Right. Anytime you issue debt, there are costs associated with it, and so anytime we draft ordinances to Council to request approval to do capital projects to incur debt, we 91 11/29/2000 WHOLE - STADIUM BILLS carve out a portion. With respect to the cost of issuances, we don't know until we're closer to the marketing date.
So we could estimate, but that number will change, but it's not included in the aggregate amount for the --
What's the total cost to the City for the $80 million transaction?
Since it's a commercial paper program, it's going to be a variable-rate debt. I can't tell you right now until we're actually in market. And let me add that because it's a commercial program, our exposure is limited to how much we draw down. So, for example, if Month 1, we draw down $2 million, our obligations are that $2 million. Month 2, we draw down an additional 2 million, and now becomes net 4, so it's really would be very difficult to tell you what the exposure would be until we actually have the program running. And it will change based on our draws.
All right, thank you. 92 11/29/2000 WHOLE - STADIUM BILLS I think you were trying to answer the why don't we just do $20 million --
That's the list that we have and see what happens going forward because we don't know what happens after that.
Right. I can respond, I think, in part to sort of some of the business reasons we're -- we want to do this, which perhaps the State from legal and otherwise. From the business perspective, if you're in a world where you're looking to increase the useful life of the Vet for ten years, you're going to develop a rehabilitation repair program, which is going to look at instead of just patching for waterproofing for our crack, we come in and do a more comprehensive, perhaps overall waterproofing to make sure that you don't get further deterioration -- you know, not just solve the problem in the short term, but solve it for a ten-year cycle. So what you want to do -- and one of the most difficult parts of this is doing this in way while the facility is, quote, occupied, with 93 11/29/2000 WHOLE - STADIUM BILLS your most significant window is a kind of January to April window. So that what you would might well want to do is not -- you know, the way this works is you take the -- I'm going to use 20 6 instead of 19.7. You don't just do the 20 and 7 say, Okay, now we're going to stay for 10 years, 8 let's add. You actually might change the way you 9 do even the first 20 because you're extending the 10 life for a different period of time. And so you 11 might want the capacity to award the contract to 12 fix all of the wires or, you know, replace the 13 transformers or whatever, and you think you should 14 do that now versus wait. 15 So I think -- 16
Does that change 17 the 19.7 number, or is that actually adding on to 18 the list? 19
I'm talking that you 20 might well want to be in a scenario where you were spending more than 19.7 in calendar 01. If you were doing the 10-year scenario, I think --
We're not doing the 10-year scenario. I mean, the 19.7 is not based on the 10-year scenario. 94 11/29/2000 WHOLE - STADIUM BILLS
No, no, no. I was saying, why do we have the bill allow up to 80. 'Cause if Council says, Let's not do new stadiums, then on December 14th, if that's still the schedule that we're all working from, then there would be a capacity to look at this and say what we need to do is really think about a 10-year cycle now and have a commercial paper program set up to do that, have the mechanics all in place to do that.
I mean, if somehow, some way, there aren't stadium deals down 14th, end of the year, whatever the date is going to be, I mean, don't you have a fairly significant amount of work that would have to be done to really figure out what we're going to do going forward? And the planning and the scenarios and what the real money is in dealing with the teams and what they have not agreed to in essence --
You'd be beyond 95 11/29/2000 WHOLE - STADIUM BILLS $19 million. I mean, you're not going to solve that problem in January '01 --
When the original assessment report was done, we went through and we did a visual inspection of every system within the building. We looked at the maintenance records of the work that had been done and in the maintenance to the equipment within the building, and we looked at the age of each one of the systems in the building and tried to make some determination as to what the useful life of that system was and what would have to be replace and what would not have to be replaced. And that's how the original assessment was generated. You're absolutely right. If we don't go forward with this, as we do the design packages for each one of these projects, we will then have 96 11/29/2000 WHOLE - STADIUM BILLS to do further in-depth investigation into each one of those systems to see in more detail what has to be done and what doesn't have to be done. You're absolutely -- that's exactly correct.
So I guess that -- my last question, at least for the moment, would be then, why don't you just wait, or why don't we do these relatively concurrent with the stadium proposals or transaction, know whether you have a stadium deal or not, and borrow through the commercial program what you need? As opposed to the mythical $80 million? If we have stadium deals, you're not spending $80 million at the Vet. More than likely, you're probably going to spend 20.
So then the bill 23 would say 20 and not 80. Or it may be a function of what the Chief of Staff Wilkerson talked about, which is a 97 11/29/2000 WHOLE - STADIUM BILLS bill that has either triggers in it or various scenarios based on actions to be taken.
My understanding is that it's -- you know and the Council President can verify this -- that the plan is not to report this out today, that she is interested in moving along the same track. And that by the time those bills are reported out, we may have clarity. So, you know, we may have to structure this as an either/or.
I mean, if the stadium bills on, you know, midnight of the 7th or, you know, whatever -- the 6th into the 7th, or if we're back in here on the morning of the 7th, I mean, if you know that those bills are going to be reported out of committee, then it seems to me that you do know what needs to be in here 80, 60, 20 whatever the number's going to be in here -- 80, 60, 20, whatever the number's going to be -- and you amend it to reflect the fact that you now know around the room the bill's coming out. 98 11/29/2000 WHOLE - STADIUM BILLS
That's right. If the plan is not to report these out today, then I think you're right, that, you know, as long as it's resolved one way or the other or with the mechanism that provides for both by the time it's reported out, that addresses the Administration's needs.
All right. Thank you. That's fair. Thank you, Madam President.
Thank you. Are there any other questions from members of the committee? (No further questions.)
May I ask the City Treasurer to please come to the witness table and explain the ordinances, please. Not the ordinances, but the amendments. I'm sorry, it's getting to be that time of day. (Witness comes forward.)
Okay. The amendment that we're asking to be considered is inserting a clause on , Section 3 of the ordinance that basically authorizes the financing of the 99 11/29/2000 WHOLE - STADIUM BILLS $80 million for the capital expenditures to the Vet. The clause reads that we wish to insert says "And amounts necessary to effect any funding," which is on the fourth line of Section 3 of the ordinance. What this clause allows us to do is to permit a refinancing of this debt prospectively. For example, if interest rates drop, it will give us the ability to go in and refinance at a lower rate, which would create savings for the City, so our cost of borrowing drops. Without this clause, this does not permit us to do this, especially if we borrow the full $80 million. That is why we're respectfully requesting this amendment. And this same clause is also in the lease on in the definition of "bonds." Under the definition of "bonds," we also want to include amounts for refinancing and refunding as well. Again, the City's always looking for opportunities to save us cost on this exposure as costs of borrowing, and this would permit us in the changing interest rate a (unintelligible) to 100 11/29/2000 WHOLE - STADIUM BILLS do that, if there are.
Thank you. Are there any questions from members of the committee regarding the proposed amendments? (No questions.)
Thank you. Is there anyone else to testify on these bills? (No response.)
Seeing none this will conclude the public hearing. We will now go into -- oh, I'm sorry. The Chair at this time would like to recognize Councilwoman Blackwell for a motion.
My understanding was that these bills were not going to be voted out of committee today, that they're being held?.
But we were going to amend the bills at this time.
Madam President, is a motion in order for the 101 11/29/2000 WHOLE - STADIUM BILLS amendment?
Thank you. Madam President, we submit an amendment to Bill No. 706 and 705.
705 and 706. I'm sorry. Have you made your motion? I don't think we hear it.
Madam President, we move that the amendments to Bills 705 and 706 be adopted.
In line with my view that the maker of the amendments have a right to submit amendments in whatever form they choose to, I will be voting for this amendment; it has 102 11/29/2000 WHOLE - STADIUM BILLS nothing to do with the merits one way or the other.
Thank you. All in favor of the adoption of the amendments will say aye. Those opposed, nay? The ayes have it and the amendments have been adopted, and Bill No.'s 705 and 706 will be continued until tomorrow morning at 9 o'clock. Thank you very much. We're going to recess -- the hearing and the meeting will be recessed until 9 o'clock tomorrow morning. Thank you. (Adjourned at 4:28 p.m.) - - - 103 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Wednesday, November 29, 2000, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE OF THE WHOLE BILL NO.'S 000705, 000706 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter