COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE THE COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, June 2, 1999 10:26 a.m. - - - BILL 990291 - An ordinance creating the Ashton Tax Increment Financing District. . . (Full text of ordinance contained herein.) PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILWOMAN AUGUSTA A. CLARK COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DAVID COHEN COUNCILMAN JAMES F. KENNEY COUNCILWOMAN MARIAN B. TASCO COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK DICICCO COUNCILMAN RICHARD T. MARIANO COUNCILMAN FRANK RIZZO CHARLES MCPHERSON, Chief Financial Officer - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 6/10/99 COMM. OF WHOLE - Bill 990201 I N D E X Robert Fina, Senior Vice President . . . . . . 3 Philadelphia Industrial Development Corporation 3 6/10/99 COMM. OF WHOLE - Bill 990201 P R O C E E D I N G S
Good morning. This is the public hearing of the Committee of the Whole. I would ask Mr. McPherson to please read the title of Bill No. 990291.
An ordinance creating the Ashton Tax Increment Financing District and approving the project plan of the Philadelphia Authority for Industrial Development for the redevelopment of the Ashton Tax Increment Financing District being the area generally bounded by Grant Avenue on the north, Ashton Road on the east, Willits Road on the south, Blue Grass Road on the west, and making certain findings and declarations all in accordance with the Tax Increment Financing District Act.
Good morning, Mr. Fina. Please identify yourself for the record and proceed with your testimony.
Good morning, President Verna and members of City Council. My name is Robert Fina. I'm a senior vice president Philadelphia Industrial Development Corporation 4 6/10/99 COMM. OF WHOLE - Bill 990201 and am appearing on behalf of the Philadelphia Authority for Industrial Development ("PAID"). I am here today to testify in support of Bill No. 5 990241, creating the Ashton Tax Increment Financing District. Today's hearing is required by the Pennsylvania Tax Increment Financing District Act to create a TIF district. Should the committee approve this bill, the Act requires that Council wait at least three weeks for final approval, which means that Council cannot approve the bill 13 until its meeting of June24, 1999. Since introduction of the bill, PIDC has met with City Council, Council staff, and representatives of the School District to review the project plan. On Monday, May 10, 1999, the School District agreed by resolution to participate in the district should it be created by Council. Creation of the Ashton TIF will allow Cardone Industries, a remanufacturer of auto parts, to expand its business within the City's borders by retrofitting the existing 640,000 square foot building for distribution uses and adding over 500,000 square feet in new 5 6/10/99 COMM. OF WHOLE - Bill 990201 construction over the next five years. Completion of the retrofit in Phase I of new contradiction construction alone is expected to add approximately 350 jobs and $450,000 in annual tax revenues. 4 million in net revenues to the School District. Since introduction of the bill, 990241, several changes have been made to the project plan based on PAID's conversations with City Council, the Administration, and the School District. In specific, the value of the tax increments were prorated such that 100 percent of the authorized tax increments will inure to the TIF fund in the first four years; and thereafter, tax increments will be introduced to the extent that Cardone fails to create at least 500 jobs over and above the existing citywide employment calculated on a full-time equivalent basis. Proviso language contained in the project plan was clarified to indicate that the amendment to the project plan will not be required 6 6/10/99 COMM. OF WHOLE - Bill 990201 prior to settlement of financing so long as changes to the scope for the project costs are less than percent and such changes in costs are 5 not funded from the City or City-related funds. 6 No amendment shall be required for changes after 7 settlement of financing. 8 The District's boundaries were revised, 9 adding approximately 15 acres in order to 10 accommodate all phases of the expected 11 construction as described in the project plan. 12 City sales taxes and City sales tax increments, 13 which were projected to be minimum in the initial 14 project plan, were eliminated altogether in this 15 revised plan. The project has been amended and restated to reflect these changes and is on file 18 with the clerk of City Council for review and public action. In addition, Section 1 of the bill 20 has been amended to revise the metes and bounds description of the district boundaries. I have a copy of that amended bill, a legal description for submission, and it is on file with the chief clerk. I will present this. In closing, I wish to assure City 7 6/10/99 COMM. OF WHOLE - Bill 990201 Council that PIDC will assist the Mayor in complying with the employment reporting requirements as stipulated in Bill No. 990181 should it be approved. I ask again for your approval of Bill No. 990241 and remind Council that the TIF Act requires a three-week wait before Council's final passage.
I would like to also add, on behalf of PIDC, PIDC's appreciation for this Council for the past five years in approving the four TIF districts already, numerous amendments to those TIF districts, and for consideration late in the session for creation of these two TIF districts -- this one today of Ashton and the creation of the Whitaker. So again, PIDC's appreciation and thanks to Council for all this support.
Thank you. Mr. Fina, for the record, can you tell us if this requested TIF legislation is the companion bill to the Whitaker TIF, which was approved and reported out of committee last week?
Yes, it is a companion such that Cardone would move certain operations from 8 6/10/99 COMM. OF WHOLE - Bill 990201 Whitaker to Ashton and then expand their operations at Whitaker within the TIF District. Because of State law, the TIF Districts must be contiguous, so we could not propose one TIF district. Therefore, we had to technically propose two TIF districts.
Thank you. In your testimony, you indicated that if Cardone fails to create 500 new jobs above the existing citywide employment levels, the TIF will be reduced. Is this the same 500 jobs identified in the Whitaker TIF?
That's a very good question, Council President. It is the same 500 because their maximum build-out of all phases is 1,000 jobs of the two. The first phase from both sites will be 750, and they're not proposing an increase of three years that most manufacturers limit themselves to because of downsizing and other technologies. What we are proposing is that there will be 500 net jobs for the term of the TIF, which is 20 years in both districts. The aggregate would be 500. And anytime after the fourth year that there is not 500, the TIF will be 9 6/10/99 COMM. OF WHOLE - Bill 990201 reduced in both districts proportionately by that number.
And that letter is contained in your letter addressed to me, copies of which have been distributed to all members of Council?
Yes, that's correct. It's dated May 27th, and there's a formula at the bottom of the first page of how that's simply calculated, and we will begin doing that again in the fourth year.
I have not had an opportunity to look at the amendments that you have presented this morning. Are the amendments that you are requesting for the Ashton project plan consistent with the amendments adopted in the Whitaker TIF?
They are very consistent. And not only that, which is not in my testimony, 10 6/10/99 COMM. OF WHOLE - Bill 990201 last week, there was requested that we limit the amount of City economic stimulus per project to $1 million. And although I have not testified to that to this moment, we are agreeing to do that again in the Whitaker. There will not be more than $1 million of City Stimulus Program funding in the Whitaker as well as in the Ashton TIF districts, 1 million each.
The project plan reflects $6 million in other public funding. Could you give us the breakdown of this funding source, please.
ONE million would be, as I mentioned City economic stimulus funding; the remaining 5 million will come from the Commonwealth of Pennsylvania. We're looking at million in grants -- 2 to 3 million in grants and 2 to 3 million from the State's Pennsylvania Industrial Development Authority Loan Fund. And we would do that in conjunction with the Commonwealth of Pennsylvania over the summer.
Thank you. The Chair recognizes Councilman Cohen.
Thank you, Madam 11 6/10/99 COMM. OF WHOLE - Bill 990201 Chair. First, what -- can you explain in simple language, on of your statement, you have in the middle, "The value of the tax incremented were prorated such that 100 percent of authorized tax increments will inure to the TIF fund in the first four years." I don't understand the language of "prorating." Do you mean -- if you disagree with me, explain it. The question I have in mind is, does that mean that during the first four years, all of what would have normally been tax payments to the City will instead go toward the payment of any financial obligations that Cardone may have undertaken in connection with the expansion project?
That's not a correct interpretation, Councilman Cohen, if I may. One thing, as the letter that Council President Verna noted that I sent her on May 27th, and I have a copy, is a simple formula on the first page of that letter, which is the gross annual TIF revenue times the current year employment minus the base year employment, which 12 6/10/99 COMM. OF WHOLE - Bill 990201 the base year is 4262 jobs divided be 500 jobs. That gives you what the TIF would be. And it's only the TIF revenue that you've authorized by ordinance in the project plan. So it's only the property taxes and 50 percent of the use-and-occupancy taxes here. We did not TIF all the U-and-Os, as I mentioned last week, because we're trying to provide as much revenue to the School District as possible while, at the same time, creating enough revenue to pay the TIF note. There will be a specific TIF note of $6 million for this project.
A use-and-occupancy tax is a tax that goes totally to the School District; is that right?
Yes, that's correct. All use-and-occupancy taxes are collected by the City Revenue Department and are remitted to the School District.
So that 50 percent of the use-and-occupancy tax is involved, not 100 percent.
As has been the case 13 6/10/99 COMM. OF WHOLE - Bill 990201 in some of the other TIFs that were 100.
Now, with respect to that 50 percent, and it's 100 percent of the real-estate tax portion that would go to the City; is that correct?
One hundred percent of the incremental property taxes will inure to the TIF fund for the years providing that Cardone 11 creates a net 500 jobs citywide. 12
Now, I've got to 13 separate what you're saying 'cause I'm trying to 14 find out what this language means. I don't 15 understand it. 16 Why do you use the word "prorate?" 17 What's going to happen the first four years? Say 18 the normal tax portion of real estate is $200,000 19 -- I'm just speculating. Say that one half of 20 the School District's comes to 100,000 on use-and-occupancy. Now, say that's the total that he can get in any one year if he maximizes the employment, meets all of the requirements. Now, does it mean that for the first four years that 14 6/10/99 COMM. OF WHOLE - Bill 990201 300,000 of this additional tax revenue that is being TIFed, he will get the benefit of that toward the payment of TIF notes. Is that --
The Cardone Corporation will get the benefit to pay the TIF notes the first four years.
Then if they do not create 500 jobs, let's say they only create half those jobs --
You mean during the first four years, if they don't meet the 500 goal, it doesn't count?
Right, right. They have 4 years to get the 500 net new jobs above the 4262 full-time equivalent jobs currently in the City.
Then they only create 250 jobs, they would, by the formula, not receive $300,000 in TIF revenue; they would only receive $150,000. They would receive half 'cause they only created half of the jobs. That's the proration. If they created 75 percent of the jobs, they would receive 75 percent of the TIF revenue. If they created 0-number jobs above the 4262, they would receive 0 TIF revenue within both districts. So they would be penalized.
This is totally unusual. This is totally unusual for this length of time requiring any developer in any economic development program, any business to maintain jobs for years for the economic benefit. This is 20 totally new, Councilman.
Yes. That's what in the letter of May 27th. It's a simple formula that will be installed and written into the TIF 16 6/10/99 COMM. OF WHOLE - Bill 990201 agreement.
Well, I know I read that letter of May 27th, but it doesn't --
For example, those of us who are lawyers know that it's kind of simple to get involved in a great discussion as to what constitutes a new employee. It may seem simple, you know, to ordinary people untrained in the law. But to lawyers, that gets to be quite a problem. And so if somebody's going to have to decide whether or not such an argument develops, is this the total language that appears, what there is here? Is this the total language of the agreement with respect to the number of new employees?
Councilman, we try to keep lawyers away from the document before we prepare it.
I'm being somewhat facetious. 17 6/10/99 COMM. OF WHOLE - Bill 990201
Please don't try to divert, don't try to divert; it won't work.
Otherwise, we'll just keep going back and back and back. I would just like to know simply, what is the total language of the agreement? I want to be able to read it to see, is this an agreement that's really going to hold, or is it an agreement full of loopholes? Or does it have some loopholes? That's all I'm trying to read out of it. I'd like to understand how we are we going to enforce that and what is the mechanism. Is there a given date when somebody from some department is scheduled to visit Cardone and check his records? Are we merely going to take a letter from him saying, This is to inform you that as of this date, we now have 510 new employees? and we say thank you, sir, and that's the end of it? What is going to be the enforcement technique of such a provision? 'Cause I don't believe in having a feel-good provision, you know, that makes it look good and then find out that it doesn't mean very much. 18 6/10/99 COMM. OF WHOLE - Bill 990201 And I expect to be here five years from now, the lord and the voters willing. But I'd rather not have to ask that question.
Councilman, I'm sure you'll be here five years from now. And what the language will be is, in the letter that was sent to President Verna, there is a paragraph that's indented, it's the third paragraph in that letter. That language will be in the TIF agreement as well as the formula at the very bottom will be in the TIF agreement. The TIF agreement is --
Where is that language? It's not in the May 27th letter.
It's the third paragraph. It's indented. (Mr. Fina approaches Councilman Cohen.)
Yeah, but what I'm asking is, how are we going to enforce that provision? Where is the language that says what it is the company has to do? And how do we check that? Or are we merely going to accept his letter? 19 6/10/99 COMM. OF WHOLE - Bill 990201
Councilman, I will get there if you bear with me a moment. It may take me a bit to explain all of this. This language will appear in the TIF agreement.
The TIF agreement is executed by the City Finance Director, by PAID, by the funder of the TIF note and by the developer. The City Law Department reviews that TIF agreement. That, at that point, will then require the City Finance Department that will provide PAID with the revenue, the incremental taxes, to have certification that the jobs have been created.
Now, what are they going to require to give that certification?
We haven't worked out that detail. If you'll remember, Councilman, I said this is totally new; it's not done in any other city, it's never been done in Philadelphia. Council has not required this before; we are volunteering this.
Excuse me, Mr. Fina. I'm just saying I don't think you've got 20 6/10/99 COMM. OF WHOLE - Bill 990201 anything here. I think this is just language that's totally meaningless. What I would like to know is, how do we make the language meaningful? It's important for me to vote on a bill where I can honestly say to people, Well, you may have questions about this, but this does, in fact, guarantee 500 jobs. You know what happens? On a given date, the company's going to have to prove it to whom, to such and such a department of the City, and we're not going to just take their word. We're going to have an examination, some kind of an audit that will determine that it does, in fact, exist, these 500 new jobs.
Councilman, I said the City Finance Department, the operating department of the City --
They did -- you know, they do nothing in so many cases. The City Finance Department can't be everywhere. There ought to be --
Mr. Fina, are you attempting to say that the Finance Department will audit and make the determination that Cardone 21 6/10/99 COMM. OF WHOLE - Bill 990201 is doing what they're supposed to?
In effect, yes. They will require certain certifications from the business, from auditors, from PAID. We haven't worked out those details but they will require that. As in any of our economic-development projects, we require job creation. We don't require it for 9 years, but we require job creation, and we make 10 certain there is certifications to that, and we 11 test those certifications periodically. 12 Every economic-development program PIDC 13 administers -- and we administers over 20 economic 14 programs in the City of Philadelphia -- has job 15 creation components, sir. And we certify to 16 whatever body -- many times this body, and you may 17 recall that Councilman Nutter had introduced 18 legislation for monitoring of the TIFs, and he 19 wants to see this information provided on an 20 annual basis by the Mayor to City Council. All that is a way of verifying that information that you are requesting, by legislation that this Council is considering.
I want to have confidence, Mr. Fina, and I know you have 22 6/10/99 COMM. OF WHOLE - Bill 990201 confidence, but I want to have confidence that this is meaningful language. If it's meaningful language, it's a strong plus in favor of Tax Increment Financing, if there is, in fact, a guarantee of jobs. You know, over the years, we have said so many times, many Councilmembers, when we go to find out where the jobs are, we can't touch them 'cause often, there is no way of approving that they ever existed. We're told they save jobs. Is a saved job going to be a new job when the employer says such-and-such company cancelled the job order, therefore we're going to lay off 300 people, but as a result of the expansion, we've been able to find new work for them to do, now this is 300 new employees? Now, I don't know whether that applies or doesn't apply. I'm saying there ought to be a specific procedure. I have no further questions, Madam President, at this time. And I don't disrespect Mr. Fina or his good intentions; I know they're there. But I don't think we have anything enforceable. And if anything exists in the past 23 6/10/99 COMM. OF WHOLE - Bill 990201 history where PIDC has had a process that, you know, audited, I would like to know of it. I know of no such process. I never have seen any verification of the existence of job creation. And if this is a new plan for it, fine, but I don't see anything except verbiage, just a statement that he will have to do. Thank you, Madam President. There's no 10 point in further inquiry on this point.
Thank you. The Chair recognizes Councilman O'Neill.
Thank you, Madam President. Mr. Fina, I just want to verify something for the record. I know we've had private conversations. The TIF boundaries in the bill are extensive, using the streets Ashton, Willits, Blue Grass, and Grant, which cover an enormous acreage. We're specifically only dealing, though, with the Crown Cork & Seal building, that property, and an additional 15 acres in your amendment today that may be purchased from an adjoining business to 24 6/10/99 COMM. OF WHOLE - Bill 990201 expand the Crown Cork & Seal building. Could you explain that on the record, because if I were living in the area, there's some parcels I'd be very worried were being TIFed, as I was when I first saw the boundaries. Can you explain how the TIF works in terms of limiting the area to be TIFed.
Yes. Thank you, Councilman. As a part of the project plan that's distributed to all members of City Council and to the President and is also on record in the chief clerk's office, there is a proposed uses and an existing uses that shows a graphic representation of the TIF District. And that shows that Ashton Road is the primary street that creates the TIF. The TIF District, in the legal description that I supplied Council with this morning, and the chief clerk stipulates exactly the boundaries of the TIF District. And they cannot be increased or changed in any form in any way, unless this Council approves by amendment a change in that district. So the area is graphically represented. And it is, as you said, the Crown Cork 25 6/10/99 COMM. OF WHOLE - Bill 990201 & Seal property, an additional 15 acres that is currently owned by Clement Muler, that is under consideration for purchase but that will be a future phase of development within the TIF District. If that is not purchased and there's no 7 new development, there obviously will be no new tax revenue and there will be no new TIF revenue from that portion of the project.
It's my understanding that 85 percent, approximately 85 percent of Cardone's employees are City residents. Is that your understanding also? I don't see it in your testimony. I had some private conversations with Cardone and I'd like it on the record 'cause I think it's of some importance to this Council. And I would emphasize it if I had a company that had that high of a residency record among employees.
Councilman, you're correct, and I should have included in my testimony that 85 percent of the 4,262 current employees of 6/10/99 COMM. OF WHOLE - Bill 990201 Cardone are residents of the City of Philadelphia. And last week, I gave current employment breakdown as to female, male, and ethnicity of those -- of that group.
There was a proposed move by Cardone to the Northeast Industrial Park that fell through back in the mid-'80s. I went out and visited their plant at that time on Rising Sun Avenue, before they had expanded to the other location. I have never seen operation as impressive as what they do, both with inner-city residents, families, counseling, really bringing the whole family in and trying to help whatever's weak within that family. And also building up wages -- starting out fairly low but with a promise of an increase, with a very unskilled beginning workforce. I would also emphasize that. But going back to that mid-'80s period, I had checked and found out that Cardone at that time, with about 1500 employees, was the largest purely private employer in the City at that time. Now, there may be with the CIGNA building going in, some insurance companies that have overtaken 27 6/10/99 COMM. OF WHOLE - Bill 990201 them, but they have increased their employment. Just for some comfort and, Councilman Cohen, I hope we begin auditing all promises that are just left there as promises in most cases. It's not just with TIFs, but with other lending and things like that. But so Cardone's record of job increases is enormous, whether you go to the 2700 that were all around during '98 in the one figure, or the 4200 today. Could you explain for me, because I have trouble with the 2700-plus that's listed in the one section of the letter and the 4200-plus in the other section. It says 2700 all during the year 1998, and 4200 today. And I don't know what -- does that mean 2700 were there every day in '98 and 4200 were there -- it's such a large number difference that I would just like an explanation for the record as far as how we determine the number of jobs when there could be that great a disparity just within a few months.
What we require Cardone to do so we know exactly the employment based upon requests for salary ranges, we ask Cardone to give 28 6/10/99 COMM. OF WHOLE - Bill 990201 us-- to provide us with job information for full-time equivalent jobs for one full year of employment. That meant their records showed from December 31, 1998, going back to January 1, 1998, the employment that was full-time equivalent citywide, and that was 2765. That's why that number -- since that time, there's been -- because even then, people were coming on during that past year but they weren't there for a full year. We thought any representation of salary ranges, which should show one full year of salary ranges. And that's what the letter of May 27th indicates on the second page. So since that time, during '98 through now, through currently now, they have reached their 4262 number. And that's the number that we're using as the threshold. That's the minimum, and then they have to go 500 above that. So if anything, we've put Cardone in a disadvantage to create even more jobs, saying, That's what you have now, and they may have dropped and gone up, and this 4200 has not been there for a year, like the 2700 was, but we want 29 6/10/99 COMM. OF WHOLE - Bill 990201 that to be the threshold. So if you're going to get the TIF, you need to create in the full value of the TIF 4,762 jobs every year, starting with approval of this TIF hopefully on the 24th of June.
So at their current rate of expansion of about 1500 jobs in the last year -- less than half a year, I should say -- they should reach that threshold within a few weeks.
Well, if all businesses expanded at that level, that would be wonderful for the City of Philadelphia. Again, this is highly unusual in a manufacturer's committing for such a long term of employment at a certain level to receive the economic benefit of the City. I can't emphasize that enough that this is most unique. And that's the very nature of this corporate citizen that we have in Cardone Industries. They are an excellent corporate citizen in the City of Philadelphia. Many of the points that you've raised, Councilman, are displayed by the good faith and commitment that if 30 6/10/99 COMM. OF WHOLE - Bill 990201 we're taking public dollars, we're going to do good service to the City of Philadelphia for 4 years. 5
Where are they in 6 the ranking of private employees in the City? 7
I don't know exactly that, 8 Councilman. I could find out, but they are now 9 the largest blue-collar manufacturer employer in 10 the City of Philadelphia, they have the most 11 employment. 12
Okay. I would 15 just commend the company. I'm first of all glad 16 to see the Crown Cork & Seal building being 17 occupied and possibly expanded 'cause it could 18 have become a white elephant in the entire 19 community. 20 But for any Councilmembers, I'd like to go back and sort of get an updated visit. I was never more impressed with a company's operation and caring level for their employees and their families as Cardone.
Councilman, we'd be more 31 6/10/99 COMM. OF WHOLE - Bill 990201 than happy to arrange a tour for you and any Councilmember through the President's office or on an individual basis of the Cardone Industries sites. I'm sure they'll be more than happy to do that.
Thank you. The Chair recognizes Councilwoman Clark.
Thank you, Madam Chair. Clarification, Mr. Fina -- how are you today?
You spoke of limiting to $1 million the City's stimulus per project, million per project. What about a maximum percentage rather than a dollar basis? 'Cause sometimes a million dollars would be a different proportion depending on the size of the project. You said no matter how big the project 32 6/10/99 COMM. OF WHOLE - Bill 990201 is, the City will not put more than 1 million, but is it fair, or would it be a fairer proportion to do a percentage of total?
Councilwoman, that's a fair question. In fact, it's probably fairer for the company. Cardone would benefit on a percentage basis. And since there are representatives of Cardone here, I would rather not negotiate that point with you for their benefit at this point. They have agreed to limit -- that discussion did come up. They agreed to limit the City amount of funding in each project to $1 million. That will be certainly to their disadvantage if they more than expand from the minimum Phase I development of each project that's projected here. And if they do that, the TIF note is limited and the City dollars are limited. And this is one where, again, they stood firmly as a good corporate citizen of the City of Philadelphia and said, I'm not going to ask for more for each thing that I do. I just want the City to be fair and give me the incentives to develop here in the City. And if I could do more, then I will do more. 33 6/10/99 COMM. OF WHOLE - Bill 990201 And that was in negotiation. It was a very fair, honest, and a comfortable negotiation with Cardone and unusual in many ways.
Okay. Let me see if I can get some clarification on two questions that Mr. Cohen was asking. His last question was whether -- David, I forgot the question.
Mr. Cohen was asking whether there is documentation that is, in effect, binding enough on all parties that the jobs could be monitored and were -- and the promise of new jobs will be documented and monitored. (Discussion off record between Councilmembers Cohen and Clark).
Right, okay. I have another question. I don't want to rehash that whole statement that you and Mr. Cohen were going through. He asked the question whether 300 retained jobs is the same as 300 new jobs. I'd like an answer to that.
Well, I don't recall that specific question, but 300 retained jobs is the same as 300 -- in any business, you're asking, or are you -- specifically here? 34 6/10/99 COMM. OF WHOLE - Bill 990201
With respect to the language that you put in the agreement to satisfy Mr. Cohen's question.
Oh, okay. Concerning that, they must retain 4,262 jobs minimumly (sic). That's the number they have today full-time equivalent. They must retain that number -- that will be in documents also -- of 4,262 jobs. To then benefit from the TIF, to benefit 100 percent the value of the TIF at each location, they must create a net 500 jobs above the 4,262.
So if they only retain the 4,262 jobs, they will receive zero TIF benefit.
'Cause they would have not met the 500 new jobs requirement --
-- that Mr. Cohen was insisting be spelled out in great specificity.
Okay. Now, he was asking how you follow up and assure him as a legislator that he has language that he can sue 35 6/10/99 COMM. OF WHOLE - Bill 990201 out and enforce. What is the enforcement mechanism for David Cohen as a legislator or John Q. Citizen who wishes to sue out the agreement that says we will provide 500 new jobs or else?
Well, if we cannot represent to the City Finance Department that we are in compliance with the agreement and, therefore, not creating the 500 jobs, they will not give us the incremental taxes to give to Cardone to pay the TIF note. The TIF note will be their obligation to pay, and the only way they'll get money is if they create the net new jobs.
Okay. So in a nutshell, they do not get the benefit if they don't perform.
But is it clear? Mr. Cohen, Mr. Cohen is it clear? I can't make it satisfactory. Now we're just talking about, is the language clear?
The language is 36 6/10/99 COMM. OF WHOLE - Bill 990201 clear.
Thank you. The Chair recognizes Councilman Kenney.
Thank you, Madam Chair. Based on today's testimony and the information that was provided by Cardone on their employment breakdown -- salary ranges, numbers of employees -- and the fact that they are the largest blue-collar manufacturing employee in the City, all of this discussion about job creation, I think is very important, and I hope and wish that they do meet their goals and exceed their goals. But even if one new job were not created as a result of this TIF, the expansion of this operation and the continued retention of these employees at these salary ranges, with their ethnic racial background and educational, is well 37 6/10/99 COMM. OF WHOLE - Bill 990201 worth doing this TIF regardless of one new job not being created. It is amazing to me that in this city, and echoing some of the things that Councilman O'Neill said, in this city, based on the type of employee that they're employing, at the levels that they're employing and at these salary levels -- I mean, we have 350 making between $30,000 and $40,000 with high school educations, with the potential of 248 people making $50,000 or more. I mean, I can't see where we could go wrong doing this TIF under any circumstances. Now, I recognize that -- I guess, Mr. Fina, your language on job creation and prorating goes under the category of "No good deed goes unpunished" because in other TIFs in the past, we haven't required these things. We're trying to make an effort and I guess you're trying to make an effort to even justify more of why we should do these TIF operations and these TIF arrangements. But, again, Cardone is a Godsend to this and its blue-collar high-school graduate employment pool. And I hope that they do exceed 38 6/10/99 COMM. OF WHOLE - Bill 990201 their goals, but even if one new job wasn't created, we should be doing this TIF. Thank you.
Thank you. The Chair recognizes Councilman Cohen.
Mr. Fina, what does "full-time equivalent employees" mean? Why doesn't it just say "full-time employees?"
The answer to that is very simple. Many times a business will hire part-time people and they may have -- like a McDonald's may have three part-time people totalling a 40-hour shift. What we would do is count that as one full-time equivalent 'cause we look to a 40-work week as the -- or whatever the standard is of that business. It may be 37.5 hours, it may be 35 hours. So we do that so that we are not misrepresenting the facts of total employment.
Now, applying it to Cardone, can you tell me how many employees, in fact, were needed to make up this equivalent of 4,200 -- well, no, first equivalent of 2,765 39 6/10/99 COMM. OF WHOLE - Bill 990201 full-time equivalent employees on your chart on . (Mr. Fina confers with Cardone representative.)
Yes, Councilman, I can answer that. Interestingly enough, Cardone does not show any equivalency in here but full-time people. So all 4,262 and all 2,765 are full-time people -- not part-time equaling that number. Any part-time workers they did not include in these counts; they decided to eliminate that for simple simplification.
It's a standard term that we use in all our economic-development programs so we will not unintentionally mislead City Council when we're talking about employment.
No, but the statement, as it is, is misleading when -- if the statement is true, but all we have here is the word whispered to you by a representative of the company. I'm assuming it's true, but I think there ought to be ways of testing that and we 40 6/10/99 COMM. OF WHOLE - Bill 990201 ought not to just rely on somebody who obviously has a self-interest. That's the reason you have enforcement procedures. I'm sure the gentleman is trying to tell the truth, but it seems strange to have a report that arose out of the fact that questions were asked and then you try to satisfy those questions and you introduce others.
Councilman, let's take for an example, let's say these numbers are erroneous for inadvertent reasons. We are saying for the record, whether they're erroneous or not, we are going to certify that there are 4,262 jobs to the satisfaction of the City Finance Department and the Law Department who enter into the agreements, and that they create 500 new full-time equivalent jobs above this number by the fourth year. So whether their erroneous on the part of the company because they made a mistake, we are going to lock them in to high employment numbers in the manufacturing industry in the City of Philadelphia in neighborhood locations that they must achieve and maintain or they will not receive the benefit of the economic-development program 41 6/10/99 COMM. OF WHOLE - Bill 990201 that you're approving.
I'll believe it when I see a process aimed at verifying that. To merely have your words is like the fact that people believe that the City guards money that it spends; yet very recently, there have been stories about how money gets spent without any kind of of a verification. So I can't accept your word. The City does not have automatic procedures that it uses to check out things. Now, let me raise this question. What was your explanation -- why does the total that you have in the chart say 2765 and then three lines below, it says Cardone employs 4265 persons citywide on a full-time equivalent basis? Again, you use that equivalent. What's the distinction between those two?
I'll repeat my answer, and hopefully, I'll make it understandable.
The 2765 represent full-time employees at Cardone for one year prior to December 31, 1998.
And that they had to be there from January 1, 1998 for the full year. That's the number 2765. The 4260 are total employees today, as of last week, at Cardone Industries citywide. That meant they could be there a day, a week, a month, a year, and some of them a year and a half because some of them go all the way back to the number that I gave them, the 2765, as of January 1, 1998. So that's how those two numbers are calculated, sir. I hope that's clear.
Mm-hmm. I think it would have been good to have stated that, you know, in the letter. But could we -- are we going to get a statement from the company as of the December 31, 1999 so that we'll have a basis of comparison at the end of the year?
We will track employment for the term of the TIF. If this TIF is approved by City Council, we will track it on an annual basis.
And that will be at the present employees of 4268? 43 6/10/99 COMM. OF WHOLE - Bill 990201
You're welcome. The Chair recognizes Councilwoman Clark. I think you wanted to ask a question?
On the breakout of your employees by race, from your last presentation, we have 28 percent Asian, 33 percent Hispanic, 13 percent African-American, and 26 percent white and others?
Do you have a spreadsheet as to where these jobs are from laborer through manager? You know what I mean by "spreadsheet?"
That would be an extensive spreadsheet. I do not have that with me. I could ask the company to produce that in a reasonable period of time. 44 6/10/99 COMM. OF WHOLE - Bill 990201
That would be fine. I would be interested -- I don't mean to hold this up, but I am interested to know where these jobs are and how they are distributed throughout the company, whether they're clustered either at the bottom or at the top. And I can't tell it with numbers this gross. So if you give me a spreadsheet on it, I can see -- what we used to say in the old days "an EEO 1 spreadsheet" that shows managers, professionals, technical, clerical, laborers, you know, that kind of breakout by employment. And then go by male and female and by the various minority classes. There's a form that's already developed for this -- and I would be happy to show you what I mean off the record -- that therefore permits a reasonable interpretation of what your workforce looks like by labor class rather than by these gross numbers, which do not give me a clear picture of who works for you in what capacity. Thank you, Madam Chair.
You're welcome. 45 6/10/99 COMM. OF WHOLE - Bill 990201 Councilman Cohen, did you want to be recognized?
Were the figures that Councilwoman Clark cited to you as percentage of ethnic groups employed, was that basically accurate?
That's the information the company provided in good faith to me, and I believe it is absolutely accurate.
All right. Do you know of any other companies that have 61 percent of employees who are Asian and Latino? Is that an unusual workforce?
That is a highly unusual workforce, from my experiences, Councilman.
Unusual. Could you tell us how it comes about? Have you raised that 46 6/10/99 COMM. OF WHOLE - Bill 990201 question with the company?
No, I have not raised that question of why so many of their employees are Asian, African-American or Hispanic.
Well, it does not seem to be typical or representative of what we expect. We know in the African-American community, for example, there's vast unemployment and that the numbers of African-Americans are far greater in the city than of other ethnic groups. I'm just wondering about the unusual character. I do it because I am concerned. I do not join in the plaudits given to this company. I'm not saying the plaudits are not earned; I don't know whether they're earned. The one experience I had was an unfortunate experience with the company, and I would just like to know whether there's any understanding of why there's this unusual workforce spread.
Councilman, I'll inquire providing that there is nothing that's deemed discrimination by my inquiry into that. I would be more than happy to talk to the company.
All right. Thank 47 6/10/99 COMM. OF WHOLE - Bill 990201 you, Madam Chair.
Are there any other questions from members of the committee? (No further questions at this time.)
Do we have anyone else to testify on this bill? (No response.)
Seeing none, this will conclude the public hearing - - - 48 6/10/99 COMM. OF WHOLE - Pub. Meeting
We will now go into our public meeting. The Chair recognizes Councilman O'Neill.
Madam Chair, I move that Bill No. 990291 be amended as per --
Excuse me, are we going to move for the adoption of the amendment?
I move that Bill 15 No. 990291 be amended as per the amendment introduced and circulated by Mr. Fina. (Duly seconded.)
It has been moved and second that the amendment, as provided by Mr. Fina, be adopted. All in favor signify by saying aye. Those opposed? The ayes have it and the amendment is adopted. The Chair recognizes Councilman 49 6/10/99 COMM. OF WHOLE - Pub. Meeting O'Neill.
Madam Chair, I move that Bill 990291, as amended, be reported out of this committee with a favorable recommendation at the next session of Council. (Duly seconded.)
It has been moved and seconded that Bill No. 990291 be reported out of committee with a favorable recommendation, as amended. All in favor will signify by saying aye. Those opposed?
Madam President, I would like on the record my abstention.
Please have the record note that Councilman Cohen is abstaining. All others are voting aye? If so, may I hear the ayes so that there is no question about this? Thank you. All other Councilmembers in attendance are voting aye. Thank you all very much. 50 6/10/99 COMM. OF WHOLE - Pub. Meeting (Adjourned at 11:09 a.m.) - - - 51 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Wednesday, June 2, 1999, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE OF THE WHOLE BILL NO. 990291 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter