with that. Because the risk is ours in terms of the private development, the private nature of this. The request to share the financials of the private development is something that we would have to come back to you. I don't know that we can commit to that.
Thank you for that. Now, the risk is yours financially but the risk is ours as a City. And that's why we are here and that's why this project would need our approval. So while financially it is your risk, we would also have to take a huge risk that you all would not have to come back to once you're finished with this part of the process that we would be left holding the bag. So while you have risk, we have an even greater risk. And particularly for my member colleagues who are here, this is probably one of the biggest risks we'll ever have to take. And so, I just want to be real clear about that, that we all have a vested interest in this project for a number of reasons, but it does impact everyone as well. Okay.
Councilmember, I just want to state very much appreciate what you're saying. And that there's risk that Council and the City have to take on with this project as well. I think we all have a little bit of risk here. I won't even say a little bit. We all have risk here. I think what we are saying is that in terms of the overall timing of specific information we'd have around financing wouldn't happen until we're ready to finance the project as things change, et cetera. But appreciate the spirit of what you're saying. And so, let us go back and see if there's anything in what we can share and circle back to you. I think we understand what you're trying to get at. So let us do some homework and see what we can come up with.
And to be clear -- Council President, I apologize for this delay -- but to be clear, it's not just the financing commitments and also projections, but also how you all came to the conclusion that this would be financially feasible for you to even engage in the first place. You have to have something to show your investors and others when you're working on a project of this magnitude. There is some documentation somewhere that exists that we have not been privy to that I think we should be as this project potentially may or may not move along. We need to have as much information as possible in order to make an intelligent decision. That's just the ask. Okay. Thank you very much, Council President, for the accommodation.
You're welcome, Madam Leader. The Chair recognizes Councilmember Quetcy Lozada.
Thank you, Council President. I just want to touch on a question that I asked you earlier, and I think Alex responded that there would be no displacement to some of those retail businesses on top of Jefferson Square. And I did get confirmation that if this project were to happen that all of the retail space at Jefferson Station would be lost and that none of those businesses have been communicated with regarding what the impact would be nor has anyone reached out to those employees. And so, I'm just trying to figure out where are we, what do we do, what's the engagement, who else do you need to talk to and who haven't you talked to?
No, thank you for the question Councilmember. We actually had a conversation about this during the break because I think we misinterpreted what the question was, so we appreciate the opportunity to clarify. And just to confirm, I think our earlier response was about businesses specifically within the SEPTA station versus the mall. We understand it's kind of open air so I think that may have been where some of the confusion came from. So Alex can clarify exactly what would happen to those businesses in the mall where the arena would actually go. So, Alex.
Yeah. Thank you. So David's correct, with regard to the mall any tenant that exists obviously has a lease. We're going to abide by those leases, the rights that those tenants have will be honored. And whether those tenants want to relocate if they did want to relocate, that would be as part of their leases. Each one has got its own nuance, but those obligations are on the landlord to offer them a space to relocate to, to fund the costs of the relocation and to make it available to them. And so, that's what I was referring to with regards to the existing mall. And David's correct, the delineation between the mall and the station gets a little murky down there.
I just want us to be conscious of the fact that when we're talking about projects this large, right, and we're talking about it in people's spaces, that there's anxiety, right, there's uncertainty. And so, let's be conscious of that and let's reach out to those people that feel like I'm going to be displaced. This goes beyond just the folks in Chinatown. This goes beyond the folks that are within walking distance. This is people right inside of that space. They should be a part of the conversation again on the front end as opposed to being an afterthought.
Yeah, you're right. And so, our partners at Macerich have been having those conversations, but we can certainly get more updates and would be happy to confirm with you if you have specific folks that you're hearing from. Would be happy to engage them directly.
Thank you, Member Lozada. Chair recognizes Councilmember Phillips.
Thank you, Council President. I just want to start by saying that this has been a riveting discussion and I've been relatively quiet throughout this entire hearing process because I truly wanted to listen and I respect all of our colleagues who have questions that are thoughtful to help us really make sure that we're getting this right. So I just want to say thank you on that regard. I just also want to note for the record so our public is very aware of the consciousness of our Mayor in terms of her negotiations. She is a -- one of the things I'll tell you is that when in the 9th District several years ago there was a marijuana dispensary that was trying to come into our neighborhood and she heard from neighbors that how important this was for this dispensary, this marijuana spot, not to come into our neighborhood. And she stood there to make sure that that didn't happen. She took neighborhood feedback, constant meetings. This also happened when some developers tried to come in and do work with building a house, right, houses that didn't fit our neighborhood and neighbors were complaining about that. So on record when she's saying that she's going to do everything that she can do to safeguard the neighbors in Washington West as well as those businesses in Chinatown, she has a track record of doing that. So when Councilwoman Blondell Reynolds Brown says, your previous actions dictate your future actions, her previous actions will dictate the fact that she's not going to allow for the Sixers, and I don't think the Sixers also would allow, for Chinatown to be in a position where they're not going to be thriving. So I do want to note that because -- the other thing is I do want to ask this question based off of that as well. The Sixers, you all have been in conversation about going to New Jersey for whatever reason. And our goal and I know the Mayor's goal is to keep you in Philadelphia. What was that possibility? And do you believe that our beloved Philadelphians would love for their beloved sports team to go anywhere else but Philadelphia? What was the possibility at hand of going to New Jersey?
For the record, you're still in discussion with Governor Murphy, correct?
That's correct. So our priority is and remains Philadelphia. That's why we're here today. Our company has a long-standing relationship with the state of New Jersey and are in constant conversations with them over a range of topics. But we are focused on this site. We want to be here. This is why we're here today. And if Council passes the legislation that's in front of them, our intention is to build here. We will be here.
Great. And I just have two quick questions as well. I'm sure you all have been to Chicago which is, outside of Philadelphia, one of my favorite cities in the nation, a great city --
Right. Well, don't go there. But when you look at the Chicago Cubs, can you talk about the research that you all did, what (inaudible) in the Chicago Clubs downtown and how that is -- I mean, it is a question but it's not comment too because it is electrifying, right. But did you see in Chicago, the Chicago Cubs downtown stadium that can work in Philadelphia?
It's a great question and it's more than just Chicago. It's 27 out of 30 NBA teams play in downtown arenas. There's also a very big distinction between an arena and a ballpark or a stadium. And I think that's something that's important to hit on. When we look at other venues and other cities, we looked at not just Chicago, but Boston or New York or Sacramento or San Francisco or Detroit or Milwaukee. And all of these have thriving districts that are mixeduse dynamic urban districts around the sports entertainment venue. They each have their own positives and negatives and there's a lot of things that we've picked up along the way and continue to. And I think that some of the key themes you've seen in our design are what we've been focused on, things like porosity at the ground level, activation at the ground level, non-event day activation, giving people a reason to be at this site when there's nothing happening inside our building as well as a transparency from the building materials and an aesthetic that is contextual to the surrounding neighborhoods.
Thank you. And real quickly, Building Trades how are they going to benefit from this experience? And then lastly everyone's been talking about this CBA, this Community Agreement, which I understand is really important because we got to keep Philadelphia thriving and increasing the funds. But in an ideal world, can you talk about -- I'm fairly confident, but you could tell me if it's true or not the Administration probably themselves would love to negotiate gazillions and gazillions of dollars, including the Mayor, for the Sixers to come back. And that conversation right now stands at $50 million, but that doesn't mean that our Mayor is not going to come back and try to increase that at some point. And you all will be open for that conversation as well; is that true? And also, the Building Trades, how does it help with our Building Trades and Black and Brown folks are going to be benefiting from that because we want the public to know how this is really going to help our labor community too?
Sure. So taking the first question with the Building Trades, we are very grateful to have the support of the Building Trades. We believe in union labor. We believe that this will be union built and union operated and also -- not we believe. We are committed for this to being union built and union operated. And then as I was detailing in an early part of the hearing, we're also committed to making sure we're working hand-in- hand with the building trades and the carpenters to increase the diversity and opportunities within their ranks. And that's why we're a founding member of Everybody Builds and really was the impetus to bring that together and are looking forward to continue to work with Everybody Builds, utilize that as a tool to ensure that this project and also development projects across the city are used as real tools to expand opportunity. The second question was around the CBA, right?
The CBA, as we've mentioned the CBA we believe is appropriate given the project in context of past projects as well as us not seeking City funding. And again, we welcome additional conversations around how that should look. We know the Administration does as well based on their comments yesterday.
I just want to say that some of these conversations that happened, I want folks to know it's fairly possible that $50 million might have been the first initial offer, but there's so many intricacies that go into coming to that final number, right. And I just know that our Mayor and our experience if there's a way to get more money from the Sixers, that's going to happen, right. And I think that we're going to continue to try to find ways to get more benefits from this. And that's why I appreciate our colleagues asking about it, but I also want the public to know if the Mayor wants -- if she could get a gazillion dollars from this deal, she would, and she's going to keep fighting to get that gazillion dollars if she could.
Thank you. The Chair recognizes Dr. Nina Ahmad, City Councilwoman.
All right. Thank you so much, Council President. All right. First, I wanted to echo what our Majority Leader spoke about, which I had referenced earlier as well, understanding the financial stack because what if you default on the loan, so understanding the terms and evaluate the risks are really incumbent upon us. And perhaps as evidence of financing, you can give us just a letter of credit that is contemplated, right. There's a myriad of ways to address our concerns, so I hope you will address that. I also want to go on the record about the economic analysis and details as provided in Bill 23 240973. It provides a context of new tax revenues being projected from the proposed 76 Place over 30 years. While the 248 million over 30 years is impressive, it is only 8.2 million per year in new taxes from all sources, sales tax, wage tax, PILOT, amusement, parking tax, et cetera, which includes that 1.82 million in PILOT payments per year, which includes City and school taxes combined. So for context, we took a look at similarly-sized projects, about 1 million gross square feet, and they're not exactly apples and apples, and this is on Market Street like the Marriott. The PILOT for 76 Place is 40 percent lower than the 3 million in real estate taxes being paid by the Marriott, which also has other revenues spinning from it, including hotel tax. I realize they're a different business. They're open not like you will be. However, that's just to give us some idea of what others are generating for us. So I want to go on the record that the City is making significant investments in the form of service fees that will be appropriated annually to PAID, the front-end, administrative and legal cost of striking streets entitlements, foregone real estate taxes under the PILOT and U&O payments and foregoing the fair market value of the fee interest in the site by providing the right to purchase fee simple title to the Arena for $1, right. For that I will propose that the participation at the exit lease termination to make us whole. We're giving up quite a bit, so you're going to be benefiting. And your projections are conservative, and I'm sure you'll do really well. We would love to see something for us to participate in at the termination. And I'll be finished in a second. I further believe that, and others have said this, the proposed 50 million CBA is not proportionate to other arena projects around the country. You talked about the ones inside Philly. It also stretched over a longer period, which dilutes the economic effect of investments in community projects and programs. So perhaps there's a way to shorten that to maybe years, replenished with 15 additional CBA commitments for the remainder of the lease term. That's maybe one way you can get around that. So we do have great opportunities and challenges ahead. We must balance the prospects of economic growth with the needs of our community that will face social and economic consequences and the fiscal impact on City finances. So thank you and I'd love to hear your responses.
Just one initial response because we appreciate that City Council has an important decision to make and we just want to make sure everybody has accurate information. The PILOT payment I believe, Councilmember, you referenced 1.82 million per year. Our PILOT payment would be an average of 6 million a year over the course of the lease, which would be multiple times more than every stadium and arena in South Philadelphia, would be significantly more than the mall currently generates, and would be one -- if you compare it to other privately- held buildings in the city, would be one of the highest tax buildings --
I'm talking about the net present value calculations which is from your table here. I took it from what was provided.
Yeah. I think that's an important distinction, net present value versus cumulative total.
Specifically as it relates to the PILOT, the PILOT is an annual amount that's set at starting at $5 million and then escalates.
Yeah, so net present value is what that's worth today to the City.
Right. I'm just using your numbers that were given to us in this 16.
I think those are from the City's studies. And I do believe that they look at the NPV as well as the cumulative, but happy to spend some more time --
-- over this. That's an important number for us, what are we giving up in terms for the PILOT payment.
Yeah. I think the answer is we're not asking the City to give up anything. We're not asking the City to give any dollars to this. We're not asking the City to put anything into this from a monetary perspective, notwithstanding comments previously around the risk and what's being asked from this Council. But financially, we are not asking for anything from the City and the billion dollars of projected revenue or if you use the City's numbers, the $700 million of projected revenue are at no cost to the City because the City is not putting any dollars in.
And the key word is projected, right, which was a concern that all of us have expressed. One is the projected and the net present value is what we can only use to say how we're making whole what we're not getting in real estate taxes. That's how we would say what we're doing, right. How else are we going to assess that?
The concept of net present value is typically used when you're trying to assess what should I pay today for the rights to a future revenue stream. In --
So in the context of this transaction because the City isn't paying anything, it is our position, and I believe the City would testify to the same thing, the concept of net present value is not really applicable to this agreement as well as our agreement for the PILOT is $5 million a year starting.
However, what we are -- the only way we can do it is today, right. We're looking at what we're foregoing over the years today, and that's what we're going to be able to negotiate with you to say either you increase your PILOT or maybe you can offset it by putting it into CBA. It seems like we're not getting our fair value is what I'm really trying to get at. That's one. And the second thing is we don't have any guarantees which is why the escrow conversation happened, which is why the need for getting some financial stack numbers are important. We're going to sign away a lot of stuff in giving you and hoping all of these -- and as we said projected. So these are the reasons why we need to in today's value understand what's going on and what we are foregoing.
Yeah, understood. I think in today's value the mall generates about a little over $1 million in taxes. And in today's dollars, we would pay $5 million in PILOT.
In the PILOT. However, why are these -- these are not your numbers?
I believe what you're looking at is from the City's studies.
So I'm going to -- obviously they did their study and that's what they're giving us to review in this bill so I'm going to go by this. So that is a discrepancy between what you're saying and what they're telling us.
I don't have the report in front of me. I believe there's a page towards the end that shows the cumulative numbers versus the NPV numbers --
I just want to make sure that we understand that we are foregoing value. Whatever we would have put in there instead of you we are not realizing those real estate taxes.
Sure. I think we definitely would like to spend time to make sure because I think we may be talking past each other and not fully understanding the information that you're looking at right now. But I do just want to be clear in terms of whether it's net present value or today's dollars, as long as it's comparable figures or analysis. What we will be paying on the mall is more than what -- what we would be paying in a PILOT is multiple times more than what the mall currently generates.
Well, yes, of course which is why we are even contemplating doing this. Of course, that's a given. But we're just wanting to know if not you, something else might be able to make us more whole and that's why this negotiation -- this is a negotiation --
-- or else you would not be testifying. This is not final. What you've said is not final. What we've said is not final. We're going to come up with something better and our job here is to make sure the City makes out, which means our constituents make out on this. So obviously what you're going to project, what we are going to project, we have to come to a place to say which one is the correct projection in order for us to move forward because I'm just looking at the projection in the bill that the City transmitted to us. And in that transmittal, I can tell you what the real estate taxes would have been from comparable, as I said, the Marriott, which is not exactly the same, is a lot more. So in the PILOT perspective, we are giving up some resources. And since there's been a conversation about the Community Benefits Agreement, I think reducing the time and having a back-end renegotiation on that and allowing some of what we're giving away in the PILOT to show up in the CBA, that's one way to look at this negotiation. Just telling you to -- we're going to negotiate.
This is not the final. And as my colleague Anthony Phillips mentioned, the 50 million from everybody I've heard here doesn't seem to be final for us. It sounds like it's a final for you, but we've got to sign off on this.
Understood and appreciate it. And we'd love to spend time because I think some of the numbers that you're referencing are not computing with how we interpret the numbers. So we want to make sure that we're speaking the same language. Absolutely.
Yeah. Just once again this is what was given to us by the City in this bill.
So can you and your team provide 76 Place numbers?
We'll take a look at what the Councilmember is looking at and make sure we have an understanding --
Compare some of the Councilmember's numbers. Okay. Dr. Ahmad?
Thank you. The Chair recognizes Councilmember Kendra Brooks.
Thank you, Council President. So my first thing is just a point of clarity from Councilmember Landau's question about the WNBA team, because we've been doing a lot of WNBA research. So are you committing today would a Philly WNBA team be playing in that stadium because it's to my understanding that currently the majority of the WNBA teams play in separate arenas?
Sure. So our expectation is that if we are successful in a bid for a WNBA team, the team would likely start before this is open. But this would eventually be -- once this opens this would be their permanent home.
It'll be a shared home between the Sixers and whatever WNBA team?
Okay. So my next question is about jobs. So what's the average wages for stadium employees and other properties owned by your company?
Because developers websites claims that the new arena will produce 12,000 jobs, and I know we've been going all over the place with this number. And the Mayor's presentation claims that over 1,000 construction and operations job. But the current economic study said around 700 jobs for Philly total, and a third of those will only happen during the three-year construction period. Which estimation is correct in your opinion and why?
So I think there's a number of different assumptions being talked about. One, there's during the construction period and then during the operations period. And so, those are two different periods that need to be delineated. I can tell you what our projections are for those periods, which are the numbers that I quoted before in terms of during construction. The 9,000 FTE jobs and the 3,000 FTE jobs for indirect and induced. And during operations, 1,000 jobs onsite.
Okay. So for that, we have a long history of developers making promises about jobs to get what they want and only to leave the residents with little to nothing in the end. So the 76ers owner received $82 million in government subsidies to build a practice arena in Camden, but seven years later the practice facility only employs seven Camden residents. Why did this happen and what went wrong in Camden that would prevent it from going wrong here in Philadelphia?
Sure. Thank you for the question. So a couple things. One is that -- and I just want to be clear and state for the record, when we built our practice facility in Camden there were a number of commitments that we made to the Camden community and we followed through on all those commitments. We also know that in contemplation for the redevelopment of the Camden Waterfront for a lot of different companies and employers that ended up building their homes in Camden there was the promise of jobs, to your point, Councilmember. We have invested -- we are investing over $1 million in Camden organizations and workforce development programs to better prepare Camden residents for jobs. Also with the 76ers, we have an agreement with Rutgers Camden to provide internships. One thing that's unique about our business is that a lot of the roles within an NBA team are extremely specialized. And so, that is an organic challenge in terms of ensuring that residents from a specific and relatively small city are equipped and capable to serve in those very specialized positions because they require a lot of specialized training. One thing that I think we're really excited about the potential for this project is there's a much vaster diverse array of jobs that will be available as a result of arena operations that will also be much more accessible, which is one of the things that we're excited about in terms of the opportunity for Philadelphia residents to take advantage of opportunities here. We also know that there's provisions in the Community Benefits Agreement to provide internships to ensure that we're preparing Philadelphians for those jobs as well.
So out of the jobs that are currently in Camden, so the seven are skilled jobs or they're --
I don't think the -- I'm not sure if the number is seven, but I'll confirm that. And I don't have the specific breakdown in terms of which jobs those are. We also know we've had instances where we hired residents of Camden that then chose to move out of Camden so that number fluctuates pretty regularly. But we can go back and make sure that we get you the classifications on the specific jobs.
-- because I know there are skilled jobs associated with the practice arena, but there are also unskilled labor that happens --
-- to keep the building going, and I'm pretty sure it was more than seven. So can you just get those numbers to us so we have a better understanding?
And will the 76ers management pledge to be neutral in any potential organizing drive that would take place for the new arena?
So we do have agreements with SEIU, with the Building Trades and we're working on a similar agreement with UNITE HERE. It's not complete yet, but that is our goal. And we have already committed that we will have union labor within the building. We will not stand in the way of that.
Thank you very much. The Chair recognizes Councilmember O'Rourke.
Thank you, Mr. President. While many parts of the this particular Arena plan don't make much sense or any sense to me or some of my colleagues, I'd like to talk about why this plan makes sense to you all and the team of billionaire developers who are evidently behind it. There is a perfect spot in the South Philadelphia Stadium complex. Despite having a stadium district with one of the largest complexes of parking lots in North America and an easily accessible subway stop, the team is dedicated or excuse me, the team has decided that the only viable option is an arena in Center City. Can we be honest that it's because HBSE, Harris Blitzer Sports Entertainment, cares more about the potential ROI on related mixed-use development and land speculation than an Arena proposal that is sensible? This proposal isn't competing for championships. It's about cornering the Center City real estate market. This became extremely transparent to me when I saw that HBSE is one of the main investors for a brand new real estate entity called Sports and Entertainment Real Estate Global Holdings or Seregh. Seregh was started just about two months ago September 2024. Even more telling is that it was founded by Mr. Kafenbaum's former boss Jonathan Fascitelli, who was up until two months ago the CEO of HBSE Real Estate and 76 Dev Corp. The Seregh website prominently features the architects of this proposal, Josh Harris and David Adelman. To clarify for us on Council, how much has HBSE invested in the new real estate group Sports and Entertainment Real Estate Global Holdings?
Councilmember, that is a good question. I do not know the answer to that. I will also say in terms of the motivations of the team to locate in Center City, just to address your first question, I don't think we have ever shied away from or denied that this would be a good investment for our business and for our company and for our team, and we've talked about the reasons why. I don't think that's necessarily mutually exclusive with it being a good investment for Philadelphia. We know that there's a wide diversity of opinions in terms of this project. There's a lot of very strong feelings. There are folks who have concerns about it and are opposed to it. There's also many folks who are supportive of it, and not just building an arena but building an arena there. One group that we haven't talked about that is supportive of the project is the Midtown Village Business Association, which represents more than 100 businesses in the area that are very excited about what this could bring back, especially when you think about post-COVID and pandemic and how a dearth of foot traffic has negatively impacted their business and how this could really uplift them and help revitalize Market East. Again, I would reference SEIU who is supportive of this project, not because it's just building an arena, but it's because of the location and the opportunity to revitalize Market East and what that could mean for working-class Black and Brown Philadelphians who are their members.
I appreciate that. And also, I just want to hat tip to SEIU. It is a good union and grateful that you all are working together. But I will say that this makes me wonder or just affirms for me what is true, which is this is for your interest. This is not necessarily a necessity for the City, but there's a billionaire interest here. This makes me wonder and ask the question who the building is for, who this arena is for. Are we building an arena in an incredibly inconvenient location because it's good for small businesses in Chinatown, because it'll get us more affordable housing, because it'll make traffic better in Center City or are we building it because HBSE wants to squeeze every penny from us by claiming the real estate around the arena for personal gain with no 9 guarantees that those developments will support small businesses, prevent displacement or create good union jobs for Philadelphians other than by some of the things that you're lifting up just kind of saying but nothing necessarily in writing? Why do the Sixers get to inconvenience the entire city? Maybe that's a bit of a stretch, but I mean that's how it feels, in pursuit of a new home when we have countless families and locally-owned small businesses at risk of being pushed out of theirs, as you said, there are many folks that are naming this. If this was about doing what is good for the city, why not take a serious look at the options available in the Stadium District? Councilman Young lifted up what other options there might be. And if this is about what's good for the city, as Council Gauthier flagged yesterday, why are we putting this project before any serious attempts at a master plan for Market East in Chinatown? The answer is, I believe, it's not about what's good for the city. It's about what's good for billionaires that doesn't work for me and a lot of other folks. We need a revitalized Market East that is not lost on me. It's a densely populated city that needs that revitalization happening on that eastern corridor, but this isn't how we do it. Let's not get distracted by shiny proposals. Let's have a real conversation on how to deliver on these particular shared goals. That having been said, thank you, Mr. President.
Thank you. Thank you, colleagues and thank you, Council President. I know it's been a long day. I also was grappling -- I spent some time over lunch looking at the numbers that we all talked about and had some questions. So I'm curious maybe your -- sorry, I don't remember your name, the finance guy -- MR. LeVEE: Max.
Max can come up. You said -- there is definitely a disparity between numbers that the City has given us and numbers that you said today. You said earlier today that there would be a direct impact of $770 million to the City and $200 million to the School District over 30 years. Can you break those numbers down for us? MR. LeVEE: Break down which numbers, the 770 million or 200 million?
They do not match what we have. So the 775 million to the City, 200 million to the School District. I'm going to pause for one second and also say we've said over and over again, I'd asked this in a previous smaller meeting, how much does the current Fashion District generate for the City. And the answer was $1 million a year which would be 30 million for the 30 years, but the question is what is that number to. I believe that number might only be property taxes because there's a TIF, so let's be honest it should be generating more than that. So I wanted to break down you said there's a direct impact of 770 -- there will be a direct impact of $775 million to the City over 30 years and $200 million to the School District over 30 years. Where do you get those numbers and the $1 million we've talked about from the Fashion District, what exactly does that cover?
I'll ask Max -- the 1 million, you are correct, that is property taxes.
The Municap analysis though took into account the other tax revenue streams. And when we talk about the billion dollars, that is the net new result of the various property streams --
Sorry. Tax streams, in addition to the property tax. So Max can talk about what the work was that they did. MR. LeVEE: Yeah. So the tax revenues we looked at were real estate taxes, wage earnings taxes, business income and receipts taxes, sales and use taxes, liquor taxes, amusement taxes, outdoor advertising taxes and use and occupancy taxes as well as the PILOT payments.
So we don't currently know that total number for the Fashion District right now. We only know the $1 million in real estate. It's important for us to understand when you say we can make 775 million for the City over 30 years, you have to subtract what the total amount is that we receive now. MR. LeVEE: Yeah. And so, when we did our net new impact analysis, we estimated what the existing tax revenues are for the Fashion District today for those tax streams and we reduced that out of our impact. So the net new impact takes into consideration the revenues the City is already receiving today from Fashion District for those revenue streams.
As does the City's studies. And I would suggest maybe we could spend some time together to go through the line items if that would be helpful to explain what was in or what was out. But the City's studies also did go through line-by-line and do the same thing, net out the estimates of what's being produced today. MR. LeVEE: Yeah. And to be clear, also our net new impact analysis excludes tax revenues that we estimate to be occurring today at the Wells Fargo Center that will just be moving to the new arena.
That is helpful too. Thank you. But your -- MR. LeVEE: And that's just like with the City's analysis as well.
Your 775 and your 200 are net new impact analysis numbers? MR. LeVEE: Correct.
Super helpful. I want to take one last second, a point of privilege, to also say I underscore moving the headquarters here to Philadelphia as well. Thank you.
Thank you, Mr. President. Let's jump right to it. Will the Sixers -- will you agree to incorporate the EOP language into your contracts with the contractors to ensure that we're all on the same page, to ensure that your contractors know that we have these goals to be met and that you can hold them liable in your contracts as well because they're not a party to the EOP? It's just you and the City.
So one question I do have is that during the beginning of the year there was a residential component to this proposal. Why was the residential component pulled off the table if we're concerned about development jobs and things like that? I just want to get clarity on that.
The Chair recognizes Councilmember Mark Squilla, author of the bill.
Thank you, Council President. Thank you, Councilmember Young. During our conversations for over the two years we had met with a lot of community members. And initial conversations with the 76ers group and the Chinatown community, they heard a need and a concern about affordable housing. After that concern was done, the 76ers Development Corp., and they could correct me if I'm wrong with my explanation, had proposed adding a residential tower for affordability to address some of the concerns of the Chinatown community. After that was proposed and a design was put forth, we continued meeting with a lot of the folks in Chinatown and they felt that the proposal was not in their best interest. It wasn't a community benefit for them. They felt that the affordability of the project was not something that people in the Chinatown community would be able to benefit from. The numbers of 80 to 120 percent AMI was far outside the range of people from that community. And we mentioned that to the 76 Development Corp. during our conversations and we requested them to instead of building that tower there, to develop on other sites that the Fashion District own, which is the south side of Market Street and build the density on the south side of Market and not as a community benefit for Chinatown for something they couldn't depend on. And in doing that, we got commitment from the Mayor and part of the CBA dollars for affordable housing to transfer a local parcel that was City-owned in the 9th Police District -- the 6th Police District, now it's called the 9th, at 11th and Winter, that working with the Chinatown community to co-develop that site as a true 100 percent affordable housing project that would have approximately 52 units of 30 to 50 to 60 percent AMI. And we thought that that development would reach more of what Chinatown was interested in as far as providing affordable housing but still allow the development team to build density on the south side of Market Street and also help with some of the vacancies that were on the south side of Market Street. So we saw that as a win-win when we were negotiating with the 76 Development team, that we probably spoke to them about a year before they finally agreed to remove that tower from the project. I got a lot of heat and pushback from a lot of the apartment and development community, but I did agree with the Chinatown community that I thought it was not really built as a benefit for them, even though I think the 76 Development Corp thought it was and that it benefited them. Obviously, the density does help Downtown Center City and it does help building retail to make sure we get more people in the area to go to those retail. But during those conversations, I thought during those conversations that it was better to build the density on the south side and build a truly affordable housing project in Chinatown for the residents of that community.
Thank you, Councilman, for that. I appreciate that. The next question has to do with I guess traffic and infrastructure. Again, you all heard the issues that SEPTA has and your proposal only works if you achieve 40 percent ridership on public transportation. And I can tell you that looking from folks from my community who go to the Sixers games, that's a place we go get fly. We're not in fly clothes on SEPTA, right, to get down there. So we're not driving -- I mean, we're not catching the train. Anybody can attest to that. I'm not, my wife's not getting on the train and going to the Sixers game and we only live a couple of miles away. It's not happening, right. So in knowing that, right, in knowing that are you willing -- you have a segment of folks who will not take public transportation for a variety of reasons. Will you commit to the City to some type of fee, some type of charge, surcharge, for traffic management if you do not achieve your goals of 40 percent ridership? Because again, it only works if you achieve 40 percent ridership. So if you only have 30 percent ridership, percent 14 ridership, who does that burden fall 15 on and who pays that cost? 16
Thank you 17 for the question. So obviously we 18 believe that 40 percent is 19 achievable but so does the City. 20 And the City's studies that were 21 conducted independently of ours came 22 to the same conclusion that 40 23 percent is achievable. It's not a 24 foregone conclusion. There's obviously work that's needed to get there --
Yeah. So tell us those things that have to happen in order for that to be achievable.
Yeah. So a SEPTA system and a PAT -- it's not just SEPTA. It's PATCO, right. 15 percent of our fans live in New 16 Jersey. The functioning systems 17 that are safe and reliable as well 18 as the promotion of public transit, 19 the integration of transit. 20 We've looked at a lot of different cities across the country who have developed in conjunction with transit agencies and figured out how to promote the use of transit to make it a seamless interaction, right. So things like as simple as a website or wayfinding signage or including on your ticket information about the use of the transit. Things like that are the things that need to go into reaching that 40 percent goal.
So you all know the issues that we've had with SEPTA. I'm not going to belabor that point. But to think that we can get SEPTA at a position to achieve those goals right now I think is a hoop dream, as I'll call it. Thank you, Mr. President.
You're welcome. Any other questions or comments from members of the Committee? (No response.)
Thank you for your time being here and I expect as we move forward and go through this process you will continue to keep engaging with members regarding questions and concerns that were brought up during this hearing. Thank you for your time for being here.
This concludes the business before the Committee of the Whole today. The Chair recognizes Councilmember Mark Squilla.
And so, our option for a callback will be on the table. We have a significant amount of time to go through this process. We won't be fast-tracking it. So at the request of the member, the sponsor for the legislation, just be on standby.
This concludes the business before the Committee of the Whole for today. I want to recognize Councilmember Mark Squilla for a motion to recess the public hearing until Tuesday, November 19, 2024 at 10:00 a.m.
Thank you, Mr. President. I also want to wish our Councilmember Quetcy Lozada a happy birthday today, for sticking with us. So moved. (Duly seconded.)
It has been moved and properly seconded that the Committee of the Whole will be recessed to Tuesday, November 19, 2024 at 10:00 a.m. All those in favor will signify by saying aye. (Aye.)
The ayes have it. And we are in recess until Tuesday, November 19, 2024 at 10:00 a.m. (Committee of the Whole concluded at 4:00 p.m.) C E R T I F I C A T I O N I, hereby certify that the proceedings and evidence noted are contained fully and accurately in the stenographic notes taken by me in the foregoing matter, and that this is a correct transcript of the same. __________________________________ TANEHA CARROLL