COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, November 29, 2000 2:35 p.m. - - - BILL NO. 000705 and 000706 - Related to Stadiums. (Full text of both bills attached hereto.) PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILWOMAN JANNIE BLACKWELL, Vice Chair COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK J. DICICCO 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, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 11/29/2000 WHOLE - STADIUM BILLS I N D E X William Hankowsky, PIDC. . . . . . . . . . . . F. Pekune, City Treasurer. . . . . . . . . . . 6 R. Tustin, Acting Dir. of Capital Program Off. 20 7 Joyce Wilkerson, Mayor's Chief of Staff. . . . 25 8 Rob Dubow, Budget Director . . . . . . . . . . 32 9 P. McCarthy, Divisional Deputy City Solicitor 69 10 3 11/29/2000 WHOLE - STADIUM BILLS P R O C E E D I N G S
Good afternoon, everyone. The public meeting of the Committee of the Whole regarding Bill No. 705 and 706, and I would ask Mr. McPherson to please read the title of the bills.
Bill No. 000705, an ordinance authorizing the Commissioner of Public Property, on behalf of the City, to enter into a lease agreement with the Philadelphia Authority for Industrial Development providing for the leasing by the City to the Philadelphia for Industrial Development of Veterans Memorial Stadium, including the ground lease of land underneath Veterans Memorial Stadium and obligating the Philadelphia Authority for Industrial Development to finance certain repairs to Veterans Memorial Stadium. Bill No. 000706, an ordinance amending Bill No. 000003, adopting a Capital Program for the six fiscal years 2001 to 2006, inclusive, and amending Bill No. 000004, adopting a Fiscal 2001 Capital Budget, each to provide authorization of certain capital repairs, renovations, and 4 11/29/2000 WHOLE - STADIUM BILLS replacements to Veterans Stadium, as part of said Capital Program and fiscal 2001 Capital Budget. (Witnesses come forward.)
Good afternoon, Mr. Hankowsky. Are you testifying first?
Council President, if I could take just a second of indulgence of the chamber.
I think it would be better if I do this today than tomorrow -- since I think tomorrow might be a little more emotional situation. Tomorrow will be my last day that I will be testifying in front of City Council -- not my last day but my last set of hearing over the last 15 years, and I would like to take an opportunity to publicly thank all the members of Council -- yourself as president, the technical staff, and everyone else for treating me personally in a courteous and professional way in 5 11/29/2000 WHOLE - STADIUM BILLS the cooperation on a variety of projects. And most of the time, we agreed; occasionally we didn't. But it's been a terrific experience, and I would be remiss if didn't take an opportunity to thank Council once before I leave. It's not that I do it today versus tomorrow. So thank you.
Thank you for all that you have done. You have certainly been an asset to the City. And I will tell you, I think we're all going to miss you, and I know that Councilman Goode is smiling and I know he agrees with me, that you -- that we're all going to miss you. And we want to thank you for all that you have done, and I'm sure we're going to see you before you actually --
You will, you will, but thank you very much for those kind words. So let me talk about the matter at hand.
Yes. As perhaps one of the Councilmembers -- maybe the Councilmember 6 11/29/2000 WHOLE - STADIUM BILLS most critical of the testimony that Mr. Hankowsky has presented over the years in support of various projects, I wanted to add my note of thanks. He's always conducted himself in a very professional manner, and despite some of the barbs in my questions -- I didn't think they were barbs, but other people tell me that they might have been, I think he handled himself very, very well. And I just wanted to make sure that everybody understands that the differences we express in City Council have nothing to do with personalities. And I think he really did, on behalf of the City, even though I still disagree with him -- (Laughter.)
But that in matters that he presented to City Council, I think he did act in what he considered to be in the best interests of the City. And I want to thank him for his entire professional, fine, personal manner he's always exhibited.
Thank you very much, Councilman. I look forward to coming back 15 7 11/29/2000 WHOLE - STADIUM BILLS years from now and seeing you here. (Laughter.)
Because you clearly are the institution, an institutional memory.
Excuse me, sir. Councilman Nutter, did you want to be recognized? Your light is on.
I did, Madam President, but I was just kissing a young lady on the cheek here, so I --
There's no 19 one else to be recognized, so we'll proceed. Thank you.
Good afternoon. I'm William Hankowsky, President of the Philadelphia Industrial Development Corporation. I'm here 8 11/29/2000 WHOLE - STADIUM BILLS today to testify in support of Bills No. 705 and 706. These bills complete a process that was begun this past spring to allow for certain repairs to be made to Veterans Memorial Stadium ("The Vet") to extend its useful life. These bills amplify the process set forth in Bill No. 9 82, enacted by City Council March 23rd of this calendar year. Let me briefly describe the content of Bill No. 705. This bill sets up a financing structure for Vet repairs. It does so by the following actions: The City will lease the ground and improvements of the Vet to the Philadelphia Authority for Industrial Development ("PAID"); PAID will issue bonds to finance the Vet repairs; PAID will lease back the Vet to the City and provide the proceeds of the PAID bond issue to the City for the City to execute the Vet repairs; The City will pay PAID a rent equal to the cost of PAID's debt service on the PAID bond 9 11/29/2000 WHOLE - STADIUM BILLS issue; The City will continue to operate the Vet, remain the landlord to the Philadelphia Phillies and the Philadelphia Eagles, consistent with their current leases, which remain unaffected. The proposed structure is consistent with suggestions actually made by City Council in the spring to explore the use of PAID in this transaction. The successful passage of this legislation will eliminate the need of the City to use valuable and scarce City Capital Budget authorization to repair the Vet. We thank City Council for this suggestion, and we are pleased to be here today to say that the use of PAID can work and will be used. This legislation authorizes up to $80 million in repairs to the Vet. This amount would be necessary at a minimum to extend the Vet's useful life to 2010, should we decide not to proceed with the construction of new stadiums. Should we decide to proceed with new stadiums, we only need to extend the useful life through 2003, which is estimated to cost $19.7 million. A copy 10 11/29/2000 WHOLE - STADIUM BILLS of the list of repairs for that amount has been provided to Council, I believe, yesterday, and delineates the 19.7 million of repairs. I would recommend Council's favorable consideration of these bills and am available to answer any questions that Council may have. I believe we have one amendment -- we have two, which I will ask the City Treasurer to let out, which I believe are technical in nature, being provided to us by (unintelligible) counsel.
Good afternoon. My name is Falasha De Olane Pekune (ph.), and I'm the Treasurer for the City of Philadelphia. I wish to offer to Council an amendment to Bill No.'s 705 and 706. The proposed changes on , Section 18 3 of this Bill 705 and of the Veterans Stadium sublease between PAID and the City. Section 3 of Bill No. 705 provides the authorization language that will permit PAID to issue bonds from time to time in an aggregate principal amount not to succeed $80 million. of the said lease provides for the definition of "bonds." The clause being 11 11/29/2000 WHOLE - STADIUM BILLS inserted is: "and amounts necessary to effect any more funding." The reason for this change is to permit the flexibility of effecting of refinancing should economic conditions or structural issues warrant such. Because interest rates are constantly, it was changing virtually impossible to determine what our cost exposure would be in the event there is a need to refinance the debt. As a result, it would be imprudent to subject the issuer, PAID, to what might be, depending on prevailing interest rate environments, unnecessary restrictive financing language. Please note that the proposed ordinance 15 amendment does not change the maximum aggregate dollar amount of $80 million authorized to be spent on Veterans Stadium repairs and improvements. It simply provides the flexibility of executing an economic or structural refinancing on the debt that prospectively may be beneficial to PAID and the City. In Bill No. 706, it's also another technical amendment, and all it is doing is inserting the Bill number, Bill No. 706, that is authorizing the amendment to the Six Year Capital 12 11/29/2000 WHOLE - STADIUM BILLS Program. We have provided copies of both amendments on disk and in hard copy and in black-line form and in clean form for Council this afternoon.
Do Councilmembers have copies of the amendments?
All right, Mr. McPherson, members of Council do not have copies of the amendments.
I was instructed to bring them this afternoon. They're in this box.
And a disk containing the documents. (Copy of amendments distributed.)
Okay. Are you finished? 13 11/29/2000 WHOLE - STADIUM BILLS
No? Mr. Hankowsky, you stated in your testimony, you stated that these bills complete a process that was begun this past spring to allow for certain repairs to be made at the Vets Stadium and to amplify the process set forth in Bill No. 13 82, enacted by City Council on March 23, 2000. Would you please explain how these bills amplify the process provided in Bill No. 82 in light of the fact that the process envisioned in Bill No. 82, in summary, provides the City and the two teams with mutually agreed upon the list of capital improvements, which would be attached as an exhibit to agreements amending the leases in each team. Also, the agreements, including the exhibits, would list the capital improvements, would be subjected to Council for its approval by resolution prior to the execution and delivery of 14 11/29/2000 WHOLE - STADIUM BILLS each agreement. Three, Council would then adopt resolutions approving the agreements. Can you tell me how this amplifies or what I have just read to you as to what Council approved in spring?
I think I can, in part. What was envisioned in the spring, as you recall, was the subject of much discussion, was the use of City Capital Budget authorization, and we actually included $40 million in the approved City Capital Budget. And then we also had a dialogue about this early this fall, when we did the authorization for the voter referendum on the Capital Budget. And what we're doing today is bringing a new vehicle -- I mean, a technique as to how those repairs can get done, so that instead of using the Capital Budget, we can use the technique of having PAID-issued debt, and thereby eliminate the need to put any strain on the City Capital Budget for these repairs. That' is what I meant by "it amplifies and further carries out the process." 15 11/29/2000 WHOLE - STADIUM BILLS As we all are well aware, we also have before us not today but tomorrow the question of whether we would be proceeding with new stadiums or not proceeding with new stadiums. We provided to Council, I believe, yesterday, the list of the $19.7 million in repairs, which would be the list that the teams have mutually agreed to, which would provide for extending the use of the life through 2003, and that obviously makes the assumption that Council would consider in the affirmative the development of new stadiums. If you don't do that, then 19.3 is not the relevant list. So we should have one list if we're proceeding with stadiums. The relevant list, if we're not proceeding with new stadiums, is the report that -- I think the final report that you recall produced, which laid out the approximately $80 million in repairs, which was looking at a useful life extension to the Vet through 2010. And which of those two lists to be consistent with the provisions you read is the appropriate list, in effect, that gets triggered by which of the two scenarios we decide to pursue collectively over the next several weeks. 16 11/29/2000 WHOLE - STADIUM BILLS
Do we have any assurances that agreeing to make the repairs does not obligate the City to make additional repairs?
I think I can speak in one scenario to that question, but not in both. In the scenario where we would develop new stadiums and extend it for three years, the teams have verbally said to me that they are prepared to say that this 19.7 is the cap -- I'll use that term -- of the exposure the City has on Vet repairs, with one caveat, which would be some kind of an emergency safety problem, you know, if something broke that was dangerous and it would have to get fixed that's not on the list. We do not have a similar agreement with the teams under the scenario where it would not develop stadiums. They have withheld agreeing that A is the correct list. I think that's -- I'm only going to reference -- I believe that's, in fact, consistent with the correspondence the Law Department's received. And I'm getting a head nod that that's accurate. So we've accurately portrayed that. 17 11/29/2000 WHOLE - STADIUM BILLS
So, Mr. Hankowsky, can we be led to believe that in your opinion the expenditures of the $20 million will maintain the Vet in a fit-for-habitation state of repair for the next three years?
I'm going to answer in the affirmative, but the phraseology sounds like someone quoted the lease. I'm not a lawyer, so I don't want to interpret the lease, but from a business perspective, that's what the teams are saying. They're saying, do that 19.7, that place will sustain itself through 2003, that's fine. And as I said, I just want to be clear, with the one caveat: unless there's some safety emergency, you know, something just falls and it has to get fixed that would come up that's unanticipated.
Thank you. The Chair recognizes Councilman DiCicco.
Thank you, Madam Chair. Good afternoon, Mr. Hankowsky. The capital improvement summary that we were supplied with that identifies approximately 18 11/29/2000 WHOLE - STADIUM BILLS $19.7 million in repairs, my question is, there are a lot of different items, with a certain amount of costs involved for each item. Are these costs that we are asked to incur as absolutely necessary, are they absolutely necessary for at least the three-year life expectancy of the stadium? I guess my question is -- it's a small item, but by way of example, interior wall resurfacing, painting of the concourse walls in 2, 3, 5, and 700 levels. Is it an esthetic thing that we're doing and we're spending $400,000 just to paint over what may be flaking paint? Does that really make that much of a difference if we didn't paint it? What I'm looking to do is, obviously, see about shaving this million down even 18 further. 19
If it's something that is of public-safety nature, the heating system is definitely broken, you know, we have to do something? Are we putting in a Cadillac state-of-the-art heating system, or will we be putting something in that will at least get it 19 11/29/2000 WHOLE - STADIUM BILLS past the three years and maybe another year as a cushion?
Because you can't determine how long these things would last.
I see some of these things, and I'm wondering, do we really have to paint the locker room?
Right. Let me give a partial answer to that, then I will ask Mr. Tustin to further amplify it since he's actually worked in detail with the design firm and, I think, understands these projects much better than I do. But just so you understand, you might even recall that initially, we had Ewing Cole do it, a three-year number, a five-year number, and a ten-year number. I think the original three-year number was like million. 22
And we have sat down 25 with the teams, in fact, to review that, in fact, 20 11/29/2000 WHOLE - STADIUM BILLS exactly in the spirit of your question, which is, what do we really have to do here to be reasonable but not extravagant? And that led in part to what is now the 19.7 number versus the number. 6 There was also, I think, an 7 understanding in some of these categories where 8 the consultant just said, Okay, here's our 9 estimate of what it is. When you really get into 10 it, you should really kind of go around, and you 11 might actually find out that we don't need to fix 12 every inch of the wiring, there's three places 13 where it's a problem, let's just fix the three 14 places, and that these numbers, in fact, could go 15 down. 16 So I think what's built in here -- 17 contingency's one way to look at it or, you know, 18 worst -- this is kind of the worst case if you had 19 to fix it all, but there's a theory that, in fact, 20 you may well be able to save money on this list. 21 And I'll ask Mr. Tustin to further 22 amplify that and make sure I'm correct when I say 23 that. 24
Good afternoon. My name 21 11/29/2000 WHOLE - STADIUM BILLS is Richard Tustin. I'm the Acting Director of the Capital Program Office. I think Mr. Hankowsky answered the question probably as good as I could at this point. He's absolutely right. Some of the issues, as you've just rose, concerning the resurfacing of the walls, we will look at them in depth as we get to each project. And anything that doesn't have to be done will not be done. But I need to remind everyone that the Vets Stadium is an open structure; there is no 13 inside and outside. Essentially, it's all open. So an interior wall is still exposed to the weather in many, many cases. So it may not just be a situation where there's some flaking paint and it usually doesn't look good; there could be other issues as well, with it constantly being wet through driving rain or whatever. That moisture would seep into concrete structure of the block. So those areas would have to be sealed just to protect the structure. But, again, we intend, as we get into each and every project, to look at it in detail and determine what the minimal amount of work we 22 11/29/2000 WHOLE - STADIUM BILLS would have to do in order to get us through the next three years, and restrict ourselves just to that work. The numbers you see here are, as Mr. Hankowsky said, a worst-case scenario, and they do include a contingency of approximately percent to each number. So, therefore, things 9 that you will uncover as you get into construction 10 that you didn't anticipate, and because the 11 building is as open as it is, we really don't 12 think we'll need that full 20 percent either. 13 So I can only see these numbers going 14 down. 15
Okay. And how 16 would we know that? I mean, is that something 17 that would be reported back to Council? I mean -- 18
Whatever protocol or 19 procedure that we want to develop, you know, we 20 would be happy to follow in that. Some things happen during the actual construction that you -- you take down a part of a ceiling or a pipe or whatever and you find --
And you find something else. 23 11/29/2000 WHOLE - STADIUM BILLS
-- something that you have to do right away, yeah. But we can develop some sort of a periodic reporting process or paper that we could forward to Council on a regular basis, with updates, periodic updates, monthly updates, bimonthly updates, however you would like to see them, on what's happening, what decisions have been made, and what things we may have uncovered.
I don't know if I necessarily would need to see a punch list.
But I just was curious that we're not at least making repairs or resurfacing things that we really don't need to do, just for the aesthetic value, because in three years, we're going to tear it down.
Right, right. If I can also add to that answer, going with the new stadiums, the Eagles, now that their new practice field is complete, will be moving out of their offices shortly into that new space. Some of the items we have in here included their office space. 24 11/29/2000 WHOLE - STADIUM BILLS
Okay, that was my next question. Thank you. Thank you, Madam Chair.
When is it anticipated that they will be moving into the new facility for their office? The Eagles, that is.
We have talked to the Eagles organization and they believe that they will start moving in early February, after the season. They will not be moving in all at once, lock, stock and barrel; they'll be moving over a long period of time. They have not yet identified for us what that time will be. That's very important for us as we put together construction schedules, knowing when they're going to be out of certain spaces, so we're anxious to get that information as well. 25 11/29/2000 WHOLE - STADIUM BILLS
Thank you. Councilman, are you finished with your questioning?
Thank you. The Chair recognizes Councilman Rizzo.
Thank you, Madam Chair. I'd like to follow in the same line with a major item. About a week, ten days ago, the Finance Director indicated at a briefing that a letter of intent, a commitment letter, was sent to a sole-source vendor to replace the playing surface at the existing stadium. And here, it's listed at a total estimated cost of approximately $2.5 million. I'd appreciate an explanation on how this award to this sole-source vendor occurred prior to today's hearing and the approval of these expenditures.
My name's Joyce Wilkerson. I'm the Mayor's Chief of Staff. I don't know if you've received a letter; there was a letter that was sent to the 11/29/2000 WHOLE - STADIUM BILLS Council President that included the letter, I guess, that was provided to the sole-source vendor. I've brought extra copies.
It was a letter that explained the process that was used. If you don't mind my distributing it.
No. In fact, I'd like to have one too. I don't remember it.
When we had the last briefing, the question was raised about, you know, why was the award letter issued and what was the authority for that, the letter? And also, you wanted a copy of the letter that was actually issued. An explanation of the process is included in my letter, and a copy of the award letter. And Rob Dubow can answer in more detail -- provide a more detailed explanation about --
I, unfortunately, had not received this letter, and I guess it was appropriate to send it to the President, but I honestly -- 27 11/29/2000 WHOLE - STADIUM BILLS
The Administration normally responds when the questions come up like that.
Yeah. The issue -- and, obviously, I don't have time to read this letter at the moment. In following Councilman DiCicco's questioning, I understand that this contract was let out without competitive bidding, it was a sole source, and apparently there was a deal to make temporary repairs to the seams of the existing surface, and I understand the value of that repair was approximately 30 to $50,000, and the vendor made the repairs with the stipulation, if they got the deal, there'd be no charge to the City of Philadelphia for those particular repairs. I have a problem with that in the fact that it's a sole-source deal, but I guess the basic question here is that the repairs, from what I understand, and the consultant's report have no 24 technical data to support the decision. And in my conversation with the City Solicitor, it's 28 11/29/2000 WHOLE - STADIUM BILLS basically just a decision whether to replace it or to -- to keep it is just a call, a call. And my comments are that the repairs apparently meet the conditions of the lease. Since there's no technical data to support a decision to replace it, why would we be spending $2.5 million to replace the turf if the turf there, after repairs and continuing repairs, could meet the conditions of the lease? I just don't understand why even if the potential of a suit from a athlete that's injured, if he's injured or she's injured on a particular surface that meets the terms of the lease, I have a tough time spending $2.5 million in replacing something that is in excess of what the lease requires.
Councilman, I'll try to answer that question, and that's several questions that you have just asked. To my knowledge, there was no deal in any way with the vendor of the Astroturf product that's down right now concerning not payment of repair costs for an award of the contract. We had an independent design firm go out and evaluate, I believe, eight different 29 11/29/2000 WHOLE - STADIUM BILLS products as far as -- replacement products for the turf. We narrowed that down to two products that we thought could possibly work, and those two products we discussed with both the Phillies and the Eagles. One of the driving decisions concerning the product that we selected had to do with the convertibility of the stadium. As you know, Veterans Stadium has telescopic stands that have to get pulled out and put back, depending on whether the Eagles playing or the Phillies are playing. And a lot of times, because there may be a game on a Monday night, a football game, and a Phillies game the following day, these conversions have to take place very quickly, in less than 17 hours. 18 So we had to find a product that we 19 could use that could meet that requirement, as 20 well as be something that the teams would accept 21 as a playing surface. Also, the surfaces have to 22 be accepted by the National Football League and 23 also the Major Baseball Association -- I think 24 that's MBA. The Astroturf that was down there was 30 11/29/2000 WHOLE - STADIUM BILLS at the end of its useful life. It had to have repairs done. Those repairs were being done on an as-needed basis. But essentially, it was evaluated to be at the end of its useful life. One of the problems with the turf isn't the surface itself but the padding below the surface. It's a padding that's used that provides resiliency and also cushion to both teams in a playing situation, so that when they do fall, you know, if they get hurt, it's part of the cushion of the product. The padding itself was, in the opinion of our consultants, was completely gone, as far as any resiliency left in the product. And the surface itself, in many, many areas, had been worn to the point where it would be very difficult to repair it in any way. And so, whether we were to continue on with a three-year scenario, where the teams stayed there for either three years or ten years, it was felt by all that that surface needed to be replaced, even if it was only for three years. It was at the end of its useful life.
The fact that the 31 11/29/2000 WHOLE - STADIUM BILLS vendor that made the repairs got the award, and in fact, if the vendor hadn't gotten the award, we would have gotten a bill for the repairs of approximately 30 to $50,000. You're not aware of that?
No, I'm not aware of that, that we would not have to pay that bill if they got the award, I'm not aware of that.
Well, then, unfortunately, I'm disappointed that you're not aware of it, but I was briefed by the City Solicitor and the Stadium Manager yesterday, and in fact, that's exactly what occurred. And, also, the consultant's report on the fact that the useful life of this surface has ended its life is beyond. There's no technical -- there's no technical information to support that. There's nothing suggesting that there's a thickness of a certain number of millimeters when it was first installed versus the condition of it today. I was told yesterday that it was just basically a call that the surface -- that the playing surface needs to be replaced. And in my opinion, if the repairs of 32 11/29/2000 WHOLE - STADIUM BILLS that particular field meet the terms of the lease, I can't imagine spending $2.5 million, even if we had to spend another $100,000 in the next three years to repair it and keep it to the terms and conditions of the lease agreement. I think that's money better spent than spending 2.5 million. And to the Chief of Staff, since we haven't had an opportunity to read this letter, I'd appreciate you explaining to Council how this deal occurred, how a award has already been given before you have the money authorized to make the repair.
I've asked Rob Dubow, the Budget Director, to provide the technical explanation.
Good afternoon. Rob Dubow, the City's Budget Director. Councilman, what we did was partially certify a contract against the existing stadium capital appropriations under the theory that if this legislation is approved, we would reimburse the General Capital Fund from PAID.
One of the things that -- you know, after the meeting we had last week, 33 11/29/2000 WHOLE - STADIUM BILLS we have held up on even taking this partial step. There are any number of projects that need to proceed at this point if, in fact, there are going to be repairs made during the period between seasons. We've held off on that and are not doing design work on them and are not, you know, have not retained the experts to prepare the bid packages because we understand that, you know, that Council interpreted, you know, this step as an act of bad faith, and so it held up on even taking this interim step. There are time constraints, however, if the bid packages are to be put in place so that the work can proceed timely. You know, we do need to, you know, sooner rather than later some go-ahead. It was our assessment that this is a way of not committing fully to the project but not losing so much time that, in fact, you blow a whole construction season.
Could I get an answer to this question? After the repairs, the value, as I understand it, of the repairs is between 30 and $50,000. Do those repairs today meet the lease of the that the Phillies and the 34 11/29/2000 WHOLE - STADIUM BILLS Eagles have with the City of Philadelphia? (Witness comes forward.) (Panel confers off the record.)
We had to discuss something. My understanding is that if a determination is made that the playing field is not in a good and playable condition, that it would be because the pad underneath is -- no 13 longer has the resiliency it needs or the surface itself is worn to the point where it doesn't provide proper traction or any of the other play characteristics of the field. Then, in fact, we would in fact be in violation of our lease to keep it in a good and playable condition.
Could you provide the Chair the technical data to support that decision.
Because I was, again, told yesterday that the consultant's report provides no technical data to support the 35 11/29/2000 WHOLE - STADIUM BILLS decision. So I don't know how we could make a decision for -- to spend $2.5 million for three seasons without any technical support to make -- to support that decision. And if, again, it's just a giveaway, then let's be honest about it.
You're welcome. The Chair recognizes Councilman Cohen.
I'd like for a moment to follow up the question of Councilman Rizzo. Is it your judgment that the $2.5 million that Councilman Rizzo was referring to was part of what I understood was a commitment of $6 million per year for annual repairs?
Is there a general lease requirement with respect to repairs?
And is there any provision for any amount of money to be paid? Or is it just a description of conditions that have to be maintained?
Has the cost of that been generally within about 6 to $7 million a year?
There's been, actually, a lot of variation. There were some years where it would be more than six, some years where it would be less.
Well, was this repair work that was done, that Councilman Rizzo is alluding to, was it considered to be a part of the requirement of the lease?
Do we go through any process that determines whether or not it's required by the lease, or is it possible for the 37 11/29/2000 WHOLE - STADIUM BILLS teams to call up and say, We would like to have a color change, and will you do that for us? And then you say, Yeah, sure.
No, I don't believe we would go that route to change colors. The repairs actually would have to be done under the terms of the lease in order to keep the field in good and playable condition. The $30,000 that was spent to repair seams or to repair some of the portions of the turf -- and I believe it was in a very isolated area, if I'm not mistaken -- would have to be done in order for the City to --
What is the portion that Councilman Rizzo was referring to in addition to that? I will yield to you, Councilman Rizzo. 'Cause I understood you referred to something involving $2.5 million.
Councilman, the 38 11/29/2000 WHOLE - STADIUM BILLS scenario is that the playing surface needed some immediate repairs because on national television, there were comments made about the uneven seams on the pitching mound and some other areas of the playing surface. A vendor was called in and the vendor made the repairs. The value of those repairs, the temporary repairs, is between 30 and $50,000. How I understand is that the vendor that got this letter of intent made the repairs, said there will be no bill if we get the deal. If we get the deal for $2.5 million to replace the playing surface, you won't get a bill. And I asked specifically during the briefing if we -- if that particular company did not get the deal to put this new $2.5 million playing surface in, the City then would, in fact, get a bill for between 30 and $50,000 for those temporary repairs to meet the terms of the lease agreement after the repairs were made. I was told that the playing surface met at that time the terms of the lease agreement between both the Phillies and the Philadelphia Eagles. The replacement of that playing surface now is beyond 39 11/29/2000 WHOLE - STADIUM BILLS the terms of the lease.
That was my understanding. Is there any disagreement by the City as to that?
Yes. My understanding is there is -- we do have a disagreement with that statement. We felt, our consultant, after evaluating the field as part of assessment report and also doing the investigation into the replacement products, we did feel that we had to replace that field in order to keep it in a good, playable condition.
I -- I -- I again ask you, if you're telling me that you based this decision on a consultant's report to spend $2.5 million, nowhere, from what I understand both verbally and reading, in the report does the consultant apply any technical data specifications of the turf when it was originally installed, readings at various locations throughout the playing surface of the condition of it today. There is no technical data, and I've asked for the technical data to support the decision. The decision was based on, Well, you 40 11/29/2000 WHOLE - STADIUM BILLS know, let's change it. We can either say yes or we can say no, so let's just spend it, let's just spend it to make the place look pretty. I was told that part of the decision was the image of the City. Well, when the Good Year Blimp of the old Vet, I hope that the camera person then turns the camera to the two new stadiums we're building, and I think that will neutralize any criticism that we get about the condition of the existing stadium that we only have to live with for three more years, hopefully.
We will provide you with all of the technical information that supported the decision.
Well, I think the basic issue raised by Councilman Rizzo is that in view of all of the discussion in March about the repairs that might have to yet be done, it does seem like a question of whether good faith was complied with when the project cost you $2.5 million, almost half of the average annual repair costs, was entered into without any knowledge by City Council. And I think, from my point of view, that seems to be a very basic issue 41 11/29/2000 WHOLE - STADIUM BILLS raised here that Councilman Rizzo was raising and saying, Prove to us that it was really necessary. And there doesn't seem to be any proof that it was necessary.
We will get the additional information that supported -- there are a number of discrete studies that support the Ewing Cole report. We have given the Ewing Cole report -- my understanding is, there are various technical experts, you know, engineers and others who have reports and documentation that support the conclusions in Ewing Cole.
No. There was a report distributed in the fall -- where are we now -- in September that had provided a discussion of the conditions at the Vet. It was circulated to Councilmembers at the time the Administration sought an increase in the bond authorization limits. What we have circulated more recently are refined numbers for short-term repairs and long-term repairs.
It seems to me you 42 11/29/2000 WHOLE - STADIUM BILLS didn't need long report; you just needed some information saying, This comes to our attention that such-and-such is required. Before we proceed, we want to make sure that Council is fully advised. The letter could have gone to the President of City Council, and she undoubtedly would have asked for some proof as to its need, and you would have furnished it, if it existed, and if it didn't, then there would have been discussion. There's a concern that it seems that Councilman Rizzo raises is a constant refrain from this side of the City government that the Administration makes its decisions, ignores us completely, and later comes in with some kind of story that this was really needed. For example -- and now I go to your question, Madam President. I thought your first question today was superb. I have to say, Mr. Hankowsky, while your manner was fine and professional -- (Laughter.)
I thought your answer had absolutely nothing whatever to do with 43 11/29/2000 WHOLE - STADIUM BILLS the question, and it didn't answer the question at all. And that was -- you know, she was asking you what -- how do these bills carry forward the process that was characterized by the legislation we passed last March? And your answer had nothing whatever to do with that question. You told us about PAID, many more things than the involvement of PAID was concerned. Could you go to your first question, Madam President?
I recall it, I believe. I thought I said, Councilman, and perhaps I was not clear -- I think you need to make a distinction between the various components of this Vet repair transaction. Component one is, how do we pay for it? Up to this point, prior to today, the actions that we have taken collectively, starting with the spring action, the fall action, the voter referendum, had anticipated the use of the Capital Budget to do that. I think we all acknowledged that that was less-than-satisfactory course of action. 44 11/29/2000 WHOLE - STADIUM BILLS So we have developed this alternative so that the source of funds would be paid bond issued proceeds and that we will preserve, save for other uses, the Capital Budget authority.
If I can continue. I'd like to finish my response, please. Thank you. So, one is how do we fund it, and this legislation amplifies how we fund it. So I was trying, in part, to respond to my testimony because my testimony was quoted back to me. The second is this issue of what are we fixing, what are we going to spend the money on? And we basically believe now that we have two scenarios or two lists. One is the 19. 7 million, as was just discussed. It's kind of a worst-case, or the 80 million. Which list do you end up going with is a function of a decision that is before us, but not today, which is the decision of, are we extending the useful life for 3 years or for 10? Once we make that decision, three versus ten, then I think you likely would then 45 11/29/2000 WHOLE - STADIUM BILLS need to memorialize that decision with the teams, if in fact that is possible, in what is, you know, called for in the legislation, an amendment to the Vet lease. And then -- and then, seek Council approval for that amendment, which is required. I'm not, you know, somewhat -- someone will be back, because that will be a necessary step. And with that would be whether it's attached to it is the list or the 80 list. 11 So I thought I was trying to be 12 responsive to kind of cover the components of what 13 has transpired. 14
In carrying out the 15 terms of the lease, where would the funds come 16 from? 17
I think I can say that 18 -- and, obviously, someone else can jump in -- 19 the City built the Vet and has the --
I'm not asking for that; I don't need a long history. Where did the fund come from the annual report?
Under the Capital 46 11/29/2000 WHOLE - STADIUM BILLS Budget.
What was ever done in March to justify the Administration thinking that this is the time to shift three years, the next three years from the Capital Budget to PAID? What Councilman Nutter raised, and I believe it was he who raised a whole series of questions about not taking all of the money out of the Capital Budget --
-- for that 80 million and then stripping the City so it wouldn't have money for anything else. I didn't hear anything from him with respect to taking funds for annual repairs from a bond issue. Isn't that what you're proposing?
Yeah, I think I'm going to ask Rob to step up because maybe we're misunderstanding each other, and I think Rob seems to understand the question better than I do, so 47 11/29/2000 WHOLE - STADIUM BILLS I'll let him respond.
In the spring, when we were testifying about the Capital Budget, one of the comments from Council was, why are you eating up our limited debt-incurring capacity with this requested 80 million in repairs? Why don't you examine whether there are ways to finance these repairs that don't involve eating up debt- incurring capacity?
Eating up debt-occurring capacity. Because if we run it through the City's General Capital Fund dollars, it eats away at the 324 million or 342 in --
That's right. But if we fund it through PAID, it doesn't go against that debt-incurring capacity, so we thought by going through PAID, we were actually responding to your concerns that -- Council's concerns about our debt capacity.
And what's your proposal with respect to if it's only going to be needed for three years, that would be -- 5
Unless there's no 12 stadium deal under your version. 13
That's right. Our proposal 14 is whether we need to do 80 or 20. 15
So let's say at 20, 16 what is your proposal in this scenario? 17
So that we don't use up debt-incurring capacity. That's 20 million --
I'm talking about what was said related to the $80 million, a huge new amount of capital investment that's going to be made.
This 20 is essentially a 49 11/29/2000 WHOLE - STADIUM BILLS portion of that 80. The 80 was if we're there --
But it's not a portion of the 80 if we're only dealing with the three-year lease.
Well, it is because it's the amount of that 80 that we need to do if we're in the facility for three years.
But you would need to do that approximately anyway. You've told me that each year, it's either a little more or a little less than 6 million. And 3 times 6, when I went to school, added up to 18.
And that's awfully close to the 19.7 over a 3-year period.
Well, yeah, but it's still $20 million that we now can use our debt-incurring capacity for other things. In other words, it's 20 million more that we can use in the City's General Capital Fund.
So you are expressing in this bill a whole new idea that the annual costs for repairs ought to be funded by 50 11/29/2000 WHOLE - STADIUM BILLS bond issue instead of coming out of the Capital Funds.
Well, it's not a whole new concept; it's a concept that was actually raised by Councilmembers in the spring.
I didn't hear a year about these annual expenditures to maintain a lease.
I heard something with respect to an $80 million figure that the Mayor wanted to guarantee to the teams, which would be spent to refurbish the Vet if there were no new stadiums.
The 80 million for 10 years was 8 million a year; 20 million for 3 years is a little under 7 million a year.
When you suddenly bring in that, in view of the fact that the Mayor at one of our briefings said that we might think in terms of negotiating a new lease for the three 51 11/29/2000 WHOLE - STADIUM BILLS years. Why would we negotiate a new lease for the three years? Is it to free the teams of the obligation of pay that 4 million to 6 million that should start rolling into the City, beginning in February, from the super boxes? Is that what you're aiming to do, to negotiate a new lease that will relieve the teams of that payment during this three-year period?
I don't think so. I think when we -- 'cause I -- I don't want to --
Well, if I could -- if I could be responsive. I don't think we're talking about, quote/unquote, renegotiating a new lease; I think what we're talking about is, in the scenario of new stadiums, is negotiating what would be the Vet lease termination amendment. And by "termination," in other words, new stadiums are coming, we're going to end your obligation to be in the Vet, our obligation to maintain the Vet, you go in the new building. We're going to have to think about 52 11/29/2000 WHOLE - STADIUM BILLS things to address in that amendment because now we're in a construction cycle. So, okay, we think that's going to happen in 2003 and 2004. But if a crane falls down and there's a construction delay and the time is longer and there's a (unintelligible) about what happens in that scenario. So it will deal with how do we end the relationship. But this -- this 20, or 19.7, has simply to do with what Rob said, which is to eliminate any further draws on the City's Capital Budget to do repairs to the Vet for the next several years, use the PAID technique, and have those dollars available for whatever the Administration and Council wish to use the Capital Budget for.
Well, may I ask you, has there been any discussion whatever between any of the teams and the City? And by the "City," I mean including PAID, PIDC -- I don't want any technical separations. Has there been any discussion between those groups with respect to the 4 million minimum payment, somewhere between 4 to 6 million, we're told, due to the City 53 11/29/2000 WHOLE - STADIUM BILLS beginning February 2001 in relation to the super boxes?
The only discussion has been the City and PAID, and everyone saying to the teams, We're not prepared to discuss it.
What does that mean? It means that the City is insisting on the payment of that money?
No. What I mean, Councilman, is that the (unintelligible) people have said -- the (unintelligible) people have raised previously with us, let's start talking about the Vet lease amendments. We said, We're not doing that now. What we want to do now is figure out the nature of a transaction for new stadiums. And we'll deal with the Vet lease amendment later. Later is upon us, but we haven't had a negotiation on the Vet lease amendment, we have not.
Well, I don't know -- you may interpret something as a negotiation and something else as a conversation, so I don't 54 11/29/2000 WHOLE - STADIUM BILLS know whether that means there's been no talk. Is the City in a position where it is expecting to get paid that 4 million-plus beginning with February?
I mean, at this point -- at this point, the lease is the lease.
Because, I'll tell you, I can't understand for the life of me why these two bills are before us today, in view of the stadium bills, in view of the confidence expressed by the Administration that the stadium bills will pass. We'll see about that one way or the other. But in view of that, and it's right on our schedule, beginning tomorrow, what sense do these bills make?
Because the Administration is not presuming that Council is going to approve the stadium deals.
We have an obligation to begin making repairs to the facility in the event there are no new stadium deals. We want to 55 11/29/2000 WHOLE - STADIUM BILLS put in place a financing mechanism that will enable us to do that. And that's why we're here today. (Unintelligible, parties talking over each other.)
Very respectfully to you because you know how highly I regard you --
I that think that answer's hogwash. The answer -- everybody's going to know the answer by December 14th, and you're sitting there seriously expecting me to say that this is the serious reason we can't wait. You'll know by probably December 7th, because Mayor Street certainly knows, in his role as Councilman Street and President Street, that Council can't pass something without it having been passed, you know, after it came out of committee successfully.