00001 COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Monday, 1/29/01 10:35 a.m. - - - RES. 010020 - Approving Phillies lease and development agreement between Phillies and PAID. RES. 010021 - Disapproving Phillies lease and development agreement between Phillies and PAID. RES. 010022 - Approving Eagles lease and development agreement between Philadelphia Eagles Limited Partnership and PAID. RES. 010023 - Disapproving Eagles lease and development agreement between Philadelphia Eagles Limited Partnership and PAID. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILWOMAN JANNIE BLACKWELL, Vice Chair COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK J. DICICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN W. THACHER LONGSTRETH COUNCILMAN RICHARD T. MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 00002 1/29/2001 - COMMITTEE OF THE WHOLE I N D E X Janice Davis, Director of Finance. . . . . . . 5 Kenneth Trujillo, City Solicitor . . . . . . . 9 6 Wm. Martin, Esq. (Representing Administration) 21 7 Marilyn Cutler, Esq. (Representing PAID) . . . 54 Charles Hardy, Esq. and Tyler Wren, Esq. . . . 111 (Representing South Philly Residents) David Montgomery, President, Phillies. . . . . 136 David L. Cohen, Esq., Phillies Counsel . . . . 143 Robert B. Sklaroff, MD, Private Citizen. . . . 193 Michael Sklaroff, Son of Robt. Sklaroff. . . . 195 Tina Nelsen, CEPA. . . . . . . . . . . . . . . 208 00003 P R O C E E D I N G S
Good morning, everyone. This is a public hearing of the Committee of the Whole. Just last month, City Council passed, and the Mayor signed, ordinances providing for the development of a new football stadium and a new baseball ballfield park at the South Philadelphia Sports Complex. In particular, Bill No. 000721-A authorized various transactions between the City and PAID necessary for the development of the new Eagles football stadium, and Bill No. 000722-a authorized various transactions between the City and PAID necessary for development of the new Phillies baseball ballpark. As part of Bill 17 000721-A, City Council approved a document entitled "Eagles Lease Terms" as the basis for the Eagles agreement with PAID for the lease and development of the new football stadium. Section 8 of Bill No. 000721A provided that the leases with PAID must "conform in all material respects" to the Eagles lease terms approved in Bill 000721-A, and it may contain such other terms and conditions as are not inconsistent 00004 with that document. Bill 000721-A further required that a copy of the Eagles lease be filed with City Council, and City Council would then have ten days to approve or disapprove the lease. Bill No. 000722-A contains identical provisions with respect to the Phillies lease terms and approval of the Phillies lease and development agreement with PAID. On January 21, 2001, copies of the Eagles and Phillies leases were filed with City Council. Therefore, City Council has until February 1, 2001 to approve or disapprove these leases. The purpose of this hearing is to take testimony as to what action Council will take. We will hear today from representatives of the Administration, PAID, the Eagles, and the Phillies, and we will then hear testimony from the public. Please note the limited purpose of this hearing. The purpose of this hearing is not to debate again whether new stadiums should be built or where new stadiums should be built. It is not 00005 the purpose of this hearing to debate whether the City should assist in the financing of new stadiums or the amount of such assistance. Those matters were debated at length in a series of public hearings held in November and December, when Council considered the stadium bills, and those issues were resolved as far as this Council is concerned when Bill No. 000721-A and 000722-A were approved by the Council and signed by Mayor on December 28,2000. The sole purpose of these hearings is to hear testimony as to whether Council should approve or disapprove the Eagles and Phillies leases; and, in particular, whether those leases conform in all material respects to the Eagles lease terms and the Phillies lease terms, which Council approved as part of Bill No.'s 000721-A and 000722-A. I implore the members of the public who wish to testify today to confine their remarks to that issue only. Before we begin the testimony, I would ask Mr. MacPherson to please read the titles of Resolutions No.'s 010020, 010021, 010022, and 00006 010023.
Resolution No. 010020, a resolution approving the Phillies lease and development agreement between the Phillies and the Philadelphia Authority for Industrial Development for the Phillies baseball ballpark project. Resolution No. 010021, a resolution 9 disapproving the Phillies lease and development agreement between the Phillies and the Philadelphia Authority for Industrial Development for the Phillies baseball ballpark project. Resolution 010022, a resolution 14 approving the Eagles lease and development agreement between the Philadelphia Eagles Limited Partnership and the Philadelphia Authority for Industrial Development for the Eagles football stadium project. Resolution 010023, a resolution 20 disapproving the Eagles lease and development agreement between the Philadelphia Eagles Limited Partnership and the Philadelphia Authority for Industrial Development for the Eagles football stadium project.
Thank you. 00007 I believe our first witness this morning would be the Finance Director. (Witness comes forward.)
Good morning. I'm sorry we kept you waiting. Thank you for your patience. Kindly identify yourself for the record and proceed with your testimony.
Good morning. I'm Janice Davis, the Director of Finance for the City of Philadelphia. As directed by the Mayor of the City of Philadelphia, I reviewed the sublease and development agreements between the Philadelphia Authority for Industrial Development and the Philadelphia Eagles Limited Partnership and the sublease and development agreement between PAID and the Phillies. Both documents reflect the financial terms presented in the documents labeled "lease terms," which were previously submitted to the Council, amended and attached as exhibits to Bills No. 000721-A and 000722-A. There are no 23 financial commitments or risks contained in the leases that are not included in those terms sheets. 00008 Thank you for the opportunity to testify.
Thank you. So your testimony indicates that the leases are in conformity with the terms sheets adopted by Council?
Thank you. Are there any questions from members of the committee? The Chair recognizes Councilwoman Blackwell.
I was curious as to why we were approving leases between PAID and the 00009 team rather than between the City and PAID.
The leases that are on the table are those leases between PAID and the team. Any agreements between PAID and the City, I think, -- and I'll have to defer -- were previously approved.
Our next witness is the City Solicitor. (Witness comes forward.)
Good morning, Madam President. Good morning, members of Council. My name is Ken Trujillo. I'm the City Solicitor. Council President, on January 26, 2001, I sent to you a letter and I am pleased to be here today to confirm that, as you know, on Monday, January 22, 2001, acting under Bills 000721-A and 000722-A, the Philadelphia Authority for Industrial Development, or PAID, filed with the Chief Clerk of City Council copies of what has been known as the "Eagles lease" and the "Phillies lease." I have reviewed the Eagles lease and the 00010 Phillies lease, and I also relied upon briefings about both leases which I've received from other members the City's Law Department and outside counsel, which is working on behalf of the City and on behalf of PAID. These reviews and briefings have focused on, among other things, the extent to which the Eagles lease and the Phillies lease are consistent with documents entitled "lease terms," which were previously submitted to Council, amended, and attached as exhibits to Bills No. 13 000721-A as to the Eagles and 000722-A as to the Phillies. Based on this review, I confirm to you that the Eagles lease and the Phillies lease conform in all material respects to the terms and provisions of the Eagles lease terms and the Phillies lease terms respectively. They do contain other terms and conditions that are not inconsistent therewith. I also believe that the Eagles lease and the Phillies lease do not materially increase the legal risks to the City beyond those contemplated by the transactions set forth in the respective lease terms and 00011 accompanying ordinances, except for the creation of certain contingent liabilities; for instance, liabilities for the City's willful negligence or gross misconduct in certain circumstances, which are not uncommon in large-scale commercial transactions to which the City is a party and in commercial transactions of the size and complexity of the stadium projects. I'm happy to answer any questions.
Thank you. Are there any questions from members of the committee? The Chair recognizes Councilman Nutter.
Thank you, Madam Chair. Mr. Solicitor, I've listened to your testimony. I thought I heard you say that there were no terms that were inconsistent with, I assume, the terms sheets that were a part of the legislation that we passed, and then you went on to say that there were other terms and conditions. Did I misunderstand your testimony?
I believe my testimony was that there were no material terms that are 00012 inconsistent with the ordinances which were previously passed.
Let me look at what I was reading, Councilman. I believe that I testified that the Eagles lease and the Phillies lease do not materially increase legal risks to the City beyond those contemplated by the transactions set forth in the respective lease terms and accompanying ordinances, except for the creation of certain contingent liabilities. Then I went on to describe the kinds of contingent liabilities.
Okay. I may have misheard you. I thought I heard you say that everything that we had done back in December and the things that are here today are consistent with those things but that were other things that were not a part of the December transaction, which are also in the document or the attachments in front of us today. Did I misunderstand you?
I believe you 00013 misunderstood me. I confirmed that the team leases conform in all material respects to the terms and provisions as were passed in December of last year.
Thank you. The Chair recognizes Councilman Goode.
Thank you, Madam President. The Finance Director said that we approved leases between the City and PAID, and I'm assuming that was done by ordinance 722-A. On what date was that approved?
'Cause the resolution states "approved December 28, 2000."
That's not the way the resolution reads, though. It says, "Whereas City Council, by Bill No. 000722-A, approved December 28, 2000. . . "
All right. If the date in the resolution is wrong, that can be amended, I assume?
I have a copy here. Thank you, Madam President. I have a copy. The bill was signed by the Mayor on December 28th. That's the day that the bill takes effect. And so I do not believe that there's an 00015 inconsistency with the resolution.
I understand. If you were looking at the "approved December 28 2000," that reflects the date that it was signed by the Mayor, not the date that it was passed by this Council.
So it's written wrong. It's a mistake the way it's written.
I don't believe it's a mistake. It's just that the approval date reflects the final approval; that is, the signature date by the Mayor.
I guess the question I was really getting to is not really about that date, but how amendable is this resolution?
It's difficult for me to answer that question unless I see a specific amendment before me. I believe that it is fairly restricted. This is -- as Madam President indicated, this hearing and the review of this Council is -- is fairly narrow in scope. And that is, the resolutions are to either approve or to disapprove the subleases, as 722 and 721 reflected. So it's difficult for me to answer that in a broad sense unless there's some specific --
But the resolutions are amendable based upon action we took in December if it's consistent with the action we took in December; is that correct?
Councilman, again, I would -- if there is an amendment that would be offered, I'd be happy to look at the particular amendment. I would prefer not to answer that question in a vacuum.
I have some questions about the operation -- about the leases around the oversight committee. Who's prepared to testify to that?
On the specific terms of the leases, I believe Mr. Martin will be testifying on that.
Are there any other questions, Councilwoman? Thank you. The Chair recognizes Councilman Cohen.
Mr. Trujillo, isn't it a fact that if all of the parties were to agree, everything could be amended?
If all the parties -- this Council's powers are fairly broad with respect to the resolution.
I'm not talking about this Council; I'm talking about an agreement by all of the parties -- the sports teams, the Mayor, and City Council. If all of us were in 00018 agreement, we could change anything; isn't that a fact?
Well, I don't think so, Councilman. I believe that the ordinances constrain the extent to which any changes can take place with respect to these leases.
I believe that the ordinances that were passed by Council in December constrain what can be presented with the lease and the subleases that are being presented today.
But if all the parties agreed, wouldn't it be possible to even redo those ordinances?
I can't comment on who would be there to complain. I suspect that if this Council wanted to undertake a legislative process that included --
But that's not my question. My question has nothing whatever to do 00019 with the legislative process; it has to do with basic contract law in the United States. The parties to a contract can, unless third parties' rights are being injured thereby, the parties to a contract can always change it.
Well, Councilman, the parties to a contract can always agree to whatever they want to agree to.
You're absolutely right there. That does not mean that this Council will have or will approve that which is agreed to.
Well, I have not suggested that. All I've suggested is that if all the parties were to come to an agreement on terms and conditions, whatever they may be, or the existence or nonexistence of ordinances, all of that would be changed.
I can tell you that on the general question as to whatever parties can or cannot agree to whatever they want, the answer to that is yes. The enforceability of that is quite another question.
All right, thank 00020 you. Thank you, Madam President.
I would just like to follow through on that if I may. Wouldn't the ordinances have to be amended? So we would have to take the ordinances back to amend them; they could not be amended under a resolution.
No. And, Madam President, that is why my response is, You and I can agree to do whatever you and I want to do, but that doesn't mean that it's enforceable.
Thank you. Are there any other questions of the City Solicitor? (No further questions.)
Good morning. Kindly identify yourself for the record for the record and proceed with your testimony.
Good morning, Council President Verna and members of City Council. My name is William F. Martin. I am a former member of the City's Law Department and am now an attorney in private practice in Philadelphia. I represent the Administration regarding the sports stadium development project. I'm here today to testify in support of Resolution 010020, approving the Philadelphia Phillies lease and development agreement submitted to City Council pursuant to Bill No. 000721-A; and in support of Resolution 010022, approving the Philadelphia Eagles lease and development agreement submitted to City Council pursuant to Bill No. 000722-A. The Administration does not support Resolutions 010021 and 010022 and respectfully requests that City Council not approve them. I am joined today by Marilyn Cutler, who is an attorney representing the Philadelphia Authority for Industrial Development. As you're 00022 aware the City Solicitor Ken Trujillo and Finance Director Janice Davis are available today to also answer questions that may arise from my testimony that are appropriately directed to them. There are also representatives here today of the Philadelphia Eagles and Philadelphia Phillies, who will be available to answer questions as may be requested by members of City Council. 's 000721-A A an 000722-A to authorize the underlying lease and financing structure necessary to proceed with the expansion of the Sports Stadium District in the construction of a new baseball park for the Philadelphia Phillies and a new football stadium for the Philadelphia Eagles. The underlying leases between the City and PAID contemplated that PAID would enter into a lease and development agreement with each team, specifying the details of the transaction. " " The bills provided that lease and development agreements must be filed with the Chief Clerk, and the City Council shall have ten days from the date of filing to approve or disapprove the agreements. The agreements were filed on Monday, January 22, 2001, and the ten-day period conclude on February 1, 2001. As you are all aware, each team is on a very tight schedule in order to meet their planned opening dates of 2003 for the Eagles and 2004 for the Phillies. In light of the limited time, the parties their intensified efforts to complete the drafting of these agreements immediately upon passage of the bills, continued intensive discussions through the holidays and came to closure a bit more than a week ago today, when the agreements were filed with the Chief Clerk and distributed to the Council President. Although discussions were intensive, they were a at all times within the limits placed on us by City Council and the approved terms sheets. As you have heard, the Finance Director 00024 and City Solicitor have each reviewed the agreements and agreed that they are consistent with the terms sheets adopted by this body and have not in any way expanded the City's investment, as contemplated by the bills. In addition to memorializing the agreements, the City's been required to pursue acquisition of certain parcels in order to maintain the teams' critical pass schedules. The team purchased the Acme warehouse site last week and has entered into an agreement in lieu of condemnation for the T-Warehouse. We have concluded preliminary negotiations to relocate the Jetro cash-and-carry business to the Acme property and expect to finalize this transaction shortly in order to make the property available for demolition by the Phillies late this summer or this fall. The Eagles expect to commence demolition work almost immediately upon taking possession of the T-Warehouse, which is expected to occur within the next 30 days. With respect to the agreements, please note that each includes time periods within which various conditions must be met for the transaction 00025 to proceed. In both cases, these include items that will require further action by City Council.
In particular, the Administration expects to come before this body with proposed bills to close Tenth Street, amend the existing Veterans Memorial Stadium lease, and to amend the existing agreement between PAID and Spectrum Area Limited Partnership as regards parking arrangements for the sports complex. As you may be aware, the City has been sued by several groups and individuals requesting injunctive relief to the City from proceeding with the transaction. Without further comment, I would like to state simply that the City believes the suit is without merit and expects to be in a position to proceed with financing shortly, shortly without material damage to the Eagles' and Phillies' respective critical pass schedules. In closing. I would like to reiterate the several benefits of this transaction circumscribed by the terms sheets and included in the lease and development agreements. These documents unequivocally require each team to play in their respective stadiums for 30 years from 00026 opening day. They require each team to make certain tax payments to the City and School District of Philadelphia, and include donations of $1 million each team annually for the Children's Fund and $375,000 each annually to the Special Services District throughout the lease terms. Furthermore. The City is ridding itself of operational responsibility for Veterans Stadium upon completion of the new stadiums and limits its exposure to only potential Board of View risk on property acquisition. The increased efficiencies of an expanded sports complex will benefit the surrounding community and the addition of two world class facilities will result in a complex that is unique in this country. The Administration fully supports the agreements, and I would respectfully request that City Council approve each agreement either by resolution or simply by letting the ten-day period lapse. I would happy to answer any questions that Councilmembers may have at this time.
I believe there are a number of Councilmembers that would 00027 like to ask some questions. I would like to start with them. Can you assure us, Mr. Martin, that the leases are in conformity with the terms sheets adopted in Bills 721 and 722?
Yes, Madam President. As we were negotiating the leases with the teams, that was the touchstone of our efforts, to make sure that they were consistent with the terms sheets, and we have concluded that they are.
Thank you. The terms sheet requires the approval of an affordable seating plan by both the State and City; the leases provide that whatever plan is acceptable to the State shall be acceptable to the City. Doesn't that lease language essentially override the terms sheet requirement of an approval process by both the State and the City?
No, I do not believe it does, Madam President. The lease contemplates that the affordable seating plan will be reviewed and approved, consistent with the requirements of the Commonwealth. These requirements were embedded in the statutory requirements imposed by 00028 the Commonwealth in connection with the Commonwealth grant, and we're comfortable that their requirements will be appropriate for the City, and as appropriate, representatives of PAID and the City will be in dialogue with the Commonwealth's attorneys regarding what they will anticipate from the teams.
Mr. Martin, can you tell us, why do Phillies get the proceeds from salvage remains of the Vet since the Vet is City property and the City is paying most of the demolition cost?
Mrs. Verna, when we structured the transactions, one of the benefits to the City was that we are imposing upon the teams respectively the obligations to fully complete certain site development work at their risk based upon a certain allocation of cost, which is an allocation which is being made by the team. So the Phillies, for example, are undertaking broad ranges of obligations in the area north of Pattison Avenue to demolish, to build parking, to prepare that site as anticipated 00029 by their plans. And one of the sets of obligations that they are undertaking is the demolition of the Vet. While there has been a number allocated for that, it is the Phillies who have the risk if that number is exceeded. In connection with that, a determination was made that since the City -- it was questionable whether the City wanted to undertake an obligation to remove the debris, to go through the debris to determine what was salvageable. So we thought that it was most efficient to allow the Phillies to have both that risk and the potential benefit of salvage value.
Please explain the status of conditions, precedents set forth in the leases. Specifically, have financial commitments been made at this time sufficient to meet the parties' obligation under the lease? Particularly, what is being done to close the $53 million gap?
There exist a number of conditions in the lease, including, as you point out, the condition relating to the conditional contributions, or "the gap," as you referred to 00030 it. We have continued discussions, not only with the State, which, as most people are aware, has committed -- the State's committed at this point $10 million of additional contributions and has held open to the City its willingness to entertain other possibilities to the extent that may be necessary. There are other parties that the City has been in dialogue with, both private and quasi-public. We're not at this point able to identify the parties, out of consideration for their respective processes. We are encouraged by the feedback that we have received, both in the private party and from the other party. We believe that all, or close to all, of the additional contributions will be forthcoming to allow the project to proceed. We believe the numbers will be identified, we would hope, in the next 30 to 45 days, with specificity. And the Mayor has confirmed to me, and we have confirmed to the teams throughout, that no portion of the additional contributions will come from City funds, that this is a 00031 tradition to proceeding that will not come from City monies.
I phrased it that broadly because we think it's a broad description. It's -- the City Council staff from time to time has suggested to us that there could be approaches which would be inconsistent with the commitment which has been made, and the commitment is intended to be a broad one. It won't be City money either directly or indirectly being used to fund this gap.
Thank you. You also indicate in your testimony that a bill will be forthcoming to amend the Vet lease?
Yes. One of the conditions to the transaction is the amendment to the Veterans Stadium lease required by the fact that the teams will be leaving, that we have to anticipate what will happen with those facilities during the transition period, and we have not negotiated those provisions with the teams at all. 00032 And it's our expectation that very promptly, after we conclude this process, that we will be in negotiations with the teams, and we'll be back in front of this body shortly, seeking its approval for Vet lease amendments.
So you don't have an answer to the following question: Assuming the Eagles vacate Vets stadiums prior to the Phillies, how will the Eagles rent obligations be affected? We don't know at this point in time.
Is approval by major league baseball needed for this deal to go forward? If so, what is the status of the approval request?
There is a condition for major league baseball approval. That process -- the approval of the -- there's two questions, both the question of the approval of the lease and sort of a broader approval of the transaction. The lease has been subject to informal review by major league, and major league baseball, 00033 through the Phillies, requested certain changes in the negotiating process. Some of those we were able to address, some of them we had to say no, and major league baseball accepted those answers. But I do believe the formal approval is still forthcoming.
Thank you. I have several other questions, but I know many of my colleagues want to be recognized. So I'll just ask this question for now: Eight million dollars of the $53 million gap is dedicated for the purpose of demolishing the Naval Hospital and building parking on the site; yet the lease provides that the City has an obligation to perform that work, whether or not the $8 million is forthcoming. Doesn't that mean, contrary to the terms sheets, that the City may have to provide some portion of the missing $53 million, namely, $8 million for Naval Hospital clearance and parking?
I don't believe that the conclusion you suggest is required by that language. As I indicated previously, the 00034 additional contributions and the provision of those monies are a condition to the teams' obligation and to the City's obligation to proceed. Until those monies are received, or perhaps until the teams waive some portion of the requirement that those monies be provided, PAID and the City will not allow these transaction to proceed. So it is intended that the Naval Hospital site will be demolished, that the interim parking will be provided, and that it will not come from City funds.
And how soon do you see the hospital being demolished?
It is our schedule that the demolition and construction of parking will occur by November 1, 2001.
Thank you. I have other questions, but I don't want to dominate this. The Chair recognizes Councilman Rizzo.
Thank you, Madam President. Could you, based on the new leases, the 00035 working relationship that the Administration has, the Recreation Department will have, the role that they will have with these new facilities will obviously affect the current employees at the Veterans Stadium. Could you please for the record just let us know how the Administration and Recreation Department plans to deal with the current workforce at Veterans Stadium? I believe there are 35, 40 people associated with the Veterans Stadium at this time.
Councilman, I'm not sure of the exact number, but you're right that, unlike today, where City employees are responsible for the ongoing maintenance of the facility, once the new buildings are complete, it will be employees or representatives of the two teams that have that responsibility. This issue was raised informally last week, and contact was made with Managing Director Joe Martz, and Mr. Martz confirm that the employees -- or currently, the Recreation Department employees who work out of the Vet, that their jobs will not be at risk because of this changeover from the public Veterans Stadium to the 00036 private baseball and football; but rather, consistent with the union contracts for those who are unionized, and otherwise for those who are not unionized, other opportunities will be made available to those individuals within City government, either within the Rec. Department or otherwise as appropriate with their skills.
Thank you. Thank you for that. Thank you, Madam President.
You're welcome. The Chair recognizes Councilwoman Miller.
Okay, thank you. And Councilman Ortiz's light is on. Would you please push the button. 00037 Councilwoman Tasco?
Yes, just a follow-up on that question. Has there been a plan developed that could be shared with us relative as to what will happen to those City Recreation Department employees?
Councilwoman, I'm not aware of a specific plan. And as Councilman Rizzo indicates, the number is relatively modest: it's a few dozen. I'm not aware of there being a specific plan in terms of where they would be utilized within the City government. Certainly they're insisting positions will be needed, presumably at least through the end of the 2003 baseball season, so you're probably talking at least until September or October -- for the minimum, September or October of 2003, there's going to be a need for the City employees down there. But I do not believe that there's a -- I'm not aware yet of a specific plan for reallocation of those managers.
Okay. What will the recruitment mechanism to reach the goals in the lease for the union OIC and apprenticeship 00038 program? There are goals outlined for minority participation; what is the mechanism to reach those goals?
Councilwoman, as I'm sure you're aware, both with the terms sheets that were approved in early December, in the first of the terms sheets that were approved in early December, there was an economic opportunity plan applicable to both the baseball park and the football stadium, which was attached as an exhibit to those terms sheets. Consistent with the requirements of the terms sheets, those plans have now been incorporated as exhibits respectively to the Phillies and Eagles leases. And in each of the documents, there is an Exhibit A to the economic opportunity plan, which specifies economic opportunity procedures for identifying subcontractors and employees. I think that to the extent it is -- you're seeking more detail about the recruitment process, that may be a question appropriate when the teams' representatives come up.
Okay. Well, can 00039 you answer the questions about the oversight committee?
Well, the oversight committee. . . The oversight committee is called for in each of the economic opportunity plans.
Well, how will they be -- who will make the appointments?
I believe it will be a collegial decision by the teams, by PAID, and also with the assistance of Greater Philadelphia Urban Affairs Coalition, who's going to be the monitor as to each of the plans.
Okay, you don't have any details of how that committee will operate?
I think you may want to consider asking representatives of the teams.
Thank you, Madam President. What's the scope of the new negotiations with the teams?
Councilman, your question would suggest that the negotiations -- are you -- is this as to Veterans Stadium? I'm sorry, I was assuming.
The scope of the new negotiations following, say, if there's final approval here. You talked about new negotiations with the teams and you've indicated that there's been no work done on that new negotiation yet; what in general will be the scope of those negotiations, what are they intended to cover?
My earlier reference, Councilman, was to the anticipated amendment to the Veterans Stadium lease.
And we need to anticipate in that document how the lease needs to be amended in response to the fact that there is going to be 00041 an early termination -- an early departure of the teams. There is not an existing scope because we have not yet commenced those negotiations.
Have the teams indicated any specifics that they want the City to reconsider? Or to change?
There have been -- we have made a purposeful effort not to get into that.
We have purposefully not gotten into the Veterans Stadium lease issues because we thought that it was more essential to conclude the lease discussions as to the new -- as to the new ballpark and the new stadium. Each of these documents have a variety of conditions which need to be satisfied. We have a Veterans Stadium condition. We have had someone undertake the responsibility of commencing a first draft, which is still to be reviewed by the City team and has not yet been shared with either the Phillies or the Eagles.
(Inaudible.) As of now, has there been anything in the existing lease that was about to become new with respect to 00042 the superboxes? Has there been any discussion at all with respect to that?
That issue we've sometimes in shorthand refer to as the "flip," and we have not had discussions about them. And, in fact, we have affirmatively made the point to the teams that there are no commitments on that issue at this time.
I raise it specifically 'cause I was a member of the Council at the time that issue came up and that was very specifically --
I'm sorry, Councilman, you're going to have to speak into the microphone. The stenographer cannot hear you.
Thank you, Madam President. I raise this issue because the payment to the City of the superboxes, the Vet estimated to bring in $6 million of revenue annually to the City was the major selling point by Mayor Goode to the Council on the ground that the contract with the teams was backloaded but that the time would come, and we have arrived at the time when the 00043 City would receive substantial income from the stadiums. Now, has there been any -- any commitment by the City in any way to change those terms?
There was a case approximately ten years or so ago, maybe a little longer, in which the Pennsylvania Supreme Court referred in an opinion on an ethics matter in which the position of the City Council was being sustained. The Supreme Court referred to the fact that there are certain powers that the City Council has which are not subject to delegation. There have been other cases in which the Pennsylvania Supreme Court has ruled that the State legislative body is unable to delegate certain powers. Is there any such concern on the part of the City with respect to the one thing this very limited review that the ordinance provides that City Council may have in which City Council is not free to exercise under the terms of the original ordinance its judgment to bring about 00044 amendments but must vote up or down the lease agreements. Is there any concern at all on the City's part that this may constitute an illegal delegation of power by the City Council?
Madam President, the Councilman asked a question which I think is probably more appropriately directed to the City Solicitor. Would it be appropriate, if he's still here, to ask whether the Solicitor would --
Well, you were a top and very respected member of the City Solicitor's Department. If I recollect, at times you've been the acting City Solicitor. Would you have any --
Thank you for that characterization, Councilman. My opinion is that the approach that was utilized by Council in the early December ordinances, which were passed, is consistent with existing State law that the approach -- the up or down approach, which you're suggesting Council faces, is a result of ordinances which Council passed. I think it's also worth pointing out that the leases, which are the subject of the review here in the leases between PAID and the teams 00045 normally would not require any approval of this body; but, rather, the approval by resolution was a requirement developed by the early-December ordinances. So, no, I don't believe that Council, as it has acted in early December and is acting now, is doing anything which is contrary to existing law.
Are you -- are you, in your role as an attorney, concerned by the fact that this is a transaction in which there are four different leases that at times the City plays the role of the landlord, at times the City plays the role of a tenant in these leases, and that this very complicated, and maybe arcane, system has been worked out, I'm sure, by very competent attorneys, but it indicates that the deal is extremely complex, extremely questionable, may be so arranged to avoid the application of laws of the City that might other apply? Does that cause any matter of concern?
I would agree that you described it as complicated, which I would agree. I would disagree with your characterization as 00046 questionable. The approach that has been utilized in this transaction is not inconsistent with approaches that have been utilized previously by the City in transactions where it's utilized its economic development authority. The creation of PAID by State statute, I think, anticipates uses of the type which is contemplated by this transaction. There have been, as I noted in my opening statements, there is pending litigation. Certainly we, in the structuring of the transaction, the potential claims that were raised in the litigation were contemplated, and we are confident that the litigation is without merit, and the transaction, as structured, can proceed. But I'm also confident that through the effort of people working on behalf of the City, people in the Law Department, attorneys on behalf of PAID, that this transaction's been structured in a way to properly protect the interests of the City and properly protect the interests of PAID.
But has there ever been any transaction that has approximated the huge sums of money involved in this transaction, 00047 where this kind of arrangement's been made with leases and -- I was going to call them counter- leases, they're not so defined, but there are four sets of leases, I understand, involved here, leases from the City to PAID, leases back again, and I think there's another leaseback to PAID. It seems to me that legal precedence, if any, have not dealt with this issue. And as far as I know, the lawsuit that has been filed to date does not include the question of unlawful delegation of power by City Council. I'm not certain of that, 'cause I haven't studied that lawsuit thoroughly as of yet, but it seems to me that that's the question that's not been raised as yet. Does Council have the right, for example -- Council would normally feel in a transaction of this kind that it has the right -- in fact, the obligation -- to review every aspect of every final lease agreement. Yet Council itself agreed that its own review would be limited. I think that might be questionable. And in fact, Council went beyond that by passing the most basic ordinance soley on a laundry list of 00048 what are the terms and conditions, some of which there can be questions as to whether they've been fulfilled, but the question also be raised that the Council had that power. And you say you have no concern about those issues?
I'm confident that the transaction has been structured in a way that is consistent with State and local law and that the current lawsuit would be defeated. And if there were to be additional litigation based upon the types of concerns that you've articulated, that the transaction would withstand that type of attack.
And there are going to be bonds that are to be issued in connection with financing by various parties to this agreement, to these series of leases; is that not a fact?
And in the prospectus in those bond issues, will there be requirements with respect to putting forth the issues that have been raised by critics who claim 00049 that there are questions about the validity of the actions taken by Council? Would that have to be referred to in those bond issues?
There would exist a requirement of disclosure of any pending litigation.
And what is the feeling of the -- if you know it, of the bond authorities with respect to the effect of those disclosures on the saleability of the bonds and with respect to the interest rates those bonds may require?
As to the commercial paper issuance, which is anticipated during the month of February, we continue to review the litigation and prepare changes to the bond documents to reflect the litigation. We're comfortable that that aspect of the financing will proceed without interruption, and we believe that it will proceed without impact upon the interest rates on the paper. The circumstance that we're facing here is not dissimilar to one that occurred in the early '90s in connection with litigation that was 00050 raised by Mr. Weiner against the Convention Center transaction. And in that case, while the litigation was pending prior to its final adjudication by the State Supreme Court, the Convention Center Authority was able to proceed with the financing of that transaction.
Are you troubled by the fact that even in the -- what's generally referred to as the "prime lease," and as I wind my way through these leases trying to figure them out and have developed my own -- maybe it's my own numbering system, I would call that "lease no. 2 of the 4," in which the City is the tenant, not the owner in lease no. 2, there is this clause in that lease agreement. It says that -- and it's Section 19.15(d), as in David, of the Eagles prime lease between the City and PAID and states that the City and PAID can enter into amendments to that lease, quote, without the consent of any other parties in order to quote, add to the covenance and agreements of the City herein contained or to surrender any right or power herein reserved to confer upon the City, end quote. 00051 In simple language, that seems to me to say that at any time, without ever coming to City Council, new agreements could be entered into, old agreements could be changed by the parties at any time without notice to anybody, certainly not to Council and without any action by Council. Now, do you agree or disagree with my interpretation of that clause? And if you disagree, then tell me how it's limited in any fashion.
I think that the relevant limitation is in the leaseback lease agreement, which is sort of the next sequence of the documents between the City as landlord and PAID as tenant, where we provide that the Authority will not amend the lease -- it will not amend the team leases in a way that would materially affect the obligations of the Authority, without the prior written consent the of the City acting through City Council. And we believe that the structure, as adopted, allows for the transactions which are contemplated by the team leases and by the terms sheets and protects the City from amendments to the lease structures, which would materially 00052 increase any obligation to the City.
Well, if that's the interpretation, why isn't that language made clear in this prime lease? Why do you need another separate agreement to limit something -- why do you need lease no. 3 to indicate how lease no. 2 is limited? Why is that limitation in lease no. 2 itself?
Thank you. Mr. Mart, is someone's there who apparently knows the answer? Can he or she come to the witness table and respond.
Councilman, your prior reference was to which section? I'm sorry.
My prior reference was to section 19.15(d) of the Eagles prime lease, in which the City is the tenant to further identify the particular lease. If you're numbering and my numbering don't agree, I wanted to make clear which lease it was. It's the lease in which the City is the tenant.
The section which -- which 00053 relates to amendments was, I believe, crafted to -- because the lease structure that you've described is being relied upon to some extent by the bondholders and also by the teams in ensuring that their rights are as they anticipate by the sublease agreements that we're reviewing today, this amendment, or this language, indicates that while PAID and the City can enter into amendments as between themselves, it is limiting the right to enter into such amendments so that it does not impair the security of the lenders. So I don't see this section as materially increasing -- either posing a risk to the City because of actions of other parties. I mean, it's -- as you were mentioning earlier, most agreements allow that the parties can amend, as between each other, and that's what this is saying, except putting certain limitations upon that amendment, right.
Well, what you're saying, it seems to me, is that what we have are today's version of the leases, but we don't know what tomorrow's version might be, because Council is obviously a necessary party to the -- all of 00054 these transactions. And what you've just said is that the parties may at anytime change those agreements. And yet, we're told that this is the final agreement. And I know of nothing that requires -- if these agreements change, I know of nothing that currently requires this matter to come before the Council again.
Excuse me. You're going to have identify yourself for the record, Marilyn.
Okay. I'm Marilyn Cutler, and I've acted as counsel to PAID during these negotiations. Councilman Cohen, I think you're citing Section 19.15, which deals with amendments and which has been specifically written to discuss those circumstances under which there may be changes made that affect the rights of -- or the security of the holders, and those are the people who have certain rights under the bond indenture, because the complex set of leases, or the structuring of the deal that you referred to 00055 earlier, is in fact to allow the financing to proceed through PAID's issuance of notes and bonds. The section in 19.15 talks about those circumstances, and I think you can see at the introduction of the section that it states that it's specifically only for the following purposes; and, therefore, limits the circumstances under which there can be changes made that may affect the holders, the people under the bond indenture. The beginning of the sentence talks about the parties agreeing to an amendment. As you're well aware, the City of Philadelphia is a party to this agreement, and because the City is a party, it would have to agree to any amendment, and since these documents were approved by City Council, the documents that we have here that were approved in December, City Council would have to approve any material change to the documents that, in fact, had been voted on in December. So to the extent you are asking us whether you are adequately protected and whether you would have an opportunity to see any kind of material change to these documents, I believe that 00056 19.15 allows you, and in fact requires, that that approval would come back to you.
Well, it would be a little bit reassuring, at least with respect to this particular issue, if there were an opinion of the City Solicitor basically stating that if there are any material changes which affect the existing basic terms and agreements to which the City's a party, that if there are such changes, that they have to come back to City Council for approval. Because as I read it, that's not the case now. And further, what I'm concerned about is there's a wide area of interpretation as to whether or not this is in fact a material change and is it the kind of change that would have to come back to City Council. I would prefer to see an opinion stating clearly, without all of these reservations, that if there are any changes, that they have to come back. Because, otherwise, I just think Council has, you know, shorn itself of the power to protect the taxpayers here, to whatever extent there is still any room for protection of taxpayers. This clause seems to me to be a threat to, you know, the most basic rights 00057 of taxpayers. So I'm going to be requesting that. Now, Section 1 of Bill 721 states that the City must "pay all obligations of PAID as required under the Eagles leases." Couldn't this provision added to the provision I mentioned previously allow or require the City to provide additional financial support beyond what has been agreed to for this deal? And I would ask in that answer to tell us what the absolute financial requirement of the City is. What is the maximum that the City funds directly or indirectly, as has been referred to in the previous answer to some question, I think of Councilwoman Tasco, what is the absolute, final liability of the City in this transaction?
And that assumes, of course, that we will have gotten an opinion from the City Solicitor saying that there can be no 21 changes without things coming back to City Council, because if you can make changes, then you can change entirely the City's obligation without ever coming back to City Council. So that's why the City Solicitor's opinion would be needed in 00058 the first instance to establish a base figure, whatever that figure is, and now I would ask you for that base figure as to the cost to the City. And that, of course, does not include the annual interest payments; that's another matter. But the basic initial dollar cost.
Councilman, first, I'll go back to the question that you posed at the beginning of your series of questions having to do with how -- how Council is to receive comfort, that there's not incremental obligations that will be imposed upon the City beyond what's being approved here. And I guess there's two thoughts, and I'll get back to the numbers in a second. We believe that it is clear that the subleases which were presented are consistent with the financial obligations that were included and presumed by the financial presentations made back in December by Mr. Hankowsky regarding what the City has to put into the deal. Beyond that, again, the leaseback lease agreement between the City as landlord and PAID as the tenant indicates that the Authority is not permitted to amend the Eagles lease or the Phillies lease in a way that 00059 would materially adversely affect the obligations of the Authority as landlord without the prior written consent of the City acting through City Council. So in terms of the City's obligations, what exists is what is embedded in these documents, period. And it can only be added to through amendments, which would require the consent of the City acting through City Council. In terms of the numbers, the numbers that were presented to Council back in December indicated that the bond issue, which is contemplated by this transaction, will be $304 million, that the present value of the future operations and maintenance obligation which is being incurred vis-a-vis the Eagles under the Eagles lease is $90 million. So you have 394 (304+90=394), and the only potential unknown, which I tried to reference in my opening statement, would be in the event that land acquisitions were not completed amicably and went to the Board of View. And if the Board of View imposed acquisition costs, those costs theoretically could result in the cost to the City 00060 exceeding the 394 number that I've just described.
The Acme warehouse, you indicate the transaction has been completed. Does that mean that's one that will not go to the Board of View?
No, Councilman, to the contrary. Let me describe that. The agreement with Acme was that an amount was paid to the current owner by agreement.
By the City. And in the event -- the owner retained the right to challenge the valuation before the Board of View. So the essence of the transaction was that the owner was not fighting the condemnation or questioning the condemnation act, but was reserving the right to challenge the valuation. So there is potential risk associated with the Acme site before the Board of View.
Thank you. You say other than. . . the estimated 00061 cost of land acquisition, which I assume is included in that bond figure of 304 million?
Yes. There is a number of between 90 and 100 million which is included as a component of the 304 for land acquisition. There is also a contingency for the benefit of the public of PAID within the 304 -- not a contingency relating to construction overruns because, as we made the point, those construction overruns are the obligations of the teams, but we have included a contingency for potential overruns on cost acquisition to the extent those two components are exhausted and additional amounts would be imposed by the Board of View. That would be -- if you're asking what the universe of potential risk to the City? that is the only one which is not subject to specific limitation here as we speak today, and that was the one that was also identified by Mr. Hankowsky in his testimony in December.
Well, let me refer 00062 your answer back to what Miss Cutler said a few moments ago. Can this City Council rely on the fact that if, except for that one contingency of land acquisition costs, that if the costs were ever to exceed the $394 million figure as outlined by you as the cost to the City, that there would be action to refer back to City Council for approval of whatever element caused that change?
Councilman, to answer your question, it's -- yes, it's hard for me to envision where PAID would secure the money to do anything beyond the levels that we've talked about here today. So, I mean, there is authority to borrow the 304. The City has its ongoing operations and maintenance cost. The Board of View exception, I think, was scoped out specifically in the ordinances that were already approved. Beyond that -- beyond that, I don't see how PAID would have access to funds to do anything more. It couldn't rely upon its lease with the City because that is limited by --
It asks for an extra 00063 appropriation from City Council.
Would the City have the power, in your judgment, to waive any of the requirements? For example, many of us take some small solace from the fact that there's going to be a million dollars for each of 30 years from the teams to the Children's Fund, for example. Could there be a waiver by PAID or the City of those payments without there being action by City Council to approve it?
Because there's language in the lease that talks about waiver.
As far as it relates to the Children's Fund, I believe it's anticipated that the Children's Fund will be subject to a bilateral agreement between the teams respectively and the Philadelphia Foundation, which has been selected as the administrative entity for the Children's Fund. So the City would not have the right to waive payments under the Children's Fund because 00064 those obligations will be memorialized in a bilateral agreement that the City is not a party to.
How about the pilot payments, the payments in lieu the taxes? Did the parties agree without coming back to Council?
I don't believe so, Councilman. I mean, it was in the terms sheet, it's in the leases.
We would like that with respect to both answers on the Children's Fund and on the pilot to be included within the City Solicitor's opinion. I think these are very severe areas of concern. What is very troubling is this unaccounted-for $53 million. Was your earlier answer to that a statement that under no 19 circumstance would there be any payment by the City directly or indirectly through any authority? When you say "the City," are you using the City as a term of art, separating it from obligations of authorities? Authorities are sometimes the City, sometimes they're not the 00065 City. And we would like to have it clear on the record that when we talk about the City paying money, that that includes PAID and PIDC and any other theoretical body that now exists or may come to exist in the future that serves basically as an agency of the City.
The problem, Councilman, is, as you phrased that as broadly as you did, we have to sate anticipate, for example, that the Commonwealth grant that we're all aware of, which is a component not only of the core financing for this transaction but additions to that may be filling a part of the gap. That money is likely to come through PAID or through the City. So that what happens is, you may have grants of monies that may come from the Commonwealth or may come from other quasi-public entities which flow through PAID or flow through the City into this transaction. So as you get more and more precise with asking me to state, you know, what the City and what all of these agencies will not do, I don't want to -- I don't want to mislead. I don't think it's a complicated 00066 concept. There is money that is intended for this transaction which may come via PAID or the City and flow into the transaction. But the Mayor's commitment here has been a general one, and I don't think that it's intended to require parsing. City money won't go in to fill the gap.
Madam President, I still have a number of questions and I'd like to follow your precedent because there may be other members --
There are other members that would like to be recognized.
I would like to hold at this moment and then come back, Madam President.
Thank you. At this time, the Chair recognizes Councilman Nutter.
Thank you, Madam President. 00067 Mr. Martin, just a quick question, if you could refresh our memories. Who is responsible, and what is the extent of the responsibility, for any reporting requirements related to either construction activity or the ongoing operations of the facility, whether it's the financials or who's doing what at the particular sports complex relative to the two stadiums? Were there some reporting requirements in the documents that we dealt with last year?
There are a variety of obligations in the leases for the teams to solicit approvals by PAID of a whole range of component parts of their project. But I'm surmising you're trying to get to something else, but I'm not exactly sure.
I thought I recalled in one of the terms sheets for both transactions that certain reports had to be made on some kind of regular basis with regard to the progress of the project, how many people were working at the project, who those people were, where they were from, some type of demographic analysis of who they were, who had contracts with 00068 the teams to do certain things, what the value of those contracts were. And then once the facility is up and running, is there any requirement to make any reports with regard to how the two facilities are operating, who's there in terms of either concessions, restaurants, or any other activity outside of, obviously, the ballplaying that's going on? Did I read that somewhere in one of the terms sheets?
Yes, you did, Councilman. That would have been in the economic opportunity plan in Section 2(d), and that section, again, is incorporated also -- that plan is incorporated as an exhibit to the lease, and it indicates that after the commencement of project operations, the team will forward to the Mayor, the President of City Council, and PAID semiannual updates of employment and contracting activities for the project in appropriate form.
Tell me that term again. You said upon the completion of what?
The phrase used is "after 00069 commencement of project operations."
The project is described as the development, construction and operation of -- and in one case, it's a ballpark, and in the other case, it's a football stadium.
And what are the dates that trigger this commencement terminology? When does this start?
Well, I think that it would be different as to -- I mean, there are not dates specific; it would be based upon an interpretation of.
Well, there must be some trigger. I mean, what does that -- what does that phrase mean?
Given the status of the projects currently, Councilman, I would believe that the projects will have been commenced at the point these leases are signed. If the question is development construction and operation, I would think that these projects are clearly currently under development. 00070
I was going to say, some of this activity has already started, right?
Right. So the obligations embedded in what is being suggested here are part and parcel of the lease, so they won't --
So when would you consider -- if some of these activities in that phraseology have all right started, what would you consider the start date of -- what's the phrase, "commence, "operate"?
After commencement of project operations, all right. So what's the -- what was the first day of the commencement of -- I'm sorry, tell me that again?
Of project operations, thank you. What was the first day?
I think we could probably debate that, Councilman, but this is triggering a reporting requirement, and I would surmise that after --
Well, if you have a 00071 reporting requirement that's a semiannual --
I always get the semi-annuals and biannuals a little mixed up, but what's --
Right, okay. Well, if you're going to do something in six months, you got to have a date from which you start, then you get six months. So what was the date?
So is your testimony that if this all gets wrapped up on or by February 1st, that you have until, what, the end of August?
-- That I what I called to your attention was the reporting requirement as it related to operations, and there's a separate 00072 reporting requirement relating to design and construction.
What are those operations? What are those requirements?
The teams will similarly forward to PAID, the Mayor, and the President of City Council in formats reasonably agreed upon monthly updates.
Oh, so we got monthly updates, okay. And when do those start?
Wasn't it your statement that some of this activity, in that phraseology, has already started?
So then the reporting requirements have started, right?
Well, the reporting requirements are part and parcel of commitments that are being made in connection with the lease. 00073
If the lease isn't executed, I'm not sure that we can get a hold of the teams that are reporting requirements.
Without the lease being signed, I'm not sure what the basis would be upon which to hold the teams to the reporting requirements.
Let me sure I understand this. We have certain terms and conditions in the lease that say that you have to make certain reports to us when you start certain activities; is that correct?
Okay, and just so I understand, those activities have started, right?
Those activities have started, in essence, by the teams in anticipation of these leases being signed sort of on their own nickel, yes.
Right, I understand. They took a certain amount of risk, 00074 but starting before things were well in hand. But now you're saying that we can't request the information that we requested to have in the lease, and even though they started doing certain activities which would be a trigger date for those reports, we can't have any of that information until after the lease is signed. Is that your testimony?
No, it would never be my testimony, Councilman, that you can't request something.
Certainly the teams can respond to any requests issued by you or any member of City Council.
Okay, all right. Who's responsible for gathering the data and information for these reports?
There are contact people indicated within each of the plans on behalf of each of the teams. As to the Eagles, the contact people include Mr. Montgomery, the President, and the Project Manager for the --
I'm sorry, for the Phillies, Dave Montgomery, John Stranicks (ph.) are listed. And as to the Eagles, I believe Mr. Banner and Mr. Simmon (ph.).
Well, this is the last part of the question. What are the three terms, development, operations and something else?
As to the reporting requirements under design and construction --
-- it indicates "over the estimated design and construction period," which, in the Phillies document, is indicated to be of 34 months.
I think that would have to be a -- I would suggest that you need -- that question would be better answered by the teams' representative in terms of when they anticipate that --
The 34 months, can 00076 you tell us what's happened so far?
The Phillies have commenced a design process for the ballpark on the new location that was specified in -- back in November. That design work, I know, is ongoing. The Eagles --
Okay, does that mean that they have a contract with someone to do that?
Again, I would suggest that you ask the Phillies to give you details about that.
Because their stadium is located on the T-Warehouse site. Getting back to your earlier question, Councilman, the language in the Eagles document is similar, except the construction period is noted to be 30 months instead of 34 months.
Okay. And so whether it's the monthly reports or the semiannual 00077 report -- now, the semiannual was a part of the economic opportunity plan and the monthly was a part of -- what was that, design?
These are different sections of the economic opportunity plan.
I understand. Who is responsible for producing -- gathering the information and producing these reports.
So on a monthly basis or a semiannual basis, they have to get together all this information and forward it to the Mayor, the Council President, and PAID?
And would you consider that to be a material term of the lease?
Is there any particular penalty for not forwarding the information?
I think it would be handled similarly with any other breach of the respective leases.
Is it considered a 00078 breach not to forward the information?
Presumably, after exercising the notice and cure provisions that would be in the contract, yes.
So if they didn't send us the information and we notified them that we haven't received your monthly or semiannual report, they have an opportunity to cure that deficiency before you would take any other action.
Thank you. The Chair recognizes Councilwoman Miller.
Thank you, Madam President. Madam President, I was wondering if anyone from the Greater Philadelphia Urban Affairs Coalition will be here to testify?
Or MBEC. I have some questions that talks about the implementation 00079 of the MBE/WBE contracts.
Mr. Martin, aren't you in a position to answer those questions?
Well, because, you know why? 'Cause some of the questions that people are asking he's referring to the team, and that's probably true, but I also think that someone from MBEC or/and the Greater Philadelphia Urban Affairs Coalition should be here because they are a part of the implementation.
We'll look into if somebody from MBEC could be available today.
Well, we want 00080 them and we also want someone from the Greater Philadelphia Urban Affairs Coalition.
Can a call be made for both of those organization to be here please?
Thank you. I just have a few more questions that I would like to ask. The terms sheets require the teams to provide capital repairs to the stadiums during the entire length of the lease terms. The leases cut that requirement to years. How do 17 you reconcile these provisions? 18
The provision that was in 19 the terms sheet -- bear with me for a second. 20 The terms sheet provides -- requires 21 that the teams to be responsible for capital 22 repairs without any precise delineation as to a 23 time frame. And as we got into the negotiation of 24 the lease, we needed to contemplate a circumstance 25 where there would be a requirement of capital 00081 repairs that would require an investment with useful life beyond the then-remaining period of the lease. And we went back and forth with the teams in our negotiations. And the conclusion was that we needed to provide for the possibility that there would be a need for a capital repair, especially potentially an emergency capital repair in the last five years. And we anticipate that if that occurs, there will be a division of the cost for the period remaining in the lease, which will be the responsibility of the teams, as against a longer period, which may be the responsibility of PAID. This, as negotiated we, believe, was fairly anticipated by the terms sheet. It was standard for long-term commercial leases of this type. And we think it appropriately balances the interests of the public and the teams in this regard.
Well, if -- again, I need to emphasize that the teams' maintenance 00082 obligation continues over the entire 30-year period, that we're dealing only with potentially emergency repairs, and that determination regarding the payment is going to have to be made at the time.
No. PAID could also decline to make the payment. It's hard to anticipate how that would, with precision, work out, because we are talking about the period probably 2029 to 2034, you know, where we're dealing with periods that are probably 28 to 32 years out from now.
Are there limitations in the leases on the obligations of the teams to make repairs in the event of casualty? How do you reconcile these provisions with the capital repair provisions of the terms sheets?
I think the limitations, Mrs. Verna, that you're referring to are included in the insurance provisions, and the insurance provisions were the topic of negotiations between 00083 the City's risk managers and their representatives and the teams and, again, we believe are pretty much standard for commercial transactions of this type. And the limitations, to the extent they exist on the teams' casualty obligations, are not inconsistent with the terms sheet.
Mr. Martin, are there any circumstances under which the teams can legally escape their covenance to play their home games at the new stadiums?
The preservation of the play covenance was paramount in our drafting of the documents, and the only place that occurs to me as a spot where the play covenance might be subject to avoidance is where the City fails to make its cash payments that are required. You know, for example, we have the $10 million payment that is required to the Eagles in June. There are a couple of other places where, under certain circumstances, the City has requirements to make cash payments -- excuse me PAID has requirements to make cash payments. And I also think that under certain casualty events, if the buildings were to be destroyed or 00084 condemnation, if the City were to condemn the properties, those arguably may result in an impact on the play covenance. But the preservation of the play covenance was paramount in the preparation of the leases.
Thank you. I believe Councilwoman Blackwell, you wanted to be recognized?
Thank you, Madam President. This is a follow-up to a question and a dialogue with Councilman Cohen. The O&M costs you mentioned were about $90 million. Is this a net present value basis?
Thank you, Madam President. Mr. Martin, there's a job difficulty that those of us who are members of the bar face, and that's talking plainly and not being considered as if we're trying to hide things by 00085 the words that we use. I'm a little troubled because I read your statement on the Acme warehouse, and in this statement that Mr. Martin read, he said that the City purchased the Acme warehouse. Now, you know, I'm both a lawyer and a non-lawyer simultaneously. And "purchase" means to me "buy it." And then you gave an answer that indicated, Well, we really didn't. All they did was agree to not fight us if we move ahead and condemn the property. If we bought it, there has to be a purchase price; and on that purchase price, we have something we can examine and decide whether or not it comports with what the estimate had been. So did we buy it or didn't we buy it?
Why did Mr. Martin say that we purchased it? There's no other adjective in it. The City purchased the Acme warehouse site last week, and I read from of Mr. Martin's statement, and has entered into an agreement in lieu of condemnation for the T-Warehouse site, but the Acme is a straight, 00086 all-out purchase. And if it's not, I don't think it should have been stated as an all-out purchase.
Let me attempt to clarify. I'm sorry if I left you confused. There was an agreement with respect to condemnation entered into with the equitable owners of the Acme warehouse. That provided --
Well, can you tell us what "equitable owners" means, because we're talking to citizens of Philadelphia, and not just lawyers.
Okay. Acme owned the property, Acme entered into an agreement with another party to sell the property to them. Our agreement was with that buyer, to take its rights to purchase. So that -- so that the City could acquire the property.
He agreed as to an amount to be tendered to him in connection with the City taking control of the property. And that's what occurred last week.
No. There was an amount that -- an amount has been tendered to that party at the end of last week, and now the City --
If it's been tendered to him, why can't it be stated on the record?
I could state it on the record. I guess I'm a little reluctant because as we're continuing to deal with all of the other parties, we're attempting to continue negotiations. And the less information that is out there regarding what we've done with other property owners may leave us in a bit better position. And if you would be willing to take that information privately, I'd be happy to give it to you privately.
Well, let me ask you this: Is the agreement -- whatever it is, it was something less than a full purchase. Is there any 00088 circumstance under which the City would not be able to acquire ownership?
No. The City has acquired ownership. The only question now is if this party challenges the amount which has been paid as fair consideration under the agreement with respect to condemnation and that challenge runs to the Board of View, does the Board of View make a subsequent ruling that more money is due?
Well, where did the money come from, whatever amount it was?
Those were funds which were available from the City. My understanding is that they constituted repayment of a -- under a 00089 State grant. They were monies otherwise available to the City for its use, and they will be reimbursed out of the bond proceeds when the commercial paper closing occurs.
You mean it was money from a State grant unrelated to that legislation that gave $85 million for each stadium from the State?
And that was borrowed? Did you have to get State approval for that? Did the City have to get State approval?
The amount I referred to previously of the $90-some odd million, which has been budgeted for land acquisition, this is a 00090 subset of that amount. When the commercial paper is issued and the proceeds are available, the first payment will be back to replenish these funds.
Was it the total amount that had been agreed upon that was paid or a partial payment?
Subject to what, the Board of -- I don't know what they call that.
You know, that's an interesting concept. I expect there are all kinds of grants from State and federal government that come into the City, and we hope and we pray that that's not going to change effective a week ago or so. But the concept is that that money is available for other purposes? It seems such an easy way to frustrate 00091 the City Council. City Council likes to feel the City Charter has placed upon it a responsibility, which often is a burden of, you know, being held to account for payments made by the City, because we appropriate the money. But if we have not appropriated the money, somehow the City, meaning the Executive Department of the City government, still can have money available to itself to do things.
In this case, the funds that were available were available for use by the executive branch for this purpose. I'm not -- I don't want to suggest that there's a broader -- a broader principle at work. It was isolated as to these monies.
I don't think that can -- I know what you're trying to do, but I don't think we can do it at public hearings. You know, there's money that the City Council has not made available yet for the stadiums that we haven't even completed all of our actions.
I think there has to be a better answer than that. And I say that 00092 respectfully, sir, but --
And I understand that, Councilman. Would it be appropriate to suggest that someone else from the Administration try to speak more precisely on this question at this point? Or would --
Who from the Administration would be able to speak on this precisely?
If he's here, perhaps he should come to the table. (Mr. Trujillo returns to the witness table.)
Good afternoon, Madam President. I'm Ken Trujillo, the City Solicitor. Good afternoon, Councilman. I was in the back and so I heard a little bit of the exchange, and I am happy to answer any questions you might have.
Well, I'm sorry, I did not hear all of it. I was literally in the back corner. (Mr. Martz repeats the question to Mr. Trujillo off the record).
It's my understanding that there was already an appropriate for, I believe, up to almost a hundred million dollars for the purpose of acquisition for the real estate property acquisition that was made by this Council in December.
Mr. -- the witness testified before that he believed that it was money from the State, which was available for use for this purpose.
Oh, if what you're talking about is the actual funding of the purchase --
You know, having a 00094 lawyer's discussion is to the need for lawyers to speak in language which citizens can understand and rely on and not feel is questionable language intended to cover rather than to explain and open the situations, because I point out to the conflict in testimony as to what appeared to be a flat statement of purchase of the Acme warehouse, and later on, it was indicated, Well, we sort of purchased it, but we don't know what the final price might yet be, all depending on whether the matter goes before the Board of View, which apparently the so-called equitable owner has reserved the right to do, you know, and awaiting the final judgment of the Board of View, if he actually proceeds with that. And then, it turned out -- I raised the question to ordinary people -- "purchase" means that you put down the money. And the witness said, Yes, we have paid the amount the City had agreed on, subject to what may happen later. And I wanted to know where did the money come from?
'Cause I thought that this matter, you know, that money matters by 00095 the City were being held in obeyance. I would like to hope that the decision of City Council is not for or against in advance, that these hearings have a purpose, to both inform the public and to permit Council to consider and then to permit Council to vote. And if it turned out that the vote was against this ultimately, that there would be no expenditures of monies. But, apparently, that was just -- I guess I was still naive, after all of these years in City Council, in believing that Council had the power yet to act.
Sir, first of all, I know one thing, and that is that you are not naive. Let me start with your first question. And once the declaration of taking is filed, once the declaration of taking is filed, ownership of the property does in fact change hands then.
That has been done. And so if we were incomplete or inarticulate in phrasing that, I apologize, but the declaration of 00096 taking has been filed. And so ownership of the property is in the City's hands. As Mr. Martin, I believe, was trying to make clear, that does not -- that does not end the question as to price, because the seller kept the right to go to the Board of View so that is --
Well, is that a purchase? If we require ownership by a declaration of taking, is that a purchase of property?
Well, it's -- I'm not a real estate; I would defer to real estate lawyers and I get some more information on that. My understanding is, however, once we have filed the declaration of taking, equitable ownership goes to the City. And so title has passed, and title has passed to the City. As to --
Is that title subject to being recovered again? Is there any legal action which can reverse that? ?
The only issue at this stage is the question of what is just compensation for the property? And that is what would be in 00097 the hands of the Board of View. The Board of View would then make a determination, if the seller chooses to go to the Board of View, as to whether or not the price, as has been paid by the City, was just compensation.
Did we have to establish any right to file this declaration of taking? Or does it mean the City legally has the power at anytime to file a declaration of taking against anybody's ownership of any property and thereby require legal ownership?
Councilman -- CHAIRMAN COATES: I'm just trying to understand what form of acquisition of property was involved here.
In December, among the ordinances that were approved by Council as it relates to the stadium transaction were five different ordinances which authorized the City to acquire each of the five parcels required for stadium development, and those parcels were permitted to be acquired either by condemnation or by amicable negotiates. So the authority of the City to file condemnation on the properties that 00098 we're talking about here were part and parcel of what was approved by this Council in early December.
You know, let me explain one thing: The basis to some of these questions is, we know that in private transactions involving private money, all sorts of things take place -- let's assume they're all even legal, but there are all kinds of actions that take place. But when you're dealing with public monies, taxpayers have this old-fashioned, quaint notion that they kind of have a right to know what's going on and how their money is being used, and they even have a right to express an opinion whether they think it's right or wrong and whether or not they have legislative power, you know, to effectuate those feelings or not. But these are important issues to people in Philadelphia, and that's the reason I'm trying so hard to get to the bottom of what have we actually done and what are the powers of the Council. And that's the reason I raise the questions. We hope that in telling us what's going 00099 on, that the language is clear and simple, and that ordinary conclusions can be safely drawn without our later being told, Oh, but we used this word. You know, we were very careful not to say something else. And we're trying to avoid that. Thank you for the explanation, Mr. Solicitor.
We appreciate that. So the City owns the property, but we're not certain yet or not whether the estimate as to the cost of the property, the estimate that the City made, will prevail, but I assume the payment is within the limits of the City's estimate of what it costs, so we don't yet know of any overrun on acquisition of property. Would that be a fair conclusion to say, without revealing the amounts?
Yes. They're -- on the two parcels where prices have been established, first the Acme, and there is a risk that it may be increased, and as to T-Warehouse, which is a set amount still to be funded, those two numbers, as 00100 agreed upon, constitute a slight increase as to what was budgeted. But the vast -- the majority of the contingency, which I previously described, continues to be available to the transaction. So we weren't right --
Yes. And we were wrong within the contingency; we weren't right on in terms of the numbers, but perhaps over by a couple million dollars total.
And I guess in transactions involving the latest estimate, I understand, of the immediate cash going in is something like 1.3 billion from all parties, not just the City, that this is now being described as a $1.3 billion project and, as I calculate it, with some 6 to 700 millions of dollars in tax money being require over the next 30 years to pay for the cost of bonds. I would call it from my arithmetic a $2 billion project from the point of view of the total costs. Do you disagree with that?
Well, you can calculate 00101 the value of the transaction in any number of ways, Councilman, and I'm sure that if you accept certain premises, your calculations are accurate.
Okay, very good. Thank you. Thank you, Mr. City Solicitor.
Now, back to -- what is the indenture? There is reference made to indenture. In the leases for example, there is this very intriguing language, I think, worthy of a detective novel. Section 18.4(a), I mean that designation is enough to scare away lawyers as well as citizens from reading further. Section 20 18.4(a) of the Eagles prime lease states that the City must abide by all of the lease documents, plus the obligations imposed on the City pursuant to the indenture. Now, that raises a whole new question. What is the indenture and what's going to be the 00102 impact of the indenture on everyone? What do the lease agreements mean by the word "indenture"?
Councilman, the indenture refers to the document that will be central to the bond or note financing by PAID, and it is a document that sets forth the terms under which the bonds or notes or commercial paper will in fact be sold and the rights and obligations of the parties concerning that.
When I went to law school back in the '30s, "indenture" meant a deed.
No. It's a document that would be used if the financing transaction. If, 00103 in fact, you denied greater detail than that, I would get one of the bond lawyers to respond, but it's not the deed for the real property.
Well, could you, without going into detail, tell us generally what does the indenture relate to? Why is there such a thing as indenture? Why weren't the leases enough?
Well, because we have different parties. The leases in the first instance, the underlying leases, are between the City and PAID, the layers of leases that you referred to in your earlier question.
The next layer of leases are those between PAID and the two teams respectively. As you're aware, there are subleasing development agreements between PAID and the Eagles and between PAID and the Phillies, and they set out the respective rights and obligations of PAID and the teams to each other as landlord 00104 and tenant for the new facilities.
The indenture -- and then there are a variety of other documents -- are documents that will be used by PAID to obtain the funds necessary to make the various payments that are necessary in the transaction. So, for example, the terms sheets that Council approved in December anticipated that the City would provide, through PAID, money for, for example, with the Phillies, the construction of their stadium. PAID will borrow those funds in order to have them available to make that investment in the stadium. The borrowing documents include the indenture. So the indenture is not --
I think it is actually, Councilman, the contract between PAID and the bondholders. So it is the document that sets forth that PAID will borrow the money and the terms under which it will repay the money.
Well, if it's between the bondholders and PAID, then it's an obligation running to the bondholders.
Are they the only parties that can enforce the terms of the indenture?
Yeah, the trustee, under the indenture, can also enforce, and usually would be the party enforcing, on behalf of bonds holders.
Well, then, tell me, how does that impact -- or does the indenture come before City Council at some point?
No, the indenture does not come before City Council because City Council is not a party to it. The underlying leases --
Then why -- if the 00106 City is not a party to it, then why does that section that I read, Section 18.4(a) say that the City must abide by all of the lease documents -- that I understand -- plus, quote, the obligations imposed on the City, pursuant to the indenture?
You mean there are going to be obligations imposed on the City that we know nothing about?
No. These are the obligations, in fact, that will result from these underlying leases being used as the vehicle for funding those dollars necessary so that PAID will be in a position to repay the borrowings that it makes in order to develop the stadiums.
Well, I understand that, but why -- this language indicates that there are going to be, or may be, additional obligations; otherwise, there's no need for that language. The City and PAID are going to have various kinds of obligations through the lease agreements, but this says that the City must abide by all of the lease documents and, in addition, 00107 must abide by the obligations imposed on the City pursuant to the indenture. Now, if there are obligations already imposed on the City by the leases, then there is no purpose to having them impose a second time pursuant to the indenture. So this, to make sense, must refer to the possibility of there being other obligations not imposed by the lease which may be further imposed upon the City by the indenture, obligations which we know nothing about.
Councilman, it may be worth, in terms of getting the broader picture, to go back to Section 4.6 of the prime lease, which I think is the document that you're. And 4.6 indicates that the terms and conditions of the indenture, the credit facility, the identity of that provider, the form of the bonds, collateral, security, all of that is subject to the prior written approval of the City acting through its Director of Finance, which may be granted or withheld in its sole discretion. So, again, this is a necessary component of the overall financing structure, but the prime lease has been structured in a way to 00108 ensure that there is nothing about the indenture or the bonds or any of the documents collateral to the indenture or the bonds which will impact the City or impose any obligations upon the City other than ones that we're anticipating by the sublease agreements.
You know, I don't mean to be disrespectful in any sense, but it just sounds like pablum. In one place, there is clear language that there may be new obligations, which we know nothing about that are going to be imposed upon us by a document -- in this case called the indenture. And then we're told that somewhere else in the document is something that says you can go back to sleep peacefully, don't worry about because actually, even though it sounds like we're doing something, we really haven't done anything at all. You know, we haven't added anything that you haven't already agreed to. Now, I just have enormous difficulty with that. I'm not going to pursue that further but I think you can understand why it raises so many -- so many questions in our mind, because what we see -- let me speak for myself. What I 00109 see is the possibility at sometime, when there may be other people representing the City, when maybe there may be other City officials, they're coming in and they're saying, Well, it was plain as day that the indenture said that it had the right to impose other obligations on the City. And as a matter of fact, we went through the Council's transcript, and you even discussed that. Why are you complaining now that there are other things? And then we'll say, Yeah, but at the same time, we were told that it really doesn't mean anything, because there was another clause that was supposed to have made the first one that troubled you utterly meaningless. You know, I think that that puts taxpayers in a very uncomfortable situation 'cause I don't-- I really don't know what the answer is. When you draft a document -- and I've done many in my lifetime -- everything you say has a meaning by the drafter. Maybe other people don't know what the meaning is, but the drafter knew what it was that he or she wanted to achieve. And it kind of doesn't make sense to say that phrases like imposing additional obligations in the indenture 00110 upon the City, saying that that's there but it doesn't mean anything. At this point, I have no further questions, President Verna.
Well, for a moment, I'm sure as I contemplate this intricate pattern of leases and indentures and imposition of obligations, but not really. You know, we're only putting it in words.
But we'll put in words that will eliminate the effect. Thank you, Madam President, for your patience.
Thank you. Are there any other questions of this witness? (No further questions.)
You're going to stay with us for the remainder of the hearing, 00111 I'm sure.
Our next witness is Mr. Hardy. And I would recommend that Mr. Hardy take whoever he wants to the witness table. (Witnesses come forward.)
Good afternoon. And may I thank you for your patience. Many of the Councilmembers are in their offices, and they can hear the testimony. You have a letter, a copy of which is now being distributed to each of the Councilmembers.
Thank you, Council President. My name is Chuck Hardy, and I'm here with my associate Tyler Wren, who is going to start out giving the testimony that we are giving today on behalf of some of the community groups who live in the area most affected by the proposed 00112 new ballpark and new stadium. Mr. Wren?
My name is Tyler Wren. I'm an attorney with the law firm of Sprague & Sprague here in Philadelphia. We are testifying here today on behalf of the various community organizations which represent the South Philadelphia residential communities that will be most affected by proposed new Eagles stadium and new the Phillies ballpark. , South Philadelphia Community Civic Association, Broad Street West, and the Packer Park Civic Association. Our clients -- your constituents -- have suffered more than 30 years from the effects of the present Veterans Stadium: noise, traffic, illegal parking, drunken and disorderly fans, and a non-caring and unresponsive City government. It was clear to everyone when we began the new 00113 process here of new stadiums that this sorry state of affairs could not be repeated with the new stadiums. This Council and this administration made clear their resolve to not repeat the past mistakes and to not ignore again the interests of citizens of South Philadelphia in the construction and use of the new stadiums that will replace Veterans Stadium. To this end, the neighbors, with our representation, spent many hours in discussions and negotiations with the City and with the teams to develop a plan that will provide a reasonable and profitable venture for the teams, but one that will minimize the impact on the neighbors. This was not an easy process, but we were eventually successful in obtaining promises from the teams and the City, which we feel go a long way to address our community needs, particularly with respect to the types and locations of uses within the Stadium District. There was no litigation by the neighbors; we worked out our differences. In December, this Council passed Bills 000721-A, 000722-A and the various other bills 00114 necessary to authorize the stadium development. The deal, as embodied in these bills, was satisfactory to the City, the teams, and the neighbors. Before this Council at this time are the actual leases and development agreements for which the City and the teams seek final approval from this Council. As Council is aware, and the other witnesses have reminded Council, under the December bills, these final leases are supposed to conform in all material respects to the terms and provisions set forth in the December bills and may contain other terms and conditions as are not inconsistent therewith. These final leases were negotiated between the teams and the PAID representatives. The neighbors and Council not included in this process. We did not see the proposed final leases until they were filed with Council last week and a ten-day approval process began. We have now reviewed the leases and have found a number of critical provisions which do not clearly embody the terms as authorized by Council and related promises benefitting the neighbors which the 00115 Administration has made to Council. In reviewing the leases, we found that the leases did not explicitly provide, as previously agreed, for buffer zones between the stadiums and the neighborhoods. The leases did not provide, as previously agreed, on the limitations for the use of parking in the nearby Naval Hospital site. We also noted that the leases did not provide for review by the neighbors of development plans as they would be generated by the teams. We found that the leases before you also appear to improperly allow PAID in many in many critical areas to modify or waive in its sole discretion the teams' commitments in a way that would violate the promises to the neighbors in the December bills and ultimately in a way that would thwart the will of City Council. 2 of the Phillies lease, dealing with their rights as so signage and advertising at the stadium site, revealed that the Phillies intend to erect what would be a second so-called theme tower. This is a free-standing, massive two-sided 00116 electronic billboard with faces that easily would be 30 feet square. Such a massive tower already exists at the stadium site.
Somewhat to the west of Tenth and Packer, there is this large, approximately 120-foot tall electronic billboard that is designed to catch the eye of the motorists as they travel on I-76. This operates hours a 9 day, 7 days a week. The Phillies wish to erect a 10 second so-called theme tower. It is an 11 advertising billboard. 12 The Phillies maintain that they, under 13 the lease, have the right to erect the second 14 tower anywhere they like within the district, 15 including within the parking-only zones and in the 16 limited-activity parking zone, which was worked 17 out by the neighbors and the teams and is embodied 18 in the December ordinances as an exhibit to the 19 terms sheet. 20 A second such tower in this location 21 was never agreed to by the neighbors and, indeed, 22 was never even does discussed with the neighbors 23 by the teams and the City. A second tower, any 24 tower to be located in this parking-only and limited-activity zone is unacceptable. 00117 These are the areas on the western edge of the site that are adjacent to the homes. And the intention in working out the arrangements by which uses in this area would be limited was that there would be only parking, or, on occasion, limited events by the Phillies that were controlled in a way that would not generate excess noise and other impacts on the neighbors. The proposed theme tower, the 120-foot, 24/7 sign, potentially on the very edge of this neighborhood would undo many of those good restrictions which we had worked out. We've discussed our various concerns with the teams and the City in the preceding week since we've had these leases, and we are pleased to report that, with the exception of the theme tower issue, the neighbors' concerns have now been met in a way that is acceptable to the neighbors and which will not a require the actual leases before City Council to be modified. William Martin, who has just testified here, acting as a representative of the Administration and of PAID, has today delivered to Council President Verna a letter which recites that PAID and the teams will 00118 forego in the areas at issue rights which they believe were given by the leases, which we believe exceed the prior agreements with the neighbors and the will of Council. I would like -- in order to make these commitments of record, I would like to distribute to Council and read into the record the letter to Council President Verna from Mr. Martin.
This letter is dated January 29, 2001 on Mr. Martin's letterhead of his law firm. It's addressed to the Honorable Anna C. Verna. Dear Mrs. Verna: Thank you for the opportunity on Friday evening to meet with you and your constituents regarding their questions about the sublease and development agreements herein after the Phillies agreement and the Eagles agreement relating to new stadium development which have been submitted for review by City 00119 Council. I am writing to you in my capacity as representative of Mayor Street's administration and the Philadelphia Authority for Industrial Development in connection with new stadium development. I believe Friday's exchange was useful in allowing both PAID and the two teams to better understand the concerns in the neighboring community. After consultation with the teams, we are able to respond to certain of the community's concerns with clarifications of the manner in which parties intent to implement the respective agreements. As to specific items raised by the constituents, I can advise you as follows: 1. Phillies signage. The Phillies have confirmed to PAID in writing that the team will locate its video display and two of its three electronic message boards on a portion of the stadium premises, as defined in the Phillies agreement, other than in the parking-only zone, which is identified in Section 5A of Exhibit E to the Phillies agreement. You will recall from our discussions that the third electronic messages 00120 board is intended to be located on the northeast corner of Broad and Pattison. 2. Buffer zones. The Phillies have confirmed in writing that they will undertake the construction of a 150-foot buffer zone along the east and south sides of the Veterans Stadium neighbors' community. The entire perimeter of the buffer zone will be fenced with what is known as "Eagles fencing," a high-quality fencing, or a fencing of similar quality. Maintenance access for the buffer zone will be from the parking lot side only, with locked limited access gates. The Phillies will advise the community regarding design plans for the buffer so as to solicit its input regarding appropriate landscaping and lighting for the buffer. Furthermore, the Phillies have confirmed that maintenance of this buffer zone will be a component of the Phillies maintenance obligations, pursuant to Article 8 of the Phillies agreement. PAID confirms that it will design, create, and cause to be maintained a 200-foot buffer zone at the Naval Hospital site, along Hartranft Street and 20th Street, consistent with 00121 the existing buffer along Hartranft Street. Both sides of the area will be fenced with Eagles fencing on the street side and cyclone fencing on the parking lot side. of the Eagles agreement. Category 3, Navy Hospital Lot. of the Eagles agreement. 3 A or B of the Eagles agreement. Nor will it approve any other uses by the teams at anytime without the prior written consent of the incumbent Councilperson representing the 2nd Councilmatic District. Category 4, Review of Plans. Within 00122 hours of its receipt of such plans, PAID will 3 make available for inspection at its offices by representatives of the Special Services District all schematic plans submitted by the teams to PAID and all other plans submitted to PAID by the teams for areas outside of the football stadium and baseball ballpark. In addition, similarly available for inspection will be relevant studies and reports prepared directly by PAID or its representatives -- for example, traffic studies. The last category, number 5, General Commitment.
PAID confirms to you, as the local 14 District Councilperson, that PAID will not grant 15 any waivers, consents, or permissions, or make any 16 elections, which may otherwise be allowed by the 17 Phillies agreement and the Eagles agreement if the 18 grant of such waivers, consents, or permissions, 19 or the making of such elections would be violative 20 of the provisions of Exhibit E of the Phillies 21 agreement or Exhibit D of the Eagles agreement. 22 Mr. Martin concludes: I hope that the 23 confirmations and commitments set forth above are 24 helpful to you and your constituents in your respective review of the two agreements. Copies 00123 of the written commitments of the teams are enclosed. I'm happy to provide you or other members of Council any additional information which would be helpful in your review. Signed, William F. Martin. I'm advised that Mr. Martin -- that the actual wherein commitment of the teams to which he refers in the letter are not yet in hand but are expected shortly. But he has indeed the verbal commitments that he so relates in this letter. Accordingly, the concerns which the neighbors found in their review of the leases have been addressed, with one exception: the issue of the second theme tower which the Phillies wish to erect literally potentially right on the line of the neighborhood to the west. The existing Phillies theme tower at Tenth and Packer will remain. The neighbors do not like the existing tower, it does operate 24/7, with flashing lights, but will live with it. Moreover, the neighbors have no problem, recognizing the realities of this deal, with the Phillies placing a second theme tower anywhere on the site, but it must not be erected next to our 00124 clients' homes, on the western edge of the site. To place a tower in this area, in our view, will clearly violate the December ordinances. It will violate Exhibit E to the Phillies lease, which provides for a parking-only zone and a limited-activity parking zone in this area. To place the tower in this area will intrude massively and unnecessarily into the lives of the residents, your constituents, in the affected neighborhoods. The tower will have a huge display area, as we had said, operating 13 hours a day, 14 7 days a week with flashing lights. 15 We believe that locating this tower in 16 this area to the west of Tenth Street, as we had 17 said, would violate the ordinances. And it would 18 violate the promises to the neighbors, which City 19 Council adopted and embodied in the December 20 ordinances. 21 And in the agreement before you, the 22 commitments are referred to as the use, scheduling 23 and parking rules, an exhibit to the lease. As we 24 had said, this provides a parking-only zone and a limited-activity zone in the area north of 00125 Hartranft and west of Tenth Street. We believe that the Phillies siting the second tower in this area would violate the lease and the will of Council. We do not wish to have to fight this issue in the future. We want, and I think it is in all parties' interests, to have this issue resolved now by Council. The negotiation process on this development has been a long one. Both sides -- and I say the neighbors versus the team and the City on occasion -- have come a long way. A spirit of cooperation, supported at every turn by this Council, has resolved most of the neighbors' problems. This remaining -- and these problems are all quality-of-life issues. And the neighbors were reasonable in their requests in this regard of this Council, and Council supported the neighbors. We look again to Council to resolve this last major issue. The final Phillies lease does not have to be modified to resolve this issue.
Like was done to resolve the other issues we have mentioned, PAID and the Phillies can 00126 provide to Council written assurances and commitments that the Phillies will not request, and PAID will not approve, the erection of a second tower in the restricted parking zones next to the residential neighborhoods, as identified in Exhibit E to the lease. Again, we look to this Council to protect the neighborhoods by obtaining adequate assurances from the parties here that this last issue will be resolved. Thank you much.
Thank you. The Chair recognizes Councilman Kenney.
Thank you, Madam Chair. Gentlemen, could you for the record expand a little bit on any issue in the lease as it relates to the neighborhood that would deal with the scheduling of multiple events at the stadium on the same evening or in the same 24-hour period. One of the major problems in that community usually happens when there are potentially four buildings -- three buildings now 00127 and potentially four buildings in use in one particular 12-hour or 24-hour period. And could you talk a little bit about what protections there are for keeping that from not happening, or at least what notifications are required if it's intended to happen.
Councilman Kenney, there are specific provisions in this lease intended to address that very issue. And Mr. Martz, the Managing Director's Office and parking and traffic experts, Commissioner Timoney, members of this Council, and representatives of both the Phillies and the Eagles were involved in lengthy discussions regarding just that issue. There are several aspects which need to be addressed in order to minimize the adverse effects of simultaneous scheduling or overlapping scheduling. One is planning, and there is written into these leases, both of them, similar provisions which require schedules be set in advance and that information be exchanged and available to everyone who might be affected. The next issue is determining how long particular events can go on, because, of course, 00128 the fact that an event occurs in a day doesn't tell you whether traffic problems begin at in 4 the morning or at 3 in the afternoon or when they might end. So there are within this lease particular restrictions on the time prior to and after the intended length of the event in which ancillary events in the parking areas on the plazas might go on. The intention there being that simultaneous events be put at a minimum and that there not be overlap and that there not be 40,000 people trying to leave an area at the same time that there are an additional 35,000 people trying to get into the area. One aspect of that planning that cannot adequately be addressed soley in these leases is the fact that there are two other venues down there which are not directly covered by these leases; namely, the Center and the Spectrum. And there are provisions and intentions to come up with a comprehensive plan that would include them. They already do have some restrictions which the neighbors have felt are not adequately enforced. In addition, there is a sensitivity to the limited amount of parking. And so the number 00129 of people who can be expected at an event has to be limited to some extent by the amount of parking. And the magic number that was reached -- as magic numbers often are, by compromises -- is the number 84,000. And if the attendance at simultaneous events is intended to exceed 84,000, it is the neighbors' hope that those events will not be scheduled simultaneously. If, in fact, there is simultaneous events which exceed that number, there is a penalty. So that there is an incentive on the teams and the owners of the venues not to have those simultaneous events. A contribution has to be made to the Special Services District.
Let me give you a scenario, a potential situation at the complex. I'm talking about all four buildings, as it's envisioned. The flyers win the Stanley Cup Finals, hopefully, in June. The Phillies have scheduled a Yankees game, which is always a big draw. The Dave Matthews Band has booked the Eagles facility. And the opportunity arises for Comcast SpectaCore or the operators of the two buildings 00130 in the middle there, not involved in this discussion directly but indirectly. The opportunity arises to book another minor concert that may also draw 10, 15,000. And it's done without the prior time constraint notices that are a part of this arrangement. What's the penalty? Who begins the penalty process? And what are the details about that kind of potential happenstance?
If, in fact, there is a violation of simultaneous scheduling by over-booking events, there is a penalty of $50,000 imposed for the event that goes over.
It's imposed, under these leases, both the Eagles and the Phillies, jointly and separately.
That's correct. They're beyond the reach of these agreements. That's for the first violation. To prevent it from becoming a chronic situation, there is a provision that for the second and every 00131 further violation, that penalty goes up to $100,000. So there's a great disincentive have not to have that happen. I will tell you this and to assure the people of Philadelphia: that each time this arose, it was the unanimous opinion of all of the neighbors that if it was a World Series game or a playoff game, that they only wish that would happen. But nonetheless -- and there are some exceptions for extraordinary circumstance like that. But ordinary planning which results in exceeding the limitations of 84,000 would result in those penalties automatically. And if, in fact, there isn't the amount of parking that's been promised -- and this is the major concern for the neighborhood, 'cause when the parking lots are full, of course, the neighborhood is full of cars seeking parking and people circling the blocks -- that that 84,000 number is reduced by the number of parking spaces that are not available, whether they haven't been built or whether they're occupied by some other thing.
I think the concern 00132 on my part and my experience with the history of this complex, having worked at another job that brought me involved with the construction at the First Union Center, is that the goal of all of these organizations, admirably, is to fill every seat every night. That's what they're supposed to do. And I guess the concern that I have is if we have locked in the Phillies and the Eagles to certain constraints, how do we deal with the potentiality that the operators of the two buildings not involved in the agreement will hold true to the goals and spirit of neighborhood preservation?
Well, you do have yet to come before you this stadium area limited partnership agreement, which is supposed to be an agreement among all four venues with regard to parking and development and, I would, hope scheduling issues, since they relate to parking. And perhaps it's that opportunity. We don't see an opportunity here. I think Comcast is not (indiscernible).
And for the 00133 first time -- I don't mean to interrupt you. For the first time, the community will have a board, they will have a Special Services District. It my understanding -- and I understand your concerns, Councilman 'cause we've lived through that, but it's my understanding that if in fact there were a fine imposed. Eventually down the road, all four venues would have to pay. Fifty percent of the penalty would go to the Special Services District, the other 50 percent would go to the Children's Fund.
Part of this, and Council President Verna knows it very well, is credibility with the community. When we first hashed out the agreement to allow for the construction of the First Union Center, the late Governor Casey at the time came down and talked to the neighbors in the basement of the (indiscernible) school on a rainy Saturday or Sunday and made assurance on these issues of multiple events and numbers people. It never seemed to have ever been enforced. And I do understand why people feel that -- there's some 00134 skepticism. Despite the hard work Council President and the Mayor's Office and the teams, there's some skepticism as to its long-term enforceability, especially as it relates to the two buildings, 'cause we've run into problems in the past there, where the operators of the First Union Center and Spectrum decide without notice, for example, to have an outdoor concert with a heavy-metal band. And it kind of seems that that industry will book things at the last minute, when opportunities arise, different from what the Phillies and Eagles do because their schedules are known and promulgated at least almost a half a year or so in advance. So it's not as much how many Phillies games there's going to be or how many Eagles games; we know that. Concerts, of course, impact it in the larger arena, but I think the two buildings -- the Spectrum and the First Union Center -- have been kind of the uncontrollable problem in last-minute scheduling, multiple-event scheduling, and scheduling of events that break the ceiling on what was prior agreed to for limitations. 00135
Councilman Kenney, in fact, under the leases that you are being asked to vote on this week, there is a provision in Article 2 B of these use rules which says that the teams, Comcast, and PAID shall enter into an agreement within 30 days, if possible, which agreement provides for limited scheduling of simultaneous events, and that's exactly addressing this issue. So it is the goal to get this going right away. But, again, as I said earlier, there will be an opportunity for you to address it directly with Comcast.
And I thank you for the answers and I thank you for the hard work that you've put in along with Council President to assure the neighbors hopefully some credible and consistent enforcement as we go forward.
Thank you. And the neighbors are very grateful for your interest in their concerns.
Thank you. Councilwoman Blackwell, your light's on. Did you want to ask a question?
No? As I understand your testimony, you are not saying that you are opposed to the second theme tower; your concern is where the second theme tower would be erected. Is that correct?
Mr. Montgomery, would you or your attorney feel free to discuss this at this point in time? This one issue, if you will? And gentlemen, please stay where you are, and we can just pull over two more seats. (Mr. Montgomery and counsel come forward.)
Mr. Montgomery, I know you've been sitting here very patiently --
-- listening to the testimony, and you have heard what the concern is about the tower. Do you mind addressing that one issue? And perhaps we can put this last issue to rest. 00137
Well, Council President, I believe that we have -- first of all, my name is David Montgomery, and I'm joined by David Cohen of Ballard Spahr. I'm President of the Phillies, and David acts as legal counsel on our behalf on this issue. It's a pleasure to be here. As far as the specific question that's been raised, I think our goal all along was to provide the neighbors with the opportunity to participate in the dialogue, and I think, as was testified earlier, the opportunity to clarify in those cases where the existing document did not provide clarification necessary, some of the issues that the neighbors raised upon their inspection of the full lease, which I guess took place during last week. As far as the theme tower is concerned, you know that the existing team tower does in fact exist, as was testified, on an area which was already identified as the parking log-only or parking-only area or limited parking area, and it would be absolutely consistent with our understanding of our discussions with the City 00138 that we would have the opportunity to place a second theme tower. I believe, in the initial terms sheet, there was reference to theme towers plural as far as our situation was concerned, and it even referenced the existing team tower that's there. So --
The existing theme tower sits in the northeast corner of the North Lot. Now, keep in mind, the North Lot is approximately some 80-plus acres of square footage. This happens to be very close to the corner of Tenth Street and Packer Avenue. It sits on a very thin base. I'm not sure that I could verify the specifics as far as the description that was made, as far as the size of the face. But most of the theme tower is a tower to a video display opportunity, which was correctly identified as being something that actually was there when the Vet was first built, in 1971. That tower has existed from that time. I believe the Phillies took over obligations associated with it about seven or eight years ago. 00139 The first few years that the theme tower was erected, I believe it took a couple of years for it to become fully operational. And my understanding is that it was an element of the advertising display system in the initial design of Veterans Stadium. And it was in part, I think, funded by three sponsors at the time that were also involved in putting up some dollars for the initial scoreboards that were located in the facility. So it's been an element of Veterans Stadium itself for a number of years. And as far as our discussions with the PAID and the City through Bill Hankowsky and then subsequently Bill 16 Martin, it has been an element that we talked about from day one.
My understanding is that the Eagles lease provides them the opportunity to have two such towers.
You know, it's amazing, during all of the hours of discussion, I don't know that this issue ever came 00140 up.
Council President, if I could remind you, you were involved in many of these discussions, and Mr. Montgomery stood in front of that plot plan that showed, as best they can now, their plans for the stadium and discussed what it was they wanted to do and where they wanted to do it. And our neighbors' concern was, of course, particularly there in the segment to the west of Tenth Street and as you approach Broad Street, where, of course, the neighborhoods are. And never did Mr. Montgomery indicate that he wished to put a theme tower, a 120-foot electronic billboard in the area near and adjacent to the neighborhood. This was an area which we worked out as a parking-only area. In fact, the terminology used continually in our negotiations was that this be a pristine parking area. Mr. Montgomery indicated he had -- the Phillies had the need to have certain very limited activities within the parking-only zone and what was described as the limited-activity zone, which was the area north of Hartranft, south of Packer, 00141 between 10th and 11th. In those zones, he indicated his desire to have certain small events at certain times. And the neighbors, realizing the financial aspects, the necessary financial aspects of the deal, agreed to all of this. Never, not once, did Mr. Montgomery indicate a desire to put a second theme tower in this area. The language which we worked out, which is embodied in the ordinance and now is part of the lease, in our view, is clear. It provides for a parking-only zone. That is the terminology. They contend that they have the right to put this theme tower there; we contend they absolutely do not. We do not wish to, as we said, fight about this in the future; it should be resolved now. But it is totally inconsistent with the spirit and, we contend, the letter of the agreement worked out between the neighbors and the team and the City to ensure that the stadium, the new stadiums, will not unnecessarily impact and diminish the quality of life of the neighbors.
Thank you. Mr. Montgomery? That was my 00142 recollection too, that there would be parking only. However, let's talk about how we can address this issue so that, as I said, hopefully we could --
Council President, let me just add, if I might, I agree that there was very specific concern about what would occur in what's called "parking lot activities." And frankly, from the team's perspective, recognizing there was an activity already known as a theme tower that existed there, you can understand why we did not necessarily feel the need to be more specific on that subject. We felt that, obviously, the documents that we had agreed to specified that there would be multi-- the opportunity for multiple theme towers. As you know, we've had this discussion. The club, at this time, has not designed this facility. We have the right, it's an important right, that the team felt was a key element of its negotiation to have the opportunity to do two theme towers. As far as the specific siting of that, that is yet to come. But I want to be very specific since it 00143 was represented that there was a great deal of discussion on this. There was, indeed, a great deal of discussion, but it comes under the heading of "parking lot activities" and specifically what they were. And, again, if there was a burden on our side to identify a second, I would suggest there was a similar burden on the other side to identify concern with the one that already existed in the area that was identified.
Council President, my name is David L. Cohen, a partner with Ballard Spahr and am counsel to the Phillies in this transaction. And let me try and respond, if I can, to your last question, with some thoughts about a potential resolution to this. As Mr. Montgomery stated, the problem for the Phillies is that they do not have a design today for what this will look like, what these areas will look like. And that, as Mr. Martin testified -- I mean, a lot of this is about flexibility. And we, the Phillies, do understand the concern of the residents, your concern as their representative and as Council President, and 00144 all of Council's concern about these issues. And I would suggest that within the framework that exists with the leases, as they are currently before you, there is a relatively easy way to deal with this, and it does require a little bit of trust on both parties, on all of the parties involved in this, and I would hope that we could use that. And that is an understanding of what will happen when the Phillies do their design and know where it is that they want to put this second theme tower. And what happens under that system is that there will have to be, first of all, an approval process with PAID. Second, there will have to be an amendment to the master plan, which will require the Phillies to go before the Planning Commission. We -- obviously, the Council President would be aware of those proceedings. I would suggest to you that if it would be of assistance in improving the level of trust, that the Phillies would be prepared to, either in a letter to you or a letter to PAID -- we can figure out the mechanics -- make crystal-clear that the Phillies will communicate their plans 00145 with respect to the second theme tower to you and to the residents before approval of PAID is sought, and obviously before there is a Planning Commission proceeding. At a Planning Commission proceeding, as you know, the community has the right to appear, and most certainly, the Council President as the representative of the community and of the residents not only has a right to appear but the right to offer on opinion and offer an opinion by letter. And we in the Phillies certainly understand that when the Council President says to the Planning Commission, "I don't like this," there's a problem for the proponent. And we're willing to rely on the trust that we will be able to work with the residents and with the Council President and her staff and hopefully be able to have a plan that is acceptable to everyone. And I think we'd ask the residents to work with us with the same level of trust that we can be able to work this through the process at that time and not have a black-and-white rule that it can't go here or it can't go there, when no planning has been done. 00146 And, frankly, I mean, we don't know what the buffer is going to look like and how the buffer might protect these homes. Looking at it within an entire design concept, people may have a different attitude about it than they have about it today. And then, finally, I would note that even if all of that didn't work, even if somehow, the advance notification, the discussions that would inevitably result, because I know the Council President, if the neighbors are not satisfied, are going to call and ask, can you come in, and can you have Mr. Montgomery come in an talk about this, we need to figure out a way to try and resolve this. If all of that doesn't work, if the Planning Commission miraculously ignores an adverse recommendation from the Council President -- I'm not sure I recall the last time that occurred, but if it miraculously happened, the residents would still have their legal position that they have expressed here today, and that is that a theme tower -- that a second theme tower in the parking-only or limited-activity parking zone 00147 would violate the provisions of the lease.
And there would be nothing to stop them from exercising that litigation option, which itself would bring the Phillies back to the bargaining table yet again in an attempt to negotiate a resolution. So, the bottom line, I think if you put just a morsel of trust on the table both ways -- and, by the way, I want to echo something Mr. Wren said, because I know that the Phillies feel this way: There's been a lot of progress made here. The City has made progress and the teams have made progress, and the residents have certainly made a lot of progress. And I would hope that part of the progress that has been made is an ability to put little bit of trust on the table, that this last remaining issue can be worked out through the process in the way contemplated by the lease, as currently drafted, and frankly, by our normal administrative proceedings in the City government.
Council President, the Phillies maintain that under the lease, as presently written, they will have the right, the right to site this second theme tower anywhere 00148 they want in the district, including in the parking-only zone and in the limited-activity zone adjacent to the neighborhoods. If down the road, when they decide exactly where to site the tower, they then make a presentation, of course, to PAID and say, We want to site it here, please approve it, I am certain, being that since they are good lawyers and intelligent executives, that they would argue that for PAID to refuse to site the tower in that area, which they believe they have a right to do, would be a bad-faith refusal by PAID, and they would have the ability to go to court and further their view before a court. We cannot trust the process, but it should not be addressed in a way that guarantees a lawsuit. If you look at where it's -- now that we know that they are contending that they want to put a second tower anywhere they like, the most likely location for this tower would then be at the extreme western edge of the site, up against the neighborhood. Because those towers, in order to be effective for their purpose, would be as far apart as possible on a line adjacent to the 00149 expressway. The motorists coming would see the first sign, read it, and then come to the second sign. You don't want have them too close together because they won't be able to read by the motorists. So from hearing where they're coming from now, it is our expectation that the location will be at the northwest corner of the North Lot; that is the location that they will come back to PAID and say, Please approve this. It is crystal-clear now, since we hear where they're coming from, that they do not intend to honor the parking-only zone that we worked out, that this issue needs to be addressed now. And there is no trust on this issue. We thought we had a trust on many issues. This second theme tower, their intention to locate it in the North Lot, potentially the northwest corner, is out of left field. We do not want to have it resolved in that way. This Council should address this issue now and demand -- the Council should demand of the teams that they honor the agreement that they worked out with the neighbors before. 00150 And let me just say one other point. I'm glad you mentioned the buffer zone. This, of course, was the 150-foot area between the neighborhood on the west and the activities and the parking lot on the northwest corner portion of the site. And, of course, one of the issues that we had to raise in reviewing the leases was that the buffer zones were not mentioned in the leases. They now are going to be addressed. Obviously, it was the intention of all parties that the buffer zones exist. Now, those buffer zones were intended, among other things, to protect the neighborhood from the noise and, in this case, light that would come from activities at that portion of the stadium site. To locate the second theme tower in this portion of the site, which is likely to be as tall as the one there, 120 feet, there's no 20 landscaping in a buffer zone that's going to protect the neighborhoods from this massive, 24-hour/7 intrusive light, blinking lights all the time. It is totally unacceptable to the neighbors, it was never discussed with the 00151 neighbors. Mr. Montgomery stood up and he never said, "I want to do this here," when we had a chance to negotiate it. We believe that the language we worked out addressing a parking-only zone means what it says, and there can never be a second tower sited in this area. This issue should be addressed and clarified now, not later in a lawsuit.
Thank you, Madam Chair. Just a few questions about the issue of towers. How effective are they and how do they fit into the overall revenue scheme? Are they really necessary? And the only reason I raise this is because I've lived in South Philadelphia my whole life and have seen that 120-foot tower that's there now. I mean, I don't know how effective it is in informing me of anything. You know, if you're -- I actually see more information on the lighted billboard outside the Spectrum driving there than I've ever seen driving either on the 76 Bridge approaches or the 00152 Walt Whitman Bridge, or certainly I can't read it from my house at 11th and Tasker. I mean, how effective are they? And I think you do recognize what potentially could be a kind of conflagration of two towers in, you know, the Eagles facility and two towers in the Phillies facility. I mean, it seems like it would be adverse to the design of a ballpark that we're looking for, kind of a throwback ballpark, with low-rise, and all of the things that was attractive to us when we looked at the design. It would seem antithetical to --
I think you've identified a key point, Councilman, and we're not necessarily overly proud of the design of the existing theme tower. And part of our discussion was to pursue the opportunity to design something that would be perhaps more in keeping with the facility. As far as the --
I'm sorry. Does that mean the intention is to take it down?
No. I said that we were not -- we -- we are not necessary wedded to 00153 the existing architecture associated with the current theme tower for some of the reasons you said. It may not be the most esthetic complementary structure to the ballpark that we're talking about. As far as the utilization is concerned, we have said from day one that the theme towers that were afforded us and to the other organization are primarily highway signs. And as a result, they cannot be used in the same manner as the electronic message boards that you identified outside, in front of the Spectrum, for one good reason, which is that traffic moves fairly quickly on highways such as I-95 and the Walt Whitman Bridge approach. And so you can only have a board that would have what I would call very quick viewing, if you know what I mean, opportunities. And so it is for that reason, we have stated and said this directly to the neighbors the other night, that we're not sure we will follow up and do this second theme tower. But the fact of matter is that it was part of the display right opportunities that we have been granted, and it is 00154 something that we want to preserve the right to do where it would be most effective and --
Is it an issue of -- is it an issue of publicity for the events an issue of revenue for the signage? Or a combination of both?
It's a combination of both, but I would say in this case, revenue from the signage, I mean, that's the obligation that we took on with the current theme tower 'cause it had fallen in such disarray, you know, it had gone, I think, about at least a half dozen years where it didn't work at all. And the City took the position that they weren't anxious at that time to rehab it and make it into an ongoing useful message board.
I asked, but I wasn't clear on the answer, whether or not there's an intention or a possibility that the existing team tower would come down and be replaced by something different or the intention is that the existing theme tower would stay in the same place and same height, perhaps with some improvement. Has there been a decision on whether it's -- 00155
There has not, Councilman. (Unintelligible, parties talking over each other.)
We wanted the flexibility to have theme towers, and we are -- we wanted the flexibility to retain the existing one. We put ourselves a good bit of money into it not that long ago. And at the same time, we wanted the opportunity to investigate whether or not it could be redesigned so that, as you pointed out, it would be more esthetically pleasing.
Again, I'm not in this business and I'm not in the advertising business and I'm not in the sports promotion business, but I mean, I just don't know any way to gauge the real benefit of having them at all, other than the potential revenue from whatever -- whoever is advertising on it.
Right. Again, I'm certainly not ignoring the revenue associated with it. I mean, after all, we've been asked to take a significant North Lot obligation. It was asked earlier about, you know, the 110 acres north of 00156 Pattison. There are opportunities, obviously, that we wanted to at least have the ability to pursue. At the same time, there are obligations that the City wanted us to take, and very significant obligations. And that was a major part of the discussion. If I might, it may be an appropriate time while I'm here, just to clarify one question that you raised earlier of these gentlemen. And that was -- you talked about a scenario whereby we were playing a baseball game at our venue, and at the Eagles new facility, there was a concert. I want to be perfectly clear that our document specifically prohibits us from doing that, as between just the two of us. Neither a team sporting event nor a concert can occur at the same time, Councilman.
So I wanted to make sure you were comfortable with that restructuring on behalf of the neighbors.
If I could make one additional comment in response. 00157 I think you can redesign all you want a tower, an electronic billboard, but it's still going to be an electronic billboard tower. It's going to be huge, it's going to be 24/7 blinking lights, it will affect in a massive way the quality of life of the neighbors. These neighbors have borne the negative effects of the Veterans Stadium for 30 years, and the hope of all parties all the way around was that this would be a new day dawning and that there would not be this massive intrusion any more than necessary into the neighborhoods. This -- in our view, this intention by the Phillies, which we are hearing now for the first time, once these leases are presented to Council, leases in which we had no involvement in negotiation, in our view, could well undo everything that we worked at in so many hours of negotiation, by putting this massive presence right in the windows and in the backyards of these neighbors. This can't be allowed to happy. We are sympathetic, of course, to the Phillies' need for revenue. We do not have a problem with the existing tower remaining where it 00158 is, on the eastern edge of the North Lot. We do not have a problem with a second tower being erected elsewhere, other than in the parking-only and limited-activity zones. South of Hartranft is fine. This cannot be allowed to happen and this will undo everything we worked so hard for and that you, Council President Verna, and other members of Council recognized and supported in a way by agreement was the intention, and we did arrive at agreements by which the new development could go forward not contentiously, not with the prospect of litigation, but by a consensus of a development that would benefit all. This will be undone if this is allowed to proceed.
Thank you, Madam Chair. I can understand the Phillies' desire to have the second tower, and I also understand the community's objection to it. And I'm wondering if the Phillies would be in a position to -- we hear the term "24/7." The one tower is 00159 running 24/7 at this point. If the second tower was constructed in a location that would be considered inappropriate to the community, could there be some restrictions on its operational -- the hours of operation, where it would be limited to game day, that it wouldn't need to operate after a certain hour? Would there be some considerations to limiting the hours of operation or locating it in an area that would not be so desirable. So would there be a trade-off of limiting its operation versus putting it in a location that would be not desirable to the Phillies?
Councilman, first of all, again, we have not specifically identified where this potential theme tower would be, nor have we in fact decided to go forward with it. However, I would tell you that the purpose of the theme tower, as I answered Councilman Kenney's question, is one that is primarily a highway sign. And so to the extent that you would go through the cost associated with the construction and everything, you would end up needing to 00160 operate it days a week and hours a day. So I would not want to mislead you in that respect.
So it's fairly 6 obvious that if you do make a decision that would 7 impact the community, that you'll never get it 8 done? 9
It appears to me 11 that if you decide, if your research decides that 12 it would go into the parking-only area, and that 13 would be your decision that that's where you'd 14 want it, you'd probably never get it there based 15 on what we're hearing here today. 16
Well, I think, as we 17 said earlier, we have -- we have to look at this, 18 I believe, in the context of the entire impact of 19 our facility, our ballpark, and other elements of 20 it. As far as the community is concerned, I 21 would, I guess, disagree with the characterization 22 that this is sort of a breach of an otherwise, I 23 think, effective dialogue between the community 24 and the club. We have clearly agreed to things that probably at one time we were not necessarily 00161 thinking we were and I'm sure the community feels the same way. I think this is an element of it and I think it's an important element, as far as the team's concerned, to keep the option open. We negotiated on a number of issues with the City that we ended up being discouraged or displeased about. And this is one that we have this opportunity available to us and it's one that we want to at least pursuit.
I appreciate that, but in all fairness, it's a lot different negotiating before a lease than negotiating after there's a lease signed. So I think the community's concerned that once the document's inked that it's going to be very, very difficult to challenge the Phillies in exercising something that's already been agreed to. So I would hope that there would be a way to work this out, but if that's not possible, then we'll see what happens down the road.
Well, I just ask you to make that comment in the context of all of the other elements that we have reached agreement on. 00162 Thank you, Councilman.
Does this have to go before the Art Commission? I don't know; I'm asking the question.
I would suggest that I wouldn't be the best person to respond to that, Council President.
The Planning Commission would certainly have to sign off on it.
I don't believe it would require Art Commission approval unless the team was seeking to utilize this as part of their contribution to fine arts.
Council President, it's my 00163 understanding that any structure that is erected on City property -- and this is indeed City property that's being leased through a number of parties, ultimate to the teams, that any such structure has to be approved by the Art Commission. That's my understanding.
Council President, David Cohen, again. You could add the Art Commission into this. Whether it's there or not, the fact of the matter is that there will be a Sunshine City administrative approval process for this, and frankly, the concerns raised by Councilman Rizzo, I mean, the Phillies understand that we're going to have to go through that. And with all due respect to Mr. Wren's desire to resolve everything now, we may not be able to do that. This is an issue that is sufficiently small, that is sufficiently concrete, and with the protections existing down the road, that I think it is not an issue that has to be resolved now, when the Phillies are without the benefit of being able to make a comprehensive pitch based upon what the entire design of the 00164 area north of Pattison Avenue looks like and how it is that the neighbors' concerns have been taken into account as a result of that design process. That's really the difference that I see happening as resolving it now, when frankly -- and I don't object to Mr. Wren characterizing this way, of a theme tower that looks exactly like the existing theme tower being planted right next to the buffer in the northwest corner of the parking-only zone. I mean, that's the worst nightmare for the residents, and that's what they're trying to avoid. But that is not at all what the Phillies are contemplating. It's not that they know what they're contemplating; they don't know. I think they would just like the opportunity to have a rational discussion about that once there is a plan and it is a complete plan and everyone can see what it looks like and they have the opportunity to pitch that within the context of an overall plan.
Council President Verna, I will tell you that this is not a small issue to the community. They've lived for decades with the 00165 sign blinking in their bedroom windows. There are hundreds of homes affected, the sign is visible across I-76 on the other side of the Schuylkill Expressway to those neighborhoods in South Philadelphia, as well as to the areas immediately next to the parking lot and the areas on the other side of Broad Street. Doubling the level of that intrusion, moving it closer to even more homes by three or more blocks is of major concern to the community.
Thank you, Madam President. Mr. Montgomery, you referred to this as a highway sign, and I've seen it a million times, and actually from my home in South Philly -- I live a little further north than Jim Kenny -- I can actually see it 'cause I have a roof deck. And I'm not offended by it, by the way. Is there any other type of advertising that goes on those signs, that is broadcast on those signs besides what the events are?
What we have on there 00166 -- again, you cannot -- my point earlier was that you cannot run a 10- or 15-second sequence, so you can't say, for example, if it were Coca Cola or, let's say, a bank that you cannot identify that, you know, that loans are available at a certain rate, et cetera.
It basically works just with logo orientation. We have, I believe, two sponsors that exist on the triad that is the lower portion of the board. I believe two of the three spots are in use at the present time. I believe Maxwell House Coffee and Verizon are the two that come to mind. Frankly, I'm not sure who the third is.
My point was, it could be used, and it is used, for non-events.
Right. So primarily, it talks about what's going on at Veterans Stadium and then it does put up a Verizon logo, for example.
I guess I'm raising that because I'm getting into an area with 00167 some legislation -- one piece I've already introduced and I hope to have some amendments to it as it relates to outdoor advertising, and this kind of falls within the same area or at least the same concerns that neighbors would raise as to how close the sign is to their residence and things like that. Isn't there something in this agreement, or is there something we can do that would just make certain that there is a process, at least to the community. And I think you spoke a little bit about that, David, but I think it should be rather simple to figure out a way in which we could put some language in here that will assure at least that there is the community involvement as to a process on the site of the sign and where it gets placed.
And, Councilman, I believe that under existing law, there is a process. The City Planning Commission approval process is a public Sunshine process for the community to be involved and have an opportunity to object if they don't like it. And I say this -- and I'm not trying to 00168 overstate it but, I mean, you have been in front of the Planning Commission. You know if the District Councilperson is in front of the Planning Commission and is arguing vehemently against what a developer wants to do, the Planning Commission does not just say, Well, it was nice hearing from you, Councilman DiCicco, we're going to ignore you. And where the District Councilperson is the Council President, that is even more the case. What I had suggested, as a possibility to help improve the trust as to the quality of this process, was that -- was for there to either be a letter to the Council President, or maybe we could figure out how to feed it into the PAID process, that is in the PAID letter that Mr. Wren read, and supplement it by a commitment letter that we, the Phillies, would write to PAID, underlying that letter, that there would be advance notification to the Council President, which I think, in this situation, is the equivalent of to the community, which is what I'm trying to accomplish here, before the approval of PAID was sought under the terms of the lease. And I chose that only because I think the PAID 00169 approval comes before the Planning Commission action. So I was trying to create the community process that Councilman DiCicco was talking about, where the community would have confidence that it would have advanced warning of what was happening here, an opportunity here to comment, to participate. The Phillies, knowing that that was going to be the case, would then have every incentive and, in fact, it would be -- it would be unthinkable for this not to have happened, for there to be a discussion with the community before approval is sought of PAID, which would be well before the Planning Commission approval was being sought. And that is, I think, by definition, community process. So that there would be an opportunity to make a presentation to the community within the context of the overall plan to try and persuade the community, if in fact the sign was being located in this area -- and it might not be. But if in fact it was, that it was okay with the community, with the Phillies' understanding that 00170 if they could not get the community on their side, that they were likely to have the Council President telling PAID that she doesn't want PAID to approve it and have the Council President appearing in front of the Planning Commission saying, "I don't want you to approve this," and if all of that goes wrong, that there would still be a litigation option from the perspective of the community.
Thank you. And I think that's where I was going. I would say you more eloquently described what I would like to see happen. And especially, again dealing with some of the pieces of legislation that I'm going to be dealing with shortly, as long as the community is satisfied with what that process is, that's okay by me. And I'm not speaking on behalf of the Council President because the stadium is in her district. But I also think it's important to the community that they have the final say in that as it relates to them because, as you know, there are other groups throughout the City that have taken a position -- because I think someone could say that 00171 this is a billboard. I mean, you can call it what you want, but someone may take that position, and I think that that's the last thing we need to do, is have someone who's from the Overbrook section 6 or some other section of the City deciding -- excuse me, Councilman Nutter, I'll pick another area. Northeast Philadelphia, since the District Councilperson is not here today, coming in and deciding for the people who live in the Veterans Stadium area what is good or not good for them. But thank you, Madam President. Thank you.
Madam President, can I have a brief response. What Mr. Cohen is saying has some facial appeal, but our fear is that when you get into this and if you have these processes down the road before PAID, before the City Planning Commission, which, by the way is an executive branch-administrated agency not controlled by City Council, that they will begin these processes by saying up front, We have a right, in their view, as they've told you today, we have a right to 00172 place this tower anywhere in the District given to us by City Council. We wish to put it here. Our fear is in the northwest corner right next to the neighborhoods. And while the City Planning Commission and PAID might say, Well, maybe you should make it green rather than blue, the core issue will be, as presented by them, we have a right to put it there. And this should not be allowed, we should not, in essence, be buying into litigation down the road, or indeed, buying into a process that when it's all said and done, the Phillies will be able to prevail because any refusal to put it where they seek will be, by their view and maybe by the court's view, a bad-faith disapproval. This has to be addressed now to protect these neighborhoods.
Is Mr. Martin still in the audience? (Mr. Martin returns to the witness table.)
Mr. Martin, I know you've been listening to just about all of the testimony. Can you tell me what the 00173 Administration's position is on this?
Yes. First of all, we are gratified by the discussions we had on Friday and over the weekend that we're able to assuage the neighbors' concerns on the vast majority of the issues that they've raised. I guess there's two points that I'd like to make. One is, I reject Mr. Wren's characterization of any of these issues as constituting inconsistencies between the lease terms and the lease agreements which have been submitted for approval. There have been, in the letter that he read that I provided to you, some clarifications and other commitments, which I think will be helpful to you in representing your constituents to give the constituents some -- assuage certain of their concerns. But that being said, I don't think that they were necessary to deal with any inconsistencies; they were rather just helpful in trying to answer concerns that the neighbors and their attorneys. That is to the general point. As to the specific point of the theme towers, I do think it's worth noting that the 00174 terms sheets specifically referenced theme towers in the plural. It referenced the existing North Lot theme tower. The scheduling and use rules, which were referred to, and the parking lot-only -- the parking-only provision was in the context of activities. And I don't believe it is the best reading of that provision to suggest that that parking-only zone, also by its terms, would provide no theme towers, number one, because the existing theme tower is and is not otherwise addressed, and also because there will be a variety of other things such as presumably parking islands, lights, other things there that are not parking-specific, but which I think were contemplated by the parties. Finally, regarding the reference to the spirit within which the negotiations were handled, we spent in excess of two dozen hours with the attorneys from Sprague and Sprague negotiating these provisions. And we spent approximately hours dealing with significant levels of 24 detail, including where clowns could appear before 25 games and the exact square footage of outdoor 00175 tents and the numbers of decibels that music could be performed at. So we went into great detail through the scheduling and use rules. And if it was a requirement of the attorneys representing their neighbors that there not be an additional theme tower, or either theme tower, in some portion of this parking lot, certainly there was significant opportunity to raise that. That being said, I would think that on behalf of the Administration, some of the solutions tendered by Mr. Cohen seem to make sense, and perhaps they're an effective way to balance the interests of the parties.
Now, with all of the hours that were spent dealing with this issue with the community, I don't know that this particular issue was ever raised. As a matter of fact, I did not know that there was such a tower presently in the North Lot.
Would this require that it go through L&I also? Would there have to be an L&I permit? I mean, there's a lot 00176 of different steps this issue would have to take.
There's a general requirement that everything that is done by the teams in connection with these leases be done in connection with all applicable law, zoning and otherwise. So if there's a requirement for such a permit, they would have to procure it.
But if they had a right given by City Council to put it anywhere, L&I would be obliged to let them site it there.
I don't think we're agreeing to the fact that it could go anywhere. Am I being misunderstood? Can it go anywhere, Marilyn?
No, you're correct, Council President. The siting of all of this signage is subject to approval by PAID. Their plans and specs- - that is, the Eagles and the Phillies -- must be submitted to PAID for review. And, in fact, PAID provides review, particularly with regard to signage as to the location and the size, and I think that is indicated in the document. I understand that the lawyers for the 00177 community may have concerns about how those approvals are granted, but I think that's why the procedure that Mr. Cohen outlined in terms of the Planning Commission having an opportunity to review this in the context of the master plan, you having an opportunity to know in advance that this is coming and to know where the Phillies are planning to site the sign will in fact allow people to make sure that the approvals are not given in a way that is willy-nilly or is somehow arbitrary. It doesn't necessarily mean that everyone will agree, but it does mean that there will be a public process that will be open under the Sunshine Act and that people will be able to participate in that process.
I'd like to, for the record, since this is City property, do we -- does the community waive any of its rights based that this is City-owned property, where there would be a loophole of what you just described wouldn't be applicable because of the fact that the sign would 00178 be constructed on City property? Do we, Council, does the community waive any of the protections that if in fact this were being constructed on private property?
No, I think to the contrary, Councilman Rizzo, there are additional protections built into the document. Council is not, by its approval of these leases, approving a particular site or saying that somehow you won't have to go to L&I with full normal permits. The documents are very clear, that neither action by PAID, nor action by City Council replaces the normal approval and permits that must be obtained by anyone who's developing within the City, and that includes areas of signage such as this.
I would like to respond a little further on that because I understand that as part of the zoning approvals here that, in 00179 fact, anything that is permitted in the leases that would otherwise require zoning approval would be deemed an approved use within the Stadium District. So the approval of these leases will, to some extent, as I understand it, constitute approval for zoning purposes of what's contemplated by these leases. I want to further say that I'm not sure that we fully described what these towers are for those of you who are not familiar with them. In addition to having this blinking and flashing 24-hour signage to be visible from the highway, there are very bright lights which shine downward on the tower and do create a huge presence. The closer you are to it, the more intrusive it actually is. And that's the existing tower that's here today. I would also like to inform Council, if you may not have heard this before, that when the stadium area was finally concentrated and attention was centered on putting both of these facilities in South Philadelphia, the neighbors were told that what the teams wanted to do was have a first-class football stadium, a first-class 00180 ballpark, and the appurtenances that would go with that and nothing more, and that they would come to Council to get that approved. For the first time with this sign, I think what we're finding is that unrelated and not appurtenant really to any of these sports team and sports usages, we're looking for a separate profit center and we want to put it anywhere we can in the district, as intrusive as that might be. And it really goes to the understanding that has underlain the community's participation in this process of developing a plan which, but for this particular issue, the community is now willing to live with. Mr. Wren may have overstated it when he said the community has no problem with the existing tower. There are problems. What we're saying is, we can live with those problems because we understand the teams need to build what they have planned here. What we are saying is that this is an unnecessary intrusion, very close, right up against the community, for which you can't really create the kinds of protection -- 00181
No, I'm talking about the second tower in the northwest corner of that parking lot.
I don't know that a location has even been mentioned about the second. Did I miss some statement?
The issue is the Phillies' contention here before this Council that they have the right to site the second tower anywhere they want within the district. And it our fear that the most logical place, having heard that being their position, is the northwest corner of the North Lot, right up against the homes. And that they are not prepared today to say that they will not do that is, we view, unacceptable. It shows gnat neighbors' fears will be realized, that they will come and propose a second theme tower, an advertising billboard right there, and the neighbors will be stuck with it or involved in long litigation, none of which should be the way this matter is resolved.
At the same 00182 token, I believe that Mr. Martin has indicated that the leases conform with the terms sheets. Is that what I understand of you to say?
So if we change this one issue, where does that put us?
Well, I certainly don't think that the Administration would suggest that there should be a change. Mr. Hardy used the phrase "for the first time" in his comments a couple minutes ago. Well, it's not for the first time. When the terms sheets are presented to this Council in the first week of December, the basic ballpark elements were described to include, among others things, quote, exterior message boards, video displays, walkways and open spaces and theme towers, including the existing theme tower of the North Parking Lot adjacent to Veterans Stadium. This is not the first time these elements of the proposed development have been before the body and in the public purview, going back seven weeks or so. And I think that the concerns articulated by the neighbors are understandable, 00183 and I think that the Phillies' suggestion, which is the ultimate location be reviewed in the context of the plan as a whole and going through the administrative process required by existing law is consistent with the terms sheet, consistent with the lease and, I think, consistent with the spirit of the discussions we've had up till now.
And I know that last week at the briefing, we were told that we could not make any changes, and this would have to be voted up or down. I think that was stated at least three or four times. This indeed would constitute a change, would it not?
Council President, there is also pending before City Council, or certainly will be, this zoning ordinance, Bill --
And that is the vehicle by which the teams -- and it was their desire that 00184 this ordinance be amended, this is the zoning for the Stadium District, be amended in a way that made clear that that which they had the right to do under the lease uses would be specifically approved by that zoning provision. And we had worked out language and that was submitted to your office.
Which at that point in time, we found acceptable, that would guarantee that they would have the zoning for that which they had the right to, provided that there was no violation of the use and scheduling rules, the agreement that the neighbors got with the teams. This issue, now that we see that they have a different view as to what would be allowed to be done under the lease, this issue that we are dealing with could be addressed in that zoning ordinance without affecting -- without changing one word of the leases. And that zoning ordinance 22 could say "except you may not construct a theme tower or a similar structure in the geographic area which is the parking-only and the limited- activity parking zones." 00185 And so the Council could vote the leases without any change if the teams and PAID not willing to voluntarily, as they have done with these other issues by way of clarification, if you may, say we will not do certain things. If they're not willing to do that with respect to this theme tower issue, it can be addressed by City Council by making the amendment to specifically provide that they may not do that, they may not site a second tower in that area that's adjacent to the neighbors.
Thank you, Madam Chair. I just need one question clarified. As I read the agreement, it indicates that -- it says outdoor message boards or outdoor display towers, tower or towers, including the existing tower. Does the potentiality exist for three?
No. It is two, one of which may be the existing one, or I believe it would also be consistent with the reading of the lease that they could eliminate the existing and 00186 build two new owns that, although doesn't seem to be economically advantageous.
Do you see any prohibition to three? Not that it's their intention, just -- I mean, it is plural. It says tower and in parentheses towers, you know "tower or towers," and it specifically says "including the existing tower."
That is the language -- the "towers," plural language, is what is included in the terms sheet. Then the lease provides more detail and I think if you give me a second. . . Section 15.2.1, a list of advertising opportunities available to the Phillies and the relevant language about ten lines into that subsection, Councilman, says "two theme towers (one of which may be the existing theme tower on the North Lot)."
You understand of course, Councilman Kenney, that there are similarly two 00187 theme towers on the Eagles area. And they're actually sited in that lease right adjacent to the stadium.
Where are they intending to site them, in the back? (Unintelligible, parties talking over each other.)
Sorry, sorry, the stenographer cannot hear you unless.
They're on the south side of the stadium up against -- between the stadium and I-95 that side.
Indeed, in the Eagles lease, they have as an exhibit a plot plan that shows, with notations, where they intend to put their two theme towers. The Phillies lease does not have such an exhibit, and they want to leave this issue open and have this become a point of major dispute, major dispute in the future.
Thank you. Are there any other questions from members of the committee? (No further questions.) 00188
If I could make one other general comment. This is an electronic billboard, which potentially could be 120 feet, under their view, in the air. And the existing one was built sometime in the '70s, I think is the understanding. You know, billboards, ones that don't flash, you know electronic, just regular billboards, even those have been a particular concern of this Council. And in 1991, I believe, this Council recognized the problems that billboard present for the City and had some new legislation addressing billboards. And they said in their legislative history, this Council did, in deciding to go some restrictions, that "such signs are commercial by nature and while they may be appropriately located in certain commercial and industrial areas, they do not belong within or in close proximity to residential neighborhoods." And they went on to say, "Said signs jeopardize public safety by distracting pedestrians and, to a greater extent, passing motorists, since these signs, by their nature, are erected in areas intended to be seen 00189 by drivers of motor vehicles." We have heard Mr. Montgomery say today that's exactly what they want to do. That's the only thing they want to do with these towers direct it to the highway. This whole thing goes against where Council has been for years on trying to eliminate this kind of blight. And now the Phillies want to put this -- another such sign right on the highway, distract motorists, invade the neighborhood, the homeowners in the adjacent area. It's simply unconscionable, it's simply unacceptable. This Council, we submit, cannot let this happen. We look to you, our elected representatives, to prevent this and not let this thing be resolved later on in what will surely be litigation. If we go the route that they're suggesting address it later, we'll address it later, and it's totally unacceptable.
Sir, what are you suggesting? You're suggesting that Bill 726 be amended?
We submit that that's a vehicle by which this issue could be addressed 00190 without voting down the leases. As an alternative, the Phillies are much, as we understand, less far along in their whole development plans. The need to have a final lease agreement for the Phillies, we believe, is not as pressing as the Eagles have indicated. If indeed this lease as presented, if we need to look at it that way, the lease as presented, it is not in conformance to the ordinance as passed by this Council. And I submit this Council could vote down the Phillies lease and they could resubmit it and --
It is in conformity, from what we've just heard. Did you look at it?
We think on this -- well, we think on this issue that -- our position is set forth in the exhibit, which has these limitations on uses within this parking-only and limited-activity zone that, indeed, it's clear, and that they cannot site the second tower there. 00191 They are telling this Council that they think it's not clear in this regard, they think that they can do that. We have an issue. We think that the lease on this issue is clear and it conforms to the ordinance. They think it differently. We shouldn't pass this ordinance and let this issue remain.
I will submit, as I said earlier, that this can be resolved by addressing it in the zoning ordinance. That is the easiest, cleanest way to do this.
I would strongly suggest that the attorneys -- I see that Councilman -- or rather David L. is here, and I see that Mr. Montgomery is here. Perhaps you could go into the next room and try to thrash this out, because I think everybody has worked very, very hard on this. And I know you gentlemen have put a great deal of time into it, as has the Administration and the community, and I think it would be almost sinful to have come this far and for one issue to be outstanding. 00192 So I would really appreciate it -- I know you've been sitting here all day -- if you could just have like a little sidebar and see how we could come to some agreement on this issue and hopefully resolve it. I would appreciate it.
Thank you. I see Judge Bonavitacola returned. Your Honor, are you interested in testifying on this matter? JUDGE BONAVITACOLA: No, I think they're handled it more than adequately.
Thank you. And, Your Honor, perhaps you can join the attorneys with Mr. Cohen? Because I don't think you were here when Mr. Cohen made a suggestion as to what avenue the community would be able to take if in fact a second tower were proposed. JUDGE BONAVITACOLA: (Nods head. )
I will be here, so before I leave, I would like to know what 00193 you have decided upon. Thank you.
The next witness is Dr. Robert Sklaroff. (Witnesses come forward.)
Dr. Sklaroff, I think you were here earlier when I made my statement that members of the public who wish to testify today are to just give their opinion as to whether or not the leases conform with the terms sheets.
Okay. So please identify yourself for the record and proceed with your testimony.
Okay. My name is Robert B. Sklaroff, MD, and I will confine myself to the written text that you have before you, including 00194 the disclaimer that you just mentioned. The commentary page, which does get into other issues related to our litigation, is not a part of the text. So the text starts essentially on the handout. On the other hand, I do have some clarification points related to points that were just discussed during the testimony about which I had no opportunity to do any kind of advance research, and I'll add them at the end. Here comes the actual formal testimony, which takes seven minutes. Councilwoman Verna and Councilpeople, thank you for holding this hearing and thank you for being so patient while we listened to the prior witnesses. I am Robert B. Sklaroff, MD, and I am here today with my son, Michael David Sklaroff, to voice opposition to approval of these leases. As you know, we have testified against the misplaced priorities represented by such a massive commitment of public monies. And as you know, I am co-plaintiff in pending in litigation that was filed because the ordinances you passed last month are illegal. 00195 The purpose of this presentation will be to focus only on the leases and then to place their potential disapproval within a larger context. Thus, I will not again discuss my rationale for building the Phillies ballpark northwest of 30th Street Station, nor will I discuss the reasons why the ordinances violate the Pennsylvania Constitution, Pennsylvania law, and the Philadelphia Home Rule Charter. All key documents and filings may be accessed through my Web site and, of course, I remain available to elaborate upon anything I've written or said that is felt to be unclear. You're on, Michael. MICHAEL SKLAROFF: I am Michael David Sklaroff. I have listened to my dad complain about these laws for a few months now. I just don't think so much tax money should be spent on buildings when so many addicted people need help when they want to stop smoking. Jake here is a former smoker and he would want you to remember the proper priorities.
This is Jake over here. Okay, I would like to ask merely that 00196 you compare the two documents. If you then conclude they are identical, then you will probably vote the same way you voted last month. " Incidently, note that I am quoting from the memorandum dated 12/6/2000. This is the edited version of what had been earlier circulated through City Council with the unamended ordinances. I am going to use the football-related documents as a basis for my discussion. It should first be noted that the 12/26/2000 memo stated that the stadium budget is estimated to be $393 million. Quote, but in no event less than $313 million if opening day is later than August 1, 2003. Further, the stadium complex project budget is defined as the stadium budget plus the $258 million infrastructure budget is on . 00197 Therefore, the total cost is at least $571 million but is estimated to be $651 million if opening day is before August 1, 2003. Yet no ceiling is established for this expenditure. And even after I listened to the testimony today there still is no ceiling established for this expenditure. Furthermore, if the cost of environmental remediation of the T-Warehouse site and the Acme site exceeds the aggregate amount of $2 million, this team may request the City to fund such excess -- that was in quotes. And here comes another quote: If the cost of environmental remediation of the Naval Hospital site exceeds $1 million, then PAID shall have the option of either paying the excess or terminating its obligations with respect to the Naval Hospital side, end of quote, Pages 3 and 4. Although the impact of the former is left unspecified, the latter commits the City to pay an unspecified amount of money. And, again, no ceiling is established for this expenditure. The public contribution section, quote, is stated to be, quote, approximately $205 million of local funding, . Yet again -- still again, no 00198 ceiling is established for this expenditure. These data must now be compared with the lease. 4, . The terms differ between these two documents, and although the same $313 million figure appears in both, it is either the minimum stadium budget or the aggregate cost of the stadium premises. Regardless, the Eagles, quote, shall not be required to expend more than the tenant hard construction cost obligation in connection with the stadium premises construction, end of quote. 2, again, no public cost ceiling is specified. The lease does not specify lease the costs that may be incurred by PAID and, therefore, by the public when buying the land. This represents a black hole, which could commit the City to an unknown and unlimited expenditure that could predictably rise above budget. 00199 Now, we've heard today, after careful cross-examination, that the money which has now been censored, indeed goes over the budget, but they say they have a contingency fund. It's nice to find out about where all the money is hidden perhaps beforehand instead of after all of these approvals have gone through. Regarding the environmental remediation issue, the T-Warehouse and Acme sites are not mentioned. The only reference to the Naval Hospital site is, quote, under the Authority's special construction obligation, end of quotes. The latter states that PAID should either cover any cost greater than a million dollars over budget or terminate this obligation. 2, . Unless on point citations are buried elsewhere, again, no public cost ceiling is specified. Now, I listened to some of the other discussion earlier and they were talking about that there might be potential emergency repairs and so forth and that the City's commitment is general, not specific, and the rationalization was that if there's any kind of a deadlock, then it's 00200 difficult to figure out the result ahead of time, and this is coming from lawyers supposedly representing the City and the City's interests.
Finally, the City should be obligated to maintain the premises for 30 years in the initial lease term, excluding optional extensions rather than years. For the Eagles to allow the 9 premises to fall in disrepair during these latter 10 years, the result five years later would be a 11 property that the City might deem unsuitable for 12 any human habitation. Recalling charges the Vet 13 suffers from deferred maintenance, the prospect is 14 remote that the Eagles would keep any stadium in 15 tiptop condition being obligated to so. It's as 16 if they would want to be given a new playground 17 every quarter century. Thus, the leases should be 18 disapproved. There are both substantial 19 differences between the proforma and the final 20 leases and substantial problems with the leases 21 themselves. 22 It is shameful the public still does 23 not know what the total cost of the projects is 24 expected to be despite the fact that the public is 25 inevitably beholden to pay its bondholders. Not 00201 only does this submission fail to, quote/unquote, cure, end of quotes, the concerns raised in our lawsuit, but it also constitutes further evidence of the capitulation of the City to the sports teams. Thus, although the resolution before you is not amendable, a problem with which you're currently wrangling regarding those signs, you should pass another specifying that PAID, and not the City, is responsible to all those who purchase the bonds. Now, I might add that when I read this discussion regarding the signage, I also saw what Councilman Kenney noted, which was initially (indiscernible) over by the City lawyer. And that is the word S was in parentheses. He just sort of like read it as if everyone knew ahead of time that it was a plural term, when actually it was optional ambiguity. If approved, these lease would compromise a reasonable view of the public interest. Also, they would compound the death threat that was sounded by the City Controller. Because I was told by Councilwoman Verna's staff that Council had restricted testimony to leases, 00202 holding these hearings would not cure the third count of our litigation regarding the absence of proper public hearings prior to approval of the ordinances. And, as noted previously, these hearings fail to resolve their own unconstitutionality and their illegality as detailed in the first two counts of litigation. Frankly, we wonder why City Council would deign to approve anything without knowing its total potential cost. Join me in reformulating this commitment. You have time. You have time is an important concept also because I heard earlier that the Phillies were saying we really didn't have enough time to flesh out all of the details when, of course, they have had plenty of time, both public and private. And thank you for your attention. One other point is that I hear is that you can agree or disagree with certain terms, depending upon how they're calculated, and I had that problem initially when we were working on the lawsuit because I found a fax sheet, which we appended thereto differed numerically if you looked at the proformas when I tried to add up the 00203 commitments of the Eagles and the Phillies and then subtract the monies that were listed therein that were supposedly the public commitments. So I was somewhat confused by that. A couple other point points. I would submit that when the point was made earlier that what we're doing here is not dissimilar to the first CEPA lawsuit, I violently disagree because we have dropped that language that the City would be committed to pay the PAID costs. The issue of unlawful delegation of power we didn't raise, I should explain, because I thought it would be presumptuous for private citizens to act in any way, shape, or form on behalf of a person in City Council. I didn't like what I heard regarding the issue of reports, when they start, how often, and binding the results of the analysis thereof would actually be in what I heard today.
It was also suggested that leases do not require Council approval, which is, of course, not true, because there's a reference in Section 8 of the Philadelphia Home Rule Charter that mandates it.
Can you please come to some conclusion. Council has approved the leases. We are just making absolutely certain today by this resolution that the leases conform with the terms sheets.
I understand that. My comments are only related to what I heard, which I couldn't have, I told you, prepared ahead of time. The phrase "contingent liabilities" came up related to any difference in costs that were associated therewith, and I found that to be another one of the black holes associated therewith. Included in that phrase was the fact that a lot of this language was written for the benefit of the bondholders. And to me, you don't write language to try to sell something. You try to write language ahead of time that's applicable to all of the issues that are before you. There are a lot of other issues that I'd like to raise, but I think in the interest of time and in my son's not having had lunch -- 00205
And I know it's not my role as a Councilperson to interfere in the way someone raises their family, but I noticed your son has been here since at least 9:30 this more.
And I didn't see him leave the room so I expect that he didn't have any lunch. And I appreciate the fact that you get involved in some of these public debates. Back in December, you were here for the better part of 10 or 12 hours, and your son, David, accompanied you. David, do you go to school? MICHAEL SKLAROFF: Mm-hmm.
What school do you 00206 go to? MICHAEL SKLAROFF: Solomon Schecter (ph.).
Did they give you the day off for this? MICHAEL SKLAROFF: No. 8
How can you put your son in this chamber for 8, 10, 12 hours a day without a break? I think that is a disgrace.
And I'm not going to debate you on that. I'm going to leave the chambers, actually, but I just had to get it off my chest.
As a parent that you put your son through this, I don't think this 00207 fair to that boy.
And you can tell me to mind my own business because it's not my son, but I think I have a moral obligation. That boy sat here for the better part of six hours today to make a 30-second presentation. I think it's a disgrace.
Okay, well, now that you have your point made, I'd like to comment.
All right. Well, I'm going to put my comment on the record.
Okay. Well, number one, I told the principle of the school on Saturday that this was going to occur. Number 2, I spoke with the Council President's office and was told I was going to be the first speaker.
Doctor, Doctor, please. Your time should really be very 00208 limited. Just stick to the issue as to whether you feel that the rest of the leases conform with the terms sheets.
Okay. As I stated in my conclusion, I feel that neither do they conform to the prior documentation -- and I gave you the direct quotes -- nor are they desirable because of the omissions and comissions therein.
Thank you. Any questions of this witness? (No questions.)
Our next witness will be Tina Nelson from CEPA. (Witness comes forward.)
Good afternoon. Thank you for your patience please identify yourself for the record and proceed with your testimony.
My name is Tina Nelsen, and I am speaking on behalf of CEPA, the Consumer Education and Protective Association. We urge Council to vote against the approval of these leases, not just because the City has greater priorities than stadia, not just 00209 because this is an example of corporate welfare taking money from every income class so the super-wealthy can have a playground, not just because it shuts the City out of any possible royalties from the sales of any memorabilia --
Excuse me, excuse me. These leases were approved and the hearing today is simply to make certain that the leases are in conformity with the terms sheets.
So that is the purpose of this hearing today. It's not whether we approved the leases or not.
Okay. I don't mean who will pay if there are overruns during construction, but who will pay if the number of tickets sold fall short of the estimates, if the rental car tax revenues are smaller than anticipated, and if, as a result of the difficulty, PAID is currently paying the bonds it floated to buy the old tax liens lead to higher interest rates. Who is ultimately responsible for the debt? The City, PAID, or the wealthy team 00210 owners? Approving either lease is signing a blank check, and the people of Philadelphia do not sign blank checks, nor should City Council. Please take your responsibility seriously and vote against the lease until all of these questions have been addressed. Thank you for your time.
Thank you. Are there any questions for this witness? (No further questions.)
Do we have any one else to testify on these resolutions? (No response.)
Seeing no one else to testify, this committee will stand in recess until Wednesday, January 31st, at 2:30. Thank you all very much. (Adjourned at 2:49 p.m.) - - - 00211 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Monday, January 29, 2001, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE OF THE WHOLE RES. NO.'S 010020, 010021, 010022, 010023 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter