Is available, that's right, that's right. So if they don't need money for three years 'cause everything's brand new and nothing breaks and there's not an issue, then it's worth something more by the third year and they can use it.
Well, I mean, not to seem unreasonable but, I mean. Why do they get the interest?
To be candid, it's simply one of the business terms of the transaction. Again, we could have, as you're aware --
What's the interest worth the first two or three years?
I can't it off the top of my head. I'd have to figure out what we're borrowing it at to figure out what the arbitrage 351 12/1/00 STADIUM BILLS HEARING restriction is.
You know, before you had your new job lined up, you used to be able to do that kind of stuff. (Laughter.)
But now you feel no 9 compulsion whatsoever to do these kinds of things 'cause you know that you're leaving and will never have this opportunity again.
No, it's not that. I'm told I can actually have people doing it for me.
I understand, you're working on it. Can you give me an --
We're probably borrowing at a 5 to 6 percent range, and so it would be 5 to 6 percent. So about a half a million dollars a year would be the rough value of the interest. What I was going to say, Councilman, is 352 12/1/00 STADIUM BILLS HEARING that, as we know, in the alternative, if you look at the Phillies transaction, we could have made investments in an Eagles stadium on the basis of paying for a portion of their capital costs so they will be building through this period. And if we had done it that way, you know, it would have been a grant, equity into the building.
In lieu of that, we're providing the operating and maintenance dollars, and we're providing this one-time capital reserve. So, basically, we are providing them with the effective value of $10 million. And because they have a right to the interest in it, it in effect keeps it effective value, you know, as an opportunity cost.
Your language kind of almost goes back to an earlier discussion about keeping values --
-- in 353 12/1/00 STADIUM BILLS HEARING contributions.
Well, it is -- you're right in that sense, that it's a part of the, quote, rent that the City owes PAID in the lease leaseback.
So it will come from the revenues generated by the rental car taxes -- you know, taxes that we get from the project as we've projected it. But that's right, it will come as a rent payment out of the general fund to PAID annually.
Although conceptionally, the deal generates enough -- it 354 12/1/00 STADIUM BILLS HEARING generates an incremental tax amount --
-- that covers it, but that would be a line item straight out of the general fund for 4 million, 5 million, 6 million, whatever that schedule is at the back of the document.
All right, thank you. Mr. Dubow, the $22 million, which sheet is that on or has that number changed?
The million you're 16 talking about is the 5.8 million. It's the same 17 number. We were talking about how the number 18 changed 'cause of our recalculation of debt 19 service. 20
5.8, okay. And I guess my quick question was, why does did that happen? 355 12/1/00 STADIUM BILLS HEARING
It went down because we looked at the way we were issuing debt and realized two things: One, that we were going to earn interest on the proceeds, because we would have some kind of draw period, so those interest earnings allowed us to have a smaller issue and lower debt service.
Right, okay. Walk me through the numbers real quickly on the impact of stadium deal comparison to plan. In 2001, where we obviously have no 16 stadium, what's the meaning of this net benefit number?
What happens is in fiscal 2001, we begin to see construction benefits, so there's a bump-up in tax revenues.
Tax revenues, right. In 2002, it gets even better. In 2003 --
Right. And then after that, the benefit is the benefit of, you know, the increased attendance and the new stadiums. 356 12/1/00 STADIUM BILLS HEARING
Right, but then it takes a dramatic turn obviously between '03 and '04 because our debt service kicks in. And so what's the meaning of the net benefit number in 2004 and 2005?
Well, compared to the plan, it turns negative there. And I should say --
The overall comparative plan? It's built into that 5.8. So those last two years, the 5.8 is the cumulative five-year value.
All right. And what's the overall impact on our fund balance at that point? 357 12/1/00 STADIUM BILLS HEARING
Now, if you add in various things that have happened to the fund balance since the plan was adopted, there are two sides to this. Items increasing the fund balance, which for the most part are the increase in our beginning balance from what we projected. In other words, when we submitted the plan, we had an FY 2000 ending balance of 150 as the projection.
The biggest reason for that increase was the increase in tax revenues.
Which means we have a higher base. 358 12/1/00 STADIUM BILLS HEARING
That's the second line. The third line is the PGW loan repayment. We show the loan on the bottom, we show the repayment on the top. That's what Councilman Kenney said too. And then we have the three years of positive impact to the stadiums on top.
And then there some things like there were some things like EMS collections that were higher than we projected, that's the 900,000. And we have the payment to the School District in '01, the 45 million. And we assume that after that, it's just 15 million a year. 359 12/1/00 STADIUM BILLS HEARING
We have the loan to PGW, the 45 million. Then we have the two transfer ordinances. One was that additional demolition money; we had a hearing on that, I guess, a few weeks ago.
And then we also, in that transfer ordinance, had additional funding for City Planning and the Mayor's Office.
There's the stadium deals and then the loss of PURTA. When you calculate all of that out -- and the other thing we did for this analysis is, we backed out those future target budget reductions that were in the plan, that's 60 million. 360 12/1/00 STADIUM BILLS HEARING
When you make all of those adjustments, you wind up at 6.2 million at the ends of '05.
4.96, but that included the 60 million. So this is really about 60 million better than that number 'cause it's essentially unchanged with backing out the 60 million in future target reductions.
If you look at the top box and when you look at kind of the available balance.
We take that, the third line there, the cumulative future target reductions.
We took that number out and assume we had to make that number up on the bottom half the table. 361 12/1/00 STADIUM BILLS HEARING
So instead of showing the 4.whatever, it showed a negative 55.
It's really aimed at you. Just talking about money that we don't know where it's coming from -- where some of this money agency going to be coming from, during the Republican National Convention, we spent, from what I understand, between 5 and $10 million in police overtime that wasn't budgeted. Where's that money coming from?
When we did our quarterly report -- you get a copy of our quarterly reports -- that's one of the variances. We show -- we 362 12/1/00 STADIUM BILLS HEARING actually have other items that were positive. We don't show everything in this sheet. We show the big changes 'cause you actually look at this number, the fund balance number that we show at the end of '01. Other than the stadium impact, it matches what's in the quarterly report, and that included the police overtime.
From what I understand, there was money budgeted for police overtime.
And we exceeded that. We're projecting that we're going to exceed that number. And it's not just the Convention. There are things like, you know, court appearances and increase in arrests. There are a number of reasons why the Police Department thinks its overtime is going to be higher than --
Well, does -- does that appear -- does that appear to be a tough question to answer? 'Cause I've been asking that question now for over a month on where the money's coming from to pay the 9.5, whatever the number is. How much is it exactly in overtime. 363 12/1/00 STADIUM BILLS HEARING
The projection for the Police Department's Class 100 variance is about $13 million.
And because of anticipated problems, there was again another 5 -- from what I understand, there was unbudgeted overtime of maybe another 5 to million. 9
That's included in that million that I just mentioned to you. 11
Yeah. If you look at what we're projecting the fund balance to be at the end of the year, that's one of the reasons it is where it is, in the '01 fund balance.
Very good. Thank you. Thank you, Madam Chair. 364 12/1/00 STADIUM BILLS HEARING
You're welcome. Are there other questions? I know Councilman O'Neill has a question but --
Thank you. Are there other questions from Councilmembers for these witnesses? (No further questions.)
All right. We will recess until tomorrow at 10. We'll see you all then. (Adjourned at 6:00 p.m.) - - - 365 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 Friday, December 1, 2000, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE OF THE WHOLE STADIUM BILLS __________________________________, DEBRA A. WHITEHEAD, Registered Professional Reporter __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter