Okay. And then we will, Councilmember Lozada, ask that you come into the queue for Round 2, and we'll move on to the next member because we have a number of members in the queue. Okay. And remember, we're supposed to have 3 minutes for this round. All right. Councilmember Lozada, are you okay?
Are you good? Okay. The Chair now recognizes Councilmember Ahmad.
Thank you, Madam Chair. I just wanted to reiterate something that my colleague Councilmember Nic O'Rourke brought up. And this is really about a request for critical transaction documents relating to the proposed Arena ordinance. A large scale development project in a city is a significant opportunity to build the economic base of a city. It is especially important now as we are coming off the global pandemic, its long-term impact on Philadelphia's office market and the consequent economic headwinds facing that subsector. That is sure to result in depressed property valuation and create cities budget challenges, but with such growth opportunities come significant challenges as well. As a member of City Council, I remain committed to the economic well-being of our residents and I'm dedicated to bolstering the financial foundation of our city. I believe that as a legislative body we have a responsibility and a duty to review all ordinances authorizing such large scale developments carefully and perform due diligence to ensure that impacted communities issues are duly considered. This includes Chinatown, the Gayborhood, the Washington Square West communities and other impacted areas. We must balance prospects of economic growth with the needs of the community that will face social and economic consequences and the fiscal impact as well as the fiscal impact on City finances. The proposed Arena ordinances must be analyzed with thorough scrutiny to safeguard Philadelphia's interest. And, therefore, we must have a full understanding of the financial legal and operational terms of the ordinances. I had last week requested some key documents from the Mayor's Office that are integral to Bill No. " The primary document being requested was the sublease and development agreement SDA, which is together the Arena lease. The SDA, the Sublease and Development Agreement, fall within the definition of contracts involving significant public interests. By omitting these documents from the package provided to City Councilmembers, the City is not fulfilling its obligation to present all relevant agreements to the Council's review and approval. There are 297 references to the term Arena lease in Bill No. 240966 with specific references to sections and articles within which the full details of the provisions lie. The Arena lease agreement is a complex financial arrangement. It creates long-term obligations and potential liabilities for the City which must be scrutinized by City Council before any such approval. And the City Solicitor's response that this was a binding document, the term sheet that was provided was a binding document. Term sheets are by definition an outline of business terms that are negotiated between parties based on which legal contracts like a sublease is prepared. To represent that a sublease is the same as a term sheet is unacceptable. The term sheet does not legally bind parties and that is why the term sheet for the SDA that was provided with the ordinance package as Exhibit B does not have the parties identified and not signatories either. It's merely basic terms and conditions of a potential business deal based on which the sublease is to be constructed, including requiring elements and sections. So lacking this specificity, we are in need of this and here are the reasons why: The critical terms regarding financial safeguards restriction on maximum debt amount, this is a financial stack we have not seen, requirements for minimum equity investments. Performance obligations and risk- sharing measures can only be assessed with the complete and executed or advanced negotiated SDA. I know they're in work right now, but they can provide us some more detail and give us the negotiated SDA.
Without the full SDA, it is impossible to determine the important safeguards, and commercially reasonable provisions exists such as requirement for audited financial statements from the tenant limitation in structure of capital stack, debt and equity minimums and maximums and securing City's approval before placing leasehold mortgage, termination provisions and cost recovery --
And we can go on. I'm going to -- this has already been submitted to the Mayor. I'll submit it to Council President, this entire document. To say that we must get this information before we're able to see what our liabilities are going to be not just now but in the future. Thank you, Madam Chair.
Thank you, Councilmember Ahmad. And I apologize for the interruption, but I want to make sure we get everybody in the queue. So if you all could take a moment to please just respond to that very quickly and then we'll move on to Councilmember Squilla.
We received a request and we met with you. And I'll turn it over to our City Solicitor on her response that you were affirmative about.
(Inaudible). CITY SOLICITOR GARCIA: Thank you, Councilmember. As I stated before, the SDA is not in final form until the term sheet is finalized. And I disagree with you that the term sheet is not binding. It is actually what will be voted on by City Council and will be binding on both parties. And actually there cannot legally be any mismatch between the term sheet and the SDA. Further, I got your letter and I will respond accordingly. But I'm happy for any Councilmember to brief you conceptually as to any of the questions or concerns that you have, which I think will be more fruitful given the very technical nature of the sublease. Thank you.
Yes. Thank you. Because while you have summation in the term sheet, we need to look at the underlying stack. And if you're able to provide that, wonderful. That's all we're ask -- that's all I'm asking, to be able to see how fiscally sound and what are we on the hook for not just now but 30 years later. So that's really what I want to get at. Thank you.
Thank you. Thank you so much, Councilmember Ahmad. The Chair now recognizes Councilmember Squilla.
Thank you. I'll be brief. I know a lot of people have a lot more questions. But as we talk about enforcement, and I know, Renee, you had mentioned that the Solicitor's Office will oversee enforcement of the CBA and legislation. If there is violations in anything to do with the CBA or legislation, how would that be enforced and what would be the remedies to make sure that they are adhering to what is agreed on? CITY SOLICITOR GARCIA: Sure. Violations of the CBA or the EOP or any of these other documents are violation of the sublease, right. And the sublease has a ton of remedies for -- it could be specific performance, it could be injunction, it could be damages. But for the CBA specifically, I can file a direct breach of contract action which will be much quicker. I can get into court very quickly and file that. It's a pretty simple lawsuit, so that's likely the way I will go. But all of these documents tie together and a violation of any of them is a violation of the sublease.
But there would have to be legal action taken by the City at that point for that violation. It wouldn't be left to anybody else to file a CBA violation or a violation against the legislation? CITY SOLICITOR GARCIA: It would be in the Solicitor's Office, yes.
Okay. All right. And another question I had quickly on how we as a City look at these CBAs -- and I guess, Tiffany, for you, and I know we heard questions from members throughout -- obviously there's concerns and this is what the legislative process is for, to make sure that all Councilmembers are heard during this process. What would be the -- if Council came to a conclusion that they needed additional dollars say in the Business Interruption Fund or additional dollars, is that something we could work with the Administration and with the 76ers in order to make that happen as part of this agreement?
We have worked with you in fact, right, on the Arena Services District. So I think through our actions from the time that we got here to when we came out and said that we reached a deal, to even now with regards to the CBA and the changes that we've made to reflect a $14.1 million investment in Arena Services District, we want to ensure that we make good on our promise but that we maximize the limited funds that we have, so the 50 million. That's another reason why we fought for ensuring that most of the funds were frontloaded, so there's always, you know, we will continue to work with you, with Council.
And last question, as far as the lease, the lease starts when? And I believe it's when they give the Arena to the City; is that correct? And then after that point, explain when does the Arena go dark. And how can we make sure that the CBA if there is a renewal of the lease, there would be a renewal of the CBA or a negotiation part of the CBA? CITY SOLICITOR GARCIA: After the first 30 years we'd have to renegotiate the CBA.
When's it start? When does the lease start? CITY SOLICITOR GARCIA: When does the sublease start?
Yeah. CITY SOLICITOR GARCIA: Before demolition. I mean, we're going to sign it --
So is that 30 years -- so if it's in 2026 or 2027, so that 30 years would start from then? They wouldn't be playing for that time? CITY SOLICITOR GARCIA: I'm sorry if I'm not getting your question. Maybe, Sam, you understand the question better.
The 30 -- Sam Rhoads with PIDC. The 30 years would start in 2031 when the Sixers are anticipated to start playing. So the base term would be from 2031 to 2061 the lease would be expected to be signed if and when --
Pardon me. We cannot hear you. Please state your name again for the record --
-- and proceed with your testimony. We have to ensure the stenographer is able to get this for the record.
I apologize. Sam Rhoads with PIDC. The base lease term during which the Sixers would be playing their games would be 30 years starting in 2031. So running through --
Hold on one moment. Pardon me. They're not able to hear you.
All right. I'm still Sam Rhoads and I'm with PIDC. And so, the lease has a couple of different elements to it. The base term or the term during which the Sixers would be playing is 30 years. It's anticipated to start in 2031 with that basketball season. And so, therefore run through 2061. We would expect that the sublease would be signed if and when this body approves the transaction and commence before they commence the demolition and construction periods, so that would be on top of the 30 years. So it's demolition plus construction plus 30 years.
All right. And then renewal of the lease, if they do want to extend it at that point, is there any language within the lease that makes sure we have to go back to a CBA to look at additional funding because there is nothing past the original 30 years?
That's correct. CITY SOLICITOR GARCIA: That's correct, Councilmember. And did I understand your ques -- were you asking about the concurrence of the lease and the CBA? So the CBA starts before the lease. Is that what you were asking?
The CBA starts before the lease so we have to make sure that if we're looking to do this through the length of the lease, we have to make sure that the resources are there through those 30 years through '61, so we might have to rework some of those numbers also. CITY SOLICITOR GARCIA: Thank you, Councilmember.
Okay. Thank you. Thank you so much, Councilmember Squilla. Before I go on to Councilmember Landau, I just wanted to stop there with a question that Councilmember Squilla posed relative to when the 30-year agreement would begin, which would be 2031. So the initial period would be 2031 to 2061 with the opportunity for 13 five- year renewals; is that correct? How many renewals is it and what's the term period? Is it 13 five-year renewals? I don't have my papers right in front of me, but I remember reading that.
Yeah, I think that's right. The whole thing I think goes 99 years.
Right. So for clarification though, once the time would come to renegotiate for the term what is the notice period? So there's a clause inside of that, the contract documents that talks about the notice that the developer/operator would need to give to the City relative to the amount of time they would have to get back to us.
Whether they're renewing the lease or not.
So the terms of the lease would stay in place through the base term and then through the extensions.
It's inside the documents. I don't have my papers here at the Chair's desk, but I believe it says days. I remember 9 reading that, Section 3.3. Could 10 you just clarify that? It's the tab that says 10 years on the bottom -- 10 days. So it's Bill No. 240966, . It's Article 3 Section 3.3 Renewal Terms. And it states, Renewal terms subject to the rights of the City and the Authority under the article of this lease, following the last day of the secondary term, the term shall automatically extend for 13 consecutive terms of five years each followed by one term of three years, each a renewal term, unless the Authority notifies the City in writing no later than days prior to the exploration of the secondary term or the then current renewal term that Tenant has notified the Authority that Tenant has elected to not renew the term. So if you all could just speak to that because that was, I think, part of what the Councilmember's question was relative to only a 10-day notice if they would not renew the lease. I remember reading that in that bill. If you could speak to that. CITY SOLICITOR GARCIA: Okay. Thank you. We're just -- this is in the ground lease between the City and PAID, right, which is different than the lease between PAID and the Sixers, yes.
Right. But if you could speak to the 10-day notice. I think -- Councilmember Squilla, I don't want to overclarify what you were asking.
Two things: One was there is two separate leases, the ground lease, right, and there's a go-dark provision for that also, right, that if there's so many events not happening at that Arena, that would consider go dark and then that's when the Arena would, I believe, go back to the owners of it so we're not left with a dilapidated property. They would then have to maintain it and that lease would then end. But there's two forms. One is the ground lease and one is the lease between Sixers and PAID. And then at that point do they automatically get to renew that? And if they don't notify us within 10 days, it's automatically renewed. So if it's automatically renewed, how's there an opportunity to re-up a CBA or how's there an opportunity to say, all right, what are we going to do moving forward with the Arena?
Yeah, that's correct. The CBA is for this base term. It does not continue through into the extension terms.
Right, but we want it to. So we would have to change that, correct?
That would be correct, it does not currently accommodate that.
Okay. Thank you. And thank you so much, Councilmember Squilla. The Chair now recognizes Councilmember Landau.
Thank you. Thanks for being here and thanks for answering our questions. What we've been hearing in the questions and answers, that there's still many unanswered questions about some potential costs, things like SEPTA, who desperately wants, needs some investment, and there's a question about who's going to do it. I think all eyes are towards the Sixers. They should pay for it, right. There's also been other questions that have come up where we're leaving it a question mark as to who's paying for it, how we would get additional money. Councilmember Thomas brought up just the 1.6 million in businesses, that that's not adequate. When will we know the final -- when we have a full picture of costs and when will you come back to us to ask us about these costs? That's the first question. And I say this to also echo we have very uncertain times we're walking into now. As somebody who worked for the City of Philadelphia during the previous Trump presidency, I remember about facing much of the work that we were doing and/or adding new resources to it. We have a lot of question marks about what's going to happen to us going forward and what funding streams will stop or not. And I then feel very uneasy about the amount of question marks we have here about who's paying for what and what the full picture of the real cost of this is. And then I want to follow -- I have a lot of questions, but I'm going to stick with the CBA I think at this moment to ask some questions about assumptions that were made about the housing investment, that there's $3 million that's supposed to be seed funding to be leveraged by other funding to create more affordable housing. Why the number 3 million? What are the assumptions that were made? To me it seems very low. It also is creating housing up to 120 percent of AMI which is about $123,000 for a family of three, which is awfully high. Do you have any idea what the average annual income is of someone in the surrounding area, especially Chinatown, as to whether or not they would be able to afford this housing that we're discussing? And I cannot underscore enough how much I don't think that is enough money at all for housing. And then I'll just pepper one or two more while we're in here. I have a lot of concerns also about neighborhood gentrification that will force homeowners and individuals out but also a lot of the necessary services and nonprofits that we have in Center City. There are recovery places. There are nonprofits that support the LGBTQ community. There are nonprofits that are supporting victims of domestic violence. What happens if the Arena causes gentrification that pushes our nonprofits out? What can we do? Are there any protections for them baked in here?
I can -- the first question, there were a series of questions in there. But the first one was a concern around ambiguity of cost. And I want to be clear in the term sheet that's attached to the ordinance, the Sixers are 100 percent responsible for this project.
But what about the things that we don't have an answer for yet? SEPTA is saying it's going to cost $20 million easily, initial investment to subsidize what they need to do for the ridership. And everyone's saying, we don't know yet who's paying for it. We understand they're still in conversation. It's very concerning we're being asked to do something now when there's still so many question marks about who's paying for what in the future.
As part of the Sixers responsibility, they'll be responsible for all impacts that they have to the SEPTA station. Improvements and things like that over and above that would be SEPTA's.
SEPTA doesn't -- let's be honest. SEPTA doesn't have the money for this, so someone has to pay for it.
So we'll answer your questions around housing affordability, Councilmember, and neighborhood gentrification and pushing out nonprofits.
Hi, Councilmember. Just to be clear, so the master planning effort dedicated to Chinatown -- I'm sorry. Jessie Lawrence, Director of Planning and Development. The 3 million that has been called out again, it is supposed to be seed funding so we understand that that number doesn't necessarily do the impact that would solve the housing issue, which is why it's supposed to be part of a larger program that will more comprehensively define where the funding for housing would go. We are tying ourselves to a Chinatown commitment coming out of that housing plan, making sure that our master plan looks at comprehensively not just housing but how quality of life is to be maintained, making sure that we are eliminating barriers to maintaining such, making sure that we are minimizing any drivers of gentrification, anything that goes against maintaining the heritage and cultural aspect there. In terms of -- I'm sorry, your other question was?
It's about the nonprofits and the nonprofit organizations in the neighborhood that are necessary.
Yeah. Well, again that is part of the grander plan which is making sure that we are having this master planning effort to make sure that the stakeholders who are part of that process are at the table to guide us to make sure we understand what the issues may be, what they need to sustain themselves. Again, we're looking at different funding mechanisms in addition to this and that's why they are important to be part of that conversation to make sure that they can guide us to attach to the things that we need to sustain.
I have to pop in again just to say we based all of this around certain assumptions that I think will change as of January 20th. We are basing thoughts of funding streams and how you leverage $3 million based on a past model that's going to change dramatically. And I'm really worried about the fact that we have two pots of $500,000 each, half a million dollars each. One that's going into Market East Master Plan and one that's going into a Chinatown Master Plan, but that should have been done a long time ago. How can we backend that? We're supposed to again approve plan and go forward, but why does the approval come before the plan? And the plan is based on something we don't even know yet because things are about to get pretty bad.
I think I could add a couple things. First, the impacts from this won't happen until at least 2026. And again, our belief is that there's going to be minimal shutdowns. And again, there will be impacts for sure, but we don't think they're going to be anything as extensive as people keep mentioning Market Street where the whole street was shut down. So these are going to be minimal. The roads won't be closed except for rare exception when they need to deliver a crane or something. By and large you're going to be able to get through. So there's not going to be dramatic impacts. But we -- and again, we've talked about a fund to be able to help offset any problems that do occur, but we need to -- we're already starting to think through how we're going to do a plan. I don't know that the million dollars is going to be enough. I think that we will be able to look to other partners to help fund stuff. We have money that we do plans that we might be able to use internally. There's also plans happening right now. The Stitch is fully funded, like $163 million, and part of that is a plan. And so, the work that's getting done for that will be used, but it's already going to be done, it's already going to be paid for by some other source. And of course, all the work that the community has already done and anything we've done, the first step is to always gather up all the known information. And so, that has to be part of it to make it as robust as possible to address things that we're all talking about here like traffic, affordable housing, are there affordable housing projects coming off affordability that we can stabilize, what properties does the City own, what properties does government in general own that we can maybe look towards, an eye towards making available. So that would be an added contribution that's not part of any of the numbers we're talking about. We also -- it's interesting. We have a dichotomy here. We have Chinatown worrying about gentrification both in the cost of housing but also the affordability of commercial spaces. And yet on Market Street we have a dearth of available space. It's unbelievable. Everybody probably heard the Giant is closing at the end of the year. Jessie has a thorough analysis of every retail space. So between trying to think thoughtfully about how we can protect Chinatown from gentrification but also make it easy for that fear of business that's coming in and going to take over to guide them towards Market East where we have endless space, unlimited transportation, and I think that if you do it smartly, you can steer some of that and you can try to minimize the impacts. Can we guarantee there's never going to be a negative impact? Of course not. But I think by doing as much planning, as much thoughtful exercise, as much engagement, making sure we collect all the ideas, we collect all the problems, all the concerns. And if we're thoughtful and deliberate about it, I think we can make significant impact in making sure that the impacts aren't as significant as people worry.
Can I ask one last legal question just to tie this CBA part up?
But for the record, I do not think 50 million is enough. Yes, thank you, Renee. I know that you added to this agreement, the ability that -- the entity that would enforce the CBA or the EOP is solely the City, the City Solicitor's Office, to take the burden off RCOs or community organizations from actually suing, but I can imagine a scenario when you know we fully trust you and know you're all in and whatever but you're not here, where we might want a community organization to have the authority to also file the lawsuit if the City doesn't do it. So I'd appreciate an or clause being put in there that the City could do it and then some version or the community group to give the community the enforcement teeth that it needs just in case the City doesn't do it for them. Thank you. CITY SOLICITOR GARCIA: And I understand that sentiment, I do. But it is solely in my shop to do it because it would be unmanageable if all of a sudden all these nonprofits started suing and I lost control over that, and it could be that the Sixers gave money to the City and then the City hasn't paid out because maybe there's a tax hold with that nonprofit, right. It gets very uncontrollable very quickly. And I do think that this is -- from what we have seen, I do think that this is the best way because if a nonprofit tries to sue, they will be bled. I mean, they're up against a behemoth and I do think the Solicitor's Office carries the authority and I sincerely believe that's the best way to go.
Thank you. I just had a SEPTA question. And, Sam, could you sit there for a second as I go through this process. When we built the stadiums Lincoln Financial Field as well as Wells Fargo Center, when they were built during that period, did the teams pay for the increase in ridership that came as a result of them building the stadiums?
No, they did not. The teams had no responsibility for that. 2
During that time. You 7 said the teams paid for the increase 8 in ridership? 9
So why are we -- so what's 17 the difference between then and now? 18 Is it because it's going downtown 19 there's going to be an increase in 20 ridership versus in South 21 Philadelphia? Just trying to -- 22
Neither in 23 this case nor in that case are the 24 teams being asked to cover.
So is the requirement increase in ridership for -- is the requirement for the Sixers to pay an increase in ridership as well as the infrastructure of the subway station? Chair recognizes Councilmember Jamie Gauthier for a point of information.
Point of information, Council President. It's not just that SEPTA would have to increase service or experience operational cost. I think we're on this topic of conversation because the Sixers, themselves, have noted that their traffic plans don't work without 40 percent ridership. SEPTA has been very clear that that will not exist with one- to two-hour service at Jefferson Station. So this is not a result of an unfair burden being placed on the Sixers. This is the Sixers own plan and that it hinges upon these investments at Jefferson Station.
So the way that Councilmember Gauthier laid it out is sort of the sequence that creates this situation. Go back to your original question, what makes South Philly different. It is a fact that that's the end of a line, which makes it easier to service because all the trains are going to end up at the end of the line anyway. You can store trains at the end of the line and then wait for the events to let out and then use those trains to get them out. You can store trains along the Broad Street Line. So operationally, it's easier to manage that. The fact is that the way the Broad Street Line runs, the capacity of the trains, the frequency of the trains, it's a more straightforward proposition. But it's still SEPTA's responsibility to work that out in both cases. And so, the situation here is that SEPTA is telling everyone, and we're still waiting for more detail, but they're telling everyone what they need to do operationally to provide the capacity as events would let out at Jefferson's Station. And what they're also telling people at the same time is that currently that's not something that we have the resources for. So the question is where do those resources come from. And I think the thing we're trying to be firm on, and just not to repeat to death, but we as the City have done our part to answer that question. We have put forward resources in the 2025 budget. We've put forward additional resources in what we're proposing in the CBA to answer that question. And I just want to be clear, we don't want to get cornered as a City in a conversation that we are a party to but we're not directly involved in, in committing more City resources to answer that question. So we do need that discussion to evolve and develop and continue. And we are monitoring that. We're a part to making sure that the information is shared.
So your summary is it's not on us. It's on the Sixers to figure it out. Chair recognizes Councilman Jones.
Thank you for that insightful question, Mr. President. Simply put to give you an answer, there's a big difference between going north and south and east and west. Thank you, President.
Thank you, Councilman Jones. Councilman Jones dropped that mic over there. (Laughter.)
Mark, I think we are in South Philly though, right.
All right. And what's the dollar amount as well? Have they expressed what is it, 20 million, 30 million?
So we have seen with respect to day-to-day operations during events a number that ranges around million, but we haven't seen the detail as to how that's been developed.
Just wanted that for 12 clarity and recognizing the 13 difference between the requirements 14 from in the past and the 15 requirements now, so very well 16 explained. 17 The Chair recognizes 18 Jeffrey Jay Young. 19
Thank 20 you, Mr. President. And just for my colleagues, right, just for some information, if we're concerned about transportation, we're concerned about SEPTA, if we pass this legislation before SEPTA and the Sixers enter into an agreement, SEPTA will lose all its leverage in any kind of negotiation, any type of deals. So let's keep that in mind as we move forward, right. So with that, although it's been touted that this is the best deal, things like that, but I just want to let folks know who are in these chambers who are watching, who are listening, all the stakeholders to let them know in the history of arena or stadium deals, there has never, never, ever, ever, ever been the economic benefits reached that has been stated. And let me repeat that. There has never been the economic benefits that were stated attained by the cities that say that these are going to reap these benefits in history. In fact, no arena has even come close to return on investment. And I think that the Administration's own consultants would agree with me because they did, right, when I made that point. So let's put that on the table. That's the premise of, I guess, my apprehension about this particular deal, right. Regarding the CBA, right, did the Administration attempt to negotiate a higher number other than the $50 million?
I'll talk about the economic impact for a minute because we share your concern about the economic benefits of arenas and how they compared to studies. So we were very careful with our outside consultant to say that we wanted this to be a different type of study. We wanted them only to look at new events in the arena. We wanted them to only look at spending in the arena, so none of the kind of indirect or in induced multipliers you usually see in those kinds of studies. And we also wanted them to do a sensitivity analysis, which they did. So in their analysis, they're pretty confident based on their research what's happened in other places with two facilities or multiple facilities or other cities around our size that we'll get 53 new events. But their sensitivity analysis showed that even if we got a few as new events, there's a 18 positive impact. And in part, that's because we're not putting any money in. So whatever new --
I get that, right. There's a positive impact but that's all relative, right, because I don't think that the City has done any examination of what other uses this particular site could have that will also reap positive impacts, right. So I think that that's all relative because you've only been focused on building or developing an arena at this location and not developing anything else at this particular site.
Yeah. So what our consultants did was also looked at kind of what you're talking about, the displacement effect of having that arena there, like where else would that money have been spent. So they did account for that in their analysis to get to the positive numbers that they're showing.
And again, can you answer -- I guess I asked the second question, did the Administration attempt to negotiate a number higher than the $50 million CBA?
When we got here on day 1, January 1, $50 million was negotiated in the CBA and what we wanted to ensure that we stretched that $50 million as far and as wide and as strategic with upfront dollars more than what we've seen in other past deals from a historic perspective that these gentlemen flanked to my left and my right could say based on other deals that happened. So of the 50 million, this is the allocation that we came up with.
But given that this is a new Administration and given the autonomy, right, of a new Administration, why wasn't a higher number negotiated? Like why did you stick to that $50 million?
So we looked at not just the $50 million within the CBA because, again, this is more broader than just the CBA. CBA is important. The $50 million is important, but we also looked at the economic impact study. We looked at the PILOT, U&O tax. We looked at this deal comprehensively, and that goes to that Sam chart that Sam Rhoads developed that was referenced earlier today. So we'll go down to the Sam chart and talk about that --
Looking at the deal comprehensively and future outcomes, I still don't think that this deal -- I'm going to tell you what I think this deal is worth, right, from talking to other experts in the field, in the industry. Let give you an example of what happened in the early 2000s in Los Angeles, right. Los Angeles developed an airport. They had a robust CBA. The value of the CBA for that airport was half a billion dollars. That's the value of their CBA. Looking at this deal, this deal is worth $300 million to the City. We are getting one-sixth of the value in the CBA. And that's because again there have been no 13 arena deal in history to prove those benefits that they said. So we want to get the money upfront. Great, y'all negotiated to spend the money upfront. Great, right. But that money upfront is not -- it's only still one-sixth of the value of this deal when you look at everything in totality. So I guess another question that I have is, you know, I just can't understand why was the -- this Administration has set to do things on their own terms and do things their own way. But when it comes to this deal and this Arena, you're set on something that was passed on from the previous generation -- previous Administration rather. And so, for me I'm just trying to figure out what did you negotiate in this deal that wasn't negotiated in the prior Administration?
So in addition to the allocation of all of the caveats that Sophie Bryant mentioned earlier with regards to the 50 million, in addition to that we also through the third party independent verifier we looked at, the consultant that we settled on, we worked with, we looked at 19 other different plans. So we don't just tout that we have or we landed on the best deal possible. That's based on data and science that we made transparent in the report that we shared publicly on the record that was televised at the Convention Center. Now, from a --
Mr. President, may I add that those deals that they have researched and touted there were bad deals as well, right --
-- so if we're going to keep touting bad deals, right, I mean they're bad deals. I mean, I agree to that. I would say that the arenas that we have now currently they were bad deals when I studied them, right. So it's just that we can't keep touting a bad deal, right. I understand it was the best deal that you probably could negotiate, right, the best deal you could negotiate. I understand completely. But it's still a bad deal for the City. It's still a bad deal for the overall economic viability of our city long-term. It's a bad deal for those local communities. And I just need to see more in it, right. If we're going to -- we're giving this away. I talked to some folks, we are giving them this Arena deal for one-sixth of the value of what this could be. And I really think that we're -- if we're talking about jobs, we're talking about schools, right, we're talking about our rec centers. I have rec centers in my community that need roofs. That have HVAC problems, need brand new electrical systems. Why should kids in North Philly not be able to play in a new space but the Sixers get to play in a new space? Why they got to keep going to these crappy schools with asbestos and things like that, right? Why is that, but the Sixers get a new space? Why is that? (Applause.)
We need to -- and given an economic outcome with this new president that's coming in, we have to stick to what we can do and use our leverage as a city to get the most bang for our buck here, and this $50 million ain't it at all. Thank you, Mr. President. (Applause.)
I think whether we're talking about rec centers, right, rec centers -- now, when you talk about rec centers and slides and swings, that's my language as the former Chief of Staff of Philadelphia Parks and Recreation. I know this department through and through. I know our assets and our infrastructure through and through. I know where the needs are. And that's why I'm honored to serve in this role as Chief of Staff serving alongside of Mayor Parker to look at all of our assets, all of our infrastructure. We're looking at the citywide impact that this can make. That's why we're framing this as beyond the basketball. We're looking at how we can get the best bang for our buck with the limited resources that we have. To that end from an economic impact perspective, I'd like to turn it over to Sam Rhoads to talk about the economic impact analysis that we conducted under our Administration after we got here and why we're saying it and while we've been able to prove that this is the best deal.
Yeah, a couple things. I mean, one of the most important things to keep --
Sorry. I also just want to say this. Since we got here, even before we reached the deal, even before we came out and said what our position was, these same people that have said that this was a bad deal, they were saying it then before we even came to a deal and they're saying it now. So what I want to make sure is I want to make sure that we get on the record the analysis, the methodology, why we didn't rush to make a deal in January, why we didn't rush to make a deal in the springtime or even the summertime, we were strategic in our approach. That's what I'm asking Sam Rhoads to talk about.
Thank you, Mr. President. So this $50 million CBA, right, that has been thrown out for the past two years. It's the same deal, so that's what I'm getting at, right. This is the exact same deal that was put forward during the Kenney Administration. So again, it's like you've done this economic analysis and we appreciate that, but it gets us back to the same thing that we've been talking about for the past two -- before I was on Council, right, I was just on the outside looking in. But it's the same terms, it's the same terms. I'm trying to figure out what were you able to negotiate? What's new that you were able to negotiate that the previous Administration could not?
We'll go to the tax revenues first and then we'll take it over from an economic impact analysis. Then we'll take it over to Sam Rhoads.
Yeah. So what our independent analysis from CSL, the firm we hired, showed was that this is worth $700 million in local taxes between the City and the School District and another $350 million for the Commonwealth, so that's what we're getting out of the deal. Without any City money going in, we get tax dollars. And with that, I'll turn it over to Sam to talk some more.
Yeah. So I want to underscore that in this transaction the Sixers are acquiring the land with their funds. They're donating it to the City of Philadelphia and then releasing it back out to them. So as the Sixers propose this transaction, there is no City investment in it. And so, therefore all of the net new revenues are indeed net new revenues. The $50 million CBA comes on top of that. So not only are they not asking us to invest dollars, but they're also offering to put the $50 million on top of that. That is unusual across the entire country. So in order to compare apples to apples, you'd have to look at transactions that were privately financed without City funds and then further look at their CBA. With respect to the tax revenue projections, as Mr. Dubow indicated the City of Philadelphia, and I can't speak to other cities, but the City of Philadelphia has always and has continued to take an incredibly conservative analysis of these revenues. We are looking only at net new events. These are events that would not happen in a single arena scenario, so these are net new to the City of Philadelphia. We are only looking at revenues that come from within the Arena. We did not look -- and I'm just repeating what Mr. Dubow said. We're not looking at induced impact. We're not looking at indirect impact. We are not looking at multiplier effects. We are looking at actual experience with wages and sales on revenues at comparable facilities. That is not what the industry standard is. That is much more conservative. So with all of those guidelines, our consultant went through each individual tax, the PILOT payment, the wage taxes from these net new events, the City's 2 percent portion of the sales tax, the beverage tax, the amusement tax. The only tax that we looked at outside of the Arena is parking taxes. And again, that was only with respect to the net new events. BIRT, Use & Occupancy for the school as well as liquor for the school. And as we indicated, those numbers based on those conservative assumptions just based on net new adds up to $700 million. (Applause.)
And in saying that, right, that adds up to $700 million. But again, what makes this deal better than any other arena deal in the history of arena deals to show that we are going to net that money? Nothing from what I've seen so far guarantees me that we're going to get this money, right, when no other deal has ever come close to getting any of the tax benefits that they say they're going to get. What in this deal is like you know what, this is it, this term, this clause, this is the thing right here that's going to make us reap the $700 million?
So what's different for us is there's no local money in the deal. So that's different from any other stadium --
There's no local money for now because there's a clause in there --
-- that we reached in the agreement that we reached with the Sixers --
-- provide public funding, they're going to get some money.
-- there's not local money in the agreement that we reached with the Sixers. That's never happened before with an arena deal here. And in terms of the 700 million, we agree with you maybe it won't be 700 million. That's why we asked for sensitivity analysis. Even if instead of 53 new events we got 18, there's still a dramatic positive impact. So, yes, there's no guarantee, and that's exactly why we wanted to see what it would look like if there were fewer events.
Right, because there's no guarantee. That is my concern with the $50 million. That's why there needs to be more because there is no guarantee that the City is going to get those benefits 30, 40, 50 years from now. That's why we need more.
There's a guarantee that we will get benefits and it's with no City dollars going in.
It's no City dollars for now because there's a clause in there that says if any other competing entity gets public money, then we owe the Sixers money. So there's no public money in it for now.
There is no 16 public money in the agreement. That's right, that's where we are.
You're welcome. The Chair recognizes Councilmember Nina Ahmad.
Thank you, Council President. I just want to wrap up my comments that I was making earlier. I know there's time issues, but I just wanted to reiterate the ground lease lays out the core foundation of why we as a City would justify accommodations, use, offer favorable tax tools in exchange for significant potential economic gains. It includes language that states, Improves public use. These languages that help justify why we would not charge the real estate by formula as we do all other investments, charge U&O taxes based on established formula for occupancy and rate. That's PILOTs and U&O tax settlement agreements are set at a negotiated amount, usually much lower than what would be by application of criteria and formula that you and I would be subject to. It is done clearly on the promise, and I would say subject to our due diligence that those projected economic benefits stand as in any business transaction when we trade lower or cap taxes for potential economic benefits, then we need to have some offsetting formula to stave off or clawback -- let me repeat that -- clawback some of those giveaways so that we as a committee have a fair deal. So that's the reason for wanting the details. And I just wanted to underscore that for everybody's benefit. Thank you, Council President.
You're welcome. The Chair recognizes Councilmember Isaiah Thomas.
Thank you, Council President. You got great timing, man. I don't know if it's your energy or your ability to do this. I want to take some of the energy from Councilmember Young and see if I could help out a little bit with some of this stuff, right. So in the deal it says $3 million for public schools to go to games. Is the Administration open to removing that component? Let me say why. On a Tuesday night against the Washington Wizards, excuse all of my Washington, D.C. elected officials. Folks ain't going to that game, right --
Time, time, time. Isn't the MVP like on load management or something?
Yeah, I was going to ask the Sixers tomorrow about that, but that's another conversation.
So on a typical Wednesday night the Sixers are going to give those tickets away anyway. That's going to happen. And all of those people that were here earlier, some of them are still here, some of them are not, they can tell you that a lot of their organizations, we had a lot of Black men up there, Councilman Phillips, 18- to 25-year-old young Black men, those young Black men who are up there, they could tell you firsthand they get those free tickets already. So I'm looking at the $3 million for free tickets -- I know this is going to sound a little hypocritical, but the $1.5 million for basketball development, the Sixers put up $6 million maybe for just the Sixth Man Center alone over a one-year time period. So what does it look like for the Admin to be open to working with Councilmembers to renegotiate some of the things that's in the $50 million current proposal? But then also as I asked you earlier about the 1.6 million for business development, you told me that you're confident that you will be able to work with private sector partners and other folks to be able to generate more revenue. If my hypothesis is correct, you have a plan for that. So I think based on listening to some of the information around SEPTA, looking at some of the things that's in here that may be well- intended but dollars can be diverted elsewhere, is there any appetite from the Admin to renegotiate some of these things to put us in a position to be able to find something that is a little more beneficial to the City of Philadelphia than what we have in place right now?
We stand by the CBA that we introduced, right. But we also have had robust conversations with members of Council, with also community members as well as local civic associations. To that end, the outcome or outgrowth of that is the $14.1 million to the Arena Services District. You know, one of the things that our Mayor always says is Don't go by what I say, watch what I do. I think if we look at what we introduced at the Convention Center versus what we have here now, what we rolled out at the Convention Center versus what we have here now, that's the outgrowth of ongoing conversations even with Councilmember Squilla. So don't go by what we say, watch what we do, right. We want to make sure that whether it's the CBA, the EOP going to some of the points that were made earlier by Majority Leader Kathy Gilmore Richardson, that it's the best deal. It's the best deal --
-- I can't speak to the specific games that you were talking about nor can I dribble a basketball, but what I can say is that we want to make sure that we're making good and that we're not just throwing just random things to the children that matter most important to us, not just in the public schools but in the charter schools as well as is written here in the CBA.
So I heard the buzzer. So as I close out, and I'm not going to come back for a second round. I'm going to be open to negotiations and dialogue. As I close out, notice I didn't say anything about the City College for Municipal Employment, right. I didn't touch that because we understand that that's a pet project of the Mayor and I get it, right. But respectfully, if you want nine votes, you're going to have to negotiate. I don't know a person who came into this hearing today, maybe two or three, who's like this is a great deal for me. I think that you have to take the position of there are some of us who are open to a conversation. There are some of us who already made our mind up. There's some of us who haven't made our mind up. But right now as is, right, I'm a basketball guy and I'm telling you 1.5 million for basketball expansion is a bad idea on what to do with the CBA. Some of this stuff is going to have to be a good faith agreement, right. We're going to have to say, listen, if you want to be a partner of the City of Philadelphia, giving out free tickets is what you supposed to do. That ain't a CBA thing. (Applause.)
If you want to be a good partner at the City of Philadelphia, expanding basketball in neighborhood initiatives, that's what you're supposed to do. I just got an invitation from a Tyrese Maxey Foundation that he's giving out 2,000 turkeys. These people do this stuff already. They do. We just honored Marcus Morris in City Council earlier this year not because of the basketball player he is, but because of all of the philanthropy work that he does in the City of Philadelphia. We legit gave him a key to the City because he does more than 99 percent of the NBA players who are from Philadelphia and he comes back here and does this stuff on a consistent basis. So I think that if we're going to get to a space and a place where we're going to come to an agreement that we're all comfortable with, clearly some Councilmembers are more frustrated than others, but there has to be an appetite on the position of the Admin to negotiate some of the positions that you've taken so we could put us in a position whereas though we all feel like this is a good deal for the City because I think you're hearing a lot of resistance. The last thing I'll say, Council President, and I'm listening to my colleagues and this is all being recorded, I heard schools brought up a lot throughout the course of today's conversation. And we all know that we have a $7 billion tab as it relates to school facilities alone. So when we go into budget negotiations next year and we all got our priorities, I'm hoping that based on today's energy that school facilities would be something that we'll be willing to sacrifice a little bit more for because I don't hear school facilities or anything around buildings in this conversation right here. So when we come back at your next year's negotiation, I hope a lot of us got this same energy because in order to get real money for our buildings, we're going to have to give up some of our pet peeve projects in order to put us in position to address some of the issues with public education. So if we're going to use that as a tool for negotiation, let's keep that same energy next year when we're on the floor begging saying, nah, don't put money there, right, put money here, because there's a chance we might have to increase, what, we went from 55 percent to 56 percent, we might got to go to 57 percent next year.
We're talking public education, right. And if that's a real thing and we're really going to use that as a part of our negotiations which I'm 100 percent for, right, that's going to have to be we're going to have to be -- we're going to archive this moment. And I'm really talking to my colleagues more than anybody. We're going to have to archive this moment and make sure that this is the same appetite we have next year in budget negotiations because we're going to have a huge tab on our hands. So as the Chair of the Education Committee, I love the energy around this but I got to make sure I put a pin in that because I know it's on the horizon next year working with the School District and knowing what the plan is and the direction we're going in.
So, Councilmember, you don't have to put a pin in it because we're working on that now and we're working alongside of you working with the School District.
With all due respect, you know I know. I'm in that conversation. I'm a part of that negotiation, and I'm also listening to issues related to the change in President and that having an impact on things. So we know firsthand next year when we go to talk about public education and funding for public schools is going to be a huge fiscal deficit from the operating and the capital side. So I just want to make sure that we have that same energy next year. But please as I close out -- I'm sorry, Council President -- please I'm challenging the Administration to be a little flexible with the CBA. You heard from Councilmember Young, you've heard from other Councilmembers. There's questions about SEPTA and a lot of other stuff, but we really need y'all to be open to negotiating to a conversation around how this money is spent and it needs to be done in a way where we're all a little more comfortable, because I think right now we're clearly communicating we don't agree with all of the terms in here and we're purposely not talking about y'all pet projects. We haven't touched them at all.
So I just want to state for the record I can't dribble a basketball, but I know economics and I know economic impact and I know economic mobility. I understand that through and through. Okay. You mentioned the Tyrese Maxey Foundation. Again, can't dribble a basketball but I can tell you about Tyrese Maxey and his Foundation because they have partnered with and stood with the Administration on some amazing projects --
And as it relates to whether it's the City College for Municipal Employment, PHL TCB or other investments that we're looking to make through this CBA, there's nothing pet or a project about that. And, in fact, this Council affirmed that in our One Philly budget, in our One Philly budget. So CCME is not a one-and- done or one-time investment. It's not just a good idea. It's not just a pet project. It is a policy that we stand on. As they say we're talking about Tyrese Maxey and basketball and with standing on business, right, this is our approach to standing on business when it comes to investing in these projects that this Council affirmed were good projects, not just pet projects, not just one-and-done projects that were good ideas but systemic ideas that would move the needle in the right direction. I appreciated that affirmative vote earlier in the year and I appreciate the support here. And absolutely, Councilmember Thomas, we will continue to speak with you not just about school facilities, not just about public schools, charter schools, all the schools because that's what we stand on.
So, Council President. Let me just clarify. I didn't mean to offend you when I said pet projects. What I'm saying is that these are initiatives that were created by Mayor Parker and her team that we didn't have before that we now have. So when I'm talking about some of projects like Extended Day and Year, that's a great thing. Yes, we voted for it because we feel like it's a phenomenal idea. We're not touching that. I'm not suggesting to touch that. When you talk about the City College for Municipal Employment, yes, that's a great thing. So when I say pet projects, I do not mean to offend. I should have used the term ideology or ideas that came directly from this Admin that didn't exist before you got here. All of those things are amazing. We're not touching them. I see where you're going. But I just think that there are things that are in the proposal that I'm asking you all to be a little more flexible about. In order to put us in a position to be able to offset concerns that Councilmember Young communicated, councilmember Landau, Councilmember Ahmad, Councilmember Gauthier. I mean, I'm listening to everything everyone's saying and I do think that there's a way to solve some of this stuff, but I don't think it happens if the Admin does not have an appetite to negotiate the current positions in the proposal that you've communicated to us. So I think what I'm asking for is just a little flexibility from the Admin to put us in a position to negotiate some of the things that's been communicated today in order to see if we can find a little more happy ground, right. Politics is about negotiations. A good deal is one where everybody walks away with something but nobody got everything they want. So I'm asking you guys like, you know, not to get everything you want and see if it's possible for us to walk away with something. I don't know if that's possible. I'm just going by the temperature of the Councilmembers and looking at the Council President. I just don't think that this deal right here is the best deal for the City written as is. Thank you, Council President.
Thank you so much, Council President. Just help me out here for clarification regarding the CBA. Everyone keeps talking about the 50 million. Is it that there's consternation relative to the amount? Meaning, is 50 million a cap or is there consternation within the sort of different concepts and things listed in the CBA? Meaning, all the different allocations? Meaning, are you all stating, and I want to get this on the record, are you all stating that million is the cap on your end? Meaning, we still have to do our own negotiation so I don't subscribe to the fact that this is an endpoint. To me this is a beginning point, but I'm trying to get clarification on what members are asking for relative to the CBA allocations that we have listed here and the amounts, just for the record for my own understanding?
So thank you, colleague. I think that's a phenomenal question. And I would say based on what I asked and what I've heard, I think that both are the asks. I think that we want to see if there's an appetite to go above the 50 million that has been proposed thus far. I've heard that from members, but I also think and I've said myself we want to see if there's an appetite to renegotiate some of the items that's in the current CBA as is. Again, I just think that there are some items in there that kind of should be good faith things that kind of go without saying and those dollars could be reallocated to some of the other concerns that was communicated, whether it's housing or business development or support for Chinatown. I just think that we can -- I think that there's an appetite for both.
Okay. Well, thank you. Thank you very, very much for the clarification. But I just want to state for the record and just ask the Administration to affirm this one way or the other. As far as I know with the negotiation, the information as presented is a starting point. This is not an ending point, because now this process is in the Council chambers and we will have to go through this process and come up with sort of the end goal of whatever it will be one way or the other. But you all agree?
Okay. All right. Thank you very, very much.
Thank you, Mr. President. Just to get some clarity, point of information, when it comes to negotiating the CBA, right, if the CBA is between the City and the developers I'm trying to figure out what role does Council play in having a seat at the table with the developers to negotiate the CBA, right? That's the clarification I think that we're looking for as a Council as a body.
Thank you, Member Young. And so, as we go through this process, and I expect that this process will be where we will deliberate the CBA, to be quite transparent, as well as the proposal as a whole. And then we'll have to come up with a compromise and give and take. That's what the legislative process takes in order for this project to even move forward, to be quite frank, to all the stakeholders or not to move forward. Because as mentioned, in order for it to get voted out of this body everybody has to be comfortable on what they're going to be voting on and they can be voting either up or down, so there's going to have to be flexibility on all sides as it relates to how we go through this process, at least that's how I always envisioned it and that's just how the legislative process works. If that wasn't the case, there would be no need to even come on this side of chambers.
Absolutely, Council President Johnson. Absolutely, and we respect the process.
Okay. The Chair now recognizes Minority Leader Brooks.
Thank you so much, Council President. Good afternoon. I know I have a bunch of questions so I'm going to just put them all at once, and some of my colleagues also have already alluded to the some of the same questions. So City Council, we did not have input in the CBA. And maybe I'm speaking for myself, but I've had one meeting with the Sixers, two meetings with y'all and both of the meetings with y'all, y'all spoke with me, gave me an opportunity to ask questions of a packet that was about this big(indicating), and then we followed up. That's not a meeting and that's not engagement. And I was wondering what possibilities do we have in improving the CBA? And I'm glad you just said that it's a possibility. My next question is, knowing from the reporting in the Inquirer that the Administration caved on the competing facilities clause, what additional items did the Mayor ask for that the Sixers rejected in the CBA? And how come the Administration did not include labor neutrality agreement with the CBA? And the 76ers owners previously delayed this several times, because I know they want to get it opened for 2031. So given the discussion today, and I know I have so many more questions that have not been answered, will we be able to have a delay to weigh in on this appropriately or this is it? CITY SOLICITOR GARCIA: Councilmember, I will -- I think this is for me and Tiffany to split here. So with respect to the CBA, I think we've -- was the question answered before through these conversations? It sounds like the consensus is it's now on the floor. And so, I don't know if you need anything else around --
No, that first one was kind of -CITY SOLICITOR GARCIA: And you're talking about the allocation, right, not necessarily the flow of funds?
Well, I think if we're negotiating, from my understanding of what was just said that it's all up for negotiation in this legislative process, if I heard correctly to that? CITY SOLICITOR GARCIA: I'm just trying to clarify do you need anything from me as to the legal structure of the CBA? I think it sounds like we're really talking about the allocation of funds here.
I think that we will have information about probably both. We'll kind of send it to you in an email and wait to hear something back. CITY SOLICITOR GARCIA: Okay. And then with respect to the most favored nation clause which was reported in the newspaper as the Mayor folding, which I reject that summarization of what happened. Did you have specific questions as to the competing facility --
Kind of just what happened. Our negotiation process up to this point is what we hear in the news is what we have to ask questions on, which is unfair. And that's not fair negotiation for Council when all of us will be taking votes that will jeopardize or increase our ability to be elected officials later on based on, what's the quote that you said, Stephanie -- I mean, Tiffany, see what I say and see what I whatever do?
Watch what I do. But so far, and I've said this before, watching what I do has had adverse effects on us. CITY SOLICITOR GARCIA: Sure.
So we just want to be a part of the process and have a clear understanding. So when things come out in the paper, how do we know if we weren't engaged in the process? CITY SOLICITOR GARCIA: Yes. So with respect to what we call the competing facility provision, that is not a new concept that is popping up throughout the country and in different negotiations with arenas because we have moved to the point where arenas are not being funded by public dollars anymore. And so, the Mayor was very clear that while she was going to allow the Sixers to protect their investment in part, that she was not going to tie her hands or any future mayor's hands specifically with respect to what's going on in the Sports District downtown. So the competing facility clause that we negotiated is actually very limited and narrow and only involves direct funding tax benefits or the grant of land outside the sports arena, and it is only that kind of investment in stadiums that are between five -- stadiums, arenas between 5 and 25,000 seats. And I can give you a full briefing on that. It's actually -- there were a lot of carve-outs so it doesn't cover government facilities. It doesn't cover nonprofit facilities. It doesn't cover benefits that are already baked in the contract for the stadiums that we have downtown. It doesn't cover routine maintenance that the City is doing in that area, so it really -- and I'll repeat what the Mayor has said very publicly, it's dollar for dollar, arena for arena. So it's quite narrow. So again, I disagree with how it was portrayed in the newspaper. I think if we were going to negotiate it, we did it as narrowly as possible. But with respect to the Sixers, they are putting $1.3 billion into this project without any public funding.
Thank you very much. Minority Leader, are you okay?
One other question. So does the Administration expect the Sixers to seek state and federal dollars to help subsidize this project?
Are we expecting the Sixers to request state and federal dollars for this project?
Thank you, Minority Leader. The Chair recognizes Councilwoman Jamie Gauthier.
Thank you, Council President. I wanted to follow the Vice-Chair of the Housing Committee in asking some questions about housing. The City's own impact study states that although the Arena won't be built on top of any housing in Chinatown or other neighborhoods, there is evidence that it could stimulate displacement indirectly. And in your testimony, you also acknowledge that we know that Chinatown and Wash West are already gentrifying. The City Solicitor will remember that when we were fighting to preserve the University City Townhomes for that one location we secured $3.5 million in order to provide meaningful relocation assistance to the families who were living there and then we worked together to secure another $14 million for the City to redevelop the site, and that was needed for 75 units. More recently we saw PHA put $24 million up just to acquire Brith Sholom, right. And so, given those circumstances and the ongoing housing crisis in the city of Philadelphia, I'm very skeptical about the $3 million over three-year amount identified for housing, especially since we know that nearly 40 percent of the individuals in Chinatown and Washington Square West are considered cost-burdened or severely cost-burdened. Meaning, that they spend at least 30 percent of their income on their housing cost and sometimes much more than 30 percent. So can you expound on how you arrived at the figure of 1 million per year over three years to support housing programs? Can you talk about what that money will be used for more specifically than we've heard today? And can you also talk about renters? According to the impact study, 68.5 percent of the impact area is renter-occupied, a much higher proportion than the rest of the city. Can you describe the measures that you plan to take to stop the displacement of Chinatown residents who rent and may be gentrified out by rising rents?
Hi. Jessie Lawrence, Director of Planning and Development. So I'll defer to my colleagues to explain how they arrived at the line item. But again, the seed investment as we've been providing it or portraying it as is that it is, in fact, part of a larger contribution that will be mapped out. The housing plan is really important here because it will be much more comprehensive in understanding where all that funding will come from, how we will be able to -- all the numbers you just kind of described, we're looking at not just avenues to that type of funding, but we're looking at the partnerships that would be able to access those types of funding and collectively, comprehensively, strategically be able to provide the housing where the deficits exist the most right now.
So there are lots we don't know is the short answer.
There is -- again, we understand how important the housing plan is going to be in the interim. There's a spending schedule when spending is supposed to come out of the CBA, but we're not going to wait until that spending comes from the CBA. We're going to implement what we can now in the interim and be able to leverage that once that spending actually begins.
Council President, very quickly to just put on the record, does the Administration have an opinion on the wisdom of pushing forward a plan that is identified in our own impact study that there's proof that it would provide displacement without securing the necessary resources to stop the displacement?
Well, again the housing plan we'll be able to identify where we can implement measures to not have displacement. Again, we're looking at Chinatown as a commitment specifically in that housing plan. We plan to leverage public opportunities, public -- excuse me, public ownership opportunities to look at where we can provide that type of housing. But again, it will be a larger plan -- it will be part of a larger plan that is going to serve as an interim tool and resource, again, until we are able to leverage those funds as it gets spent down.
Does the Administration have an opinion on standing behind a plan that might stimulate displacement while not having a plan to stop the displacement or the resources necessary to stop the displacement?
I think the point of the -- I'm sorry. John Mondlak from the Department of Planning and Development. I think the point of the impact study was to identify what are the areas of concern and I think it did that. And I think the criticism we got early on was, oh, this is just a, you know, it's paid for by the Sixers and it's just going to tell everybody what they want to hear, and it didn't do that. What it did was it identified vulnerabilities. But I think in doing so because they did a very good job I think in identifying what are the possibilities, it gives us some place to aspire to try to impact or try to avoid some of these impacts. And so, that is the idea behind the seed money. But the study, we need to do the study to understand exactly what does the community, what are available assets that we can utilize to put into solutions for affordable housing beyond the 3 million. We are going to look at other funding that we are making available, that we are putting together right now that could also layer on top of it. We also have many City programs that do target renters and all those need to be put into play. So it has to be an all-in solution where we're looking at everything or it's not really going to be effective.
How much leverage do you think we'll have to secure those resources after we give the Sixers a yes? Do you think it'll be easy or hard?