Committee Hearing, January 27, 2005

Okay. Going back to Mr. Banner for a second. The Eagles have paid and are willing to pay all change orders that were Eagles approved?

Yes.

KUD, are you willing to pay all change orders that were approved by KUD?

What we haven't done is finalized the change orders. That's the process that's ongoing right now. As soon as we can close those, yes.

Repeat that for me. Repeat your answer. My question was, are you willing to pay out all change orders that 166 01/27/05 - PARKS - RES. 040912 were approved by KUD?

And I said that what we were doing right now in the process of mediation is creating those change orders so that they can be paid.

And that money is going to -- without giving a definitive answer or having to -- that money is going to exceed the whatever little amount of money that the Eagles may owe you?

If it does not create a change order to the Eagles then it would create an excess demand, which would require us to fund that amount.

Do you expect that it's going to exceed whatever small amount of money the Eagles may owe you? In other words, they're change orders that were approved by KUD that the Eagles are not responsible for that is not going to come from whatever money the Eagles owe you. Are you going to pay that money?

If when we get done with the process of issuing change orders the 167 01/27/05 - PARKS - RES. 040912 answer is yes.

Mr. Banner has been very helpful in his testimony in terms of saying what he's paid, what he's responsible to pay, what's outstanding. There's not much of a dispute between what he says is outstanding, what you say is outstanding. He's been very clear about what change orders, that they didn't approve all the change orders. It's very clear that somewhere between KUD and TKM there were change orders that were approved. As you said, you thought that we were confused by the testimony from the contractors. You purposely tried to confuse this panel by suggesting that you were going to pay for the change orders that you approved from the Eagles money. (Applause.)

The change orders that are approved through the mediation process, some will flow to the Eagles.

I'm talking change orders that were approved in the 168 01/27/05 - PARKS - RES. 040912 subcontracting process. I know you claim you're all still working on the mediation, but you did in fact approve some change orders.

Change orders that we have executed, change orders that we have executed, have been through the process and have been funded by both the Eagles and KUD in the part of the $363 million that Joe mentioned that he has paid. All of those have been paid.

I understand all that. My question to you -- and I don't know whether you're going to answer it directly or not, but we can get some answer from you that will be helpful in this process. I'm assuming you know that there are change orders that you approved as KUD that will exceed the amount that is owed to you by the Eagles. Are you then responsible for that and will you then in fact pay it?

We have not executed those change orders.

Thank you.

Councilman Rick 169 01/27/05 - PARKS - RES. 040912 Mariano.

We're getting somewhere, but we're obviously not getting Paula's or Luis Cruz's money. There's more questions. I'd like to thank everyone for being as honest as they can. I'm not totally satisfied, but I'm going to ask Councilwoman Brown to reconvene this when we're done here, when she says it's time for it to be done. We're going to come back in about three weeks. Will the Eagles, KUD, TKM, will you guys come back in three weeks, if she picks a date? If it's two weeks and three days maybe, whenever she can get us a date? Because this is total BS. Tempers are hot in here. The brother is right. It is a shell game. I wanted to blame Joe Banner, but I'm not. I think he's being pretty honest here. Like Councilman Goode says, it looks like you got that little pea under that shell. You got it, KUD. We don't have to be rocket scientists. We don't have to be team leaders. We don't 170 01/27/05 - PARKS - RES. 040912 even have to be Councilpeople to understand this. You contracted with her, Paula, Luis Cruz and everybody else, not the Eagles directly, not you directly, them. But they work for you and you work for them and the Eagles gave you the money, right?

And we have a guaranteed maximum contract with TKM as well.

Okay. Then why would you approve work orders or anything that's over that amount? Mr. Banner already said that they were Eagle approved change orders, and I suspect they are ones that the people that work for the Eagles or someone working for them says, we don't like this here. We want to change that. There were changes down there. I know there were changes down there. My brother worked on the job. There was changes a lot. All of those changes are being taken care of?

All of the changes that have been brought to the table by the Turner organization were either part of a change 171 01/27/05 - PARKS - RES. 040912 order already or in the process and have been. We have disputed a lot of those change orders, that they are owed by Turner under their contract to us.

So you're saying Turner approved those change orders that you may not have approved, correct? Is that a safe assumption?

Every one of these could be a different story. There are items where Turner's people signed approvals to go ahead.

Okay. Now, that means that Turner's on the ball for that one, correct? Turner, are there changes that you approved that he's saying, we're not giving the money for these? Why did you approve these? This is totally ridiculous. And if there is, how are you still in business? Why would you ever do a change order that you know you're not going to get the money from him, unless you know down the road you're going to screw him? Did you know that? Did you say, I'm going to screw 172 01/27/05 - PARKS - RES. 040912 Paula and Luis? I hate to use that word, but with my limited vocabulary. Are you going to screw him? Are you going to screw her? Did you sit down and say, let's sit down and hurt these people; let's not pay her so she can't pay for her mother in the senior citizens home; so Luis' kid can't have whatever Luis wants to give him; so Luis can't help Mr. Matos' community; so Councilman Mariano has a headache for three weeks worrying about this nonsense; you didn't do that, did you?

No, we did not.

Are you a terrible businessman?

No. 17

Then why would you help someone do work for you that you knew you were going to have to pay eventually, because you hoped he would go away and never back? Because his skin color is a different tone than mine? Does it have anything to do with that? Because that question has to be answered.

No, sir. Emphatically 173 01/27/05 - PARKS - RES. 040912 no. 3

When you're here testifying, the next process somewhere is probably a court case, so everything you say here is probably admissible in some court case. I was smart enough not to be an attorney because then I could say anything and I'd say, I don't know. I'm not bright enough to be an attorney. But there are some attorneys around here that got that figured out. You didn't do that, did you?

I'm not attorney either. And I'm not nearly smart enough to be an attorney.

Who did that?

Councilman, we've been in business for 97 years in this City. We're not bad business people.

I worked on jobs with Turner. They're a decent firm. They're a decent firm. They're not the worst, they're not the best, but they're getting better. I worked with them in the '80s and the '90s. They're good. I thought they were 174 01/27/05 - PARKS - RES. 040912 good. So I don't understand why you wouldn't pay a Luis Cruz or Paula. I'd pay it out of my own money. Because didn't somebody here say -- whatever the fancy word was -- if they pay them the money, they get reimbursed anyhow? Didn't I hear that somewhere? Mr. Banner?

That's my view. This stuff I learned today that I didn't know and there's probably a lot more I don't know. I'm not prepared to sit here and tell you exactly who owes the money. The subcontractors subcontracted with Turner, and they did the work for Turner and Turner needed that work to complete their contractual obligations. So my belief is Turner should honor those contracts and pay them. I understand there's a loophole in the subcontracting, that they technically don't need to pay them until they get paid, but that's what it is, a loophole. So they could pay them. If either of us owed any of that money or all of that money, they have recourse. And then instead of those guys 175 01/27/05 - PARKS - RES. 040912 being the ones holding the bag, one of us is holding the bag in the meantime. That's the way it should be.

Did the subcontractors do work without authorization? Is that what happened?

No. We gave them authorization.

Then you're responsible, correct?

Yes, we are. Sir, we gave the subcontractors authorization and we felt we had full entitlement from KUD for that. Otherwise I would be out of business.

Is that the magic phrase, you felt you had full entitlement from KUD? KUD, does he have full entitlement from you? Were you entered in a contract with him?

No. 24

Say that real loud so she can get that on the record. 176 01/27/05 - PARKS - RES. 040912

No. 3

No. What's the disagreement here? It has to be this simple. I feel like I'm dealing with 12-year-olds. I mean, come on.

I have written authorization from KUD for those changes. $7-and-a half million. I have written authorization for $5.5 million.

Then, Mr. Businessman, you made a mistake, didn't you? Did you make a mistake? Did you authorize new work changes that you had money to authorize? Did you do that? Because if you did, then it's on you.

I had authorization from KUD to authorize the subcontractors.

KUD? Are we going to go back and forth all night? They did, KUD, or didn't they? The Super Bowl is only two weeks away. I can wait.

Subject to the terms of our agreement, some of the documents were 177 01/27/05 - PARKS - RES. 040912 approved. Others with not.

Some were authorized?

Some were, some were not.

Do we have a list of what's authorized and what wasn't?

Could you please answer that question, sir? Do you have a list of that which was authorized and that which was not?

I'm not sure we have it in that fashion, but we could --

At this point this is the street we've gone down. It comes down, Banner's telling the truth it looks like. You're his guy. They hired you. Strictly it was a smart decision on their part because they didn't want to deal with this great foresight. Besides signing Andy Reid and Terrell Owens, that was probably your third great decision. Now you've got that. You're the 178 01/27/05 - PARKS - RES. 040912 guy. You're holding the bag. It's not Turner. It's not the Eagles. You're in the middle.

You have made that conclusion. Contractually, that is not a true statement.

Then what is it?

Contractually that document that he's referring to that is executed does not accomplish that task.

What does it accomplish?

It tells us that the work has to be completed at the site for the job to be complete.

Is the work completed or not completed? That's the argument, correct?

That is the argument that relates to the subcontractors. That is not the argument as it relates to TKM and KUD.

Let's move the questioning to Councilman Jack Kelly. 179 01/27/05 - PARKS - RES. 040912

I just want to go back to Mr. Banner. Just clear something up for me. You presently are holding up $6 million, is that true -- $5 million perhaps?

In that range.

And that is for what? For work not being completed or change orders that you would like to see or what?

It's either work that was not completed at all or work that was not done correctly to begin with that we now have to go get fixed.

Do you know how much they would cost if they were implemented by Turner, of the $5 million?

We think that number significantly exceeds $5 million. We believe it's multiples of $5 million.

Okay. I believe Turner, you have $7-and-a-half million? Is that what you're saying.

We feel there's $7.7 180 01/27/05 - PARKS - RES. 040912 million in base contract and retainage that has not been paid by KUD to us.

So you're short $7-and-a-half million?

Yes.

And Mr. Banner wants to see change orders or changes to the stadium which exceeds the $5 million that he's holding. It looks like someone is going to lose on this thing. We just don't know who it is at this point. The subcontractors, it looks like they're the ones not paid. But someone is going to have to take this up somewhere, probably in court. Thank you.

You're welcome, Councilman Kelly. Back to this question of the unauthorized list. Who has the list?

We have a list of outstanding estimates that leads up to a potential change order attached to those, so any documentation that relates to that particular item would be attached. 181 01/27/05 - PARKS - RES. 040912

Has that list been shared with the other party in this dispute, namely TKM?

They're being addressed on a per change estimate by changes estimate basis, yes, as we review them with the mediators.

I want to ask TKM -- and if I asked you this before, bear with me. I'm starting to lose my mind. I just realized I've been sitting in front of Councilman DiCicco's sign all along. If he's here, I'm sorry, Councilman for my bad behavior. I hope they don't think it was you. How much does TKM think they owe on the change list? How much do you owe the subcontractors? What do you think?

$7.5 million on the change list.

$7.5 million. And the Eagles are holding $5, maybe $6 for the retainage.

The $5 that Mr. Banner was referring to is contract work. 182 01/27/05 - PARKS - RES. 040912

So you're $7.5 million above that extra that you owe?

That's correct.

Now, somewhere along the line, somebody authorized some work. Now, the Eagles get a 100 for being smart business people for hiring them, in my simple book. You two guys, TKM and KUD, the San Francisco guys from Japan, you guys are going to eat this. Between you, you're going to eat this. Somehow you've got to decide. I know you can't say, fine. We'll split this up today. You will be fired by the time you get out to your car. And the same for you, right? As State Representative Blackwell said, this is a sin against God. This is a sin against humanity -- I'm serious -- to not pay that woman the money that she earned, to not pay that man the money that he's owed and all them other guys. They have to pay this stuff to people. They have families. Let's step back here and think about 183 01/27/05 - PARKS - RES. 040912 how we're going to do this. This is going to go on for years and years and years. Your lawyer was right when he came to my office. He said, let's do this in mediation. I had hoped we would get this done with just the threat of this hearing, because I know I'm missing something else today. What are we going to do, guys? Put yourself in her place. What does she do? I don't want you to lose your job, but I certainly don't want Luis Cruz to lose his wife and his family and his house. Because Luis Cruz can vote for me. You can't. That makes it real simple for me.

Over the next three weeks, what can we expect from each one of the parties? What can we expect to happen and transpire over the next three weeks?

Judge Lord, what do you think? You're like Yoda in this Council. You should be able to figure this out.

You're putting me in a tough position here, my counsel to City 184 01/27/05 - PARKS - RES. 040912 Council or to my client?

Well, your client. But your client happens to be a good corporate leader in this town. We have a wing dinger parade set up for him. He doesn't want us to talk about it because he doesn't want us to jinx him. We don't want that parade to be interrupted by protesters. And believe me, it will be interrupted.

I agree with Mr. Banner that Turner ought to pay these subs now and look to the KUD and the Eagles for adjustment. They're a big company. They can afford it. They're the only ones who don't have a GNP. He has a GNP. We have a GNP. He doesn't.

Mr. TKM, can you go back to Mr. Turner, Dan Keating and Barbara McKissack and work something out? Can you do that?

Before you answer the question, are all parties of TKM, have they been kept informed of every single step and move that it appears to be Turner as the lead person in this triad, have they been 185 01/27/05 - PARKS - RES. 040912 fully aware of every single agreement along the way leading up to these hearings?

Yes.

Are there members of TKM here who would like to speak on that or not?

Turner, Keating or McKissack are not here, are they?

I'm Turner. I don't believe Keating is represented here.

Barbara is here. Anybody here from Keating? (No response.)

Nobody, I guess.

So your answer is yes, all parties of your partnership were adequately, completely informed of every single step made leading up to today's hearing? Is that what I'm hearing?

Yes, they've been informed.

State 186 01/27/05 - PARKS - RES. 040912 Representative Blackwell was right again. We should make it so that you guys can never do business with any City money or anything to do in this City again. I like Turner. I came from a union house. My brother is a union electrician. I get it. Guys have to be paid.

Please, if you would, step to the table. State your name for the record.

Excuse me, Councilwoman. Before we do that, can we get the guy from Turner. Can you answer me? Will you go back to Turner and say, look, this looks bad; if Tommy Blackwell or Rick Mariano or any of these people have their way, we may never be able to do business in the City of Philadelphia? I'm not 50 yet. Almost. I'm going to be around for a long time. I'll protest every one of your construction jobs for the rest of my natural life, unless you step up to the plate and try to do something. That's not 187 01/27/05 - PARKS - RES. 040912 a threat because I'm not making threats. Will you go back to your bosses and say, look, we look bad here? We look like fools. These reporters are writing stuff down. We look like fools. We'll do this every three weeks. It might come down where the Eagles don't have to come anymore. Maybe they won't have to come. It will just be us and TKM. I know Sheryl doesn't want to do this because I've had conversations with her.

My boss is certainly understanding the seriousness of this. We take it very seriously. We're working hard to try and get it resolved.

Well, work a little bit harder to resolve it, please.

I'll work as hard as I can, Councilman.

Thank you.

Please state your full name for the record and your affiliation.

Sheryl McKissack-Felder. I have a twin. She's not 188 01/27/05 - PARKS - RES. 040912 Barbara. I am the president of the McKissack Group. The McKissack Group is a junior partner with Turner and Keating to provide construction management services for the Eagles stadium. As a junior partner, basically all we do is review information as it comes to us. We don't make decisions with respect to how contracts are purchased, with respect to subcontractors, who gets paid or anything like that. I have to say that I have worked with Turner on other projects and am currently working with Turner on other projects. And I have not seen that they do not know what they are doing. Obviously they do. They have had a tremendous, 100-year track record in maintaining a database of information for all of their projects. This is a situation, however, where we are the construction manager holding contracts, and as we get paid, we pay the subcontractors. As a joint venture partner on this 189 01/27/05 - PARKS - RES. 040912 project with Turner, McKissack provided staff for which we were reimbursed for every hour that they worked, and reimbursed for their direct salary, plus whatever benefits came with that salary. Then in addition to that, there was a fee that would cover our overhead and then whatever profit was in the job. Our initial fee for the whole group was close to $10 million, of which McKissack's fee would have been $1.7. Of that fee, we have been paid $600,000 and are still owed another million, but it has been decreased to $500,000.

Decreased by whom?

Decreased by TKM for the fact that we have not been paid by, whether it's KUD or the Eagles. It has been reduced, because as a small business, whatever we put on our books as earned income, we have to pay taxes on. So right now we have paid taxes on over $500,000 that we have not been paid. So we are in a similar situation, and I'm sure Turner is and so is Keating. 190 01/27/05 - PARKS - RES. 040912 There is no reason for TKM to go and do extra work to benefit the Eagles and the Eagles stadium unless we're going to get paid for it. So the extras that we're talking about benefit who? The Eagles. Not Turner, not Keating, not McKissack or any of the subcontractors. And so we're looking at two issues here. We're looking at a base contract, and the little that I know of this -- because I am not very close to the details -- the stuff that Mr. Banner is saying that he wants us to come back and correct is after the stadium has been played in for two years. How do we go back and correct issues or problems in a stadium that's had 67,000 fans in it? So my frustration, from the way that I can see it, is that we have not been paid for the base contract and we have not been paid for the changes that we've had to make. Some in particular that I know of just from being on site, including adding 5,000 extra seats. Do you think TKM did that because we're going to benefit from those seats? 191 01/27/05 - PARKS - RES. 040912 Maybe we should own those seats right now. Maybe that would be an income situation for our group, and maybe we can pay the subcontractors if we owned the 5,000 seats. Everybody read in the paper about the change in the boxes. There were additional boxes added because the Eagles had to have more boxes. And these are just big things that everybody knows about. Then there were all the small things, rushing to get the job done so that the stadium would be ready for the Eagles to play in. This doesn't benefit TKM. This benefits the Eagles. So our stand and where we are now is we need to be paid for our base contract and we need to be paid for our changes. That's the bottom line.

Any questions from Members of the Committee? Councilwoman Jannie Blackwell.

Thank you very much. Certainly, again, as we spoke this morning and talked about working with 192 01/27/05 - PARKS - RES. 040912 contractors, we know of the fine work that Sheryl McKissack does, not only in our City, but across our state and country. And I think that she has articulated the issue well. We're at the core of it. It's not just minority contractors. Nobody is getting paid. I still don't understand why they've all been asked to take lesser money for an agreement. Can we have an answer to that issue and can we come to a conclusion today on when people will be paid? Thank you. (Applause.)

Mr. Banner.

There's been a of couple things said here recently that I'd like to at least respond to. The characterization that was given of the stadium and the status and the repairs was very far from reality. There were seats added. It was 2,000. It was a change paid executed and has been paid 100 percent. There were 10 suites added. The change order was executed and it's been paid 100 percent. So I 193 01/27/05 - PARKS - RES. 040912 don't know what that was about. I'll bet there are people that have been in this stadium since it opened. The escalators haven't worked from the day we opened the building. Our score board has broken down about percent of the games that 8 we've played from the first game. We've been 9 trying to get them to fix it for two years. 10 We're not waiting for 67,000 people to be in 11 the building for two years to get them fixed. 12 We've been begging to get them fixed from the 13 first day the building opened. 14 Some of you probably sat in a suite 15 on a cold day and know that the heat doesn't 16 work properly in the suites. We've been 17 trying to get that fixed from day one when we 18 opened the building, not from two years later. 19 That was a characterization that doesn't match 20 with the facts. 21

Somebody is 22 shaking their head over there. 23

He can respond. I'll 24 bet there are people in this room who have 25 been on the escalators in our stadium when 194 01/27/05 - PARKS - RES. 040912 they've broken down.

Mr. Banner, no 4 disrespect to you, but I suspect most of the people in this room can't afford a ticket to see the Eagles. I'm serious. I go someone because takes me. My brother.

The other point that I wanted to respond to. The term keeps being used that these people aren't being paid at all. I understand there's a legitimate dispute here, and I it's unfortunate and it should be corrected right away. But I also think it's only fair that we say that correctly. I mean, I think Luis Cruz himself testified to that, that he's been paid $18.6 million out of $19 million. And I think it's wrong that there's still $400,000 owed. You've already heard my view on how that should be resolved. But I still think when people refer to people aren't getting paid at all, there's a balance due. It's in dispute. We've got to accelerate, get everybody at the table, be objective, get this resolved. There 195 01/27/05 - PARKS - RES. 040912 is significant amounts of money that have been paid and very significant participation on this project.

Has this come down to, like, a personality crisis between the Eagles and TKM? Am I correct?

We have almost literally no dealings with TKM whatsoever and we haven't almost throughout the project. If I can kind of recap my view on what I think is simple, there is a legitimate dispute at the moment between two parties. There's a chance that it could take a turn that engages us, but at the moment I think there's a legitimate, honest dispute between two parties. It's a very complicated dispute, as you already heard. An arbitrator and a mediator is looking through thousands of documents and requested information and probably had to study 30 years to even follow the thing. So I'm not sure there's a way to cut through that part of it. So then the question is, is there 196 01/27/05 - PARKS - RES. 040912 something that could be done in the meantime so that the people that are stuck in the middle aren't stuck in the middle any longer. And that's why I believe the only reasonable answer to that question -- because the clear, direct authorization of the work and the clear contract that the subcontractors had was with TKM. If there was an additional authorization of that work from either KUD or the Eagles, as you've heard us both say, effectively established we'll pay it. So TKM gets reimbursed in that scenario.

How can you go two years without your score board working right? Who do you talk to about that, TKM?

TKM was involved obviously in its placement in the electrical work. But I will tell you that the company who installed it recently on their own volunteered --

Johnson Controls?

Johnson Controls is a different part of the stadium. Dactronic (ph) 197 01/27/05 - PARKS - RES. 040912 is the company that did the stadium. They on their own came to us and offered to extend the warranty a year and leave staff at their expense at site for an additional year because they agreed that it's still not working right and they or TKM or anybody else involved can figure out what's wrong. A company doesn't come in and make that kind of offer.

Did you take them up on that offer?

Yes, we did.

Ms. McKissack had a response.

I've just been informed that what Mr. Banner said is not true. We have not been paid for those seats and we have not been paid for those suites, number one. Number two, I think if we got paid we could fix whatever the issues were. It's hard to get contractors out to a job that they haven't been paid on in two years. That's a tremendous issue.

What do you do 198 01/27/05 - PARKS - RES. 040912 about the score board that he says the company called?

He still has 67,000 fans that come out there and has played two additional games this year. He needs to get it fixed if he doesn't want to pay the contractors who he hired to do it.

If it was done right the first time I don't need to hire anybody.

The construction is not done right, maybe. There are always issues in the field.

I agree.

Can we ask about the heat? What happened with the heat? Why don't the boxes have heat?

This is not even a TKM issue, as I'm hearing right now. This is a side issue. We're talking about what's wrong with the base contract. Why can't Luis Cruz get paid for his parking lot? Why can't Paula from Seal Tite get paif for what she has done in caulking? All that is there. 199 01/27/05 - PARKS - RES. 040912

So you're saying that money is there for them?

The work has been done. The only people benefiting from it right now are the Eagles.

I have no more questions.

Councilman Jack Kelly.

Madam Chair, this is probably for you and everyone else in the room. It seems to me that the total cost for the stadium is $368 million. And that cost seems to be capped. I don't know if it was the City or this Council that approved it, put the cap of $368 million on it. Now, it certainly cost more than that evidently, from the testimony I heard today, that there's at least $7 or $8 million short to pay all of the contractors who were hired to actually construct this facility. $368 million is a capped amount. I think somewhere along the line someone has to come up with an additional 200 01/27/05 - PARKS - RES. 040912 $7 million. Now, I don't know if the City is involved in this. From the testimony I heard today, they're not. So I think it has to come from someone at that table. I think we could go on and on and on. And I think this is what it is, regardless of the innovations or the change orders and everything else that went into that stadium. I think that somewhere along the line someone has to come up with additional millions of dollars to pay, not only the subcontractors, but also the main contractors. And I think that somewhere along the line someone is going to have to do it, and who, I have no idea at this point.

That remains the mystery question. That goes back to the question I posed, and I heard from the Eagles representative. I need to hear from TKM and KUD per the Councilman's recommendation that we return here in the next 21 days, what can we expect to have transpired over the next three weeks? I need to hear from TKM and KUD as we move 201 01/27/05 - PARKS - RES. 040912 toward closing. Thank you for your testimony, Ms. McKissack.

What we expect to transpire over the next three weeks in anticipation of coming back here is that we will continue to work on settlement of subcontractors. To date, Mr. Biggs and I worked together and we have come to settlement agreements on subcontractors. We would 13 continue along those lines to continue to 14 settle more.

Out of a total of what?

14 out of 60.

14 out of 60?

Yes, ma'am. We will continue along those lines. When we settle on the subcontractor for a final amount, we then need to be paid. If we do that, then the subcontractors will be paid.

I hope you are listening carefully. He's saying that they're 202 01/27/05 - PARKS - RES. 040912 settling on who's putting up the money. That's a great position to take. We're not going to be in a better place three weeks from now if you accept that answer.

Councilman Kelly, do you have a comment?

No. 9

KUD, in your estimation what do you expect to transpire over the next three weeks?

I think Mr. Kuntz is correct. The ongoing work that we're doing to try and reconcile amounts that are due to the subcontractors is paramount. That's number one. The issue about getting the subcontractors paid comes back to the amount that's owed from the Eagles to us, to TKM. And right now, as Joe has pointed out, there are deficiencies that can't allow the Eagles to distribute more money. So from our standpoint the money has to come from TKM.

TKM pretty much just said they ain't giving the money. Didn't I just hear that? 203 01/27/05 - PARKS - RES. 040912

I don't have the money, sir.

Well, you're going to bring in a paper and go, we owe him, her, him, him so much, and we admit that we owe to you. Hey, Lou, we owe you money, but we're never going to pay you. We can't pay you because we don't have it. So we wasted three hours here today basically. He doesn't have any money in his pocket, she don't and them guys back there don't. Why waste our time? Somebody is going to have to eat this or you will never do business in the City of Philadelphia again. (Applause.)

That's the end.

I should just mention for the record that we have one more testifier after this, Charles Ang, so we want you to stay with us. We do know that you want to put remarks on the record. To all the parties at the table, are you prepared to submit weekly progress reports 204 01/27/05 - PARKS - RES. 040912 to the Chair to be shared with all Members of this Committee on the record?

Yes.

Yes.

Yes.

With that said, then we will expect to begin to receive weekly reports from each of you, starting next Friday. Then I and Members of the Committee will make a determination as to whether or not you will be called back. You all will be recessed to the call of the Chair. Is that understood? We're tabling at days initial suggestion. 16

Understood. 17

Thank you, 18 gentlemen. 19 We now invite up Charles Ang of Ang 20 Associates Structural Engineers. 21 Thank you for waiting, Mr. Charles Ang. We appreciate your patience. We want to ask you to please state your name for the record and provide your testimony.

My name is Charles Ang. 205 01/27/05 - PARKS - RES. 040912 I'm president of Ang Associates.

Before you get to your testimony, are you one of the subcontractors involved in this process?

I'm a different one. That's why I think I have this great opportunity to be able to express myself here.

I only ask because if that was the case I wanted to ask the members of TKM and KUD to stay.

I have to appreciate that I had this opportunity to come here because the labor group spoke up. I'm from the professional section, which is the weakest, as far as myself, is the weakest organization among the parties involved with the Eagles stadium. Now, I'm from the engineering section. My firm is a 28-year-old minority firm, and I was one of the earliest members of the MBEC. I was really going forward for the people here, for the minority groups, and I've come down here and worked for it and finally for 28 years I'm still in it. 206 01/27/05 - PARKS - RES. 040912 The reason I come here today, as I said, I'm very thankful that the labor group has brought up this issue to open it up to the public. I have the same problem getting paid as a minority professional. We as structural engineers, we did the job from the concourse level all the way down to foundation. This is my structural design work. The thing is, I work under a sub-consultant and I'm three tiers down. You have heard that the MBBJ as being the architect. HUD hired them to do the architectural design. MBBJ has to use engineers, and they hired OV (ph). These are all western state professionals. MBBJ is from Seattle and OV is the structural engineer hired to do all the structural work. Now, as you know, the stadium itself has the super structure, which is the steel structure above and the substructure was all the concrete work. As I mentioned before, from the concourse level all the down to the foundation, we always can say we did half of the work. 207 01/27/05 - PARKS - RES. 040912 When the workers presented to Ang Associates, we had to go through competitive bidding, even as a minority structural engineer. So they, by obligation, have to offer work to subcontractors, I guess, across the line. OV, being the prime sub-consultant structural engineer to MBBJ, they would come to Philadelphia and try to interview different minorities. We, because of our qualifications, we got selected by them to work with them. Now, in working with them, I have to give them a proposal to the sub. The sub here now is OV that we work for. MBBJ is the principal architect. They had the prime design contract from HUD.

I see.

When we got a contract we had some preliminary drawings. Naturally the job is very complicated. We know it's going to be fast tracked. I hope you understand the word fast track. It's alerted that this is going to be high speed. You have to put a lot 208 01/27/05 - PARKS - RES. 040912 of people in to crank it out to meet the deadline. They have a very short-term schedule to complete all this work. As you know, we do all this work ahead of the construction people. And fast track is that they even want to prime the thing out so that the packages can be processed right after the first part of the design is done. The construction foundation is the first one that has to go out. We happen to be the one to start from the bottom up. We are the ones caught in that. In my proposal to OV, I was very careful to say that I had to put a 30 percent contingency on my job. Engineers, usually we have to work on good faith. We took a job even when somebody says verbally or in writing, just a letter of agreement, we have to agree to go ahead, we move in and we start working. So the 30 percent was kind of ignored by OV. They are kind of using the words in saying that, well, this will be made up by doing the construction phase. Maybe when the thing gets piled we will resolve 209 01/27/05 - PARKS - RES. 040912 that. So for you people just at this moment, I still do not have an official contract, just to show you the good faith here. The stadium is already delivered. And here I still don't an official contract for my design. So to cut it short, the money that should be earned shortfalls in the design phase of $190,000. People were talking around here. I was here. You know the change orders and this and that, and we are involved from behind because they can talk a typical case. There's this underground pit, they built it wrong. The contractor put it in wrong. So we were alerted. We as a structural engineer have to run down there. And because there's going to be future damage or whatever, it can bounce back to us because it wasn't built as it was designed. So this is a typical case. That of course is not written in the contract anywhere, so we have to say, I myself was involved. Our top engineer had to be down 210 01/27/05 - PARKS - RES. 040912 there all this time to record. We want to get paid. This is one of those cases. So I was dividing them into a construction phase and a design phase. The design phase, because of all this fast track, we are not honoring without 30 percent contingency. Cover that amount. The construction phase again, the certain part that they did honor, like they mentioned about those approved change orders, we did, like, 20-some items. Do you know of those approved items, we only get 50 percent of the dollar? They negotiated you to death.

So that goes to your point, Councilwoman Jannie Blackwell.

So they're partner involved McKissack, Turner, that group. They were the ones doing the construction management, watching the job.

I see.

As I mentioned, this is just one of the cases that we have to go down there to do it, to make corrections. And they say, you didn't do it. Now, will the water 211 01/27/05 - PARKS - RES. 040912 still hold. What happened there. There's a certain pipe that's going through there. We have to check it to see if it will still be safe to leave them in there. This kind of thing happens.

Any questions from Members of the Committee? Councilwoman Jannie Blackwell.

I only wanted to thank Mr. Ang for helping to clarify some of this. Maybe if we had his testimony earlier we would understand a little bit more about what happens. It amazes me that it seems like so many other things in some ways non-negotiated -- hazardous is too extreme a word -- but arbitrary in some ways, like so many other aspects of what we do. I met Mr. Ang many, many years ago with Lucien, many, many many years ago, I would say or 30 at this point. It's 22 certainly a pleasure to see him again and to 23 know he's still doing good business in our 24 City. 25 Thank you. 212 01/27/05 - PARKS - RES. 040912

Just to show you again. Now, this is a tough business. I was one of the earliest Minority Council members and I came down here to rally for it. I know that's the best thing for the City. Unfortunately I was the only minority among the minorities when we were starting with belly hoppers and all that. It's a long struggle up to now. You can see how we can move from a small project to a big project. We still suffer. We're still not out of the woods.

Councilman Jack Kelly.

Mr. Ang, I just have a question here. You had mentioned you had many change orders that you had to make for the stadium. Who approved those change orders?

This is very interesting. We're three tiers down. I am working for a sub, a sub structural engineer, and the sub structural engineer, he's a sub for MBBJ.

But it was approved by the three higher ranking 213 01/27/05 - PARKS - RES. 040912 organizations?

Of course. I report to OV.

Now, I want to ask you something. You mentioned something about you had to accept 50 percent -- I don't know if the amount was approved or the work was approved -- on the amount that you submitted for those change orders. Was that every approved?

Those were approved.

But you negotiated 50 percent of the approved amount; is that correct?

With OV all together, I was the minority part of OV Group hired to do the structural work. OV also has change orders, hundreds of items. Ang's office has, like, 50-some items. So they would go negotiate with them on my behalf.

They did the negotiating, you didn't?

On my behalf.

And they accepted 214 01/27/05 - PARKS - RES. 040912 the 50 percent which came down to you?

50 percent.

You answered my question. Thank you.

We thank you again for your patience and for staying and for offering your testimony and another example of what has not happened with the subcontractors. Did you hear what our next steps will be? Each one of the partners has put on the record that they will provide us with weekly reports, and then the sponsor of the resolution will make a determination as to whether or not they are sufficient and direct us on whether or not we will reconvene. This City Council Committee on Parks, Recreation and Cultural Affairs is recessed to the call of the Chair. Thank you for your attendance.

I thank all the Members here of the City. I thought that is my duty to do that. (Council adjourned at 4:55 p.m.) 215 01/27/05 - PARKS - RES. 040912 - - - - 216 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 Thursday, January 27, 2005, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE ON PARKS, RECREATION AND CULTURAL AFFAIRS _________________________ Lisa C. Bradley, RPR