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.