e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, October 22, 2008 2:25 p.m. - - - PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN BILL GREEN COUNCILMAN WILLIAM GREENLEE COUNCILMAN CURTIS JONES, JR. COUNCILMAN JACK KELLY COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN BRIAN J. O'NEILL COUNCILWOMAN MARIA QUINONES-SANCHEZ COUNCILWOMAN DONNA REED MILLER COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO BILL 080744 - An ordinance amending Chapter 19-2400 of The Philadelphia Code, entitled "Hotel Room Rental Tax"... BILL 080745 - An ordinance amending Bill No. 070994-A (approved December 21, 2007)... - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated
Good afternoon, everyone. This is a public hearing of the Committee of the Whole. I would ask Mr. McPherson to please read the title of Bill No. 080744. MR. McPHERSON: An ordinance 8 amending Chapter 19-2400 of The Philadelphia Code, entitled "Hotel Room 10 Rental Tax," by providing for an additional excise tax on hotel room 12 rentals and designating the expenditures for which such tax will be used, all under certain terms and conditions.
I believe our first witness is Mr. Dubow. (Witness approached witness table.)
Good afternoon, Council President Verna and members of Council.
Please identify yourself for the record e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 and proceed with your testimony.
My name is Rob Dubow. I am the City Finance Director. I have combined testimony on Bills No. 080744 and 080745 and we have proposed amendments to 080745, and they're technical in nature.
I would then ask Mr. McPherson to please read the other bill. MR. McPHERSON: Bill No. 13 080745, an ordinance amending Bill No. 14 070994-A (approved December 21, 2007), entitled "Authorizing the Director of Finance, Commissioner of Public Property and other officials of the City to execute either directly or through the Philadelphia Authority for Industrial Development various agreements, instruments of conveyance and other transactional documents by and among the City, the Commonwealth of Pennsylvania and the Pennsylvania Convention Center Authority related to the development, e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 construction, financing, operation and management of an expanded Convention Center.
There are three amendments. " It's changed to "City," and the word "term" is changed from capital to lower case. The bills that I'm testifying about today are essential for the expansion of the Convention Center. Bill 16 No. 080745 contains the provisions of the operating agreement that will govern the funding and operations of the expanded Center. As you may know, projected costs for the Convention Center expansion have grown from 700 million to approximately 790 million. The initial 700 million was to be funded by bonds issued by the state that would require e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 the state to pay approximately $64 million annually in debt service. As part of that funding agreement, the City agreed to extend its financial commitment for the Center from Fiscal Year '20 to Fiscal Year '33. But instead of being responsible for the Center's debt service plus operating deficits, the City would be responsible for a set amount, $15 million each year. The City was trading an unpredictable cost that would have ended in FY20 for a fixed cost that would end in FY33 and was getting the benefit of having the expanded Center. 2 percent increase in the hotel tax to be divided among the Convention Center and GPTMC and PCVB, the agencies that market the Center and help book its customers. Beginning in FY13, e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 the amount of growth that the two agencies will receive will be shared with the City to be used for support of the expanded Center. The second item is an extension of the City's $15 million commitment to the Center from Fiscal Year 2033 to Fiscal Year 2040. While the City will eventually put an additional 105 million into the Center, it will not incur any costs beyond those included in the initial expansion deal for years. 1 17 million. 18 And the final item is an 19 extension of the repayment period on the 20 state bonds to 2040. 21 The proposed bills that you are 22 considering today would authorize the 23 City's portion of the new funding 24 arrangement. 25 Bill No. 080744 would authorize e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 an increase in the hotel tax rate effective January 1, 2009. 2 percent. The new tax revenues would be split among the Convention Center, the Greater Philadelphia Tourism Marketing Corporation, the Philadelphia Convention and Visitors Bureau and, under certain terms and conditions, the City. The Convention Center will receive 11/30ths of the new tax revenue. GPTMC and PCVB would divide evenly the other 19/30ths of the new tax revenues through 2012. 5 percent and above six percent over the amount they received in the preceding year. The City will receive the growth between two and a half e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 percent and six percent. 3 million for the Convention Center. Bill No. 080745 extends the City's financial obligation of million 9 to Fiscal Year 2040. Like the earlier 10 financing plan, this arrangement would 11 end the requirement that the City pay for 12 the Convention Center's debt service and 13 operating deficit minus the Center's 14 portion of the current hotel tax revenue. 5 million in '09 and no more and no less than 15 million each year after that through 2040. The new financing plan also provides the City with some oversight of the Center's budget. The City will be able to review the budget and make recommendations to the Commonwealth about potential changes. The Commonwealth will have to provide a written explanation if e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 it decides not to accept the City's recommendations.
Since the Commonwealth will have full responsibility for covering the Center's deficits, however, it will have final oversight of the Center's budget. The new Convention Center agreement also states the City will not be required to make any additional appropriations for the financing, operation or management of the Center beyond the million annually through 14 2040. 15 Finally, the legislation authorizes the Finance Director to determine the appropriate allocation of FY09 Convention Center costs between the City and the Commonwealth. Those costs will be split so that the City is responsible for the portion of the Center's costs incurred during the portion of the year during which the existing lease and service agreement is in place, and the Commonwealth will be e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 responsible for payments under the new funding agreement for the portion of the year during which the new operating agreement is in place. The lease and service agreement will be replaced with the new operating agreement once the Commonwealth issues its bond to fund the expansion. That concludes my testimony, and I'd be happy to answer any questions.
Thank you very much. Mr. Dubow, what are the permitted uses for funds going to the regional attractions' marketing agency and tourism agency?
The permitted uses are for the two agencies. Permitted uses are for GPTMC and PCVB.
After e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 FY 2012, there is a formula which uses a base amount to determine what revenues go to the marketing and tourism agency. Please explain how this base amount is determined and how and why the receipts and their distribution vary from year to year.
Sure. The base amount will be whatever amount the two agencies receive in 2012. In the following year, they will receive all growth up to two and a half percent above what they received in 2012 and all growth over six percent. The year after that they'll have the same kind of collar on their growth and it will be off the amount they received in 2013. So, for example, if hotel taxes increased two and a half percent -- if hotel taxes increased three percent off the base year of 2012, they would each receive a two and a half percent increase. The amount above that two and a half percent would go to the City. The e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 following year the amount they receive would increase off of the amount that they received in 2013.
All right. Section 19-2404 provides that the funds for the Convention Center Authority generated by the hospitality promotion tax shall also be used by the City to support the expanded Convention Center. Are they to be used to support debt service? Are there other proposed uses? If these funds are to be used to incur debt for closing the gap and financing for the expansion, shouldn't the tax imposition be conditioned on its use?
That portion that will come to the City that is to be used to support the expanded Convention Center is not related to the debt service. That's money that will come to the City, and we can use it really for any expenditure that is tied to helping the Center in any way. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
You're talking about the .44. Yes, that is part of the deal, and that amount was required to help close the funding gap. That amount, plus the growth that we assume that it will achieve each year, was required to fill in the gap.
The legislation says that the funding should be divided between the three entities. It doesn't specify how.
Thank you, Madam Chair. Could you expand on that? Are these percentage -- splitting up of money between the different organizations, is that required by the state legislation or is that something that we can change by e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 ordinance at any time?
That division is -- the state legislation says it has to be divided by the three. The specific division is not in the state legislation.
So it has to be divided between GPTMC, the Philadelphia Convention and Visitors Bureau and the Convention Center itself. None of that can come into the General Fund?
Well, it has to be used for those two entities and to support the expanded Convention Center. So it can come into the -- a piece of it can come into the General Fund, but that piece has to be used to support the Center. And the way that this legislation is set up, there is that percent between two and a half percent growth and six percent that could come to the General Fund to be used to help support the Center.
But we could e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 make it whatever percentage we wanted, that's our decision in terms of the splits, in terms of percentages; is that correct?
So could we use the money in the General Fund to provide the police who are at the Convention Center?
Can we use it to support the fire station that is close to the Convention Center?
Well, but we could do it any time. We could do it this year.
Well, you're asking will we be using it for that, right? We e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 don't have that money yet. You're asking is it used for that.
If we pass the tax, can we change the percentages to provide for the support of City resources that support the Convention Center today?
Why aren't we recommending that we do that? Why is it the position that we shouldn't be using this tax to support the Convention Center other than providing the percentages that are to be provided to GPTMC or PCVB?
Because the reason it's split the way it is is when you have an expanded Convention Center, in order to book it, you need more marketing support and you need more support on the e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 booking end, so each of those two entities is getting more funds under this proposal.
I'll have someone from GPTMC if you want to ask GPTMC questions. They're testifying later.
Okay. But, I mean, in other words, they don't promote the Convention Center or --
Well, the Convention Center's Visitors Bureau does. I'm just trying to understand how we reach these percentages and think that these percentages reflect the priorities that Philadelphia should have for spending these dollars. That's why I'm asking you, not GPTMC.
Right. And part of what they do and part of their role is to draw people to the City, including to the e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 Convention Center, and they will have an expanded role with an expanded Center.
I'll ask them specific questions about their missions and budgets and other things, but in your testimony you say the new financing plan provides the City with some oversight of the Center's budget.
Are we provided with any oversight over GPTMC's budget or PCVB's budget?
I think we have membership on PCVB's Board. We appoint people to PCVB's Board. We have membership on each Board. So we get oversight through that.
And does the state legislation limit our oversight authority to the oversight authority that is in the state or, say, could this Council still hold hearings, request budgets, look at expenses, et cetera? Is there any limiting of Council's normal e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 authority where City dollars are going or where our tax dollars are going?
On the Convention Center, the final approvals of the Convention Center budget rests with the Commonwealth.
No. I understand that. I just mean our regular oversight authority. Is there any limit to our oversight authority, our ability to get the budget information, see where dollars are being spent?
Bear with me one second. Most of my questions are for the other agencies. Those are all my questions for now. Thank you.
I'm sorry. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 Has there been any discussion with the surrounding counties about getting them to contribute to the resources of either the Convention Center Bureau or the GPTMC, which does spend the dollars that our hotel tax provides promoting the region?
I haven't been involved in any discussions about that. I don't know whether there have been any that I have not been involved with, but I have not been involved in any discussions about that.
Is there a reason that we shouldn't use the passage of this as leverage to get the counties to impose a similar tax so that they could also contribute to the pool of resources that is promoting the region?
Well, I guess the only issue would be if that resulted in a delay of moving forward with the deal, then that would probably damage the Center's bookings two years from now. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
Okay. So when would we have to pass this out of Council?
We would like to have it passed out actually within a couple of weeks.
I think these are serious issues and shouldn't be brought to us with two weeks to go. But thank you.
Mr. Dubow, let's refer to Bill 080745. Are the revenues of the hospitality promotion tax dedicated in perpetuity to the Authority?
From the hotel tax? Probably a little over 2 million to start 25 for each of GPTMC and PCVB and probably a e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 little over 2.3 million for the Center. So total would be maybe 6.3 or six and a half million in the first year.
Can you tell us what the projected total annual payments that the City will be required to make?
What are the other sources and amounts of funding?
For the expansion? There's $64 million in debt service annually from the state. There is a reduction in the Convention Center's operating deficit of between $1.4 and $2.1 million depending on the year, and then there's the hotel tax increase. Those are the primary sources.
Thank you. Are there questions from members of the Committee? e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 Councilman Green.
Thank you. One of the questions I have about the percentages that we're setting out so many years in advance and agreeing to cap ourselves at six percent and give people -- so essentially limiting what we get to three percent of the growth, 3.5 percent of the growth, and giving the balance to GPTMC and the Convention Center's Visitors Bureau is inconsistent with a budgeting-for-outcomes approach where we would require people to come back and demonstrate their effectiveness, their effective use of City money or of money that we tax and then pass on to people. Is there a reason that we've sort of built in an increase that will last forever rather than sort of giving it to ourselves and then having people come back and justify it in the future? In terms of an approach of governance, it doesn't seem to me to make a lot of sense e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 to just say forever we're going to give people everything above six percent and cap ourselves at 3.5 percent. You know what I'm saying?
Well, I guess the answer is, this is local legislation. We could come back and review it at some point in the future if we wanted to.
Thank you. Are there any other questions from members of the Committee? (No response.)
Our next witness. MR. McPHERSON: Ameenah Young. (Witnesses approached witness e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 table.)
Good afternoon. Kindly identify yourself for the record.
Good afternoon. I am Ameenah Young, CEO and President of the Pennsylvania Convention Center Authority. Madam President, City Council members and their staff, hospitality colleagues and citizens, we are here today to testify in support of the hotel tax and to update you on the construction of the expansion and the adherence to the ordinance regarding inclusion diversity and the Equal Opportunity Plan. Today I am joined at this table with Joe Resta, the Project Executive; Jim Roundtree, the Director of Diversity for Expansion; and in our audience I have the President of -- I mean, the Chairperson of the Pennsylvania Convention Center, Mr. Riley, and I also brought our CFO, Madeline Apollo. I'd like to start by having my e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 colleague, Joe Resta, explain the construction, where we are to date, the two major contracts, what it involves and the participation. Joe.
Thank you, CEO Young. I'm Joe Resta, Project Executive, Pennsylvania Convention Center. We are currently in the basically deep foundation phase of the project. The project itself is split into two very large contracts, the first of which is the superstructure contract, which has been bid and awarded. The Keating Joint Venture was the recipient of that contract, and they are actively engaged on site working. So basically that portion of the project consists of the foundations for the projects, the concrete superstructure and the steel superstructure for the entire expansion. The second contract, Contract e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 2, which has also been bid and recently awarded yet again to the Keating Joint Venture, is essentially the general construction portion of the contract, which is the exterior skin, roof of the building and all of the interior fit and finish of that. So what you see on site today are caisson excavation, caisson drilling. You'll see grade beam forming and reinforcing steel installed and concrete being poured, and actually see partial demolition of the westerly wall of the current facility to accommodate the bridge that will in fact occur over 13th Street, similar to the bridge that is over 12th Street in the existing facility. That is essentially a synopsis of where we're at in construction. The summary of the minority and women business participation has been provided. I will basically present in summary, and if we have any questions regarding the e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 particulars for the respective contracts, we'd, of course, be willing to answer them. But Contract 1, as we've testified, awarded to the Keating Joint Venture. Total awards, $154,893,000. Minority business participation, $28,772,957, representing 18.5 percent of the contract value. Women business participation, $22,220,150, representing 14.3 percent of the contract value. Combined awards is $50,993,107, representing 32.9 percent of the contract value for combined minority and women business participation. Contract 2 as projected, it is basically very recently, within a day, of being awarded. The contract value, $294,499,000, $60,772,000 of which, or 20.6 percent of the contract value, will go to minority subcontractors. Women business participation on that is currently set at $24,871,741, representing 8.4 percent. Of that, there e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 are some footnotes on the further documentation provided with a commitment from the contractor to get to approximately percent women business 6 participation. So we currently stand for 7 combined minority and women business 8 participation on Contract 2 at 9 $85,643,741, representing 29 percent of 10 the value of that contract. In the 11 aggregate, we essentially have combined 12 $136,636,848, representing 30.5 percent of the contract values for the project. We also have two other initiatives along with subcontractor participation. It's workforce utilization and an apprenticeship program, and I actually would like our Director of Construction Diversity for the project, Mr. James Roundtree, to present on those two issues.
Good afternoon, Madam President and members of City Council. We provided for you a breakdown of the workforce that has been e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 participating on the project since the end of August through September, and our growth figures for that. Although we're about percent into the total contract, 6 you will see for year to date it's been 7 11,172 hours, with 4,128 going to 8 minorities and females. 9 The next page, we have a 10 breakdown by hours and by people. If I 11 can bring your attention to the first 12 column where it says Skilled Workers, you will see that total skilled workers to date is 8,193 and a half, but African American males making up 1,732, which is roughly percent; Hispanic males at 509 17 hours, which is roughly six percent of 18 those hours; with females 487, 19 representing six percent of that, and 20 this gives us a total of 33.1 overall in 21 the skilled area. The laborer trades represents 2,978 hours, with African American males doing 805 hours, representing 27 percent; Hispanic males doing 585 hours, e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 representing roughly percent; and we have females at that particular time -- that's a typo. Pardon. That is a typo, because they've done more than eight hours, because we've actually had seven females on the project. So I'll have to get you another version of this that will give you the total hours of females that worked on the project. To date, skilled and laborer minorities and females worked 11,172; African American males, 2,538; Hispanic males, 1,095; and females, 495 hours. That's better. The actual workforce, African American males, we had 37; Hispanic males, we had 17; females, we had seven, and we had a total workforce of 138. Seventy-two have been Philadelphia residents, 60 have been other Pennsylvania residents, and 36 has been other workers from around the area. The last page is a breakdown of the project by apprentice, and to date, e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 we had apprentices on the project that 3 performed 747 hours, or roughly 9 4 percent. And if we didn't have any -- 5 laborers didn't have any apprentices on 6 the project. And so to date of the 7 11,000 hours, 6.9 percent have been 8 worked by apprentices. 9 I'm available for any 10 questions. 11
Thank 16 you. 17 The Chair recognizes Councilman 18 Clarke. 19
Thank you, 20 Madam President. 21 Good afternoon. A couple of quick questions. Mr. Roundtree, you probably can answer this. You were involved with the Phillies and the Eagles or the Stadium Oversight Committee? e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
Right. I recall seeing you at the meetings. In terms of the percentages in contracts -- and I understand if you can't recollect those numbers, but off the top of your head, could you recall what the numbers were in contracts, WBE versus MBE?
Can you recall generally what the traditional numbers are? Because you've been involved in a lot of construction projects.
This number -- let me cut to the chase. This number on WBE seems -- it's great. Let me preface that by saying it's great, but traditionally you don't see the WBE e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 number higher than the MBE number.
In this case, it's the same. The WBE number is not higher than the MBE number.
That's not normal, from my perspective. Is that normal?
No. It's not provided in this document either, Councilman. In both instances, the minority activity, the minority business exceeds women business participation. It exceeds it greater in Contract 2 than Contract 1.
In the first one, about four percent, but we're working on some other areas that will increase it to a -- we're looking to try and get that number over 20 percent, but right now it's a little less than four percent. Minority businesses are 18.5 and the women businesses are 14.3. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 Now, for Contract 2 --
I guess in political terms, that's within the margin of error.
All right. One, let me say that the percent, I'm 10 extremely concerned about that number. 11
And I guess 14 I'm okay with the WBE number, but the MBE 15 number -- is there a reason why we can't 16 get a higher number other than the 17 traditional? Because this was supposed 18 to be the make or break deal, and we went through a couple of months of some real arm twisting among members, even against some of the members to be supportive, and the unions were supposed to pitch in, and I understand that our ability to get this thing done was with this new found spirit. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 Can you just for the audience, fundamentally what is wrong? Why can't we get above percent? What is it? Is 5 it the availability of the contractors? 6 And you know I can, for purposes of 7 disclosure, I've called you about a 8 couple of contractors that I know that 9 have done significant and substantive 10 work on a large scale, and I got a little 11 frustrated because I couldn't understand 12 if these people, who have done work for 13 the Housing Authority and a number of 14 other developments, they weren't able to 15 get involved, then who can get involved. 16 Now I'm hearing this 18 percent number. 17 I'm trying to understand, what is the 18 underlying problem?
Size, capacity. We've had a number of instances where we felt that we were on the brink of getting companies involved and for some reason or another, either the size and capacity or the dollar value between them and the low bid was so great, they couldn't agree to e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 terms. That's been really the significant portion of why we're below 4 percent at this point. 5
But that's 6 always the case. I mean, we knew that 7 going in. I mean, that's always the -- 8 I'm not going to use the term excuse, but 9 that's always the excuse that we give for 10 not reaching the appropriate number. So 11 we knew that going in. So why didn't we 12 come up with a mechanism, be it breaking 13 up contracts or -- I know in the stadium 14 we came up with some joint venture 15 arrangements that some people had some 16 concerns about the actual workforce. 17
Right, and this 18 number represents pure straight 19 contracting. There are no joint ventures 20 in this number. They're actually goods and services that will be provided by the specific firms. We did not pursue any joint venture relationships because of the activity that happened both with the stadium and the ball park and the e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 negative feelings that was left with those activities. I too reach some level --
I'm not saying all those feelings, because I sat on those committees, and I didn't necessarily -- there were a couple that there were some questions about, but I thought, from my perspective, it gave some contractors an opportunity because they didn't have the capacity to be in a joint venture that increased the number substantially in the stadium contracts. So I'm not saying I'm opposed it. I don't want you to think that I'm opposed to it, but if we're sitting at 18 percent and the joint venture arrangement gets us to 30 percent, what's the problem with that?
It really will depend on the tasks of the service that the minority or women business were providing in a joint venture, how you counted it. And I guess the negative e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 sentiment was that once a firm reached 51 percent, it was counted as a whole versus just a part. Where we are now, if you take a look at the firms that are participating, a number of these firms will be working at an activity that will increase their capacity. A lot of the companies have not worked at these levels before, and what we are hoping to do is, by this experience, provide them with an opportunity to be able to be primes at some other activity.
No, not necessarily the next expansion. We're looking for these firms to live beyond this expansion. This is --
No, no. I said next activity. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
Excuse me. Excuse me. Councilman Jones has a point of information.
Is it true that sometimes it's more difficult to measure joint ventures because there is the bait and switch aspect of it and people have a propensity to put false firms in there? Has it been your experience over the years that that 20 has happened?
It has been my experience that most of the firms that participated in that manner have not had an opportunity to grow, because once the industry gets comfortable with joint e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 ventures, they won't allow the minority partner to bid as a prime. They will always use the experience factor of this partner as a gauge of his ability or her ability to do work. So it's been very difficult for people to experience opportunities as prime contractors once they step away from joint ventures.
Well, how do you get over percent? 13 I'm sorry, Councilman. 14
Just by that. The contractors looked at the areas that they think that they could fill out activities or get participation from, and based on that, we got the 18 percent.
I'm asking you, how do you get over it? If you're saying that you don't want to e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 entertain --
Let me clarify then. Please let me clarify. I did not mean that I personally, James Roundtree, did not want anyone to participate as a joint venture.
Okay. I just want to make that clear. The issue for us around joint ventures is providing meaningful and substantial work. First of all, none of the ventures presented to the Authority are joint venture for us to evaluate, and at the time we were entertaining outreach meetings, we were trying to get as many prime or first-tier contractors as we could and second-tier subsequently. But the key issue for us has always been trying to get minorities e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 and females on a different playing field, on different levels of the playing field, and joint ventures did not -- was not offered to us on this activity. We could only evaluate what was offered to us on this activity.
All right. Well, let me go back to my question that I just asked you. How do you get over 15 percent? 16
By identifying more opportunities that minorities or females can participate on this project based on the way the prime contractor saw it when they submitted the bid. And we've actively and continually pursue that cause. When we find that there's an e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 area that they haven't purchased or haven't brought out, we ask them to consider minorities and females in those areas, and we identify through the Philadelphia -- the Greater Philadelphia Urban Affairs Coalition firms that could participate on that level.
So in our process of or our schedule of subcontracted bid solicitations or prime, where are we at in that process that allows us an opportunity to identify additional minority contractors to get over that percent? I mean -- 16
At this point, 17 the contractor has submitted a bid to us. 18 We've evaluated it, and we're up to the point where we say that they have provided a best and good-faith effort. It's meaningful and substantial. However, if there are any other areas that are longer and longer range, would they consider minorities and females, and at this point, they have said yes, but we e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 have not identified beyond this percent. We were asked to present to you today the level of participation we have at this juncture.
And I'm 7 asking you today, how do you get over 18 8 percent? 9
And the process 10 that we will do is, we will go back to 11 them, look at where they are in their 12 purchasing area and identify items that 13 may be utilized to increase the level of 14 participation beyond 18.5. 15
Do you feel 16 confident that you'll be in a position 17 to -- 18
I feel confident that we can move it beyond 18.5. How farther beyond it, I can't tell you, but I am confident that we can move it beyond the 18.5.
Huh? e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
Councilman Goode, do you have a point of information?
Thank you, Madam President. Two quick points. Ms. Young, could you remind us what the DBE participation goal was when this legislation was introduced in City Council?
Would you say the first part of your question again? I'm sorry.
Could you remind us what the DBE participation goal was when the legislation was introduced in City Council?
When we initially presented to you what our participation goals -- and as you recall, we had gone through a process where we had a firm come in -- we were somewhere around 11 e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 and 12 percent.
The original goal that was presented to us back in the end of November, beginning of December?
So that original goal of 11 and 12 percent was too low?
That was the goal then, and absolutely we have moved above that by 50 percent.
Second point, the numbers on the stadium project were inflated in terms of DBE participation because of the joint ventures; is that correct? In other words, you counted money that actually went to majority firms as DBE participation?
Yes. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
Getting back to my point, so tell me how you're going to get above percent again. 7
I think I 8 answered that by saying that we will 9 pursue activities that have not been 10 deemed committed to other firms at this 11 point. And we don't know that yet, 12 but -- and you also asked me was I 13 confident we could do better than the 18 14 percent, and the only way you can do that 15 is by clearly identifying the specific 16 items, negotiating with them or having 17 them negotiate with minority and women 18 businesses that can perform the work and reap revenue from it that will tell us how successful we will be.
Then can you just tell me what percentage of those contracts that you may have an opportunity to increase?
No. At this e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 point, we don't have it. We've awarded in Contract 1, we have awarded the contract to the Keating group. It is up to them at this point to identify any additional areas that they feel that they can get participation on.
No, with our help and our suggestion. We meet with them on a weekly basis to determine where they are in their whole process, and once we identify areas where we believe that minorities and females can participate, we will strongly encourage them to do so.
Thank you. The Chair recognizes Councilman Jones. His light is on. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 (No response.)
Let me just clarify. I'm going to ask you a question about what you just said. You've awarded Contract 1?
On that contract, you have percent. I think 12 the Councilman was saying how can you get 13 that increased, that number increased? 14
Okay. 16 Because you have awarded the contract and 17 we accepted their MBE percentages, are 18 you saying you can't go back and require --
Because e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 you've accepted what they offered.
Right. But to the contrary, we can always go back and say -- it's been pretty much a give and take activity, where we identify items that can be purchased from minorities and females and then we identify who they are and have them begin the process of even negotiating with them or trying to get a competitive bid. But it is clearly a part of a collective negotiation versus require, because at this point, they have provided something that we believe represents up to this date their best and good-faith effort.
Are these companies, they will actually do the work and are not really -- they're not equity participants --
No, they are not. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
No. They will be providing goods and services directly to the contractor, and we will be monitoring not only just the activity, but their payments.
How do you certify that they are minority companies? Do you do that?
No, we do not certify. We have the Greater Philadelphia Urban Affairs Coalition verifies the certifications of each one of the firms. As part of the best and good-faith effort, each firm that says that they are certified as a minority or female are required to provide to the Authority documentation to that effect. We then have the Greater Philadelphia Urban Coalition go out and verify that information and then write us to tell us what the strengths or weaknesses are of that activity. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
You're welcome. Are there any other questions from members of the Committee? (No response.)
What is the projected date of completion for the expansion?
Right now it's projected in early 2011. It really is -- a precise date at this point, we just really awarded Contract 2. We have about 45 days until we get a schedule from contractor. It needs to be evaluated, coordinated with the schedule for Contract 1 and then a master schedule basically put forth. But it's essentially the end of January into February 2011.
Thank you very much. Councilman Green, you want to e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 be recognized?
Thank you. Thank you for your testimony today. Can you tell me what the total budget of the Convention Center Authority is annually?
For the construction we're about -- our operating budget, we're about million. 18
$18 million. You may do this, I don't know, but if you haven't, can you please provide the Chair with a copy of last year's detailed budget and the upcoming year's detailed budget for the Convention Center Authority?
Certainly. We'd be e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 happy to do so.
Thank you. The Chair recognizes Councilman Goode.
Thank you, Madam President. Very quickly and just for the record, this is the first update that we've received on the Economic Opportunity Plan. How often will we be receiving updates?
Consistent with the ordinance, you will receive monthly updates. We also have an Oversight Committee, that a report goes to them -- comes from them. That includes a couple of Councilpeople who are on that Oversight Committee. Monthly updates you will receive.
So for the record, City Council will receive one in November and in December and each month e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 until this is complete?
You're welcome. The Chair recognizes Councilman Jones.
Thank you, Madam President. As we proceed with the construction, we have greater opportunities before us to increase our participation numbers?
We have awarded the contracts, and the contractors had to comply with a program, our diversity program. What we are doing now is, in the process of construction, opportunities avail themselves --
Exactly. And we are very aggressive on utilizing minority e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 and females for all of those kinds of things, whether it's printing. I mean, someone, an engineer says, Oh, I need these documents, we try and turn that toward a minority or female printer. So any of those opportunities that are tangential to the construction proper we are aggressively pursuing, because in addition to these numbers that we're giving you, what we are also attempting to do, as Council made it clear that they wanted us to comply with, is to build capacity so three years from now we don't find ourselves with numbers that look like this.
So to speak to my colleague's interests, we will continue to try to build upon the 18 percent in ways through change orders, additions and things like that?
Second thing, as we look down through the trades and where we see good participation but e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 yet some of them are not yet fulfilling any of their minority and female kind of goals, we have an opportunity going forward as we let these contracts to monitor that and increase that as well?
Yes, absolutely, but I think we all want to chime in, because we've got anecdotal stories regarding it. We'd like you to also keep in mind that we began September 2nd, and we expect to have on that site in terms of at the end of it approaching 2,000 bodies that will have come through that construction site, and we will use every opportunity, just like on the contracting side, to do the same for the skilled trades.
And the reason why you see several areas that have zero participation, it represented firms where only had one or two people at a time. And so we've identified that activity, and from this point on, it will be more e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 of a steady flow of a workforce that exceeds the two to three limit. So we will have an opportunity to make sure that minorities and females are participating fully on that activity.
I understand your desire and goal to increase participation as much as possible, but do you actually know how many minorities and females are in each trade?
Are there any other questions from members of the Committee?
Oh, e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 I'm so sorry.
To speak to the spirit of both of my colleagues' points is that we had an agreement that was one of the first pieces of business that this Council had, and that it is true that by virtue of the will of the owner does affirmative action and diversity and inclusion actually happen. So I guess one of the things that I want to have on the record is that we are going to encourage these unions, skilled trade unions, to continue in this good effort, and I think that both on the contracting side but also on the workforce side, that we are going to encourage that as the owners of the job.
Absolutely. We heard you in December and we hear you loud and clear now. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
You're welcome. The Chair recognizes Councilwoman Brown.
Thank you, Madam President. I just approached my colleague, Councilman Goode, to make sure I'm clear, because I heard all contracts. What you're talking about now is purely and strictly for the construction phase of this effort, correct? It has nothing to do with furnishings and artwork. That comes later, does it or does it not?
That's correct. That's correct. The data that you have in front of you is purely the construction contracts.
So at what juncture in the construction phase then do you let the world know that a new phase of this is about to happen and thus e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 we need professionals or skilled persons in these next new set of areas of expertise?
It will basically work out as it falls in sequence with the appropriate time in construction. Furniture, fixtures and equipment routinely are not purchased prior to having them available to be delivered to site in a scheduling --
That I get. So my question is, at what juncture do you then let that world know we are now ready for what you bring to this effort? e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
Is it six months out? You say that the end date is 2011. So let's presume it's 6/2011. Back into it. Does it become January 2011 or December '10? When does it happen?
Some of the longer lead items on FF&E would probably commence in the springtime of 2010 and really commence through the summer to coordinate with the installation schedule.
And what we'll do is like we did the outreach for the construction, we'll begin a process where we identify who is available and who has experience, et cetera. We'll do the kind of outreach that we consistently did with the construction; that is, once a week have informationals regarding what's going on, letting them know the timing of what's happening, what's expected of them, how they have to fit into the e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 entire schedule and what we're doing. So we'll start that about that time.
Okay. Thank you very much. Thank you, Madam President.
You're welcome. Are there any other questions or comments from members of the Committee of these witnesses? The Chair recognizes Councilman Clarke.
Yes. Thanks, Madam President. This will be the last question. In terms of building capacity as we're on the job or prior to, is there a process -- we all know, anybody that has an understanding of this industry -- and I think you alluded to it earlier on -- that part of our problem is that the companies out there don't have the capacity to bid as primes on these significant jobs. Is there a process e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 that we have put in place leading up to this Convention Center that would enhance the capacity of those companies prior to the letting of the contract, since we all knew that was going to be a problem going in?
I will say from an organization standpoint, we have not. We are purchasers in the marketplace. We try to do everything we can to reduce the impediments that historically has been in the way of most of the small businesses. But part of what we see now is more of a business decision on how far or how fast they want to grow and where the grasp of the activity is. We can go down some of these categories and tell you that we actually had to ask the general contractor, both in the outreach stages and as we got close to the bid, to consider reducing the size of their packages that they were going out, because once we heard in the marketplace what they were actually e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 trying to obtain as far as packages was concerned, we asked them to reconsider so that some of the firms that came to the table would have direct relationships with them versus second or third tier. I think when you go through this list and once you talk to some of these individuals as we progress, they will tell you that they will benefit in the long run by being minimally a second tier. We don't think we have any third-tier contractors on here yet. That may be a process that they have to go through, but right now our aim was trying to get first-tier and second-tier contractors, and that's why we really -- although I said earlier we did not encourage, we did not discourage joint ventures, because one of the things that they have to do after this is market their skills, and it's becoming increasingly difficult for individuals to market as part of a joint venture when you're marketing to the same client that e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 your partner is and then they start telling what they did versus what you did. And that's been a very difficult hurdle for most of the small and medium-range businesses to overcome.
Thank you. Just one final question. Can you tell me, of the additional money that you're going to get, the Convention Center Authority, what exactly is it going to be used for?
It is essentially -- the budgetary requirements of the project are going to be -- the financing for that will be funded -- the annual debt service will be funded from e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 the increase in the hotel tax.
So 100 percent of the money you'll get from the increase in the hotel tax will be going towards financing for the expansion itself?
It's my assumption that that is correct, but that is really probably a question for the Finance Director whether it's 100 percent of whatever percentage --
Well, it's your budget, though. I mean, you're getting the cash.
We're not getting direct construction cash from the hotel tax. It funds debt service.
But it's going into the Convention Center Authority, right?
And it's only debt service? Okay. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
So it could be old debt service or expansion debt service. That's the distinction you're making, but 100 percent will go to debt service?
The construction funding comes from the bond issues that are sold by the Commonwealth. To pay for those bond issues, the debt service kicks in to pay the annual debt service for bonds.
Any other questions or comments from members of the Committee? (No response.)
Thank you very much. Please remain just in the event that there are other questions that may come up.
I'm e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 sorry. Councilman Green.
I'm sorry. Could we get the CFO of the Convention Center to just answer that question? I understand she's present.
I just want to know where the extra hotel tax is going in your budget, whether it's --
I'm going to allow our Finance Director to come up and speak to that, but I'm going to stay here with her. (Witness approached witness table.)
Thank you. It really doesn't go to a specific line item. What happens is, there's a calculation that's actually done by the Commonwealth. They take the debt service of the bonds that they e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 generate. They offset that with the revenues the Convention Center generates, offset what the hotel taxes that the Convention Center receives, and there becomes a net bottom-line number that has to be funded. This hotel tax will just become part of that equation. It's not really earmarked for a specific line.
So it goes into your General Fund, and assuming the bonds were issued at a lower rate or whatever, for some reason the costs come in less than expected, et cetera, then it would be in your general operating budget as sort of excess cash flow, then you could either choose to -- what would you do with money if it ended up --
It's not at our discretion to use. It really becomes part of the debt service calculation. Like we couldn't use it for our operating budget or anything like that. It becomes -- it reduces the debt service, in effect. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
So you'll use it to pay down bonds quicker if there's extra money; is that your testimony?
That's really at the Commonwealth's discretion. It's their bonds. It will just become part of -- there will be a lesser amount they'll have to fund us each year.
So just so I'm clear, though, it's your testimony that it goes into your general budget and then when the budget gets approved by the Commonwealth with input from the City, that's when we'll see how it's actually spent?
Any other questions from members of the Committee? e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 (No response.)
Seeing none, I would ask Mr. McPherson to please call the next witness. MR. McPHERSON: The next group is Bill Fitzgerald, Meryl Levitz, Manny Stamatakis and Tom Muldoon. (Witnesses approached witness table.)
Good afternoon. My name is Bill Fitzgerald. I'm the President of the Greater Philadelphia Hotel Association, also General Manager of the Doubletree Hotel. The Greater Philadelphia Hotel Association represents 87 hotels around the region, including all the hotels in Center City, Philadelphia. Our members employ over 14,000 residents of the Delaware Valley, and we hold over 30,000 guest rooms. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 I'm here today before you to address the City Council Ordinance No. 4 080744, which proposes a 1.2 percent tax increase on hotel room rentals. As a long-time member of the hospitality industry of Philadelphia and as its representative here today, I want to plainly state our support for this proposal. We believe a tax of this size and nature will provide the right return on the investment for our industry by ensuring the expansion of the Pennsylvania Convention Center and by dedicating additional dollars for regional tourism and marketing to shore up the success of that expansion effort. You might wonder, how can an industry support a tax on itself? The answer is quite simple. Because in this situation, it is an opportunity and not a hardship. Via an expanded Convention Center, we should see hotel development grow as much as 2,500 rooms in Center City, which will create an additional e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 1,800 new jobs. Along with this development and new jobs, hotel revenues are projected to grow over $150 million. This expansion will also create compression, which will benefit hotels outside of Center City, such as properties in the Airport area, University City and Northeast Philadelphia. A 1.2 percent tax increase translates into an average of about a $1.40 more per night per room. This is an increase we, as well as our guests, can live with. Not to mention a raise in the tax will impact Philadelphia's rank among hotel markets only slightly, maintaining our region's competitiveness among some of the most in-demand travel destinations nationwide. Our City's hotel industry is willing to take on an increased room 23 rental tax because we believe it is not only the right thing to do for the City, but because we know it will lead to the e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 attraction of premiere, large-scale conventions at the expanded Convention Center and better overall marketing for our vibrant city and our region. It is a win-win for the hotel industry, and we are fully supportive of this measure.
Thank you, Councilwoman Tasco and members of City Council. My name is Meryl Levitz. I'm here as President and CEO of GPTMC representing its 13-person Board and its 45-person staff, some of whom are here today. Our Chairman, Manny Stamatakis, is also present, as is Nelson Diaz and David Hyman, two of our 13 Board members. We appreciate the opportunity to speak to you in support of the hotel room rental tax. Philadelphia has become an overnight sensation. That is why for the second time in ten years the Hotel Association has championed an increase on e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 the tax to their own customers, a very unusual thing to do. In 1998, they advocated a one percent increase and saw it pay off with an immediate, continuous, significant and measurable return. " Philadelphia began its change from a two-hour tourist stop to a premiere visitor destination and next great city. Before we began advertising, only 12 percent of Philadelphia's overnight hotel visitors were tourists. Now 35 percent of them are, with 25 percent of them coming individually and ten percent as part of groups generated by the united work of GPTMC, the PCVB and the hotels themselves. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 In 2005, the hotels came back to GPTMC and the PCVB to begin work on a second increase, with the intent of being able to stay competitive, capitalizing on momentum and meeting the marketing needs of the City's new investments in all the other buildings, not only the Convention Center, but also Please Touch Museum, National Constitution Center, Franklin Square, President's House, the relocation of the Barnes and the development of the Centennial District, for example. And that's in addition to the marketing of Philadelphia's neighborhoods, green spaces, restaurants, shops, galleries, as well as blockbuster exhibitions such as America I am, Cezanne and Beyond, Galileo, the Medici and The Age of Astronomy. These wonderful attractions need a strong Philadelphia brand to help them succeed. The stronger and more well known and well liked the brand, the more value they each have in the eyes of the beholders and the better chance they each e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 have of being successful. In addition to being able to ensure that we are marketing the City's new investments and building the brand, GPTMC will continue to market our city neighborhoods. From University City to Center City from Centro De Oro to Midtown Village and South Philly and North Philadelphia, GPTMC connects the dots for the tourists who don't see neighborhood boundaries but are seeking that authentic experience in one of our great neighborhoods. Every day GPTMC reaches out on the City's behalf to tens of thousands of people in media to entice them, invite them and enable them to come to Philadelphia for a weekend, a getaway or a vacation. And they are coming and coming back. Four million more of them means $25 million more per day circulating, 58,000 jobs in the City and a lot of goodwill and new friends for our city. They're reading about Philadelphia e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 on the web and in the New York Times, the Boston Globe, the Washington Post, Food and Wine, Rolling Stone, USA Today and airline magazines. They're seeing our Philly's More Fun advertising on cable and network TV, on billboards, in movie theatres, on Google, radio, direct mail, e-mail and mobile messaging. They're hearing about it through their AAA travel planners, hundreds of whom GPTMC talks with each year. You're probably not seeing much of this advertising because you are already here, and we spend all of our funding outside the area.
None of this increased buzz happens automatically. It's what GPTMC does 24/7. We do it with such partners as the PCVB. Together we are two sides of the same hospitality industry coin, wholesale and retail. And we work together to drive business here to the Convention Center and to all the other revenue-generating and image-enhancing buildings in our city, as well as to our e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 outdoors and our neighborhoods. People know now to come to Philadelphia for all kinds of reasons, dining, music, special events, festivals, arts, spectator sports, family activities, history, architecture and design, and they stay overnight because there is way too much to do here in a day or even two. And none of these wonderful options has a "visitors only" sign on it. Our residents have enjoyed more to do in recent years, because more visitors means more restaurants, shops and entertainment venues. With the additional revenue from the hotel tax, GPTMC can generate additional revenue for the City and jobs for the City's residents. Each media dollar we spend generates $185 in direct, indirect and induced spending, plus $13 in state and local taxes. And all of the tax revenue that we get will be spent on media. In 2007, 58,000 jobs were e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 supported by the tourism in our industry, and these are jobs in every sector, from high school grads at hotel front desks to the accountants and design consultants that our restaurants and attractions employ. This industry is inclusive and it's pervasive, and one of our biggest. We thank the Hotel Association for their confidence in our two organizations, and we thank City Council for being our co-funder in 1996. We thank Council for supporting the 1998 tax which made us a permanent organization, and we thank Council for funding the groundbreaking Philly's More Fun When You Sleep Over campaign after 9/11, nationally recognized as the most successful recovery campaign in the entire country and whose hotel package, "Philly Overnight," continues successfully to this day. Our city would not be an overnight sensation without you. The packet we gave each of you e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 gives background and great detail on all the topics we touched on above and more, and we're always available for questions. Thank you again.
Council President Verna, thank you very much for having us here today. The Philadelphia Convention and Visitors Bureau, a non-profit membership organization, is the official tourist promotion agency for the City of Philadelphia. It's also the primary sales and marketing agency for the Pennsylvania Convention Center. We compete with our counterparts worldwide for convention and tourism business, which ultimately generates economic impact and job growth and certainly leads to a better quality of life for our citizens. We do this with a top-notch e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 sales and marketing force that communicates with meeting planners and attendees, show organizers, tour operating companies, international visitors to get them to choose, meet or visit in our great city. We have a talented and diverse staff at the PCVB. Multi-cultural professionals are working at every level of our organization, from executive to administrative, and comprise 35 percent of the staff of the PCVB. We also strive to diversify our purchase, and have done so by spending at least 30 percent with multi-cultural and women-owned businesses in Fiscal Year 2008. Customer service is a core value at the PCVB. In fact, we were recognized as the best convention and visitors bureau in the country in both 2006 and 7 by independent surveys of 1,700 national meeting planners. The new room tax receipts will be used to continue to build on the great e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 success of the Philadelphia hospitality industry, which employs 57,000 people in the City. Future marketing efforts will have a substantial return on investment, which you can read about in more detail with what's been left behind. With the expansion of the Convention Center underway, consistent and strategic marketing of the Center and Philadelphia as a premiere convention destination is essential to meet the revenue goals in this billion-dollar business, which makes up 41 percent of all the room nights sold in Philadelphia. Competition for conventions is fierce. With the new revenue, we'll be able to have a consistent convention marketing program, focused on trade shows, national corporate and multi-cultural and life sciences and sports-related businesses. Ultimately, this will keep the Philadelphia brand and the expanded Center in front of the customer, setting us apart from the e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 competition. Our primary competitors are spending millions of dollars to promote their convention centers and destinations. As an example, Boston is spending an additional $4 million annually in promoting their new Center. As the international marketing arm for Philadelphia, the PCVB has worked hard over the last seven years to grow international travel to the City, and it has paid off. In 2007, Philadelphia saw the largest increase in international visitors of all major U.S. cities, an impressive 27 percent. Long-term investment in the international marketing strengthens Philadelphia as a premiere destination in the United States. On behalf of our 1,000-member businesses and our Board of Directors, thank you for your serious consideration for this legislation.
Thank you. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 Are there any questions from members of the Committee? The Chair recognizes Councilman Green.
Thank you very much for your testimony. As we have discussed really since January when you were both kind enough to come around and introduce your organizations and yourselves to me after I got into office, honestly, I believe that Philadelphia under-spends in terms of tourism and marketing promotion compared to what we could and should be doing to get people to come to the City of Philadelphia. So I'd just like to look into a few things and then maybe get you to talk about maybe some international marketing. But one of the questions I had was related to a statistic that you said, which is for every one dollar that you spend -- and this is to Meryl -- it's $185. Is that $185 spent in the City of Philadelphia? e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
And are you measuring that by dividing all tourist dollars spent or are you measuring that as -- in other words, you're saying when you spend a dollar, you're comparing that to $185 spent among every -- in other words, how do you break that down?
We hire two research agencies who measure advertising effectiveness and do focus groups and research on each campaign, and what they ask the visitor is whether they saw the advertising and all of that and then how much they spent while they're here. And clearly, when -- it might be even more now, because now that restaurants cost a little more and hotels cost a little more, it may be even more.
So with respect to -- you said you had -- can you tell me the breakdown, tell me what your e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 total budget is.
Our total budget is $12 million. It's been flat for a few years now.
And of that $12 million, how much actually goes into marketing?
It includes some agency fees, sure. Because we can't do everything in-house, we hire a number of firms, including minority firms, to do a lot of our advertising, promotion and vending.
Today, yes. We're not a membership organization. We're a marketing organization, so it's structured differently. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
And they only make up $2 million of your $12 million budget?
So roughly, everything other than staff salaries is spent on marketing, promotion dollars?
Right. We took in-house a lot of our web work, our research and our PR work. So in a sense, we're now an in-house agency for advertising, except we don't do TV production. We do a lot of our own communications and we do a lot of our own web.
Would you please provide the Chair with a copy of your detailed budget for last year and your current-year budget?
Sure. And it's posted online on our 990, but we're very happy to provide it as well.
With detail in terms of professional service fees, e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 breakdowns, everything like that?
Great. And I'd like to ask the same request of the PCVB.
Thank you. So could you describe your mission, GPTMC, and who you're promoting and what your promotional area is and where your revenues come from.
Our mission is to promote Philadelphia and the countryside as a premiere destination for the leisure traveler and to build the brand for all market segments. In short, it really means increasing the number of visitors who come, the number of nights they stay e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 and the number of things that they do. And then what was the second part?
Do you have any revenue from them into your direct operating budget?
We do, but it's not in the form of a hotel tax. They are capped by the state at three percent. If they were to raise their hotel tax to contribute to us, they would have to get the okay from the state. What we do with them is, when we do each campaign, they pay in by project. So it's a project by project. In addition, the state gives us -- last year it was $1.8 million to promote those e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 four counties.
I'm sorry. That three percent tax that applies in those counties, some of that comes to you now?
They use that for their own Convention and Visitors Bureau and their own Visitors Center, because they work on their own to promote travel to their own counties.
So just for the record, who is promoting just Philadelphia County with Philadelphia tax dollars? Anybody?
Well, we are and the Convention and Visitors Bureau. We both are.
But, I mean, there's no organization that's just promoting Philadelphia County?
But they use their tax in the suburbs to promote just their counties? e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
Yeah. Although they employ and their hotels and restaurants employ Philadelphians, and 5 percent of their -- 6
I 7 understand. I'm just asking about the 8 particular uses of the various taxes 9 between the counties. 10
So I 12 understand that there's -- when the 13 region grows, it's good for Philadelphia, it's good for everybody else in the region.
I don't dispute that at all. I'm just trying to understand the way the tax situation is working.
Point of information, Madam Chair. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
Thank you, Madam President. While my colleague gets to that next question, I wanted to ask Meryl Levitz to complete that statement, because I do want to hear what percentage of Philadelphia residents actually work in the counties. We heard the flip side. You were about to tell us what percentage of Philadelphia folks work in the counties in the hospitality industry?
No. I was really going to go into our measures of how many of the visitors that the counties generate on their own come into Philadelphia. I think the Hotel Association has better data on workers, but, for example, on the Philly Overnight package, 13 percent of the packages booked through gophila from the four counties.
What e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 percentage?
Thirteen percent. And we know from the Phillies and others that 30 percent of the attendees are from the four counties. Thirty percent of the people who come to Penns Landing festivals are from the counties. We're their big city, and that's why our campaigns, even though we're a regional organization, our name, things like Philly Overnight, Philly's More Fun When You Sleep Over, Philly Te Llama, Philadelphia - Get Your History Straight and Your Nightlife Gay, Boundless Philadelphia and Philly Overnight, it's a Philly thing. Greater Philadelphia.
Thank you. We're their big city, and tourists don't really recognize city lines. Some of the time, as a matter of fact, they describe a Philadelphia trip as Philadelphia and Lancaster, Philadelphia and Gettysburg, and they see it as a seven-day thing e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 where they're swinging through and they spend four nights in Philadelphia and a couple nights on the road. It's in their heads what Philadelphia is.
Are you aware of any -- was there any effort in order to get the surrounding counties to contribute to GPTMC or the PCVB in connection with the proposed tax increase on people visiting Philadelphia?
We have not stopped trying to get the counties to work with us on more promotional dollars. Because I really understand your point and I see it, and one of the things that the state is funding us for now, where the counties will have to pay in, is a program called Towns of the Countryside, and that would be state funded and then e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 funded with county money. But in terms of the hotel, we've had more success getting them to pay in on a project or campaign type basis than trying to get the state to re-legislate the hotel tax cap.
You're welcome. Are there any other questions from members of the Committee? (No response.)
Ms. Levitz, when you were here during the course of the discussion around the $150 million cultural fund, we noticed that you brought a large number of your staff e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 with you, and I was really concerned -- and it may not have been all of your staff.
I recognize that, but some. But I wanted to ask about the makeup of your staff, how many employees you have, what's the diversity of your employees and what are the categories of employment.
Thank you for the opportunity. We're laughing about it now. It wasn't so funny when it happened. In support of the arts and culture initiative, the $150 million bond, we, with the Greater Philadelphia Cultural Alliance, sent out a blast e-mail asking people to come and support it, and a whole lot of yuppies came. I mean, a whole lot of yuppies. And I think some Councilpeople thought they all worked for me. They didn't, but that was the impression that was given. So thank e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 you very much for offering me the opportunity to clarify. We have 45 people. We have five vice-presidents. Two of my five vice-presidents are African American women. One of them started as my assistant. She's here today, Angela Val, and she's now Vice-President of Special Projects. We have -- I would say generally we average between and 30 13 percent of color, both in management and 14 staffing positions. As of today -- I 15 wrote this down. Wait, let me get it. 16 It's seven African Americans, three 17 Latinos and one Native American. We've 18 also engaged over 50 interns over the 19 last several years and then helped place 20 them, because we're really committed to diversity. We have in your packet a couple pages called GPTMC's Investment in Diversity Marketing, which outlines our vendor relationships, community e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 relationships and sponsorships and all of that, which total over $4 million just in the last couple of years. In addition, of our 13-member Board, four people: the Mayor, Melanie Johnson, Nelson Diaz and Bob Bogle. So that's a third, and we've always maintained that. Is there something else? Oh, additionally on our Board, there are two additional women. So we're good on that, too.
Well, yeah. But we do have three women, which isn't bad. And on our staff, I think we have 27 women of the 45.
Thank you. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
Thank you, Madam President. I'm actually trying to find it in the testimony, because I learned I may have missed that. But for the record, share with us briefly how you ensure that all communities, all neighborhoods of Philadelphia are reflected in not only your advertising but the actual bringing visitors actually to the neighborhoods across the City. At one point it was a traveling bus tour, and that's not the proper name, but you actually had a tour where you would take persons to neighborhoods.
We have a number of them, and there are a couple kinds. Well, now there are really four kinds because of technological advances. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 You're probably talking about the pod-casts and then the vod-casts in terms of virtual tours, but we also take media on tours regularly of the neighborhoods. We also offer them for consumers. And the neighborhoods are one of the main attractions to the media. When you read recently in the New York Times about Philadelphia, you may actually be reading about coming to Fishtown or Kensington or Northern Liberties, because it's the neighborhoods that are making Philadelphia look different than every other city in the country. People want an authentic, unusual experience. The other great thing about it is, now that we're getting so many return visitors to Philadelphia, the second time they come and the third time they come, they've already -- not that there's anything wrong with the Bell and the Hall, but they've already done those things and now they want to get off the e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 beaten track and they want to explore their own likes and interests. And so through the strengths of the neighborhoods, we can set them off through gophila, which has about six million unique visitors a year. We can set them off and help them explore music through the neighborhoods, shopping, entertainment, the nightlife scene and, of course, food.
And so you have anchors in those communities that you partner with to help make those experiences real?
Yeah. I'd just like to say to the Philadelphia Convention Center -- e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
I never get it right, Tom. That I was very, very pleased -- I want to go on record to say that the staff that served us when we had our National League of Cities' Women in Municipal Government Board meeting here this past summer, I really enjoyed working with them. We thought we had to do all of the work, but we were really pleased to know that the young ladies, Darnell and --
Mariah and their other staff members really took the reins, took over, planned everything for us, made all of the arrangements, and it really made it a pleasure to sponsor the Board meeting here, and I want to thank you for your cooperation in working e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 out --
You should thank Wanda, otherwise I'm going to hear about this.
Yes. You're right. Wanda was it. I didn't forget you, Wanda. She certainly was very, very helpful in negotiating how we had to handle the arrangements and negotiations with the National League of Cities and with the City of Philadelphia, which is not easy. But I must say that you all stepped in and made it all work very well, and I want you to know that I really appreciate it.
Your second cousin is the National Council of State and Legislators. They're going to be here next July, so -- and there's going to be a lot of them.
Yes. And we did take the members through the neighborhoods of Philadelphia. We tried e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 to get to every section of Philadelphia, the Navy Yard, the Ogontz, of course, you know. I took them through Logan and to West Philadelphia to the Please Touch Museum. We had a preliminary visit, and the Microsoft School. We wanted to get Bartram Gardens, but the time wouldn't allow us. But it was a wonderful trip, and I just want to say to everybody that the service you provided was outstanding.
Yes. Thank you, Madam President. I had an opportunity to meet with some of the folks yesterday, and I just wanted to kind of reiterate for the record as we close out and as we move forward that one of my big interests in e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 the promotions of what we do and the conventioneers is to get more and more people, in the spirit of what my colleague Blondell Reynolds said, into the neighborhoods. If we have 30,000 conventioneers, if I can get a couple hundred of those to come to my Brazilian part of town or my Latino part of town, it has an economic impact. So I want to encourage us as you move forward is to document how many folks we get to the neighborhood and what the economic impact is moving forward. So that's a question I'm going to ask you when you come before us in budget, so that you know, that's what we're looking for. And I'm sure my Council colleagues who have ethnic communities and diverse communities and some staples in their neighborhoods would also, I believe, support us taking more and more of those conventioneers, in a more deliberate way, to neighborhoods across the City. So I'd like to look at those e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 numbers moving forward and I'd like for us to begin to measure the economic impact.
Madam President, I'd just like to add to that. I would say to you, when you host or work with organizations who do come to the City and they may not necessarily be African American or Latino, but certainly we want to show all groups the neighborhoods of the City, and so that they won't just think it's downtown. We do have some wonderful neighborhoods, like Ogontz and Mount Airy and East Oak Lane, which is never shown, to show that Philadelphia is diverse. We do have quality neighborhoods. We do have areas that they could compare. We do that with the National League of Cities. We call them mobile tours, and we go to other parts of every city. Whenever we go to a conference, we go e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 visit other neighborhoods and look at their economic development, we look at their housing, look at their rec centers. We look at all of those things, so that it's just not the nightlife or the wonderful things downtown, but also show what Philadelphians are doing in their neighborhoods. And I just wanted to throw that out to you and you should not just confine it to the African Americans or Latino groups.
If I could add to that, the Multi-Cultural Affairs Congress, which many people in this room 16 work with on different projects, but one of the interesting things is the so-called majority conventions. One of the options is that we give them information on the Multi-Cultural Affairs Congress, and for many conventions, they want to go into neighborhoods or they want to be able to purchase from minority firms. And under normal circumstances, going to a city not knowing anybody and e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 not having that ability, you can't do that. So that is something that we sell, promote, and Tanya Hall and her people do that. The other piece that does get people into neighborhoods is the Mural Arts Program. An enormous part of the appeal internationally of Philadelphia is the Mural Arts. I mean, you'll have people coming from Germany, from Italy, from all over who have heard about and want to -- and that is a great way of getting people into neighborhoods. You may or may not get them to purchase quite yet into an area, but the Mural Arts Program is a real sales product for this city, for all segments.
Are there any other questions from members of the Committee? The Chair recognizes e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 Councilwoman Tasco.
There has been also some discussion with some of the members of Council relative to Council's involvement with your organization, and since we do appropriate the taxes for the organization and we do have representatives on other Boards, could we have -- we'd like to have a representative from Council on your Board, if that's possible.
Just in the Philadelphia Convention and Visitors Bureau, then Councilman O'Neill is on our executive committee. Blondell Reynolds Brown is on the Board of the Bureau. There have been other members of Council at different times on our --
You didn't come to the meetings. And Council President Verna is ex-officio. But if there would be a e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 request for somebody else, I think we made -- Councilman Green has an interest in international, so we've made -- we have different committees as well. So if anybody has any interest, then just personally call me.
Right. And we're specifically talking to the GPTMC organization.
On our Board, traditionally the community representative position has been appointed by Council President Verna, and that was under Mayor Rendell and then Mayor Street. We haven't heard yet -- but we've been told we will soon -- what Mayor Nutter is going to discuss with you on that. But we would -- whatever happens, we would welcome it. That would be great.
I believe in cooperation. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
The way that -- what the bylaw states is that the Mayor has two positions. One is his own and one is called the community representative, where in the past he has turned that over to Council, and that started --
I think what Councilmembers are asking for is a specific Council representative.
Looking back to my Chairman, he said, yeah, we'll have to change the bylaws. We've done it before.
And are you willing to do that? I think that's what's being asked.
Very well. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745
Do we have anyone else that would like to testify on these bills? (No response.)
Thank you very much for your testimony. This concludes our public hearing. We will now go into our public meeting. The Chair recognizes Councilman Kenney.
Thank you, Madam President and Madam Chair. Due to the fact that my affiliation with the e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 firm that has done design work and engineering work on the expansion of the Convention Center and to avoid any appearance of a conflict, I will be abstaining on both votes. I have not participated in the debate on this matter.
Thank you. The record will so reflect that. The Chair now recognizes Councilwoman Tasco for a motion on Bill 13 Nos. 080744 and 080745.
Madam President, I move that Bill 080744 be reported out of Committee with a favorable recommendation and that the rules of Council be suspended so this bill can be heard at Council's next session.
It has been moved and seconded that Bill No. e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 080744 be reported out of Committee with a favorable recommendation; further, that the rules of Council be suspended so as to permit first reading at our next session of Council. All in favor will say aye. (Aye.)
Thank you, Madam Chair. I think because I believe and have discussed with GPTMC and PCVB in the past that we do not spend enough on marketing the City of Philadelphia, both around the country and especially internationally given the low dollar, people were initially surprised when I told them in the past that I was going to vote against this measure, primarily e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 because I wanted the counties to participate in the burden of promoting and marketing the region, and I think it's reasonable to ask them to increase their hotel tax to do so. But based on the testimony I've heard today and what I learned today, I think that there should be a discussion in this body in the future about the appropriate split of revenue between the City and GPTMC and PCVB once we get to the point of where that revenue split is going to change, and also there can be a discussion about more county participation. So because we need to get the Convention Center done on time, we still have oversight authority, according to the testimony of the Finance Director, and because we can adjust the split to be consistent with our priorities any time in the future, including having it cover police costs and fire costs, et cetera, I will save that debate for another time e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 and I'm going to support this measure. Thank you, Madam President.
Thank you. It has been moved and seconded that Bill No. 080744 be reported out of Committee with a favorable recommendation; further, that the rules of Council be suspended so as to permit consideration at our next session of Council. All in favor will say aye. (Aye.)
The ayes have it and the motion carries. And the record will reflect again that Councilman Kenney objects -- abstains. I wanted to get your attention.
All e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 right. We will now consider Bill No. 3 080745, and, again, the Chair recognizes Councilwoman Tasco.
Madam President, there is an amendment for Bill 7 No. 080745. It has been circulated. I offer the amendment to be adopted. (Duly seconded.)
It has been moved and seconded that the amendment that was circulated by Mr. Dubow be approved. All in favor will say aye. (Aye.)
The ayes have it and the amendment is adopted. Again, the Chair recognizes Councilwoman Tasco.
Madam President, I move that Bill 080745, as e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 amended, be reported out of Committee with a favorable recommendation and a recommendation that the rules of Council be suspended so this bill can be heard at Council's next session. (Duly seconded.)
It has been moved and seconded that Bill No. 10 080745 be reported out of Committee with a favorable recommendation, as amended; further, that the rules of Council be suspended so as to permit first reading at our next session of Council. All in favor will say aye. (Aye.)
The ayes have it. The motion carries. The record again will reflect that Councilman Kenney abstained from voting on this bill. This concludes our public e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated 10/22/08 - WHOLE - BILLS 080744 and 745 hearing and meeting, and I thank you all. (Committee of the Whole adjourned at 4:20 p.m.) - - - e4ffaeba-8542-428e-98b2-46b40e7b2878 (215) 561-2220 V A R A L L O Incorporated CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on October 22, 2008, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)