And if this does 291 Whole (Hearing) - 040640, 040642 - 6/9/04 happen, Philadelphia would be a very, very proud City. The people of Philadelphia would be so proud that we have made, through this body -- And, of course, I guess, Harrisburg as well -- that we have decided to take this bold step forward, and doing what we have to do which is what things that we have done in the past, and that is provide tax incentives to our corporate friends so they can grow the local economy. And I think that it's a... I think that we should get ourselves ready to do this. I have not heard anyone here tonight say, I am not in favor of this. Even the good business... building owners in Center City did not say that they had some concerns, but they never said that. I heard this evening Senator Fumo sent a representative stating that he was in favor of the KOZ designation. The head of the Black Clergy was here, stating that he was, in behalf of all 292 Whole (Hearing) - 040640, 040642 - 6/9/04 the people that he represents, in favor of this. The building trades -- And as you well know, I've been -- before I came to this great body, I was a construction worker. So, jobs mean a lot to the people of this City. And to those people that I worked with for so many years with a hard hat on, that there is a... there's going to be jobs, that there's going to be a way to pay for that mortgage or buy a new home in Philadelphia. I find it quite exciting. And I just want to go on the record that I do intend to vote for this designation. I think we need to take this bold step forward. Thank you, Madam President.
You're welcome. The Chair recognizes Councilwoman 293 Whole (Hearing) - 040640, 040642 - 6/9/04 Miller.
Thank you, Madam President. I, too, was interested in the economic opportunity plan, and will be glad to get that information when it's forwarded to the Chair. Just one thing. Is 2008 your target opening date of the new building?
No, Councilwoman. We actually would anticipate that we would be able to make some of the floors available to Comcast even, potentially, as late as... at the end of 2006 into 2007. So really I would say it would really be done in 2007. With a high rise you can begin to use lower floors as you're still finishing the top.
Okay. And the other thing I'd like to know, too, we need to get more information about the types of jobs that will be open; the knowledge, skills and ability that 294 Whole (Hearing) - 040640, 040642 - 6/9/04 people need to have; education requirements, just for career planning and job planning activities for young people that will be grading from college and those graduating from high school. We do -- In my office we get information about your openings on an ongoing basis. But we know that it's very difficult now for people to find employment. And if you particularly have entry level employment, we'd be interested in getting further details on that. But that's my only question right now, Council President.
Thank you. The Chair recognizes Councilman Cohen.
Thank you, Madam President. David, I wasn't around in Mississippi when Comcast was born, but I was here in Philadelphia when Comcast was seeking to be one of the four companies, 295 Whole (Hearing) - 040640, 040642 - 6/9/04 four franchisees to get a permit from City Council. At that time Comcast was very small. We didn't know whether that could be achieved. But I worked very hard with them in the neighborhood, in the Northeast where they were born, helping to win support. And the kind of question I have on your economics is this: Cable companies now are not very popular anywhere in these states, from what I can tell because of the rate questions that have been raised up, their efforts would be free from all kinds of regulations on rates. And I'm not discussing that right or wrong. But I just wonder: is the money, you know, to Comcast... If you ask me did I, when Comcast was getting started in Philadelphia, ever conceive that it could be or any company could offer Disneyland $66 billion, that's far beyond my capacity to understand anything, in terms of money. And I would have said, no, there could never be such an offer. 296 Whole (Hearing) - 040640, 040642 - 6/9/04 But it does seem strange... And that's what I hear in the communities, that I wonder, in Comcast's own interest, is the savings that you're going to get from this measure so important to Comcast that it can't afford to be kind of a model good citizen? It came from Philadelphia. It got some help from Philadelphia. It contributed a lot to Philadelphia. It's always regarded Philadelphia as its home. I remember when originally we had to bargain hard to get Comcast to agree to make Philadelphia its national home. That was one of the conditions of getting the franchise. But that succeeded. And relations have been fine, even though relations between Council members and the constituents when we discuss Comcast or any other cable company wasn't always fine. Is it worth that much to Comcast to incur the feeling of people who just can't understand how a company that could offer 297 Whole (Hearing) - 040640, 040642 - 6/9/04 so much to Disneyland, can come to a City that seems so troubled financially, to ask for a form of tax relief? Wouldn't it really be a great thing if Comcast said, we understand the City of Philadelphia has problems; now we can do something to help them?
What would your reaction be to that? Helping me in giving us answers.
Okay. I think part of this is the answer I gave to Councilman Nutter. But let me start with the Disney deal, and understand that the $66 billion we offered was in our stock. And I think that goes to the quality of the company. We were not offering to write a check for $66 billion to the Walt Disney Company --
Sounds pretty good to me, though. 298 Whole (Hearing) - 040640, 040642 - 6/9/04
I think Comcast might well be able to get $66 billion, if it put that much stock --
I'm not sure we could get $66 billion. But in any event, the real answer to your question is that I think we have conducted ourselves in precisely the way that your question is asked. We have stood up from day one and said, we are staying in Philadelphia. We will not entertain offers. We will not permit this body -- And I remember saying to -- I remember saying, I think, to Council President Verna six or seven months ago that she would never wake up in the morning and read in the paper that the State of New Jersey was offering Comcast $150 million to go to New Jersey, because we refuse to participate in that type of game plan. What we said is, we are staying here. We have a commitment here. 299 Whole (Hearing) - 040640, 040642 - 6/9/04 And I believe we have come to this Council... And as I said, with some reluctance in my testimony, because we have never asked for or received any economic development assistance from Pennsylvania or Philadelphia for any of our prior expansion. And I believe we've come here with an incredibly reasonable ask, an ask that puts us in a win-win partnership, where we will get a tax benefit if, in fact, we grow substantially. And I think that's great for the City. I think it's great for the citizens. And it allows us to invest whatever savings we have into growth of this company right here in Philadelphia. I think that's great for the citizens of Philadelphia.
Let me ask if there's a way of correcting another of what I regard as a substantial injustice that exists. Philadelphia is probably one of the very few, maybe the only, world-class city in the United States that does not have 300 Whole (Hearing) - 040640, 040642 - 6/9/04 public access. I know originally the agreement provided for a certain fee payment, and a certain promise to pay a certain amount of money for capital improvements whenever public access machinery was set up. I know that the public capital funding has never been provided because no 10 circumstances developed yet. On the fee, I understand that the fee has gone into the General Fund. And by this time every Mayor holds onto that General Fund and doesn't let anybody get close to it. It just added to the ability of any Mayor to have additional funding. And so, they don't want to make any of that available for public access. Is there any hope that Comcast would agree to a substantial increase? Because the original amounts were negotiated back 15, 20 years ago, and have never been increased. Would Comcast consider proposals to 301 Whole (Hearing) - 040640, 040642 - 6/9/04 increase the amount of capital funding, and to increase that five percent payment or whatever the payment was that comes in annually, but which today would be totally inadequate for operating expenses? Would Comcast consider renewing that and reconsidering and coming up to new agreements, to make it possible for Philadelphia to become a world-class city with public access for its citizens?
Councilman, we have just finished a franchise renewal with the City of Philadelphia, in which the franchise agreement was just renegotiated. The amounts for public access television were just renegotiated. We have made those payments in every year of our existence, and we continue to make those payments at the newly negotiated levels that -- I believe this was done two years ago? I mean, I think in the last two... I think actually two years ago is when this was done with the City Council. And I... We had testimony from the 302 Whole (Hearing) - 040640, 040642 - 6/9/04 Community Access Coalition folks who we have talked to. And I will say on the record what they said on the record which is: this is not a discussion between community access advocates and Comcast. The City of Philadelphia, as the local franchise authority, is in control of the public access decision. And if the City of Philadelphia wishes to proceed with public access, we obviously are prepared to be a party to that discussion. But I will tell you financially, we think we are paying a lot of money toward public access, and have for the entire period of time that we have had franchise agreements with the City.
Okay. All right. Thank you. Now, one last question. Whatever KOZ offers a company, would that be available to anybody who moves into the building, that's covered by KOZ?
The only people that would be eligible to receive the benefits 303 Whole (Hearing) - 040640, 040642 - 6/9/04 of the KOZ... What we would be proposing, and what I think the legislation will finally say, Councilman because, as you know, there are some amendments moving around here. But I think the way it would end up is if a company... There's three ways you could pass a test today. And what we're saying is, we would be prepared to live without the third test. So if you signed a lease that's not good enough, you don't get the benefits. If you grow jobs, you get the benefits. And if you make an economic investment -- And I think there's been a tightening of that language -- also you can enjoy a benefit. So there's a number of people today who can go into a KOZ and get those benefits. A lot of those people would not be eligible to get those benefits in this building. They would be -- COUNCILMAN. COHEN: Comcast now is in Union Square, right? 304 Whole (Hearing) - 040640, 040642 - 6/9/04
Yes. And there are a lot of businesses near there, other businesses, right? Offices of all kinds, including, say, Towers Perrin. Isn't Towers Perrin in the same building?
Well, what's to stop Towers Perrin from seeking to go into this building? Isn't Comcast the only lessee you have now? What will you do with Towers Perrin? Why should they stay in their building, if they can get much cheaper rentals in this new building?
They're going to pay rent 50 percent higher if they came to our building, if they're moving out of Centre 305 Whole (Hearing) - 040640, 040642 - 6/9/04 Square. They would pay considerably higher rent, number one. Number two is, they would have to grow their jobs by over percent in order 6 to meet the test, to be eligible. 7 By the way, they could pass that 8 test by moving to the Cira Center. They 9 could pass that test by moving to a KOZ at 10 the Navy Base. They could pass that test 11 by moving to a KOZ at the World Trade 12 Center. 13 So there are places they can go if 14 they're going to grow jobs and enjoy the 15 tax -- 16
I'm told there's 17 a huge, really huge amount of vacant space 18 currently in what is considered first-class 19 office space. 20
I'm told there is as much as maybe a quarter to a third that's vacant. It's carefully camouflaged to hide that picture, and to make it look as if 306 Whole (Hearing) - 040640, 040642 - 6/9/04 everything is occupied.
I don't know the exact amounts. I haven't seen them, but they're the reports I've gotten over time from different companies that rent out space in various parts of Center City. Now... And the Towers Perrin argument is the one that keeps getting floated in front of me by people. And I have to say, I don't know why they shouldn't. Going to be cheaper for Towers Perrin to move in. Suppose they could see who -- I don't know who the rental agent is for the building that's going to appear at 17th and Arch. But if there is such a rental company, can't they communicate with them, either Towers Perrin or somebody else? Won't they get a benefit in lower rent?
Again, Councilman, I can't do anything but be factual. The rent in our building will be probably 50 percent 307 Whole (Hearing) - 040640, 040642 - 6/9/04 higher than a deal they could strike today in Centre Square. It's that simple.
Well, the rent's got to be much lower with this tax benefit.
No. The rent they -- They have to pay me a rent to cover the cost for me to build the building. And that rent... If I'm spending 300 bucks a square foot, say, is 30 bucks a square foot. HRPT bought that building for a hundred bucks a square foot, so they pay -- rent it 10 bucks a square foot, bucks 15 per foot. It's not.
Yeah, but in that savings to Towers Perrin would be -- or a company like that. I'm using them because they happen to be in the same space you're in now. It just seems to me that we're helping to create a very dangerous situation in Philadelphia. And sooner or later what will become apparent to everybody is this glut of office space. 308 Whole (Hearing) - 040640, 040642 - 6/9/04 And I think that that's why there's so much concern with all these different questions, and why it's not advisable. And David knows from his hard work that it's better for us not to be in a position where we're compelled to reach a quick decision because later there's much more opportunity for later regrets. Thank you, Madam President.
You're welcome. Are there any further questions or comments from members of the committee? (No response.)
I think the people that should be thanked are people from the Streets Department and some other area residents who have been here for hours and hours waiting to be heard. Thank you. 309 Whole (Hearing) - 040640, 040642 - 6/9/04 Do we have anyone else to testify on this bill, whose name was not called? (No response.)
Seeing none, I would ask all Council members to please go to their desk so that we can take action. Thank you. This will conclude the public hearing of the Committee of the Whole. (Public hearing concluded at 11:48 p.m.) 310 CERTIFICATE I HEREBY CERTIFY that the proceedings and evidence are contained fully and accurately in the stenographic notes taken by me upon the public hearing of The Philadelphia City Council, taken on June 9, 2004, and that this is a true and correct transcript of same. _____________________________ DAVID A. DEIK, RPR and Commissioner of Deeds (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)