Thank you. I want to give everybody a fair chance. We will have a 10-minute go-around ask so everyone will be recognized.
We have been advised by the negotiating teams and members of the Administration that final deals with the teams will not be completed by December 14, 2000. Based on the fact that the City continues to bear the obligation of paying $23 million to the Eagles to purchase the team's practice facility, how will this be factored into the City's financial commitment for the construction and financing of the operation of the Eagles stadium?
Where we are on the 153 11/30/00 - STADIUM HEARINGS issue of the buy-back of the practice facility is we are moving the dates from when they were originally set, which I'm sure you recall, had a November 30th trigger date and a December 15th end date. We've advised -- and the team has agreed that we would do that. We've advised the bank. The bank is currently working through the mechanics. In fact, I got an e-mail. When I left here to go back to my office, I had an e-mail and he e-mailed me what the fee is to extend the LC so that we will extend the letter of credit. And we would set a new start date at December 15th, which is not to say that Council, should they deem it necessary, obviously can't deliberate further past that, but that would be -- and then we've set it at January 15th at the back date so that we will not face, while you are deliberating -- the Eagles aren't going to draw the letter of credit, that's not going to be part of what's going on. That would remain out there should we all decide not to proceed and would revert back to the original scenario and so we are moving the dates.
I didn't understand that answer. 154 11/30/00 - STADIUM HEARINGS
You said the deal will not terminated by December 14th, the deal with the teams, the day we're supposed to approve this. And we're supposed to approve it without the deal being terminated with the teams; that's what she asked, right?
I just want to make sure I'm responding to the right question. The way it's set up is that should there not be -- I think the terminology, and I'm doing this by memory. Should there not be legislation enacted and signed by the Mayor that provides for the financing and development of new stadiums, and I think it's actually specifically the football stadium, obviously, that then Eagles would have a right to call on the letter of credit and have us buy the facility. And my response was that what we have done is moved the dates of that event back to be in line with the dates of the process we are now underway such that the Eagles will not be exercising that right. And that's what I thought you meant by 155 11/30/00 - STADIUM HEARINGS terminating, you know, terminating the agreement, making us take the practice facility, buy it, while we are in deliberations here. It will go pass that. Obviously, if Council sees fit to affirmatively approve stadiums, then their right terminates.
But are all the details of the deal with the teams going to be before us before we approve the legislation? I think that's what we're trying to get to here.
I didn't realize that was the question. I'd be happy to answer that question, but I thought I thought it was the team lease question -- the practice facility question.
That was not my question. I was questioning about the practice facility and the $23 million. I think Mr. Hankowsky did answer the question. I said based on the fact that the City continues to bear the obligation of paying $23 million to the Eagles to purchase the team's practice facility, how will this be factored into the City's financial commitment for the construction and financing of the operation of the Eagles stadium?
And the way it's 156 11/30/00 - STADIUM HEARINGS factored in is if we collectively agree to proceed with new stadiums, we're not buying back the practice facility so that obligation would terminate.
Mr. Hankowsky, in LIGHT of the fact that nothing in the term sheets provided to us is binding on any of the parties to these transactions, what assurances do we have that the terms are enforceable and that City Council will be able to approve any changes to them or any amendments that may be required during the term of the leases?
Let me try to do that in two parts. I should have introduced Bill Martin who is with me today who may occasionally be speaking to respond to some of these. We obviously have other administration people also with us. I believe that the way that the Paid lease lease-back with the City and the term sheets work is in fact that PAID will be bound to 157 11/30/00 - STADIUM HEARINGS incorporate the terms of the term sheets into any final transaction. So that, in fact, should Council approve these transactions, these term sheets, in fact, become the binding business terms that we're obligated to perform under and we don't have a right to change the deal or amend the deal, to use that term, with regard to any of these business terms in the term sheets without coming back to Council.
Council President, in the lease lease-back document, lease lease-back lease agreement which was provided as an attachment to one of the ordinances, s to the Phillies, for example, in Section 2.4, the relevant section is "The Authority may enter into the Phillies lease upon terms and conditions generally consistent with the term sheet attached hereto made a part hereof." The language is similar in the Eagles lease-back lease agreement so the concept is the materials that you're approving bind PAID to the City that it's agreement with respective teams have to be consistent with the terms of the term sheet.
But presently there are no terms in the leases regarding the full utilization of the stadiums. 158 11/30/00 - STADIUM HEARINGS
I think there are. Obviously, some fairly critical issues that are of concern to either Council at large or particular Councilpeople that need to be resolved and incorporated into the term sheets either by amplifying them in the term sheets or as exhibits. I would included Councilman Clarke's issue which is I think that we are committed that there would be fully developed in writing MBE, WBE plans, that those plans would, in fact, become part of the term sheets and become binding on the Authority and on the teams. We're very aware, and I should thank you myself for your efforts, of issues that relate to concerns the community has scheduling others that need to get, one, resolved and then, two, put into writing, and then, three, in all probability added to the term sheets so that those are also clear.
I guess, Mr. Dubow, the next question should go to you. What is the basis for the wage tax estimates beyond 2005? Can you tell us does the Administration anticipate there will be no further decreases in the wage taxes after that point? It's on the sheet that you provided us. It's from the Arthur Anderson study. 159 11/30/00 - STADIUM HEARINGS
I'm sorry, your voice is muffled because you're speaking too closely to the mike.
We anticipate continuing the wage tax reduction program. I think that you're right in that the model should have continued to decrease the wage tax and that would result in a slight decrease in the revenues that we're projecting.
Why wasn't it corrected before it came here? (Pause.)
I don't know, I think you and Mr. Hankowsky were having a little tete-a-tete. I didn't hear a word you said, Mr. Dubow.
Let me try. What we did in the Arthur Anderson model I think is we took what is now the five-year plan wage tax reduction schedule and ran it through the model and then 160 11/30/00 - STADIUM HEARINGS stopped. You're right, we stopped and didn't continue it because there's not, at least at the moment, any specific, you know, we're going down .10 percent or, you know, what's the specific declining rate by which we would continue to decrease the wage tax, so we wrote it out flat. But you're right, to the degree that we continue to adopt five-year plans and continue to show progressive wage tax decreases, there would be a slight adjustment downward in the numbers, that's right.
Mr. Hankowsky, if you don't feel comfortable in answering the following question, I could certainly ask the teams tomorrow. How many of the other events contemplated at the Eagles facilities are currently scheduled at the Vet Stadium? I'm sure that the teams would know the answer off the top of their head, so if in fact you don't feel comfortable --
I think roughly, doing this off the top of my head, the Phillies really don't project additional other events in their building. Of course they project their 81 baseball games which we do at the Vet. The Eagles project, obviously, their 10 football games, 2 pre-season and 161 11/30/00 - STADIUM HEARINGS 8 home games, as we do at the Vet. They project Army-Navy. They project the five Temple games. These being things we do today at the Vet. We do -- I don't know whether we do it every year, but it strikes me it seems like it's every year. We do the Jehovah Witness event which I think is five days, if I recall. They project -- we also have done -- I think we had one concert last year in the Vet, I think it was David Matthews, so they project concerts. So there's probably 20, of the events 12 projected are current Vet events and then the ones 13 above that would be new. And I think the teams can 14 amplify that or be more specific. 15
They could 16 probably be more specific tomorrow. 17 Can you tell us who will determine the 18 use of funds deposited in the fund for children? 19
Because of the IRS tax 20 rules with regard to the receipt by the City 21 directly of payments from the teams that are what 22 are known in the business as private payments which 23 create a significant problem and, in fact, could 24 undermine your capacity to issue your debt on a tax 25 exempt basis, in other words, a much cheaper basis 162 11/30/00 - STADIUM HEARINGS for the City. The City cannot be the direct recipient of funds under the Children's Fund. The intent, therefore, is to find an appropriate non-profit organization, a 501C3 who would be the recipient. That may be an existing organization or one yet to be created.
Excuse me. I'm sorry. Would someone close the door, please. It's terribly noisy in here and it's very difficult hearing testimony. Thank you. I'm sorry. Please continue.
Thank you. So the intent is to designate either an existing or a to-be-created non-profit corporation 501C3 who would be the recipient of the funds and who would then be obligated to expend those funds on programs for the benefit of children in the City of Philadelphia.
What is the status of the acquisitions of the properties that we are to acquire? How certain are we that the purchase prices will be in agreement with those stated in the plan?
We have, obviously, five 163 11/30/00 - STADIUM HEARINGS properties that we're in discussions with. I think that for the benefit of the City in general and our expenditures, what I'd like to do is characterize these versus speak specific about numbers. But where we are is we have had conversations with all five property owners and we have actually reached a handshake agreement now with one of them that involves both price, timing, and the fact that they would not file preliminary objections. We are in discussions --
Can we guess on which one what that is? (Laughter.)
We only reached this agreement last evening so... We are in discussions with a second property owner and they are in fact -- well, this one maybe I will say the name. This is Jetro where we have actually had a conversation about them moving into Acme. We've identified the space. They are actually working with an architect to price and tell us what would be involved to renovate that 164 11/30/00 - STADIUM HEARINGS space such that it would be a substitute for the space they use today, so it does need physical work.
Is that going to be an even swap? How is that going to work?
Well, basically, there would be an agreement between us and Jetro that would roughly have the following characteristics: We would identify a portion of the Acme building, several hundred thousand square feet, a couple hundred thousand square feet. We would negotiate with Jetro in what condition that space would be in when they come to it. So, for example, it needs on truck docks, it needs work on what are called wax systems, storage systems, and perhaps certain other improvements that we would pay for out the $95 million line item, such that they would get, I'll use the term, equivalent kind of space to the space they have today both in terms of building and land. We would pay certain costs for them to move from where they are into that facility. And if we can reach agreement on that bundle of sticks, both the renovation, relocation cost, business disruption issues that in consideration of handling all those things for them, which would be inside our budget, 165 11/30/00 - STADIUM HEARINGS we would, I'll use the term, give them that renovated space in lieu of them giving us their space. That's the swap idea. So there is a cost to us to do it because we have to create the space and move them.
But aren't you also able to lease the remaining portion of that building and would you not generate money from that?
Yeah, we would have an additional portion of the building that would be unincumbered, available, and we would have an opportunity to lease that, sell that, make use of that in some way. And there is, in fact, the potential that there might be some economic value in doing that. To be candid, we have not explored that at all at this point. So that's another property owner. Two other property owners have given us prices upon which they would sell the properties. We would like to negotiate further with them about those prices, get them down. And we have a third property owner whose agreed that they were not object to the condemnation and hold up on moving forward but with that property 166 11/30/00 - STADIUM HEARINGS owner we have not reached an agreement on price.
If construction falls behind schedule and the and the Vet must be maintained for an additional season, who bears the financial responsibility?
To be quite candid, the specifics of what would happen in that scenario have not fully been determined. We discussed, I think, a little bit yesterday in the session that there would absolutely be a need to bring back to this Council for this Council's deliberations amendments to the Vet lease that would terminate the current agreement which has to happen because the teams have to get out of that lease to go into a new lease. And one of the things that that amendment's going to have to deal with is, for example, what would be generally called a force majeure event. Something happens, it delays the project, and a team has to stay longer and what will be the terms and conditions of that.
Would you please explain the provision of the environmental 167 11/30/00 - STADIUM HEARINGS remediation in greater detail, please? What is the likelihood that these costs could be more than $2 million? If costs do exceed that amount and the teams ask the City to cover the excess, how does the City intend to make the decision whether to provide additional funding?
I think there are probably three components to that question. One obviously is the question of what is the anticipated risk out there from an environmental prospective. I think for those of us who have been around a little bit of time, we have some familiarity with the food distribute center. Prior to its construction, it was basically vacant ground. We used it at one point during the centennial many years ago. We actually have some history down there of a project of a similar nature when we built the First Union Center and there were environmental provisions there. What the history seems to be is that what you're going to discover is you might discover some debris because there was some short thumping in history before the current buildings like the T-Warehouse were built there. Each of the buildings that have built there are the original buildings. 168 11/30/00 - STADIUM HEARINGS They weren't factories or steel plants there before, so there isn't any history of industrial use that would make you worry that there are significant environmental problems. And in fact, what we've discussed in the First Union situation was when we did hit some debris that the debris was so old, meaning it went back literally to the beginning of the -- I was going to say the beginning of the century, but I guess we're in the century, so the beginning of last century, the early 1900s that many of them now very dangerous, toxic, hazardous substances hadn't even been invented. For example, we didn't find PCB because they didn't have PCB back than. What we did find actually was coal ash that was used when people used to heat their houses with the bins on the sidewalks and they'd pick up the coal dust, and I guess we dumped some there. So we don't anticipate, we have no knowledge that there are any significant environmental issues that might be discovered. We've have an upset price so that if the first 2 million in total per side of the street come up that the teams worry about that. If we go past that number, then you're correct, Council President, 169 11/30/00 - STADIUM HEARINGS the understanding that we would have the ability to elect to help contribute to that cost to keep the project going, but we're not required to do it. We would anticipate that that is one of the issues that we have, the $10 million contingency for, so that if something should come up that we need to jointly decide on that we would do it inside the budget and the caps in funding that have been proposed to Council today.
Thank you. Councilwoman Tasco. I know you've been waiting for a while.
Thank you very much. Mr. Hankowsky, I just want to say that I support the comments made by Councilman Clarke. I do think, though, that we need to have sometime a full discussion about not just what the percentages would be, but how the whole minority participation will work.
Because even though we may put the component in part of the -- make it part of the deal, there is always some come back 170 11/30/00 - STADIUM HEARINGS about problems that exist and we need to discuss those problems.
Councilwoman, I couldn't agree with you more. We've had some terrific experiences and we've had some not good experiences. And you and I both know which are which.
And thinking up front is preferable to what we've sometimes had to do, which is think after the fact. I agree.
On the site work that's going to be done, is the City paying for the site work and teams will be doing the work or will we be -- will the City do the site work through the City's Procurement Department.
No, the teams will do the site work, Councilwoman with us funding it. The only exception to that is the demolition of the Navy Hospital which will be done through PAID.
And you have a minority component? Will cover everything?
On of the table that we were looking at this morning, and this is just for clarification. I'm not real good at looking at all this stuff. On Column where you 6 have foregone tax revenues, you see that, the 7 General Fund revenues from two new stadiums?
And that is because you're going to lose business and real estate taxes associated with the purchase of Jetro, Triple 7, Maggio, T-Warehouse and Acme Markets?
No, it's not there. I don't add it to that cost. What I do in this table is I subtract the fact that we're going to lose those taxes, I subtract it from the new taxes we're getting to show you the, I'll use the term, net new taxes you're getting. So charge the project for losing the five buildings and the taxes that are 172 11/30/00 - STADIUM HEARINGS related to those buildings before we take on any of our obligations here. So I've included in the analysis of what are the costs of proceeding.
Okay. So we will be down million from the total new revenue coming 7 in? 8
Right. And so I 9 subtracted before I got to the 159 million. I 10 subtracted before I got there. 11
On Table 3, Column 12 4, just for explanation purposes, what does less 13 base dollar, what's that column? 14
On this chart for the 15 School District what we did was we actually looked at what the School District gets today out of the stadiums. What the School District basically gets today out of the stadiums is the liquor-by-the-drink tax. So we took that tax, which we got from the Revenue Department, we grew it by two and a half percent to say, we're already getting this so let's look at what the School District's getting new. So again, this is -- this table the 70 million over 33 years to the School District is new money to the district over what they're getting today. 173 11/30/00 - STADIUM HEARINGS
Thousand. And you take the 444,000 base that they're getting now?
On Table 3, again, you have under U&O for the baseball stadium you have it based on 165 million? Or is that thousand? Look at the footnote, footnote number 2.
Yeah. What's different with, I guess, with stadiums or arenas is how do you 174 11/30/00 - STADIUM HEARINGS figure out the use and occupancy given here it sits -- it's not like an office building where workers go there everyday and use it and we charge U&O as if you use it all time. You use it periodically. So that the methodology was to look at the use of it over the course of a year based on both days it's open and seats that are filled, I think is the methodology that we worked through because the City's had to actually look at this for other facilities of a like nature, how do you figure out the U&O.
Do you use the baseball field more than you use the football field?
Well, you have event days, so currently you're anticipating 81 events in the baseball building and 59 in the football building. But then you also have to look at attendance for the different buildings and actually you end up with like a million seven people in the football building and I guess we used 2.9 million people in the baseball building. So it's days of use and occupancy.
Because you have the baseball U&O based on 10 percent usage and then 175 11/30/00 - STADIUM HEARINGS the football U&O based on a 7 percent usage factor.
I think that's the difference between the 81 days and the 57 days.
It would seem to me that you're going use the football field more than you're going to use the baseball field.
If it's helpful, we actually can give you the work sheets that back up these numbers and go through the mathematical calculations of how you get them if it would be helpful. There are worksheets that back these up.
Okay. On Table 10 you have calculated in here general revenue if no 15 new stadiums are built.
You do have calculated the vehicle rental tax revenue. Now, are we going to be able to keep the vehicle tax revenue because I see on the next table it's not part of the calculation.
Right. What we're trying to do in this base case is to take the world over the next 10 years and try to reasonably anticipate what it might look like. As you know, 176 11/30/00 - STADIUM HEARINGS when we enacted the $80 million repair legislation and the buy-back in the spring of this year, we said well maybe we can use that rental car tax to pay for those expenses if that's what happens to us. Then in June, I believe, of this year which was I believe after we dealt with this which I think was in March, correspondence was received from legislative leadership, both in the State Senate in one letter and the State House in a separate letter that basically said we're not sure that that's right, that we, the legislature, enacted this tax on the basis that the City was looking for this revenue to support new stadiums and we're not sure that we would be comfortable if you used it for repairs and, in fact, we might be so uncomfortable we might repeal it. What I show you here is suppose you had it what happens. And then on the next table I say, well, if you don't have it, let's take the revenue out -- not the next table, but the last table, Table 12. Let's show you what happens if in fact the legislature would go forward and repeal it and what the impact would be, and it would be massive impact.
Madam President, I 177 11/30/00 - STADIUM HEARINGS have one last question. I want to go back to Table 2. I missed my question.
Yes, I do and I apologize. We tried to make it as informative as possible.
Back to that U&O, I was just curious how we came to U&O being 250,00 for the football stadium and the baseball stadium.
Well, we actually ended up -- I think we had a number like 243 and 230, I mean they were slightly different and we rounded them both to 250.
Now, you have calculated in the football stadium pilots and the baseball stadium, pilots.
On Table 3. But you didn't include pilots on Table 2. 178 11/30/00 - STADIUM HEARINGS
The pilot numbers ARE inside Columns and 5. So within the new revenues 4 from a football stadiums and within the new revenues of a baseball stadium, I've already included the pilots.
And I actually show you that, Councilwoman. For example, if you went to Table 4, you'll see that I now break out the Eagles football revenue, the other event revenue and the pilot revenue. And that last column called the total column on Table 4 is in fact Column 4 on Table 1.
But on Table 2 when you have projected football stadium tax revenue, it's only 406,000 --
406 million and then you have 423 million. I've been trying to figure out how do we get there. Shouldn't they be the same?
It's the -- I think maybe what we did is in Table 4 -- it should be the same. 179 11/30/00 - STADIUM HEARINGS
Oh, you know what it is? We might be missing a year at the bottom of Table 4. Let me check on that. I think we might have just --
Oh, that's right. The difference between Table 4 and Table is Table we show the construction taxes in the first column, 16.7 million, show just what comes out of the football stadium. If you take the 16.7 from the 4.23, you'll end up with the 4.06 under football, and the construction impact of football is in Column 3 on Table 2.
I wanted to make sure everybody read these tables and saw if they added up, and you obviously did.
I don't have a calculator. I can't get them to add up, so just look at that again.
Thank you very much. The Chair recognizes Councilman Goode.
Thank you, Madam President. Mr. Hankowsky, I'm going to go back to the Mayor's letter, the letter we sent to the Mayor on November 17th, sent by Councilwoman Clarke, Councilwoman Miller and myself, and specifically the contracting goals within that letter that we sought to be at least 50 percent for economical disadvantaged businesses. I heard you speak about some of Mayor's goals, and in that letter, we actually asked for a formal response from the Mayor. And it's my understanding that you were supposed to give that administrative response today and you did in terms of some ranges. I just want you to repeat those ranges for the record because I wasn't clear on the specific numbers that you gave in terms of participation ranges the Mayor is seeking.
Well, Councilman Clarke, who isn't here I guess now, was so effective, I can 181 11/30/00 - STADIUM HEARINGS actually get more specific. I've actually been handed a letter that we in fact -- that I can now report that the Administration and the teams have reached an agreement on a 35 percent goal for MBEs, a percent goal for WBEs and a 2 percent goal for 7 disabled-owned businesses in the design and 8 construction of the project. I gave the range 9 earlier because I wasn't aware that this agreement 10 had yet been reached, which it has been since we've 11 been sitting here. 12
How do we make that legally binding in terms of good faith efforts?
I think what we need to do, Councilman, is take what I believe, which is sort of happening while we're here, which is the handshake on this turn this into a full-blown written economic opportunity plan, get that plan to you. I don't want to tell you I can get it to you tomorrow, but maybe with this agreement we would be able to get you something very quickly such that both you can ask questions about it and we would amend it into the term sheets.
You're 182 11/30/00 - STADIUM HEARINGS welcome. The Chair recognizes Councilman Nutter.
Thank you, Madam President. Mr. Hankowsky, I want to go back to a comment that you made before I asked my questions. In response either to a question raised by Councilman Ortiz or the Chair, I picked up the tail end of something that you said with regard to the Eagles practice facility and the -- I think actually to day is the date that's specifically mentioned in the legislation that we passed back in March.
Today is the day. And what I wrote down and what I thought I heard you say was that there is or have been an agreement to move the date back because you're in active discussions, obviously, with some uncompleted pieces of a stadium deal. If we have a stadium deal, then we don't have to worry about practice facility. Could you add a little more to the record? Just explain to me what you meant by that.
I think I'll be responding to your question, though I was having a 183 11/30/00 - STADIUM HEARINGS side-bar in the middle of your question so I hope I didn't miss it all. We have a verbal agreement with the Eagles that they are not going to draw the letter of credit, that we are going through this process in good faith collectively. We are working with the bank and we're moving the dates of the letter of credit from November 30th through December 15th and changing those dates to be December 15th through January 15th.
What was the November 30th through December 15th, what's the significance of that?
There was the date by which, if I can remember this right, Council was to have enacted and the Mayor to have signed the legislation. And as you recall, there was a whole bunch of discussion before about sliding dates. Remember we had September 8th, we had November 8th, we had November 30th. So in order to between us and the Eagles make it simple, we simply said that if by November 30th something hadn't happened they would draw the letter of credit on December 15th. We created this two-week window. So there was a date 184 11/30/00 - STADIUM HEARINGS for an event that the bank could say, yep, happen, didn't happen, and then there was a date that could draw. Quite candidly, it was also created just -- it's November 30th and you want to have one day of hearings, we don't want the same date to be the date of the action the date of the draw. I mean, you know, something could happen. So the two-date idea is simply to lift a date for the enactment and have a separate date which is the date they can draw it on which give us room so that if something happens -- and by the way, it also just makes it cleaner as a legal matter.
The new dates are enactment by December 15th and draw on the letter of credit by January 15th. And again, that's a little bit longer than the original two-week gap, but with the holidays, the bank simply asked $23 million letter of credit could we do it after the New Year, so that makes sense.
Okay. Let me go 185 11/30/00 - STADIUM HEARINGS back to an area that has been raised on a number of occasions. Your answer -- I won't ask you questions about the goals. Councilman Clarke and Councilman Goode have talked about that for sometime. What does strike me in this situation is in many of these deals that package and usually a couple other things always appear to be the last items that get dealt with. And I'm trying to understand why is that the case. We seemingly are always left at the tail end arguing, even in a nice fashion -- I won't say arguing, discussing or requesting either additional information or where are the documents or what's going on. I mean, we have no lack of paper here with 13 bills and extensive information that is obviously been put together to get ready for today and the next couple of days. Why is this always the last piece that gets done?
I guess I would just slightly modify the question by saying I'm not sure it's the last piece, but I understand the clearly the perception is it sure ain't the first piece.
The only reason I make 186 11/30/00 - STADIUM HEARINGS that distinction is we've got a few other pieces in this deal to get done.
There's no question. You've got a lease, you've got a $54 million gap, all the things that we're talking about. But always at the tail end of the package is this uncompleted piece.
I think in this transaction, though, and I think we have been clear from the beginning that meaningful -- aggressive equal opportunity plan were an essential component of the transaction. And maybe this is wrong. Maybe I'll learn one last thing before I get out of here. I mean, generally what we end up doing, maybe it's just the nature of the beast, is we generally end up trying to figure out do we even have a deal in terms of the economics with the understanding that as soon as we figure out whether we have a deal or we don't have a deal, that we're going to need to finalize what were the prior discussions. And there were clearly prior discussions. This is not something that we just started talking about since the announcement.
I understand that. 187 11/30/00 - STADIUM HEARINGS But I mean you, obviously -- this is no chastisement of you. Can I'm trying to understand the process. I mean, you obviously moved on a variety of items simultaneously without knowing whether you had a deal or not, the result of which is all the paper on our desks.
Where did this go as a part of that process and why is it not a part of what we have as the material as opposed to -- this is not the first one that it's happened on. We're not at the point of alarm even at the moment. But every one of these big projects that comes through, this, Tifts, Kvaerner, hotels, everything, it is always one of the last items that gets dealt with. And it seems to me that if there's an ability to negotiate and nail down a whole wide variety of items simultaneously to trying to figure out whether you have a deal or not, I'm just looking forward to the day where this is not an item that's still being discussed at the public hearing in a very compact period of time. And I will take you at your word that we'll have the documents and materials prior to a vote as long as we understand that today is 188 11/30/00 - STADIUM HEARINGS November 30th and at the outset there's an expectation that there will be a vote on the 14th. So somewhere between now and -- actually, first vote is either going to be late in the night of the 6th or early in the morning of the 7th to get a bill out of committee. That's the first vote. So I'm just -- you've got a lot of things that you need to take care of. It's just apparent that this a continual pattern of activity and I'm just trying to figure out as everybody's stuff gets taken care of, I'm just trying to figure out how this business gets taken care of all at the same time and if there other components that need to be dealt with subsequent, let those other components not be this component.
At lease on that characterization I think that is the case, that the number one thing we have now reach an agreement on out of the to-do list that we had after doing a term sheet, the first one I think I can check off in a handshake and hopefully in a day or two check off as a document is this.
Thank you. I know there was some discussion earlier about the various 189 11/30/00 - STADIUM HEARINGS sites. I think it's five properties in total. It does not appear that any of the boards and stuff are here today. I'm sure at another point in time we'll have those. But, I guess, can you verbally talk about how you came to the decision about these various sites, why are we buying all that we are buying and size of the project, at least the cost, as compared to -- we don't need to have a China Town discussion, but I think at an earlier point in time when there was a discussion about South Philadelphia and the potential two stadiums, the price was one number which may have been unrealistic and then there was another number in late '99 which may have been more realistic, I think somewhere in the 7 or $800 million range. That was the number that was being promoted at the time. We never had a deal, though. And now we're where we are. Why do need all of this property, why we need to own it as opposed to some other pieces being under lease to different people? Why is it the way it is?
Let me try to respond to that sort of comprehensively without turning this into an hour briefing on the site in question. When we came back to begin to look at the two stadium 190 11/30/00 - STADIUM HEARINGS option in South Philadelphia this fall, you obviously started with what might have been the base case, I'll use that term, where it had been left before. And it had been left before with the Eagles on T-Warehouse. That has pretty much been a constant throughout. And the idea of a potential of putting the Phillies in what has been generally now dubbed the north lot. That's a scenario that only requires the acquisition of one property, T-Warehouse. It is physically doable, you know, you have the north lot you can put a building on it. It results in two new buildings in the complex with no increase in parking over what you have because in effect you almost flip -- if you can almost think of flipping the Vet from where it is up to the parking lot. And then you have -- so you have no new parking, you still have a stadium roughly as close, little bit further away but not that much further away from neighbors to the west as the Vet is today, what is generally called the stadiums neighbors neighborhood. You actually have placed the stadium further north and placed it close to Tenth Street. So you've now actually created a situation where conceivably you have a 191 11/30/00 - STADIUM HEARINGS neighborhood impact going up Tenth Street to the neighborhood just north of the stadiums that you didn't quite have before when it was all the way down on Pattison. The feeling was that that was an undesirable siting scenario, both from a neighborhood perspective and from an overall sports complex efficiency and effectiveness and operations scenario. We asked the Phillies to explore --
Is that because things are even more stretched out? You actually increase in size of the sports complex area?
Yeah, I mean, we already have three buildings today, then you'd have four buildings. And you have three buildings south of Pattison. You'd have one building north of Pattison, you'd have -- the parking would not be around each of the buildings. We have parking problems today; no question. We have traffic problems today; no question. So instead of simply subtracting one and adding to and leaving everything else the same, was there a scenario that would give you a better sports complex because you're live with it for 33 years, maybe a long, long time. 192 11/30/00 - STADIUM HEARINGS
So the first question was to the Phillies was can this stadium be pushed further south and get it further away from the neighbors, with that be a driving force. And the idea was whether it could it fit between the current Vet stadium on the west and Tenth Street to the east and front on Pattison Avenue. So now in effect it would the Vet flipped, just literally just over on its side from where it is not to the lot that's immediately to the east of the Vet. We looked at that and the technical answer is, yeah, it sort of fits. What I mean it sort of fits is you can build a baseball stadium from the edge of Tenth Street to the edge of the Vet and get it in there, the buildings, and you have a little bit of space. I forget if it's or 50 feet between the wall of the 19 Vet and the wall of the new building. So you have 20 the new building coming out of the ground while the 21 Vet sits there. 22 In order for that to happen, you impact 23 four aspects of current Vet operations. You take 24 out one set of significant ramps, you know, the big 25 ramps we all come up to get to the E Gate or the A 193 11/30/00 - STADIUM HEARINGS Gate. You take out whole set out. You take out the truck ramp that brings trucks to supply the stadium and so the service entrances is on that side. You take out the pump house which is where the pumps are that pump out the water from field system because the field is sunk. In effect today we have a continual sump pump system running out in the field. And you take out the box louver, the cooler systems for the air conditioning. You'd solve any technical problem with money. You also have a problem that you can't add parking. You've sort of done nothing to make the place any different than it is today. And you face a real sort of interesting mechanical problem that if either of the new stadiums would have any force majeure event -- I mean, the only what this would work is a scenario where you're building both stadiums are coming out of the ground, you endure the problem for the construction season and then you get the Vet out of there real fast. If anybody misses getting done -- and you wouldn't move it in mid-season so they'd be there another season. To think of having the baseball stadium open, not under construction, but open and the Vet open, we weren't 194 11/30/00 - STADIUM HEARINGS quite sure how that worked. So we said, okay, is there another scenario that would make sense here? And what we looked at was moving the new baseball stadium east. East, meaning cross Tenth Street now and when you cross Tenth Street you now say could it fit on what has now become known as that Jetro site. That's the site that's in fact in the briefing maps. The answer is, yeah, you could put it there. And when you put it there, you've eliminated all the Vet impact issues. You've eliminated the coordination issues of the two buildings being side by side. You've begun to think about the capacity to begin to add new parking because now when you take the Vet down, that's new parking because we've kept all the old parking and we've added some new parking. You then say to yourself, okay, let's take Jetro. One of the issues with Jetro is this is a business that's happy to be in business in the food center, has no interest in moving, makes money. And in our previous discussions with them, they said, look, maybe we'd move, but we want to move in the food center. Moving us two miles away, we might as well go to Jersey or somewhere. It doesn't help 195 11/30/00 - STADIUM HEARINGS us. The scenario existed because the Acme building had been vacated, was sitting there and was empty that you on could literally just move Jetro into Acme and you could also create a situation where you could get further additional parking by taking what is the undeveloped portion of the Acme site -- if you look -- and I apologize because I promised it to you and I still haven't gotten it to you, an aerial.
If you looked at the Acme site, you would see that a significant portion is just grass. Acme, because they're a corporation, just -- they didn't park cars there, they just ran their business. They didn't want third parties on their lot. But you can pick up a fair amount of parking, in fact, we think probably around 2,000, 2500 spaces by sort of finishing out the Acme site. So now you can gain more parking there, gain more parking on the north lot. Then you look and you say, wait a minute, now the baseball stadium is across two kind of warehouses, meaning, the Triple 7 and Maggio. And you'd really like parking all around it, so why don't we take those two, have a really full blown parking solution, gets us that 20 to 22,000 number, 196 11/30/00 - STADIUM HEARINGS have a complex that really ties together. And part of this parking is space number and part of this parking is space location. And if we can have spaces on every side of each stadium, then people can literally leave from each way and much of what we face today in terms of congestion will get alleviated because it will just flush out more easily. That's the history of the site process.
Tell me the shorter version of the story of why do you need to buy the Acme warehouse in order for the Jetro relocation to work and was there any -- now, is it my understanding that the Jetro site is about 13 acres and the Acme site is about 40 or 42 or something like that?
Yeah ,that's roughly right. I think Acme is like maybe it's 41 acres, 40 point something, and Jetro is probably around 12, 13.
So the first question is we need the one we'd like to be there there's a space for you across the street why don't we take you over, introduce you to the folks over 197 11/30/00 - STADIUM HEARINGS there, you guys do a business deal, life is good, you're relocated, good-bye. That's one. And, two, was there ever any thought or consideration given to putting the baseball stadium on the Acme site and leaving Jetro where they are?
Let me do the last one first, and then I'll do -- actually we looked at that for a split second because putting the potential 3 million fans any one game stadium at the Acme site so at the far -- again you almost have to look at a map. You would have had Jetro still there so maybe you would even have Triple 7 there and Maggio. You'd stick a stadium in a corner. You'd have warehouses on two sides and I95 on the south.
Is Acme the white building to right of the Eagles Stadium.
Yes. So it didn't seem to make any sense to put baseball there. We did look, though, of putting baseball and T-Warehouse; football and Acme. So we looked at both ideas. And we still though we probably needed to buy Jetro and Triple 7 and Maggio because the parking is all the way up here and stadiums are way down here and there's a need for enough parking 198 11/30/00 - STADIUM HEARINGS around the stadiums to make them work. We also thought when you did that -- we actually have a plan where we actually bought all of that and stuck two stadiums on the south of Pattison. We then started looking at that from a traffic and operational standpoint, and what happens is you got all four buildings on the south side. Effectively, the new stadiums have one edge. The only way to get out of them is Pattison Avenue. The side streets simply get you up to Pattison. So we have all this traffic on the south side, whenever we parked down there going north trying to get on Pattison. And take an Eagles football game, which is, you know, kind of the sell-out event in the complex, so we have 65,000 people down there. You'd have 30 to 35,000 people crossing Pattison Avenue to get to the north parking south to the stadium, crossing against all this traffic. I think all of us know that experience today in a much smaller sense.
Excuse me, Councilman, would you let this be your last question 199 11/30/00 - STADIUM HEARINGS and then we'll have a second go-around, please?
So the functionality of it didn't seem to make sense. Let me complete the question because you had a two-parter and I only have done one part. In terms of voluntarily dealing with the Jetro relocation question, we wanted to do two things which we thought we would achieve by acquiring Acme versus not acquiring Acme. One was to have total control of the time of proceeding, not having a third party who might or might not make a deal with Jetro who might or might not proceed at a certain pace and the Phillies now with some sense of they maybe finally have a site want to move very quickly because they want to open in the April 2004 season. That literally means that we'll be working on a Jetro relocation beginning after the first of the year in the sense of designing their relocation stuff, bidding it out, getting them set up. By the time you move them, and you run that out on a schedule, you almost have no time to have somebody make a mistake, slow you up, do something adverse. 200 11/30/00 - STADIUM HEARINGS And secondly was to gain control of the 2,000 to 2500 parking spaces that that creates as part of the complex. Because what we face today is the space down there we don't control in an operational. And if we can control in an operational sense, we can do a lot more to achieve the goal in getting cars out of the neighborhood, forcing people into lots.
Okay, thank you. - - - 201 11/30/00 - STADIUM HEARINGS (Relief stenographer, Josephine Cardillo, takes over.)
Thank you, Madam Chair. Mr. Hankowsky, I'd like to thank you for all of your hard work during the course of these many years dealing with project. And I know that you're coming to the end of your tenure soon and, hopefully, we'll be able to send you off with a completed deal finally.
Let me go back for a moment to the issue of 12th and Vine. Do you remember when the Mayor announced that 12th and Vine was his preferred site for the Phillies baseball facility?
When did we announce it. My recollection is that the site -- Stadium Site Selection Committee made a report -- was it April? Maybe early May? I think.
Could you describe the activity that went on, or did not go on, relative to the effort to get 12th and Vine accomplished. Were there meetings with business owners? Was there an attempt or plan to acquire the properties needed? Were their meetings with community people at 12th and Vine? Were there traffic studies done? What was the process employed by Administration and PIDC to make 12th and Vine happen?
We commissioned -- I'll do it a little bit off of the top of my head. I mean, we commissioned a full-blown consultant analysis of the 12th and Vine site. We hired engineers, traffic consultants, environmental consultants, utility consultants. We went through a fairly intense effort that, my recollection is, roughly was a 30-day effort to analyze the technical feasibility of the site, which hadn't been done prior to saying, you know, it's a recommended site. So there were discussions with PECO, there was analysis done -- I mean, I have -- 203 11/30/00 - STADIUM HEARINGS
I have many boxes of stadium files; two of them are the 12th and Vine boxes. So I have all kinds of reports about that site. We also simultaneous our parallel, I guess, with that, as you might recall, the Mayor appointed a Stadium Negotiating Committee that included Mr. Rouse, Mr. Adler, Ms. Corbin, and Mr. Zeitz (ph.). And we began a series of intense, tough discussions with the teams about financing and transaction that would involve that -- that involved that site in conjunction with T-Warehouse. Proposals went back and forth. There was a lot of financial analysis and numbers- crunching, and those things were happening. We never actually, I don't believe, Councilman -- I think there -- there may have -- I did not participate. I think there were some discussions with some community representatives. I don't think they ever got very far. I didn't directly participate, so I can't really totally characterize them. 204 11/30/00 - STADIUM HEARINGS
When, in your opinion, did you believe that it was clear that 12th and Vine was not a feasible site, either from a financial standpoint, or more importantly, I guess, from a timing standpoint with the teams, that it would take a lot more time to get this particular facility done at 12th and Vine as opposed to South Philadelphia? Was there a almost a month or a time when people said, you know what, despite the announcement by the Mayor that it wasn't going to happen, when was it kind of understood that this just wasn't going to work?
Well, let me -- I'm going to respond to the question, but I want to do it slightly in components. I don't think we ever reached the conclusion that it wasn't technically possible.
And then the timing aspect ended up turning into a financial issue. 205 11/30/00 - STADIUM HEARINGS
So, in other words, at a certain point, the Phillies actually said, Okay, we might live with the delay because of condemnation and relocation of the significant numbers of homes and properties, but we're only going to live with it for a while. So it began to turn into, for example, would there be penalties if we were late and, you know, because they -- I mean, how long could they hold their economics when we were controlling when they got to turn the lights on?
So -- and then there was a discussion of the economics. As you recall, the Mayor gave an address, a TV address, which I can't remember when that was. Was that June?
I think? I think it was June. And we probably went for, I'm going to say, another -- I would say sometime into July; I know it was after the 4th of July 'cause I recall doing some work on the 4th of July, as I recall 206 11/30/00 - STADIUM HEARINGS it.
So that probably sometime in July, the teams weren't moving, we weren't moving, and it didn't seem like it was a -- people had kind of run out of ideas on how would you ever got it done.
At that point in time, would it have not been clear -- and I guess it was clear in my mind and perhaps in yours -- that South Philadelphia was the place that it most likely was going to be, despite the valiant efforts of people in Fish -- in Northern Liberties to get the Schmidts site done. And I give them credit; they really did do their best and made an effort.
But it was pretty clear by July that South Philadelphia was probably going to be the place; is that a fair assessment?
I mean, is it a fair assessment? I don't know if it's totally, completely, and absolutely accurate, but is it a 207 11/30/00 - STADIUM HEARINGS fair assessment that at that point in time that South Philadelphia was going to be the spot for two stadiums?
I would probably prefer to say it slightly differently. I would probably prefer to say that at that point, we were at an impasse at 12th and Vine, and it wasn't clear that that site was going to work.