COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON RULES - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, April 25, 2007 10:30 a.m. - - - PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN WILLIAM GREENLEE COUNCILMAN JACK KELLY COUNCILMAN JAMES F. KENNEY COUNCILWOMAN DONNA REED MILLER COUNCILMAN BRIAN J. O'NEILL COUNCILMAN JUAN RAMOS COUNCILWOMAN BLONDELL REYNOLDS BROWN BILL 070005, An ordinance establishing a neighborhood improvement district in an area that generally includes both sides of Germantown Avenue from 6300 to 7631 and certain blocks of streets that intersect that portion of Germantown Avenue... BILL 070168 - An ordinance approving the redevelopment proposal of the Redevelopment Authority of the City of Philadelphia for the redevelopment of the 9th and Ellsworth Urban Renewal Area... V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
Good morning, everyone. Sorry for the delay. This is a public hearing of the Rules Committee. I would ask Mr. McPherson to please read the title of Bill No. 070005. MR. McPHERSON: An ordinance 9 establishing a neighborhood improvement district in an area that generally includes both sides of Germantown Avenue from 6300 to 7631 and certain blocks of streets that intersect that portion of Germantown Avenue, to be known as the Mt. Airy Business Improvement District; designating Mt. Airy Improvement District, Inc., a Pennsylvania non-profit corporation, as the Neighborhood Improvement District Management Association for the District; approving a plan for the District, including a list of proposed improvements and their estimated cost, and providing for assessment fees to be levied on property owners within the District; authorizing 3 4/25/07 - RULES - BILL 070005, ETC. the Director of Commerce, on behalf of the City, to execute an agreement with Mt. Airy Improvement District, Inc. relating to the District; and authorizing Mt. Airy Improvement District, Inc. to assess property owners within the District a special property assessment fee to be used in accordance with the approved plan; all in accordance with the provisions of the Community and Economic Improvement Act, and under certain terms and conditions.
Thank you. Please call our first witness. MR. McPHERSON: I don't have a witness list.
I believe Eva Gladstein will be testifying. Good morning. Welcome.
Please identify yourself for the record and proceed with your testimony.
Good morning. 4 4/25/07 - RULES - BILL 070005, ETC. My name is Eva Gladstein. I'm Director of Neighborhood Transformation for the City of Philadelphia. Good morning to members of the Committee and President Verna. I previously testified in support of this bill before it was amended, and so rather than repeat that testimony, I just want to reiterate the Administration's support for the creation of a neighborhood improvement district in Mt. Airy. We believe that the business association there and other neighbors have worked diligently to reach agreement and that it will be a great partnership that will support our efforts to restore Philadelphia's commercial corridors. I believe you have a copy of my written testimony as well.
Thank you very much, and that will be given to the stenographer and it will be transcribed in full. The Commonwealth's Community 5 4/25/07 - RULES - BILL 070005, ETC. and Economic Improvement Act requires that an additional hearing be held, which is today, if the bill is amended while awaiting approval -- that is the purpose of this hearing -- of the bill as amended and reported to the full Council. Because the state Act requires that a bill be held over for 45 days before final approval is given, the final approval should not be given prior to June the 14th, 2007 at that Council session. I would ask, have all the objections during the March 14th hearing been resolved? There were several issues, and I'm asking if they have been resolved. Councilwoman Miller.
Yes, Council President Verna, they have been resolved.
Thank you very much. Do we have anyone to testify on 6 4/25/07 - RULES - BILL 070005, ETC. this bill? MR. McPHERSON: Yes. The next witness is Ken Weinstein -- all three together -- David Young and George Butler.
Good morning. Please identify yourself for the record.
Yeah. Good morning, Council President, Councilmembers. Thanks again for having us here. We also, like Eva Gladstein, will not repeat our testimony, but we do have it available and ask that it be included in today's testimony from 7 4/25/07 - RULES - BILL 070005, ETC. myself, from Paul Levy, from David Young and from George Butler. We're happy to answer any questions you had, but, again, we are here to reiterate that the process to establish this has been a very open, fair process, very long process. We're glad to be here at the finish line. Our bid, once it's enacted, will increase retail sales and property values and provide a cleaner, more attractive and safer area for shoppers in Mt. Airy. So we appreciate your support and happy to answer any questions you have.
Thank you. Are there any questions from members of the Committee? (No response.)
Thank you very much. The Chair recognizes Councilwoman Miller. 8 4/25/07 - RULES - BILL 070005, ETC.
Just for the record, I'd like people to know that this discussion started probably two years ago, and it's been very open. There have been people that called me to verbally say that they are not that supportive. However, I haven't seen anything in writing from any of the property owners along that corridor. So today is an opportunity for those that object to this to come forward and testify. And we do have another witness, Council President Verna.
Good morning, Ms. Foster. Please identify yourself for the record.
Yes. My name is Brenda Foster and I'm at 6373 Germantown Avenue. We have a travel agency. We've 9 4/25/07 - RULES - BILL 070005, ETC. been in the area for 15 years, and I just -- I think I staged my complaint the last time, but I just want to reiterate that I oppose it 100 percent. We're already taxpayers, and I think we need more of an investigation to find out how our money is going to be used, although they have clearly stated it, but I have doubtful reasons to believe that it might not be so.
Thank you, Ms. Foster, for coming in. You did state your concerns the last time we had the hearing. I would suggest that someone from the Committee meet with you. Have you been going to those meetings?
Unfortunately, I'm 10 4/25/07 - RULES - BILL 070005, ETC. never notified of any meetings, and maybe that's why I'm not as well abreasted as I should be in reference to what's going on. For some strange reason, I have called Mt. Airy's office many times and left my name and the name of the travel agency, but no one ever seems to get back to me at all.
And I have a document. I have a telephone log of the times that I've called, the dates that I've called and who I spoke to, but for some strange reason, I never get a return call.
Well, we have people here today that's been very active on the Committee, and maybe I'll ask Cecily Mangum to get back with you personally. Mt. Airy USA is not really running the bid, but it is a good place to start when you're looking for 11 4/25/07 - RULES - BILL 070005, ETC. information. Representatives from that organization are a part of the Planning Committee, and I'm going to ask that Cecily, who is coming up to the mike now -- Cecily, please identify yourself for the record.
Good morning, Councilwoman Verna, Honorable Councilwoman Verna, Councilmembers. My name is Cecily Peterson-Mangum. I'm Director of the Avenue Project at Mt. Airy USA, and I'd just like to reiterate what David Young said in his testimony regarding how comprehensive the communication has been. Ms. Foster, I apologize. I was not aware that you had called me.
Yes, I do. I document everything. I have the log and the time. I don't have it with me, but I do have it in my office, and I would be 12 4/25/07 - RULES - BILL 070005, ETC. glad to give it to you.
I'd be happy to receive that, but I was not aware of that. I'd like to know who in my office with whom she spoke to just so we can make sure that we have our operations in place that people are leaving messages properly.
The reason I called you up, Cecily, is because I want you to make sure that Ms. Foster has an opportunity to get questions answered and understand the full depth of the bid, and I also have Michael Moore and perhaps -- Michael Moore of my office and Jeanne Bethune from the Department of Commerce to make sure. We want to make sure that everybody's issues and concerns are addressed.
Thank you. Thank you, Councilwoman. 13 4/25/07 - RULES - BILL 070005, ETC.
You're welcome. MR. McPHERSON: We have another witness, Julian Wells.
Is Julian Wells here? Good morning, Mr. Wells. Please identify yourself for the record and proceed with your testimony.
Sure. Good morning. My name is Julian Wells and I'm with Century Wells Real Estate. Our 14 business is located in the proposed 15 district and has been so for the past 22 16 years. 17 I just wanted to come forward 18 to say that there is some opposition to 19 this initially, because despite the 20 claims by the witnesses so far that this 21 has been an open process, other than receiving this in the mail and almost assumably junk mail, without giving it a second look, we're a block away from Mt. Airy USA and I haven't heard one thing 14 4/25/07 - RULES - BILL 070005, ETC. about the business district or any other proposals, and I think there should be more time to contact homeowners that are going to be affected by this, because I think that it's predominantly residential properties that are in this district and I don't think these people are aware of what is going on. And I understand you said you haven't had anything in writing. You will shortly, because there's at least one business that is going to be putting it in writing, and we'd like to contact some of the homeowners to find out and make sure that they are aware of what is going on and there's a little bit more public knowledge about this situation before we lay claim to taxes on people's properties that may or may not want the business district. Okay? Mt. Airy is a wonderful place. It's a great place, but there have been attempts, most recently the Ambassador Project, which appeared to be a vicious 15 4/25/07 - RULES - BILL 070005, ETC. failure that our business did pay into it. It was sporadic cleanings of the streets. I don't know what happened to the program. We were never fully notified in writing what the situation was, except that the program was ending. I'd hate to see another situation like that come about where we're just fueling somebody's idea that they think is good for Mt. Airy but truly may not be in the best interest of the business district in Mt. Airy.
Thank you, Madam President. Mr. Wells, I'm very familiar with Wells Realty there at Century 21. I know you've been there for a long, long time, and I know your mother, the owner of that business. I would ask the same for you, to have those same individuals that I named before sit -- I mean, you can 16 4/25/07 - RULES - BILL 070005, ETC. submit your written opposition and that's fine, but I also want to make sure that you have the information that's been available. So I would ask the same arrangements for Ms. Foster to also have you and your mother or whomever from your business included. This district only impacts businesses. It does not impact homeowners. And we do know that Germantown Avenue in that area, in most areas, is very residential also, has many residential properties, but we don't want any businesses to feel like they have not been included and had a voice. So I'm really glad you came today. You have the right to object, but you also have the right to information, and that's what I want to make sure you get. Okay?
Thank you. Are there any other questions or comments from members of the Committee? (No response.)
Thank you, sir. Do we have anyone else to testify on this bill? (No response.)
Do we have anyone else to testify on this bill? (No response.)
Seeing no one, I would ask Mr. McPherson then to read the title of Bill No. 21 070168. MR. McPHERSON: An ordinance 23 approving the redevelopment proposal of the Redevelopment Authority of the City of Philadelphia for the redevelopment of 18 4/25/07 - RULES - BILL 070005, ETC. the 9th and Ellsworth Urban Renewal Area being the area generally bounded by Washington Avenue on the north, Darien Street to the east, Federal Street to the south and the rear of properties fronting on the west side of 9th Street to the west; approving the urban renewal plan and determining that such plan and redevelopment proposal conform to the general locality plan and make adequate provisions for individuals, business concerns and families who are displaced; determining the necessity for changes in and for zoning streets, alleys, public ways, street pattern location and relocation of public utilities; determining that the urban renewal plan and the redevelopment proposal meet all non-discrimination requirements of Federal, State and Local Laws and the regulations and policies promulgated with respect thereto; declaring that certain expressly designated and provided for condemnation is not imminent with respect 19 4/25/07 - RULES - BILL 070005, ETC. to the project; and declaring the redevelopment undertakings in the Project to be an important part of the City's program to remove and prevent the spread of urban blight.
Good morning. We will first hear from City Planning. COUNCILMAN DiCICCO: Madam President?
I'm sorry. I didn't see your light on. COUNCILMAN DiCICCO: May I be permitted to have a brief opening remark?
Yes. COUNCILMAN DiCICCO: I will try to be brief.
Thanks. COUNCILMAN DiCICCO: Thank you, Madam President. Good morning. There are a number of people in this audience today, in these Chambers today, who are here as 20 4/25/07 - RULES - BILL 070005, ETC. a result of an anonymous letter that had been put out in the 9th Street community within the last to 48 hours. The 5 letter indicates that the bill in front 6 of us today would provide for the City 7 Council and/or the Redevelopment 8 Authority to do a massive taking of 9 properties, somewhere in the vicinity of 10 80 individual properties. 11 For the record -- and this will 12 come out in testimony as we go forward -- 13 I just want to remind everyone again and 14 those folks who I met with in my office 15 for about an hour and a half yesterday 16 that this bill is specific to one 17 property, and the address of the property 18 is 1109 through 33 South 9th Street, 19 formerly known as the Ice House. 20 Very quick history of what 21 we're doing here. Shortly after I was 22 elected and sworn in in 1996, I met with 23 the Rendell Administration in an attempt 24 to find funding to renovate the 9th Street corridor. As many of our 21 4/25/07 - RULES - BILL 070005, ETC. commercial corridors in the City of Philadelphia, 9th Street had seen its better days. We were able to, with the cooperation and support of the Redevelopment Authority and other City agencies, do a massive renovation of the Market from Federal Street north to Christian. In addition to underground utilities, water, gas, electricity, et cetera, new sidewalks and curbs were installed, as well as new metal canopies for the entire length of the Italian Market. 1 million. And we did that, as I said, in an attempt to revitalize the 9th Street Market. We're still trying to do our best to make that Market what it once was. There are a number of buildings that have remained vacant on that corridor for a number of years, and the bill in question today is specific to a property that has been vacant for about 40 years. 22 4/25/07 - RULES - BILL 070005, ETC. Several years ago, shortly thereafter the renovations were completed, this City Council, at my request, authorized a TIF for the property that we're hearing today. The developer of that property, in spite of the fact that he had received a TIF from City Council, from the City of Philadelphia, never did anything to develop the property. In the interim, there's a local church known as St. Marons, which is a Lebanese-American church, one block off the 9th Street Market. Its pastor and I have been talking for a number of years about looking to create a senior citizen housing complex within the general vicinity of his parish. I looked at this building, realized that despite everyone's best efforts and a TIF, we were not able to get this property developed. I thought it might be worthwhile for us to look at the possibility of getting this building and 23 4/25/07 - RULES - BILL 070005, ETC. converting it into a senior citizen rental complex. I will fast forward for the purposes of time. We had an agreement. We have a developer. We have the non-profit, which is St. Marons, who would be the manager of a 51-unit residential rental senior citizen complex, with anywhere from five to seven retail stores on the ground floor. We have met with 9th Street Merchants Association. We have met with the civic association known as the Passyunk Square Civic Association. All of those folks have met and agreed that this is the best use, given the fact that up until today there has been no other interest in this property. The purpose for my speaking is that I know there's a lot of anxiety out there. I apologize for the person who sent that anonymous letter. I, for one, don't put any weight or faith in 24 4/25/07 - RULES - BILL 070005, ETC. anonymous letters, but given the fact that it's an election year, I can assume where it probably has come from.
That being said, again, for the record, I want everyone to understand this is specific to the one property and one property only. At the conclusion of yesterday's meeting with the Empowerment Group, I agreed that I would ask the Rules Committee to hear this bill, vote it out favorably, and I will on the record state that I will not move this bill or call it up for final passage until such time the Empowerment Group and the folks that they represent meet with the Italian Merchants Civic Association and, if need be, with the Passyunk Square Civic Association as well to talk about this project. But, again, the anxiety and the fear here based on that anonymous letter that approximately 80 properties were going to be condemned and taken -- and 25 4/25/07 - RULES - BILL 070005, ETC. that's not just commercial properties. They were talking about residential properties as well. So, again, I appreciate the opportunity to have this few minutes to talk to you a little bit about the history of why we're here today and why there's so many people in here who have an interest in this matter. Thank you, Madam President.
Thank you, Councilman. We will now hear from City Planning.
I think Redevelopment Authority should go first, Madam President.
Should the Redevelopment Authority go first with the testimony?
It doesn't matter. 4/25/07 - RULES - BILL 070005, ETC. Redevelopment.
Good morning. My name is Nicholas Dema. I'm the Deputy Executive Director of the Redevelopment Authority. Madam Chairperson and members of the Committee, I am here to speak in support of Bill No. 070168, which would create a 9th and Ellsworth Urban Renewal Area and approve a Redevelopment Proposal and Urban Renewal Plan for the area. This bill would authorize the Redevelopment Authority to acquire one blighted vacant property. The property, a vacant warehouse structure, has been a blighting influence along the southern portion of the 9th Street Italian Market for many years. The Redevelopment Authority will acquire the property as part of the NTI program, and the acquisition will be financed through NTI bond proceeds. Anticipated acquisition costs are estimated to be $2.7 million. Once acquired, it is 27 4/25/07 - RULES - BILL 070005, ETC. anticipated that this property will be demolished and redeveloped as affordable senior apartments, with ground floor retail. Madam Chairperson and members of the Committee, I respectfully request favorable consideration of Bill No. 9 070168.
And I think the Redevelopment Authority knows the rules. We never got a copy of your testimony until late yesterday afternoon. So hereafter, I would appreciate our receiving them at least 48 hours prior to the hearing. Thank you. Now can we hear from City Planning? Thank you.
Good morning, Madam President and members of the Rules Committee. My name is Richard Redding, Director of Community Planning at the Philadelphia City Planning Commission. I'm here to testify in support of Bill 25 No. 070168. 28 4/25/07 - RULES - BILL 070005, ETC. The bill approves the redevelopment proposal for the 9th and Ellsworth Urban Renewal Area. It authorizes acquisition of a vacant site on the east side of 9th Street, eventually to be developed as senior housing, with ground floor commercial space. Relocation is not required. The Planning Commission approved this in February of '07. It is consistent with the 9th and Ellsworth Redevelopment Area Plan published by our agency in September of '06. Thank you very much.
You're welcome. Do you know if there is a developer for the senior citizen commercial use project?
The proposal is 29 4/25/07 - RULES - BILL 070005, ETC. for a 51-unit senior housing.
Yes, they would. COUNCILMAN DiCICCO: Madam President, if I may. The original intent was to make those commercial spaces rental, but there is discussion that it's possible that they would condo those retail parcels out as well. Whatever works best for the developer and the managers, which will be St. Maron CDC. Those discussions are happening going forward.
That's fine. What is the cost of the project for the record, can you tell us?
The 30 4/25/07 - RULES - BILL 070005, ETC. acquisition cost.
Okay. Do we have any questions from members of the Committee? The Chair recognizes Councilman O'Neill.
Carmel Realty Associates. 31 4/25/07 - RULES - BILL 070005, ETC.
Councilman O'Neill, I'm Stephen Pollock. I am here on behalf of the current owner of the property to discuss --
Please. You can come up to the witness table or wait until you're called.
I think the question is being asked. You have the answer to it, so I would invite you to come up to the witness table. Identify yourself for the record, please.
Good morning, Council President Verna, esteemed members of this Committee. My name is Stephen Pollock. I'm an attorney in the City of Philadelphia with the law firm of Ballard, Spahr, Andrews and Ingersoll. I represent the owner, Carmel Realty, of the property that is before you today. 32 4/25/07 - RULES - BILL 070005, ETC. And I'm here to ask for your consideration of what's fundamentally fair both to the City of Philadelphia and its taxpayers and to this particular property. 25 million, $2,250,000. It was just signed on April the 23rd, calling for the property buyers to do some due diligence, but are interested in exactly and precisely what is being presented, a mixed use that will have commercial on the first floor, residential up above. What's happened here, Madam President and members of this Committee, is that Councilman DiCicco and his office has been fabulous over the years. They've done their duty. They've worked diligently with my client over the years. It's a sad tale, but my client was unable, despite all his good efforts and this Council creating an atmosphere that 33 4/25/07 - RULES - BILL 070005, ETC. would allow TIFs, that would allow real estate abatements, that private enterprise and private market forces hadn't yet come together to allow the old Ice House to be privately developed. So that what we're saying is that the tax dollars of taxpayers of Philadelphia might not have to be used, because the market forces have now finally come together to potentially have a development that is fitting with the Ellsworth Area Redevelopment Plan that this Planning Commission approved in September of 2006, because it specifically says the vacant building at 1109 to 1133 South 9th and adjoining parking lot are recommended for mixed-use mid-rise development. The new building should retain commercial use on the first floor, 9th Street and Washington Avenue. Residential and related uses are appropriate for the upper floors. And then there is a call to change the zoning from C2 to C3. And I'm sure that all of 34 4/25/07 - RULES - BILL 070005, ETC. you are familiar with that having dealt with it in your districts or dealt with it on an at-large basis. It allows a higher development. And since this is a bigger building that's been there -- and these are tax-paying people. I dare anybody -- I've been told -- and I got put on this case late yesterday, but I've been told that their taxes are paid. So this is not a property where the owner hasn't kept up his taxes. What was happening here -- and I'm sorry it's the last minute, it's the 11th hour, so to speak, because it's a salutary effort and it's a salutary thing that Councilman DiCicco is trying to achieve. I checked with my client, and I understand that -- I don't know if -- and I don't know because I wasn't involved. We didn't do the transaction. We didn't do this Agreement of Sale. We're just here on this end. I don't know whether there was ever a communication from the 35 4/25/07 - RULES - BILL 070005, ETC. church or the private non-profit that wants to develop this piece to the developer -- or the owner to say, Hey, is there a basis that we can move together and develop this piece together. But what I'm saying is, somebody has put down a deposit. It calls for about a six-month period, and then after that six-month period, ten days afterwards there would be a settlement. 7 million of taxpayer dollars quite yet. I understand it's the last minute, and as I said, my client told me to express this. And I'll look Councilman DiCicco directly in the eye. You and your office have been great. You've been fabulous. There's nothing more you could ever ask of Councilman DiCicco with regard to this. It's just that we're saying here today at this moment that -- I was reading a book about the Yom Kippur 36 4/25/07 - RULES - BILL 070005, ETC.
War, and Ariel Sharon remembered this phrase that Napoleon said, that in a war, there's only one time when a moment presents itself, and it's our job, is to seize the moment. And it's never too late to do the right thing, and we suggest to you that the right thing is to table this. Let us see if these private market forces that this great Council set out and allowed to happen in this city that finally private dollars are willing to do exactly what this bill is asking you to do with public dollars.
Councilman O'Neill, would you say your question was answered?
It was a long answer. COUNCILMAN DiCICCO: Still didn't get the name.
I was just trying to complete the record. What I 37 4/25/07 - RULES - BILL 070005, ETC. would always ask somebody who says they represent a realty company is, who is the realty company. I'm just trying to get a name, a person. Who is your client?
When you get a call, the person doesn't say, My name is Carmel Realty. Who is the person that's --
Gerald, G-E-R-A-L-D, Goldfein, Esquire. It's the company that owns the Valu-Plus stores, which are stores similar to McCrory's or Woolworth's.
My recollection from just being told is, I think they've had it since the early '90s. And when it started out, it did have tenants on the first floor at the typical Italian 38 4/25/07 - RULES - BILL 070005, ETC. Market, different little businesses that were using the first floor with the canopy and everything like that. Market forces apparently caused these little businesses to close down. They've had several efforts to try and revitalize this. And, as I said, nobody can thank this Council more than this land owner, because you tried with a TIF and Councilman DiCicco tried with a TIF to see if they could get something kick started around the year 2000, I believe, was when that occurred, but efforts never came to fruition. No Agreements of Sale were ever signed. They at one time did look at it to see they were going to -- because there's about -- I think it's about a 13,000 square foot footprint that this area has, and they were thinking about maybe at one point renovating it to do a Valu-Plus store there. They abandoned that because of certain costs and everything like that. So they've always 39 4/25/07 - RULES - BILL 070005, ETC. been out there looking to try and do something. Now, as I said, I know it's the last minute, but here's a taxpayer of the City of Philadelphia that has its property. This is the use of the property. This fits within the declarations of your ordinance, of the proposed ordinance. It's to try and get things done --
-- by private enterprise. And this is private enterprise. This is the actual owner, taxpayer of the City of Philadelphia.
Proposed purchaser is an entity known as the 9th Italian LP.
Do they have a name? If they call somebody, they don't say, This is 9th Italian LP. 40 4/25/07 - RULES - BILL 070005, ETC.
There's a Michael Markovitz, who is an attorney who has been serving as their --
I don't know who the principals are, Mr. O'Neill. I understand that there's another parcel next door that is used as a parking lot. It borders along Washington Avenue, and I understand or there's some thought out there that there might be an assemblage going on also that could take not just this parcel but the next door parcel and make this something really new and exciting for the City through private enterprise that would have to go through the same process of the Italian Market Civic Association, the Passyunk Square Civic Association, going through Councilman DiCicco, working with him. And, again, nobody has worked harder on this property than Councilman DiCicco with our owner. I'm just saying 41 4/25/07 - RULES - BILL 070005, ETC. here at the last minute, a tax-paying citizen of the City of Philadelphia is -- finally the market forces are allowing something to happen here.
How many years have you been doing it? I know you've been doing it for a long time.
Thirty years. I'm almost reaching Irv Standard and Paul Zucker age.
Maybe that would qualify you as an expert for this question. You mentioned that your client has an Agreement of Sale for 2.25 million. Not getting into the question of why are we appraising something at 2.7 if the market thinks it's only worth -- that's a different area for another day.
Why would your client not want to take the offer that's on the table for 2.7 and tell the Italian LLP, whatever, 9th Street LLP and Mr. Markovitz, their attorney, that, You're four and three-quarter million dollars short. Sorry. I've got an NTI bill coming up in Council. If you can't beat the 2.7, there's nothing to talk about? What's going on here that we don't know that we should know?
Councilman O'Neill, the one number I had heard thrown out to me from my client's perspective was that he had heard that the proposed offer might be in the realm of $800,000, not 2.7. Is that correct?
The total 43 4/25/07 - RULES - BILL 070005, ETC. acquisition cost is 2.7, but the appraised value of that is approximately 813,000. But the process of condemnation, there's other costs that go into that. For example, there's a 200 percent value of the cost of condemnation or the appraised value in the event that the owner would challenge the condemnation, as well as appraisal fees and all the other fees that go along with the act of condemnation.
So we, the City, could get out of this at substantially less than 2.7, but you got to reserve 2.7 for all the different things that happen in your world?
That's right. That's the total acquisition cost, not just the value of the real estate.
Well, thank you. And I think at least from my end, the record is more complete than it was.
Or to follow that 44 4/25/07 - RULES - BILL 070005, ETC. up, the other end of it is that you could be sparing yourself $2.7 million for the potential of private enterprise and private development doing what has been proposed here today.
Well, the next anonymous letter that Councilman DiCicco would see if this record hadn't completed would be that there's a 2.25 buyer and we're putting up 2.7. It's actually 800,000, is the appraisal for it. Okay. That's all.
Thank you. The Chair recognizes Councilman Clarke.
Thank you, Madam President. Eight hundred thousand is the appraised value?
And how do 45 4/25/07 - RULES - BILL 070005, ETC. you get to 2.7?
Good morning, Council President, members of the Committee. My name is Troy Adams. I'm the Project Manager for the Redevelopment Authority. We had a budgetary appraisal done that estimated the cost at $813,500 just for the real estate. The bulk of the other costs to add up to $2.7 million are legal fees and a 200 percent condemnation bond, which basically acts as a cushion to the Redevelopment Authority.
So you're telling me that we're spending a million dollars in legal fees?
The eminent domain code for Pennsylvania stipulates that we do have to have a bond of 200 percent built in.
That's the 46 4/25/07 - RULES - BILL 070005, ETC. 1.6. You're at 1.6. How do you get to 2.7?
Correct. And then we estimate -- I think on this one we factored $15,000 to $20,000 in legal fees, $15,000 in advertising fees and then costs to hire the appraiser and title work.
It's approximately $1.6 million plus the cost of the real estate, which was 813,000 and then the advertising --
You're saying that the 200 percent is above and beyond the 800?
Are you sure? That's not my understanding. And I know you guys work there and you're the lawyers, but I always thought that it was inclusive of the appraised value. Because that makes no sense to me at all. 47 4/25/07 - RULES - BILL 070005, ETC. I really need to see that statute that requires that you have 200 percent above the appraised value. You're sticking to your guns on that one?
All right. The issue with respect to the taxpayers' dollars going to a project that could possibly be done by the private sector, the sales price, assuming that the Redevelopment Authority acquired it, what would the sale price be? Because I understand based under NTI we must sell it for market value. Is that additional $2 million incorporated into the -- I'm actually asking the RDA this question. Is that $2 million incorporated into the sales price?
Because it's for affordable housing, the actual purchase price to the developer may be for nominal consideration.
So this 48 4/25/07 - RULES - BILL 070005, ETC. might be a non-profit nominal deal?
Exactly, because of the public purpose of providing affordable housing.
Okay. And I know we've gone through this whole RDA condemnation thing for a while. It just amazes me that we pay so much more for a property -- in this particular case three times the cost of the parcel -- for condemnation. That makes like no sense to me.
Again, that is only for budget purposes. The purpose of the 200 percent is that if we're condemning somebody's property, we have a financial responsibility to make sure we have adequate funding to compensate the owner if he were to challenge the value. So the safe harbor to that is approximately that if you have 200 percent of the value of the property, you've kind of met the safe harbor that you have the financial resources to actually go ahead and 49 4/25/07 - RULES - BILL 070005, ETC. acquire the property.
Right. And there's a possibility that if challenged by the property owner, that that's a likely scenario where we will have to end up spending that, particularly if this offer has any --
So I got to think that that has to be taken into account. So it's probably going to be that much. All right. We'll get into this in, I guess, the CDBG hearings again, about this whole cost of condemnation. It makes like no sense to me how we end up spending three times the cost of properties. All right. Thanks, Madam President.
You're welcome. The Chair recognizes Councilman 50 4/25/07 - RULES - BILL 070005, ETC. Kenney.
Thank you, Madam President. The Agreement of Sale was signed yesterday, the day before?
Would the potential of an Agreement of Sale for $2.5 million in some way bolster a potential opposition to a condemnation as a result of the negotiations that will take place for the condemnation? I mean, is this not the first exhibit in a case to oppose the condemnation, to argue that the $800,000 appraisal is not appropriate because we have an Agreement of Sale for 2.5 million? Are you able to get out of an Agreement of Sale if both parties agree? If both parties agree in the Agreement of Sale -- 51 4/25/07 - RULES - BILL 070005, ETC.
If both parties agree, under this Agreement of Sale, it would be on -- certain things would have to happen. I mean, there would have to be certain conditions. You just can't say now that you've signed an agreement. They did put up $50,000 that's there as good-faith deposit money.
But if both parties agree, you could dissolve the Agreement of Sale?
It's a pretty simple question. Two parties agree not to proceed. You don't proceed.
Same thing I just said. 52 4/25/07 - RULES - BILL 070005, ETC.
You'll never get a straight answer out of a lawyer, because there has to be a step --
But, see, I have to wonder when we have an $800,000 appraisal -- that's the City's or the Redevelopment Authority's going-in price. They're going to say, This is what it's worth. We're going to condemn it. We're going to give you 800,000. The owners of the property, who have had it since the early '90s and has been abandoned for 40 years -- it's been unused for 40 years, according to Councilman DiCicco, who lives in the neighborhood --
My understanding was that the first floor level, at the Italian Market level, there were shops there in the '90s.
It's not been the highest and best use for the past 40 years. Is that a safe assumption? Councilman DiCicco -- 53 4/25/07 - RULES - BILL 070005, ETC.
Let's make that assumption for today. COUNCILMAN DiCICCO: I'm sorry. I didn't hear the question.
The property has been underused for at least 40 years? COUNCILMAN DiCICCO: There was some point in the last years a little 11 bit of the floor space that was used for 12 some retial, but, generally speaking, the 13 building has been vacant for at least 40 14 years, if not longer. 15
So two days 16 ago, we have an Agreement of Sale for 2.5 17 million, which would to me indicate that 18 the owner is going to resist the 19 condemnation. And could the Agreement of 20 Sale act as an argument that the City should pay more than the $800,000 it's appraised for in order to condemn it?
The argument is there, definitely, but the argument is also there that, as I said, better late 54 4/25/07 - RULES - BILL 070005, ETC. than never. Here's something that the market forces have finally dictated. I mean, there are places on -- I always marvel walking along Chestnut Street, how come there's some properties between Front and 2nd on Chestnut Street that are still sitting there and we're not taking them by eminent domain at this time. Because this is the heart of our district. So there are -- you can probably going anywhere in any of your districts or areas that you come across as you campaign throughout the City and your services, at-large members of the City, and you see buildings that are sitting there, but we're not really pushing at this point, but market forces are changing things. There are areas probably in your districts that you thought may stay dormant, but because of different things, they've come to life. So just because something has come here -- I mean, if you were here with a delinquent taxpayer who is 55 4/25/07 - RULES - BILL 070005, ETC. thumbing his nose at the City of Philadelphia and didn't do anything -- and I haven't heard anything. I don't know this -- and I shouldn't say this, because lawyers are taught not to say anything you don't know, but I haven't heard anything yet, Councilman, about that there are L&I violations against this property. COUNCILMAN DiCICCO: You can go down that record and I can tell you the problems. This has been a nuisance problem for years.
But they pay their taxes. Now, whether or not this is -- you can look at the timing and everybody can ascribe motives to it, but I've got to ascribe the motive that this is a legitimate offer that's been signed. There's money that's been put down. There's an effort. If the non-profit had wanted to develop this for the laudable goal, that could have been somebody that could have been put together with this 56 4/25/07 - RULES - BILL 070005, ETC. owner, because the property has been out there all these years, and they could have tried to see if there had been some meeting of the minds that could have gotten it for that purpose without going through this process.
A skeptical person would view this Agreement of Sale as a way to bolster a claim of the owner that the taking and the price for the taking is not appropriate. I mean, that's where I think -- that's what I think that's all about, but I am not being a skeptical person. I'd be willing to have -- but I've got to believe that these guys said they're taking this for real now and they want to give us 800,000, we think it's worth more, let me show you a document that says it's worth more and then we can start the argument from there. So, I mean, we'll see how it goes, but that's my view of it. COUNCILMAN DiCICCO: Could I 57 4/25/07 - RULES - BILL 070005, ETC. have a point of order? I know I'm not a member of that Committee, but...
The Chair recognizes Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Madam President. Did your client, the current owner, ever notify the potential buyer that the condemnation proceedings were moving forward?
Exhibit B of the Agreement of Sale is the letter signed by my good friend Michael Koonce, who is Executive Director of the Redevelopment Authority, addressed to Carmel Realty dated March 21st, 2007 notifying them of -- and I'll leave this copy with the panel, with this honorable committee, if it wants it, but put them on notice that there was these pending proceedings, and they still signed an Agreement of Sale for 2.25 million. It's attached, and they were put on notice. My understanding -- and as I 58 4/25/07 - RULES - BILL 070005, ETC. said, this is all what I've been advised by my client, because we did not participate in the Agreement of Sale process at all -- is that this buyer came forward sometime in February of this year. COUNCILMAN DiCICCO: And your client never -- all the accolades that your client has offered to me and you have offered on his behalf -- never thought it was important enough to call me to let me know that it was not exercising a TIF that we had approved several years ago and he may be entering into an agreement to sell this property, which he has not maintained since he's owned it?
All I know, Mr. -- COUNCILMAN DiCICCO: Citizens Alliance for Better Neighborhoods has cleaned that property at least twice a week --
Councilman 59 4/25/07 - RULES - BILL 070005, ETC. DiCicco, all I know is that the minute I got on the matter at about o'clock 4 yesterday or 3:30, my first call was to your office to let you know. COUNCILMAN DiCICCO: I understand.
Sometimes we find in our business that clients don't have the good sense to get their lawyers involved because we'll get them -- we'll tell them they have to call you or call the District Councilman and then get the process rolling. So that sometimes we're dealing with a situation after the fact. COUNCILMAN DiCICCO: So you'll know, Mr. Pollock, your client knew enough to call me when he bought the property. He knew enough to call me and ask me to introduce a TIF. He knew enough to call me and ask me not to put the canopies on the face of that building, to hold off because he was going to renovate the building. He knew enough to ask me to get the stands, the 60 4/25/07 - RULES - BILL 070005, ETC. vending stands, removed from the front of his building so that he could create a loading zone for the business that he intended to open as a result of the TIF, but he didn't know enough to call me to let me know he had a $2.5 million deal on the table to build housing? And by the way, do you know if this is affordable housing?
I don't know what the particulars are that way, Councilman DiCicco, at all, whether it has that salutary purpose of being affordable housing, but I do know that they're willing to do the mixed use, and that's about what I've been told so far. COUNCILMAN DiCICCO: One other question --
All we're asking for is if this Committee would delay the vote for 30 days, let us see if this is 61 4/25/07 - RULES - BILL 070005, ETC. really a real situation so that the skeptics on this Committee maybe have some of their feelings responded to. That's all I'm saying. COUNCILMAN DiCICCO: One other question. The buyers, the potential buyers, are they the same folks who just settled on the property adjacent to this and to the rear of this property on Monday of this week?
I do not know that for a fact. My indications are just from as, again, sources out there that have been relayed to me by my client indicate there may be an assemblage going on. COUNCILMAN DiCICCO: They're land banking. Okay. Thank you.
I don't know if they're land banking. I think it makes a bigger footprint. It makes a more usable building that would be valuable, because I think it goes from about 13,000 square feet to about 30,000 square foot. 62 4/25/07 - RULES - BILL 070005, ETC. COUNCILMAN DiCICCO: But you don't know if the potential buyer is the same entity that made settlement on the Anastasia's Seafood Restaurant and the parking lot behind it on Washington Avenue?
I think -- is it the 804 Washington Avenue parcel? I do not know that for a fact. COUNCILMAN DiCICCO: Thank you. Thank you, Madam President.
I want to ask a hypothetical scenario from your legal expertise. Is it illegal in the event that an Agreement of Sale is crafted or executed, signed, and that that Agreement of Sale results in a dispute between the Redevelopment Authority and the current owner, which potentially inflates the acquisition price from $800,000 to a million two, for argument's sake, and the owner agrees and 63 4/25/07 - RULES - BILL 070005, ETC. the potential buyer agrees to dissolve their Agreement of Sale and the City settles with the current owner for a taking valued at a million two, would the owner of the property in any way be violating the law if they paid the proposed buyer some type of fee or payment?
No. I'm asking a hypothetical. I'm not implying anything. I'm asking, would it be illegal for the owner of the property settling with the Redevelopment Authority for a million two instead of 800,000 to give the proposed buyer a hundred thousand dollars? Would that be an illegal activity?
One can only speculate on that one. It might be. There may be -- there could be. It would be something you'd have to look into.
Is there 64 4/25/07 - RULES - BILL 070005, ETC. anything illegal about that transaction? It doesn't seem like there would be. If I own a building and I settle with the Redevelopment Authority for a number and I want to give some money away to somebody else, that doesn't seem to be illegal, does it?
Well, I would think you'd want to come forward with a legitimate offer and say that this is --
But we've agreed as two parties to a legitimate offer to dissolve the offer, and I walk away unharmed, and now as the owner of the building, because of that potential evidence in a courtroom or in a procedure, that a judge may say, Well, you had a $2.5 million offer and the City is only offering $800,000, so maybe we have to go up a little bit. I mean, is that scenario a hypothetical possibility?