COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE OF THE WHOLE - - - Room 401, City Hall Philadelphia, Pennsylvania Tuesday, March 7, 2000 1:10 p.m. - - - BILL NOS. 000079, 000080, 000082, 000083, 000084, and 000085 - - - PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILWOMAN JANNIE L. BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK J. DI CICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN W. THACHER LONGSTRETH COUNCILMAN RICHARD T. MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN BRIAN J. O'NEILL COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 (215) 561-2220 I N D E X BILL NOS. 000079, 000080, 000082, 000083, 000084 and 000085 PAGE JOSEPH RAUSCHER, AFL-CIO ..................... MILTON SEGAL ................................. 16 ROBERT DUBOW, Budget Director ................ 25 3
Good morning everyone. This is the continued public hearing of the Committee of the Whole regarding Bill Nos. 79, 80, 82, 83, 84 and 85. Our first witness is Phillip Berg. Is Mr. Berg in the audience? (No response.) Joe Rauscher?
Would you take the witness table, please? (Applause.)
Good morning. Please identify yourself and proceed with your testimony.
Good morning, Madam Chairperson. I have copies of my testimony.
We'll have them distributed. Would you proceed, please?
Madam President, Members of City Council, ladies and gentlemen. I am Joseph Rauscher, President of the Philadelphia Council AFL-CIO. This Council and our affiliated local 4 Bill Nos. 79, 90, 82, 83, 84, 85 unions represent almost 225,000 of the most dedicated working men and women in all of Philadelphia. We're a diverse group. We're hotel workers. We're printers. We work in food stores. We make clothes. We care for the very young, the very old, the sick and the afflicted. We teach children who are our futures. We are fire fighters and police officers who risk their lives to protect us all. We are white-collar and blue-collar city workers who provide the many city services that we often take for granted. We are the building trades, the men and women who skills and strengths have transformed the skyline of our great city and are creating the Philadelphia of the 21st Century. Madam President, we have a great city that we all can be proud of, and organized labor leads the way in that pride. But we know that there is still much to do. We must continue to rehabilitate our neighborhoods. Every person who chooses to live in our city deserves a decent place to live, the security of safe streets, the assurances of hospital and health care near their homes, affordable daycare and a public school system 5 Bill Nos. 79, 90, 82, 83, 84, 85 that is second to none. But to provide all these things cost money, and to provide that money we need investments in our city by individuals and groups that want to be a part of the renaissance of our great city. We will have a great opportunity this summer to show Philadelphia to the world when we host the Republican National Convention. The investment the city is making for this convention will pay off a hundred times over if we put forth our best efforts to showcase our great city and its residents and work force. The AFL-CIO is proud of the working relationships we have with our corporate partners who provide employment for our members. Without them and the partnership we have built, Philadelphia, its people, and its institutions would not be holding center stage this summer. However, we've taken two of those institutions for granted, like part of our family that we always expect to be there. Sure, we fight with them, we call them names, we say never again, and the next day we start the love affair all over again. The teams that we grew up. The teams that we booed and cheered, hated and love, but always 6 Bill Nos. 79, 90, 82, 83, 84, 85 came back to. Of course, I'm talking about the Phillies and the Eagles. Now, these team seek the city's help in building two new stadiums. Some in this Council have raised questions as to the wisdom of the city supplying such help. Let me remind you not too long ago there was strong opposition to a first-class convention center for downtown. Yet today we have one of the finest facilities anywhere in the country, a facility that not only spawned hotel construction and a restaurant renaissance, but is bringing millions of people and hundreds of millions of dollars to Philadelphia. We have two other teams in town that a few years back some were saying the same things about. Today they play in the new First Union Center that outshines any arena in the country, so much so that the Republican Convention will be held there. The point that I'm making is that public investment in convention centers, arenas, entertainment complexes, and yes, sports stadiums, are investments in our future that we cannot let 7 Bill Nos. 79, 90, 82, 83, 84, 85 slip away. (Applause.)
We're now in an age when sports teams are an integral part of our economy. Picture a city without hockey, basketball, football, or baseball. Picture waking up one morning in September 2007 and checking the box scores to see if the Phillies, the Fargo, North Dakota Phillies, to see that they still have the lead in the pennant race. Sounds strange? Could happen. As cities like Baltimore, Cleveland, Boston, Minneapolis, and many more, including our sister city Pittsburgh move toward or have completed new stadiums, we ar mired down in politics, politics this city has not seen in many years. There are some, Madam President, in this body that don't realize that the Mayor's election is over and their guy lost. (Applause.)
There are some in this body who feel there address should be City Hall, 2nd Floor, not 4th Floor. To them I say, get over it. We're dealing with apples and oranges here, the capital budget and an operating budget. 8 Bill Nos. 79, 90, 82, 83, 84, 85 We need the one to keep Philadelphia growing, and we need the other to run the day-to-day workings of our great city. As we approach the spring and summer of contract negotiations, we will be working with Mayor Street and our unions to assure that our city workers who make this city run and the teachers to whom we entrust our children get a fair and decent contract. (Applause.)
Madam President, I urge you and the Members of this great body to put politics aside for the good for our city and vote for the approval of the Eagles practice field. Then again to vote in the very near future to approve the building of two new stadiums to keep Philadelphia the greatest city in this country. (Applause.)
If I may add, Madam President, the Executive Board of the Philadelphia Council AFL-CIO met yesterday and by unanimous resolution passed that we support the practice field and the new stadiums. (Applause.) 9 Bill Nos. 79, 90, 82, 83, 84, 85
Thank you Mr. Rauscher. I don't think that there is a Member of City Council who has that indicated that they are not in favor of the new practice facility. We have not gotten to the issue of the new stadiums. This is merely about the practice facility. And you're injecting politics into this. I think every Member of City Council was elected, and that's what we're doing, our job, too. So we're all in favor of doing the practice facility. But it's how we get there.
Well, anything we can do as far as organized labor goes, we will help.
We are presently working with the Administration on a number of amendments, and hopefully, before the end of the day we will know whether the Administration is in favor of those amendments. But I just want to make the record very clear that I don't know of anyone in this Chamber that is playing politics. We are here to do a job, and that's exactly what we're trying to do.
I'm very glad to hear 10 Bill Nos. 79, 90, 82, 83, 84, 85 that, Madam President. (Applause.)
And anything that our office can do to assist you in that, we will be happy to do it.
We appreciate it that. Thank you. Councilman Mariano.
Thank you, Madam President. Mr. Rauscher, thank you for your oratation (sic). That's a new big word I learned.
No, it's not just the building trades. As my testimony said, it's a cross-section of every working person in the city.
What percentage of the AFL-CIO is the building trade?
The building trades, approximately 20 percent. 11 Bill Nos. 79, 90, 82, 83, 84, 85
Hotel workers, garment workers, hospital workers, printers, food handlers, supermarket employees, restaurant workers.
And like the Council President said, we're really not debating stadiums at this point, we're debating the practice facility. And everyone in Council seems to be in favor of the practice facility, it's just how we get to that point which may differ and that's the beautiful thing about this legislative body, how we differ and get to different things. There's how many flavors of ice cream that that company has?
Seventy-seven, whatever. We got all different flavors in here. So I appreciate you coming in here, but you know that I'm like a home-grown flavor when it comes to the AFL-CIO. But what happened in here about the practice facility is the Council President is a district councilperson in that area so she would have great -- you know, if it was my area, I would and I've been told that a number of times, and we 12 Bill Nos. 79, 90, 82, 83, 84, 85 understand that. But I also understand you coming here and speaking for your membership as I understood Mr. Cronin the other day. Although I didn't agree with everything Mr. Cronin said, he still has that right to come here and he has that fiduciary responsibility to his membership. But the 80 percent, taking the building trades out of the mix because I'm skewed when it comes to the building trades because my brother is in the building trades, my father was in the building trades, my cousins are in the building trades, my neighbors are in the building trades, my friends are in the building trades, and some women I like in the building trades, but not that way. The other 80 percent, those people are people who will benefit by this practice facility and more so by the stadium if we get to that. The printers will print the score cards hopefully, it will done by Philadelphia region people. Pat's people from District Council -- what's Pat's number.
274. The people will work there for the food service people. His people make up the hotel rooms and chamber maids and 13 Bill Nos. 79, 90, 82, 83, 84, 85 the bar tenders.
And the most important part is it increases the tax base and that tax base then goes into an operating budget that we need to get the fair and decent contract for our city workers. So, you know, we have to keep growing both sections.
Thank you, Joe. Thank you, Madam President. No further questions.
Thank you. The Chair recognizes Councilwoman Tasco.
Thank you, Madam President. Thank you for coming in, Mr. Rauscher, to share your thoughts about the practice facility. I'd just like to say you mentioned the Convention Center, and I was on Council, it was one of my pieces of legislation when I came into Council. And I support the President in what she says in that we do have to take our time to deliberate. That's why we're a legislative body. And if you might remember, you might not remember, it took over a year to do the Convention Center and we came out 14 Bill Nos. 79, 90, 82, 83, 84, 85 with a very, very good deal for the citizens of Philadelphia. We got a training program, we got a lot of minority participation, and it worked to the benefit of this city. So it is a great convention center, not only for people who come here, but also for the people who live and work in Philadelphia . (Applause.)
So our job here today is to make sure that when this piece of legislation goes out of this Body that it benefits the taxpayers of the City of Philadelphia as well as the workers. (Applause.)
I'd like to know and think that my constituents voted for me because we do deliberate and I do take my time to make sure what we're doing is in the best interest of them. And so I regret that we had to interject the thought of politics. The election is over. There were people who were on different sides and there were people who did what they had to do. That was November. We want to you to let us know the election is over, but other people have to recognize that it's over and we don't want to hear those 15 Bill Nos. 79, 90, 82, 83, 84, 85 comments again. Thank you very much. (Applause.)
If I might add, Madam President, to the Councilwoman's remarks. Yes, she does represent the taxpayers, but 95 percent of the members of the AFL-CIO live, work, pay taxes in this city, so we are the taxpayers. (Applause.)
Thank you. Are there any questions or comments from members? Thank you, Mr. Rauscher.
Good morning, Mr. Segal. Please identify yourself for the record 16 Bill Nos. 79, 90, 82, 83, 84, 85 and proceed with your testimony.
My name is Milton Segal. I'm a citizen of Philadelphia all my life. I'm '82 years old. And I have a plan that would make Broad and Spring Garden the ideal spot for the stadium. (Applause.)
Excuse me, Mr. Segal. Mr. Segal, our hearings are not regarding the stadiums, but the practice facility.
Well, I've been trying to make this statement for quite a while, and I feel that it's very important for the city because it's completely revolutionary. Why I state that the stadium would be ideal is because easy access from North Philadelphia with the subway and South Philadelphia, plus closeness of the Ben Franklin Bridge. When I first heard of the stadium, they were planning on closing off 15th Street and having a parking lot on Delaware Avenue and bussing the patrons in. Now, my plan would eliminate all the problems with the neighbors and everything. The plan is basically to make the stadium one level above street level. That would make entrances and 17 Bill Nos. 79, 90, 82, 83, 84, 85 exits on all streets, Broad Street, 15 Street, 16th Street, Spring Garden Street and Callowhill Street. Plus, there would be ramps going down to lower levels and a person that would come to the stadium to see the game and spend a lot of money for that wouldn't mind spending 5 or 10 dollars to park their car, knowing that when the game is over, they take ab escalator down to the level where they parked their car, drive on the street that is best for them and know that their car is safe. I feel that would cover everything. It's completely revolutionary. It's never been done. I did a lot of research. I went through the internet and got all things. There's all kinds of stadiums in the United States, but nothing -- when I hear that in South Philadelphia, there's plenty of parking down in South Philadelphia, but it's within 15 minutes of the stadium. Now, with mine, it's immediately. Plus, it alleviates the parking in the area. I guess that's all about to say. I want to thank you all for listening to me. (Applause.)
Thank you very much. 18 Bill Nos. 79, 90, 82, 83, 84, 85 Phillip Berg, is Phillip Berg in the audience? (No response.)
Do we have anyone else to testify on these bills? Do we have anyone to testify? Do you want to approach the witness table, please? (Applause.)
We'll have them circulated. Thank you. Kindly identify yourself for the record and proceed with your testimony.
My name is Pete Matthews, I'm the president of AFSCME District Council 33 representing 13,000 Philadelphia City Workers. . (Applause.)
Good morning, Council President Verna and other Members of Council and everything present. First, let me thank you for letting everybody in our unions in today. I know it was some kind of problem, but all our members 19 Bill Nos. 79, 90, 82, 83, 84, 85 appreciate it. And thank you Councilwoman Blackwell, thank you.
I just want everyone to know that we have to abide by the laws also, and we did have someone in from L & I this morning. They feel that it is really very unsafe to have more than 265 people on this first floor. So as I said, I knew I would start a war today, so I thought I would let everybody in. But hereafter, we're going to have to abide by the law like everybody else.
As I said, good morning. I'm here today to advise Council of our union's concerns about proposed financing for the building stadiums for Eagles and Phillies. Let me be clear from the start. I'm not here to oppose building any sports facilities, nor am I here to be drawn into a fight with my fellow union brothers and in sisters in the building trades union who I hope will build stadiums wherever and whenever they are built. 20 Bill Nos. 79, 90, 82, 83, 84, 85 (Applause.)
I am here merely to ask City Council to exercise some judgment and restraint and acknowledge the sacrifices made by city workers before rushing to any decisions on this matter. Quite frankly, it is the position of our union that City Council should not commit to funding the proposed stadium out of proposed budget surplus until such time as City has settled a fair contract for the city workers who helped to create that budget surplus. (Applause.)
The members of AFSCME District Council 33 sacrificed a lot in contracts in 1992 and 1996. What our union members gave up in work rule changes, wages, and benefits helped to put this City back on the stable financial footing for the first time in years. These dedicated city residents and workers deserve first consideration in matters concerning the City's budget surplus for one very important reason: They have earned the right to a fair contract. (Applause.)
As you debate whether and 21 Bill Nos. 79, 90, 82, 83, 84, 85 where to build stadiums and how to finance this project, I want to remind you that our union's contracts with the City expire on June 30th and we are looking forward to reaching a fair settlement. We do not believe that we should be tied in any way to the stadium financing deal. Our District Council 33 members are dedicated to helping the City put on its best face when our own international union holds its convention here in June with 5,000 delegates. (Applause.)
And when the Republican party holds its convention at the end of the July. I was part of the effort to bring both of these conventions here, and the last thing that our members District Council 33 want is to see any unnecessary disruption of city services. That is why we are willing to work hard to negotiate a fair contract in a timely fashion. I have been warned to be concerned about a move by Mayor Street to use the stadium financing proposal to tap the budget surplus in order to pay for the City's commitment for Eagle's practice facility and the football and baseball facilities. 22 Bill Nos. 79, 90, 82, 83, 84, 85 I have also be told that the Mayor intended to spend down the budget surplus on stadium deals so he could tell us in our negotiations that the City had no 5 more money for raises and benefits for our members. Given these warnings, I took my concerns on the matter directly to the Mayor and asked him to assure me that he did not intend to pursue this strategy. Mayor Street told me there was no way the public dollars or any part of the budget surplus was going to be used to finance the stadium project. He told me that in no uncertain terms, and I want to take him at his word in the same way I want to take him at his word when he told me that he wanted to settle a fair contract for City workers. I want to trust him and I want to him, but I am not leaving anything to chance. That is why I am here today. (Applause.)
I want to make it clear to the Members of Council, to my friends in the building trades union, to the taxpayers of the City and Mayor Street that District Council 33 is opposed to the use of any part of the City's budget surplus for the purpose of financing the stadium deal unless 23 Bill Nos. 79, 90, 82, 83, 84, 85 and until the City has reached a fair contract that recognizes the sacrifices made by the members of our union. (Applause.)
If we are able to settle a fair contract with the City, I can assure you that our union will seriously consider lending its support to any responsible economic development projects, including building stadiums, that will create jobs and expand the tax base of the City. We will not support any such projects, however, if we believe that they will be built on the backs of our members who have already sacrificed enough over the past eight years to put the City back together financially. (Applause.)
As far as this project is concerned, I am not yet convinced that it is not too dependent on a commitment by th City to tap into the budget surplus in order to succeed, but I am willing to be convinced otherwise. I would ask, then, that City Council take a close look at Mayor Street's proposal and the bills and amendments being proposed by Members of 24 Bill Nos. 79, 90, 82, 83, 84, 85 City Council to make sure that they do commit the budget surplus to a stadium building project at the expense of a fair contract settlement for City workers. Thank you, Council President Verna and the Councilmembers who have given me this opportunity to speak today. Thank you. (Applause.)
Thank you, Madam President and good morning, Mr. Matthews. Actually, Madam Chair, I would like to get some. AUDIENCE MEMBER: Speak up.
I'll talk a little louder. Madam Chair, I actually don't necessarily have a question for Mr. Matthews. I think his testimony is very clear and very direct. There were some statements that he made that I would at some point like have an opportunity to ask if there are any representatives from the Administration to respond to some questions 25 Bill Nos. 79, 90, 82, 83, 84, 85 regarding the financial issues because there seems to be a little disconnect between some of the statements made and --
Is anyone from the Administration present to respond? Mr. Dubow. Good morning. Kindly identify yourself for the record.
Good morning. My name is Robert Dubow, I'm the City Budget Director.
His statement was that he had received assurances with regard to the budget surplus or, I'm assuming, any City General Fund dollars regarding commitments for either the practice facility or proposed football or baseball facilities. Now, in the proposed five-year plan, Fiscal Year 2001 to Fiscal year 2005, are there any revenues designated for the labor contracts or any Bill Nos. 79, 90, 82, 83, 84, 85 proposed labor contracts or labor contract settlements?
Well, if there are specific revenues dedicated, are there any general revenues dedicated?
So the statement in the five-year plan on Page (vii) that says "To date the City has been able to afford these increases" -- talking about the current contract. "However, no 14 funds are included in this plan to cover increases for any bargaining unit beyond expiration of the current agreements," that statement is still true?
Yes, it is. What we've said to the unions, and we've actually had this discussion with Mr. Matthews, is that as we get into negotiations and we understand the cost of any negotiated agreement that we will take another look at the plan and see how we can afford those agreements. (Audience reacts.)
I'm sorry, I didn't 27 Bill Nos. 79, 90, 82, 83, 84, 85 hear the end of your statement.
So you would have to come back -- so you're saying you would have to come back amend the five-year plan?
Does the five-year plan include any funding for the City's share of any proposed stadium projects or even the practice facility?
The plan includes car rental tax, which is projected to start at 4.5 million and that's dedicated to this. It also assumes that by having the practice facility in the City that we will retain wage tax revenues from the teams and that those revenues would also used to help pay the 28 Bill Nos. 79, 90, 82, 83, 84, 85 debt service on the repairs at the stadium. That's not for a new stadium deal, it's for repairs to the Vet.
I'm sorry, I didn't understand that last part of your statement.
The revenues that the plan assumes having the practice facility in the City will generate or will save are dedicated in the plan to repairs at the Veteran's Stadium. They're not dedicated to a new stadium. There's nothing in the plan about a new stadium.
The wage tax you're talking are General Fund revenues, correct?
They are General Fund revenues that we would lose if the teams did not practice in the City.
I understand that, but what did that have to do with what you said earlier? I thought your statement was the retention of the wage tax was dedicated to repairs 29 Bill Nos. 79, 90, 82, 83, 84, 85 of Veterans Stadium.
Well, dedicated might have been the wrong word. What we're assuming is that without the teams practicing here, we would lose those revenues so that doing the repairs and paying for them with debt service is actually revenue neutral for the five-year plan.
But the teams are not required to practice in the City today; is that correct?
And the teams may not be required to practice in the City even after the building of the practice facility; is that correct?
What's the maximum amount the City is willing to spend with regard to new stadiums?
I think what the City would want is that any deal will be revenue neutral.
Well, any costs would be 30 Bill Nos. 79, 90, 82, 83, 84, 85 paid additional revenues generated by those new stadiums.
Now, with regard to the surplus, is it true that in the five-plan before us that the surplus is already targeted to be spent over the next five years down to a level of -- presently the surplus is $205 million; is that correct?
And in the FY 2005 year in the five-year plan, you're showing that the surplus will have been spent down to $4.9 million; is that correct?
And again, that's without taking into consideration any wage settlements because you haven't targeted any money for wage settlements; is that correct?
So you anticipate on 31 Bill Nos. 79, 90, 82, 83, 84, 85 spending the surplus in the five-year plan already; is that correct?
Let me ask one last question. I'm sure my time may be coming to a close. Does the City's proposed capital program include any capital repairs to Veterans Stadium beyond FY '02?
Well, in the capital program that I have, 2001 to 2006, the green book, it's showing $40 million in 2001, it shows $40 million in 2002, and it shows no funding in 2003, 2004, 2005, or 2006 in the capital program that I have.
Or funding that 32 Bill Nos. 79, 90, 82, 83, 84, 85 hasn't been spent for previous years.
Are you anticipating doing any repairs to Veterans Stadium beyond 2003?
And in the current proposal before us there is debt service associated with the proposed $80 million to be spent on Veterans Stadium in the two fiscal years as well as debt service to be paid on the buy-back of the practice facility; is that correct?
Are those dollar figures included in the five-year plan?
So you have provided for funding on the contingency if we have to buy back the practice facility and put capital dollars into veteran stadiums, you've made preparations for those in the five-year plan, but you have no 22 targeted revenues to settle wage contracts; is that correct?
That's correct. (Audience reacts.) 33 Bill Nos. 79, 90, 82, 83, 84, 85
Thank you. The Chair recognizes Councilman Ortiz.
Madam Chair, I just have one follow-up question. Mr. Matthews' statement, he mentions public dollars and that he's been given assurances that no public dollars will spent on any part of these dollars. Any money we spend as a City comes from the taxpayers, doesn't it? Right?
Any money that we spend in either buying back the facility, construction, is public dollars; is that true?
That's right. And the facilities and the new stadiums will be generating more dollars for the General Fund, too. So the theory is that any deal will be at least revenue neutral.
That's what you're 34 Bill Nos. 79, 90, 82, 83, 84, 85 hoping for?
Thank you. Are there any other questions? The chair recognizes Councilman Mariano.
Thank you, Madam President. Mr. Dubow, for those of us that didn't attend Wharton School of Financing, where does the money come from for the stadiums and this person's money? There's operating budgets capital, budgets. Give is like 12th grade and below level, high school graduate and below.
Well the simplest explanation, it all comes from our General Fund one way or the other. Or either paying directly for operating costs or we're paying debt service for the bonds that we would issue for capital projects. So in those funds either come from tax revenues, from reimbursements from other governments, or from fees. And our assumption on this project is that it will 35 Bill Nos. 79, 90, 82, 83, 84, 85 generate tax revenues that will at least pay for our costs.
Are we projecting the NFL salary cap going from 50 million to a hundred million?
We're projecting an increase in the salary capital. I'm not sure exactly what we're projecting it goes to.
And if the NFL salary cap does raise itself, whatever the projection is, I mean that would go directly to pay for Mr. Matthews' members and Mr. Cronin's members raises, or would it build the stadium or --
That's right, it would go to both. It would go to any costs of the General Fund. And the General Fund's largest costs are personnel costs.
Well, let me micro this right down because when you were talking my son called me to tell me he got detention for going late to school today so I missed part of what you were saying. I caught the end of Councilman Nutter's questions. You collect taxes from me for working. 36 Bill Nos. 79, 90, 82, 83, 84, 85 You collect taxes from everyone in here for working, and that money is paid to city wage taxes, less than five percent now, right?
It helps pay the people that collect the trash on my street, right? It pays for the firemen the policemen?
That's correct. It pays for all City services. AUDIENCE MEMBER: And we pay taxes.
That's right. We all pay all taxes. We pay too much taxes, but my question is here to get him on the record. A lot of people aren't real sure where all this money comes from and goes for. I mean, Mr. Matthews has a conversation with the Administration or the Mayor and he has to take them on his word because he's never had that. Now, if that doesn't work the way Mr. Matthews wants to see that or Mr. Cronin, however that happens, then he has something to go back on. At this point, we don't know what's going 37 Bill Nos. 79, 90, 82, 83, 84, 85 to happen. All we do know is Veterans Stadium needs to be fixed up and we put $80 million away. Now, if that doesn't happen and everything gets through here today or tomorrow or whenever that happens, that $80 million, could that be used to help Mr. Matthews' members get their -- is that capital money?
There are a couple of answers to that. Yes, it's capital money on which we would pay debt service. The debt service comes from the City's General Fund.
Explain what debt service is for those people in this audience who don't understand what debt service is.
Debt service is the repayment of principal and interest on the bonds that we issue.
It's not real money. We borrow money, we don't have money laying around to even pay me; we borrow money.
That's what we pay to borrow the money. 38 Bill Nos. 79, 90, 82, 83, 84, 85
We understand it now. It's in a language that we understand. So that's what you have to do, you got to pay this money back for borrowing money. The banks just don't give us money just because they like us or don't like us, correct?
My question is can we pay Pete's people with the money we save from building this practice facility and from building this if we do decide to get to that? Or actually the money we're going to save the $80 million?
The money that we would pay on that debt service, there are a couple things. First of all, one way or the other there's some repairs we have to make to the Vet. So even if we don't do this deal, there's some money that's going in that direction.
We were going to make repairs like if it's a heater we're going to fix the heater, but we're not going to put a whole new heater in if we're going to change the place.
So if we change the 39 Bill Nos. 79, 90, 82, 83, 84, 85 place, we're not worried about a new heater, we just want you to be warm for the next couple of seasons.
And then the other part of the answer is that those expenditures can be used in any way; but on the other side of it is if we don't do the repairs, we wind up not having teams in the City, we lose General Fund revenues. So in the long run everyone here winds up getting hurt if we lose those revenues.
This is way-out question for a budget director, and if it's a problem for you to answer, that's pretty much up to you. But if we don't do these stadiums, and everybody thinks we probably will get to that, I want them to have a good contract, because your members live in my district. We're not going to sit here and lie or say anything, but the Eagles do leave -- not the Eagles. If we don't get to that point. AUDIENCE MEMBER: They suck.
They're going to have a 10 and 6 season next, I guarantee it. Then you'll be happy for that. But if we get to the point where we 40 Bill Nos. 79, 90, 82, 83, 84, 85 don't build these stadiums and then we have $80 million, we're not going to be $80 million in two years; we couldn't do that if we wanted to. So we'd have to work on that. But do you believe that there are things that haven't done for them where they just might want to break the lease anyhow? Is that an option?
That's fair. Another question. We talked about the surplus, the $4.9 million surplus?
We have $4.9 41 Bill Nos. 79, 90, 82, 83, 84, 85 million now. In '91 it was what? There was a lot of cross talk.
Why do we have a deficit? I mean, you went to the schools; I didn't. I don't have to believe you, but I think you're pretty educated.
We had a basic imbalance between our revenues and our expenditures.
It's much like balancing your checkbook at home, right?
You can't spend more than you make or you get in big credit card debt or you wind up owing somebody down the street, right.
One or the other. So that's pretty much what we do but on a bigger level?
But that's broken down so ordinary people can understand. So there will be money. 42 Bill Nos. 79, 90, 82, 83, 84, 85 AUDIENCE MEMBER: How did you get out of the deficit?
I can answer that. They got out of deficit by screwing your members on that last contract. (Applause.)
Did I just say "screw" in City Council? I can't believe this. I've been known to say things. I'm sure that's not going to happen this time because I'm looking at Mr. Matthews smiling. I'm sure he's got something up his sleeve like a big convention here in the summer and possibly nobody negotiating any kind of labor contract. We don't want anybody to have their city workers on strike during the summer. (Audience reacts.)
But we're basically back to the checkbook and we're balancing checkbook.
So Mr. Matthews and Mr. Cronin and everyone else in here have people that are smart enough to figure this out. So we know what's in the budget and we know what's not in the budget. They knew there was a deficit before. That's why the Administration said before -- and believe me, I don't think it was morally right. I'm not playing to the crowd, but I came from a labor background. But what happens is, they have people who study, they know it's in the budget and they know what's projected. We know what's projected. So if someone promises a president of a district council something, how many times can they get you? Once, only once. Hopefully, that won't happen. We've got to go on here and we've got to do other things. As much as I expected Mr. Cronin to come the other day to say that, I expect Mr. Matthews to do his job, too. Because if I was in that district council, I wouldn't vote for either of them if they did the opposite. That's the beauty of this whole process. But as long as the number crunchers realize what we're doing, and as long as we can get our own people like these young people here to study the numbers to make sure they're not 44 Bill Nos. 79, 90, 82, 83, 84, 85 lying to us because those people that aren't capable to study the numbers hire people that can. So nobody's fooling anybody. We know what's in the budget. Pete knows what's in the budget. They deserve a good contract. And that's all I'll say on that. (Applause.)
My last question, Madam President. Someone said this a long time ago. We're not making sausage here. This stuff comes in looking one way, as Councilwoman Tasco just told you, and comes out looking another way because that's what the process is all about. Now, I know you're sitting there and beads of sweat are coming down your head saying "What is this guy asking me?" That's why I let you off the hook a little because you're only the point man here. You're doing your job, just like they're all doing their job. They're concerned about their job. So that money will be there. We could sit down for the rest of the year and figure out why we can't do something, but we can't actually jump ahead to the day Pete's contracts up and say, "You know what, the Administration screwed them again. They 45 Bill Nos. 79, 90, 82, 83, 84, 85 did it again." That's not going to happen. (Applause.)
Let me tell you why that won't happen. Let me give you the most important advice why that won't happen, because the guys sitting on the second floor only one his office by 1.4 votes a polling place, 1.4 votes. That's me and my wife going deciding we don't want to vote for someone. And that's you and your wife, and him and his wife, and so on and so forth. So anybody that wants to do this job after -- you got him four years. The guy wants to do eight years. I would love to negotiate your contract with terms on your side, on your side. So as far as I'm concerned, and that's just my opinion --
I think the Mayor has said he's committed to having fair contracts.
But Councilman Nutter's questions are very fair. And because it looks unfair to these people sitting here with their banners going "You say there's really no money, but where does the money come from?" I know you understand. And I don't know why I understand finally; by osmosis, where this all 46 Bill Nos. 79, 90, 82, 83, 84, 85 comes from. It's not real money, folks. But it's your money. It's the tax money you take down. They never take that money and hand it to Mr. Dubow. John Street never touches that money. Anne Verna never touches that money. God's Sake, they don't let me near that money. (Laughter.)
You know why? Because that money is not real money. They move it around. The bankers see the money. Believe me, there's money somewhere. Now, Nutter, he's smart enough to figure out where that money is. And if it's hidden, Michael knows where it is. And that's a compliment, Councilman Nutter. There's money there and there's going to be money there. Because if there's not, you guys get screwed again and what happens? You don't vote for this guy for Mayor in four years. He's not Mayor in 4 years, it's that simple, right? Thank you. (Applause.)
Thank you, Madam 47 Bill Nos. 79, 90, 82, 83, 84, 85 President. Mr. Dubow, I want to return a moment to the issue of revenue neutrality which was raised by Councilman Nutter. Is it the Administration position for the record that any subsidy, potential public subsidy for the construction of new stadia will be in fact revenue neutral as it relates to the operating budget and to the five-year plan?
Now, is it the Administration's position for the record that any public subsidies spent on the construction of new stadia will in fact be absolutely revenue neutral?
So in other words, there will be no additional General Fund dollars outside the computation of wage tax and other tax revenues that relate to the construction and maintenance of the two teams in the facilities in the City and that we will not be spending additional general fund dollars over and above that neutrality?
Thank you very much. 48 Bill Nos. 79, 90, 82, 83, 84, 85 I just wanted to make sure I got that on the record. Thank you.
Thank you. The Chair recognizes Councilman Rizzo.
Thank you, Madam President. Mr. Dubow, the follow-up on the question, where is the money coming from, can you explain to me -- right now we don't know where the Eagles facility is going to be or do we know where the Phillies stadium is going to be located. In the event that those stadiums aren't built on land presently owned by the City of Philadelphia and we have to buy an Acme facility or the tea warehouse in South Philadelphia, where does the money come from?
I guess it would depend on how the deal was structured. It would most likely, I guess, rolled into bond issue and then we'd be paying debt service on it.
It would go back to the same analysis of looking at the revenues generated from the new stadiums. 49 Bill Nos. 79, 90, 82, 83, 84, 85
At this point, don't you think we should know what those numbers are?
We haven't gotten into negotiating a stadiums deal, which I think is part of the reason this hearing is on a practice facility and not on the stadiums in general because we're not far enough along in that process to answer questions like that.
You're welcome. Again, we are here today to consider the practice facility, not the stadiums. I've given everybody latitude so that everybody could have their voice heard. But as I said, from here on, we simply talk about the practice facility. At this time, the Chair recognizes Councilman Goode.
Thank you, Madam President. I hope you will give me a little bit of 50 Bill Nos. 79, 90, 82, 83, 84, 85 latitude also.
Since everyone was given that latitude, I would certainly afford it to you.
Mr. Dubow, let's talk about revenue neutral. Is it or is it not true that not only has this City spent hundreds of millions of dollars on the last several years on economic development projects, but they plan to spend hundreds of millions of dollars over the next several years?
The City spends a substantial amount of money on economic development projects, yes.
So we can simplify, getting back to Councilman Mariano's questioning, I think he was along the right path. Let's discuss some of the economic development financing. There is several million dollars in a practice facility right now from the economic stimulus program. Can you tell me the source of those funds?
It's economic stimulus dollars that came from the General Fund.
But how did it come 51 Bill Nos. 79, 90, 82, 83, 84, 85 from the General Fund, out of what sources? There was attach link (ph) sale and the sale of port proceeds; is that correct?
For the record, having been on the other side of this, it's sale port proceeds and attach link sale created a pot of money up to $100 million, some of which went to the School District, others which went to an economic stimulus program. Could that money have been used for labor contracts? (Applause.)
So we don't want to go down that path again, but other money that was spent, particularly on hotel development, HUD 108 funds, could you explain where HUD 108 funds come from?
I'd actually rather have someone from the City's Economic Development side talk about that because I don't know the details.
Let me save some 52 Bill Nos. 79, 90, 82, 83, 84, 85 time. Having been on the other side again in the executive branch HUD 108 funds are funds that are borrowed against future community development block grant funds, secured against future community development block grant funds. Could those dollars been borrowed from the federal government for labor contracts?
The answer to that question is no. On the first source of funding, the economic stimulus funds, some funds could have been used for labor contracts depending upon how the money flows into the General Fund. Other money which is borrowed, whether it's from federal government or whether it's from other private sources cannot be used for labor contracts. Rather than just the term revenue neutral, can we as we begin to discuss this project talk about how we make it revenue neutral in terms of packaging and financially?
Thank you, Madam Chair. No further questions. 53 Bill Nos. 79, 90, 82, 83, 84, 85
Thank you. Are there any other questions or comments from Members of Council? The Chair recognizes Councilman Ortiz.
All the money for the debt service comes from the General Fund?
A lot of monies that we may spend on either the practice facility or the stadiums later on will go and will be produced by issuing a bond; is that correct?
And those bonds will have to be -- and the debt service from that will have to be paid from the General Fund?
And since we don't have any idea how much it's going to cost, because we don't have any idea -- last night there were 400 people in South Philadelphia complaining about citing and what that might mean. Since we have no 23 idea what it might cost in terms of where this place might be at, those two stadiums, the cost can go much higher than we anticipate right now; isn't that 54 Bill Nos. 79, 90, 82, 83, 84, 85 so?
That's exactly it. You cannot make any predictions. So you cannot make any predictions as to how much money from the General Fund will be needed in order to be able to finance any deal that we may come to; is that true?
Well, what I've said is that it's too early to look, to be able to project either the revenues or the expenditures, but that the Administration's position is that the revenues that this will generate will be able to pay for those expenditures. That's the approach we're going to take in the deal.
Councilman Ortiz, I just don't think we're being fair to Mr. Dubow. We're talking about stadiums.
Thank you. Are there any other questions or comments from Members of the Committee? 55 Bill Nos. 79, 90, 82, 83, 84, 85 Hearing none, this Committee will stand in recess until tomorrow, Wednesday, March the 8th at noontime. Thank you.
The School District hearing that was supposed to follow will be recessed until Wednesday at 2:00 p.m. Thank you. (Adjourned at 11:20 a.m.) - - - 56 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of March 7, 2000, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE OF THE WHOLE ___________________________ Lisa C. Bradley, RPR and Notary Public