Well, obviously, I kind of was looking at it this morning while the professor was testifying and -- so I don't want to say I've done an exhaustive analysis, which would be clearly a misstatement. But it does strike me that --
First, it strikes me that there's an aspect to it, which I almost want to embrace and agree to, which is if he believes that these teams are going to make so much money because this is such a great market and this is going to happen so wonderfully, then obviously all of our tax projections about what's going to happen here must be correct. 'Cause the only way they make the money is by selling tickets and creating attendance and paying players and doing the whole stuff, that he seems to think they're going to do. So I guess if PICA or anybody else is concerned about the financial feasibility, you know, maybe they should find some comfort there. I think, just very quickly, that the comparison of an Eagles stadium to Foxborough or to the Washington Red Skins, I think, is really missing a significant issue, which is, those are in the suburbs, they're in the suburbs. These are 247 11/30/00 - STADIUM HEARINGS stadiums that have huge parking lots, the teams get all of the parking revenue. They're on, you know, kind of rural sites. The City of Washington and the City of Boston don't get revenue from them. That's not what we're talking about here. It is more expensive to do it in an urban area. We're talking about a significant portion of our investment is in site cost, as we were just talking about a moment ago. I also think that it's interesting to talk about a private-sector person's rate of return, but I think the report acknowledges he has no idea how much debt or investment the partners of the Phillies have put in their team and, therefore, what they need to get back. He gives no acknowledgment to the fact of risk. You get more -- I mean, it's like you buy a CD and you get 6 percent 'cause it's pretty sure you're going to get it. If you want to get a stock, you might get a higher rate of return but you're going to take some risk. Well, part of the premise of this entire transaction is, Hey, teams, we're going to write you some checks, and we're done. And you take cost overrun risk on site and 248 11/30/00 - STADIUM HEARINGS you take cost overrun risk on stadiums and you take risk on operation and maintenance and you do all of the capital for these buildings, and good luck. On a good year, you better do good, 'cause if you ever have a bad year, it's all on them. So the nature of return is clearly always a function of taking risk. And so, it may sound like percent is a lot of return in a good 10 year, but not when you compare it to the potential 11 risks. 12 And by the way, I think that he, in 13 fact, overstates what the teams are going to do 14 and understates their expenses. I mean, in fact, 15 he's just wrong on what it's going to cost the 16 Phillies to do operation and maintenance. There 17 numbers are like -- I mean -- they're going to run 18 it 81 times a year. It's going to clearly cost 19 them more to run their building than it is going 20 to cost the Eagles. So to take the $89 million and say, Well, let's just say that was the O&M number is just mathematically inaccurate. He -- I think basically, though, he said -- I still couldn't find it, and I guess by the time he left, maybe he was able to find it, 249 11/30/00 - STADIUM HEARINGS but I didn't catch where he gave credit for the Children's Fund or the service district, the fact that we expanded the parking, credit to what we've done for the School District. I mean, one way to see it is take all of that stuff out of the deal, give all of that money back to the teams, yeah they could put more money into the deal, you know. But that's not what we want. There are certain social objectives, public-policy objectives, we decided we wanted in this transaction, and we're asking the teams to pay for it. I think they're looking to have a few dollars that are available to pay for it.
The -- he says the Phillies can't move, he says the Phillies have to stay in the Philadelphia market, 'cause it's this wonderful media market and they'd be crazy to go and there's no comparable market. I totally agree with him, I categorically agree with him. All they have to do is cross the bridge, all they have to do is build a ballpark in Camden and they'll be in the same center of the metropolitan area, they'll enjoy the same media market, they'll do everything, and we'll get no taxes. 250 11/30/00 - STADIUM HEARINGS The Eagles are in a comparable situation. And by the way, the Eagles do have an option, we all know that. A. I mean, there's at least one city in America that's looking for an NFL franchise that's a better media market than we are. They -- he -- you correctly raise the issue of this characterization that somehow taxes are impacted. And, in fact, Rob now, by talking about the impact on the five-year plan, I mean, we're not doing that, we're not -- you know, we're not raising taxes to pay for the deal. We're having the deal basically pay for itself. But I guess there's a fundamental simple premise, which is, it's kind of interesting to think about, you know, what should they pay and what -- you know, what's their rate of return and all of that. The teams -- we had hard negotiations. You know, this isn't where they started the number; the numbers on the table aren't where they started, they weren't close to there. We got them here. They tell us they can't put any more in. I take them at their word. " Now, it's easy for us to sit here and change our deal. That's clearly an option this legislative body has. You can ask the teams tomorrow, if you change the deal, are they prepared to proceed with stadiums? And I sit here and tell you that I think the answer's going to be no. 10
Thank you. The Chair recognizes Councilman Ortiz.
Okay, the Council will stand in recess for ten minutes, ten minutes. (Break taken.) - - - (Proceedings resume.) 252 11/30/00 - STADIUM HEARINGS (Recording equipment failure.)
-- came to be, and now we have -- we're buying extra properties which are increasing the cost of building in South Philadelphia. But tell me, we're building two stadiums, and from the conversation that just took place, the ancillary rights, those aspects that my friend Frankie here is very -- always saying that those are one of the things that come from development. The ancillary rights, I think, was one of the projections to take care of that $54 million hole. And in order for that to -- for those rights to come about, in order not to make just two cathedrals of sports surrounded by 40,000 cars --
-- you mean that there is not going to be any other development in terms of retail, in terms of restaurants, in terms of entertainment in that area? Because if it is -- if there's not, from an economic development point of view, from a job creation point of view, and I know that the neighbors will not be very happy because this has 253 11/30/00 - STADIUM HEARINGS not been told to them.
But from an economic and job creation, after the construction of the building, is that all there is?
That's a song, isn't it? Who wrote that, Peggy Lee? Peggy Lee, Peggy Lee sang it.
It is a song. Right, it is a song. As you recall, because we were together in these chambers at the time, when we did the transaction for the First Union building, there was a contemplation that there might be additional development that would get generated. And, in fact, there were parcels that were defined for, quote/unquote, development rights on the 55-acre site where the two arenas are, south of Pattison. And they include -- and they actually talk about -- in the master plan that was adopted, there were actually prescribed things that could happen, and that's kind of all that could happen but -- so there was a kind of compilation of the potential 254 11/30/00 - STADIUM HEARINGS of, I think, a 300-room hotel, I think a 75,000 square foot office building, about 175,000 square feet of what one might go call retail entertainment. And I think, at the time, remember, it would have been in a building between the two arenas. It was sometimes called the Expo Center or the Connector Building. That didn't happen after -- or hasn't happened after that project. And I think part of why it has not happened has been this kind of back-and-forth about what's happening with the Vet, what's happening with the Phillies, what's happening with the Eagles, sort of what I'll call "the uncertainty of the movement of those pieces." And the Phillies are a pretty big piece of it, because whether it's the Phillies numbers of 3.3 million, the Arthur Anderson numbers of 2.9 million, the Revenue Department number of, you know, 2.7 million, it's the biggest single generator building of people, a baseball park, because of the number of games, et cetera. And now that should Council favorably consider this legislation and should we know now that for the next years 33 years, we will have 255 11/30/00 - STADIUM HEARINGS four facilities in the South Philadelphia area, I think your question is very pertinent, because I think you then do create the environment where the potential could exist where somebody might want to invest and do other things, because you've got these, as you call them, the cathedrals of sports on the site. The scenario might be simply that the current Comcast SpectaCore rights are what they are, they stay where they are, and that things could happen this. It might be better to think about a plan that would, I'll use the term, "rearrange" them and put them in a better place from a planning perspective, sort of an operational perspective, kind of more between the stadiums instead of between the arenas. And we clearly contemplate trying to make one of those kinds of scenarios happen. I think you're right. I mean, I think the anticipation is that something would happen. It would be defined, it would be precise, it would be unlimited. It would -- you would know where it was going to happen geographically. And should there be an interest in, I'll use the term, 256 11/30/00 - STADIUM HEARINGS "moving the current rights," we need to come back here and seek Council's approval to do that, and we would clearly do that. We would -- so -- excuse me. And I think you're right, that when people know that these buildings are, you know, coming out of the ground, that's the environment where people will really seriously think about it.
We have gone from a proposal that was supposed to be revenue-neutral when Ed -- Mayor Rendell was presenting it to us, to one in which the Mayor says it's no longer revenue-neutral, to one that is reported in the newspapers that now impacts the five-year plan. And depending on when we hear anyone from the Administration speak or from PIDC, it seems like the impact on the five-year plan is changing perhaps more than Gore and Bush's numbers in Seminole County. What is -- what is the supposed impact -- I read somewhere it was going to be $22 million that was admitted to. And if that is the case, it's probably a little bit bigger and I know that David L., when he was Deputy Director -- 257 11/30/00 - STADIUM HEARINGS Chief of Staff of -- a million impact on the five-year plan would have sent David L. through the roof of this building.
And I want to know, 8 I want to know what is the true number, if there 9 is a true number, in terms of the overall impact 10 on the five-year plan. 11
Councilman, I'm going 12 to ask Rob Dubow to respond to that, and I 13 apologize. When we first started this afternoon, 14 and I know all of the Council people haven't yet 15 come back, I actually asked Rob to put that out, 16 so let us get it back out now that everyone is 17 here. 18
Yeah, we've done an 19 analysis of the impact on the five-year plan, and 20 I think copies were distributed. 21 And what we did in doing our analysis 22 is, we took the numbers that were in the plan as our base and compared that to the projected numbers in the deal. But instead of taking the numbers as they appear in the Arthur Anderson 258 11/30/00 - STADIUM HEARINGS report, we took only 80 percent of their Phillies numbers, 90 percent of their Eagles numbers, and 50 percent of their numbers from other events at the Eagles stadium.
One question before you finish that. How did the Anderson report -- where did the Anderson report get it numbers from?
Its numbers come from basically two sources, Councilman. One is, Arthur Anderson looks at league averages or experience across the country for various components, you know, what do people -- what do people spend for concessions at a stadium, what's the average amount, and things of that nature. They also got input from the teams in terms of what do they plan to charge for tickets and other things because that pricing is actually set by the team, so it 259 11/30/00 - STADIUM HEARINGS was a combination of those two factors put together.
And in using those discounted revenue figures and adding in the most current debt service run that we've done, we came up with an impact on the plan from '01 to '05 of a negative $5.8 million. The $22 million number you saw was a sheet we had done a couple weeks ago, and when we handed to that people, we said, This is preliminary, and we specifically said we were still working on the debt service numbers. And one of the things -- the big is change in terms of debt service is, the original numbers that we ran assumed that we wouldn't earn any interest on the bond proceeds, but since the draw -- the money will be drawn over a period of time, we will draw interest, and that's really what explains the difference between the that 22 you've seen in the paper and the 5.8 that we're projecting.
And what impact, if any, on the $54 million hole that we have that 260 11/30/00 - STADIUM HEARINGS we're supposed to take on faith and we walk on that and we go through the valley, how is that hypothetically can impact on that five-year plan, because so far, we have seen no evidence that there is any planning as to who's going to fill that, and that's going to be, I think, as Jimmy said, that's going to be our hole to fill. And where is that $54 million, if anything, going to come from if it is our hole to fill?
Well, Councilman, let me make it absolutely clear again: We're not filling that hole, we're not going to come back here, we're not going to take some City resources, change the deal and add City dollars to the deal.
Well, no. What might happen is you don't proceed. I mean, if you literally can't put all the pieces together, you might not proceed.
But we are supposed to proceed on faith on December 14th without filling that $54 million hole. 261 11/30/00 - STADIUM HEARINGS
And once we approve it, who's to say that we will not have to fill it at that point?
Well, I think I could say that to the degree you want to make sure we put language in that says we don't fill it, we won't fill it. We're not filling it. We -- we're basically saying that what we would like City Council to consider, and it obviously is your determination, is agreeing to the transactions in a way that I would, again, I would somewhat analogize to what the State legislature did, which is, they made secret discrete capped financial commitments to -- in fact, they did it for four stadiums in the Commonwealth of Pennsylvania, said, here's what it is, this is what it is. If you can put all of the other pieces together, you can have our money. We're saying to the teams, Here's what 262 11/30/00 - STADIUM HEARINGS the City might be prepared to do, here's what that's about, it's capped, and we're prepared to put our money in if all of the pieces come together.
Mr. Hankowsky, can you give us your assurance that the City or PAID will not go to the market and borrow any funds prior to the closing of the $54 million gap?
Council President, the one exception to that that we think might happen because of the just chronological order of things is that we might have to make a commitment to acquire the T-Warehouse property before -- and I can't say we will, I don't want to say we necessarily we would have to do this before we'd know. But the one thing, when I just look at the schedule of what has to happen when, that's the one thing that might have to happen. And in that instance, we would either 263 11/30/00 - STADIUM HEARINGS attempt to unwind that transaction; in the worst case, buy and run it as a parking lot ourselves and put it back out on the market and resell it or run the warehousing operation. That's only because you almost need to get that property under control in the month of December in order to stay on a schedule for an August 2003 opening. But that's the only thing we would do.
I think the answer is that the door is sort of ajar in order to fill that. We have -- the only stakeholder here who has any cap on the contribution is the State. I remember way back a year, a year and a half ago, in talking with the Mayor, that it was going to be 85, 85, and the teams. We have gone way beyond 85 from our side. And I look at these revenue projections that are all hypotheticals. They projected 264 11/30/00 - STADIUM HEARINGS revenue for drinking in the new revenue. How is that turned into new revenue for the school? Because the drinks are going to be more expensive?
No, it's a -- well, it's a function of two things, Councilman. It's a function of, one, the drinks might be more expensive. Number two, that what happens in new facilities is that you have actually people consume more because you have, you know, restaurants, you have club seats, you have a facility --
As if we didn't have a problem with drinking fans right now.
Well, I'm just -- where people -- so you have what's called the per capita concession number goes up. And then finally it goes up by attendance. So as more people come in because of increased attendance at a Phillies stadium or increased attendance at other events at an Eagles stadium, the combination of those three factors increases that number.
What happened to shortfalls in terms of revenue? Let's say that, 265 11/30/00 - STADIUM HEARINGS and it's a very big possibility. The Major League Union, the Players Association, and the team owners, they have done it before, very recently. They'll come to an agreement, and the Baseball Players Association is one union that really, when it says no contract, no work, they don't work. And they're rich enough to stay out nowadays for a long time. They don't have to go out and pump gas anymore. What happens to the revenue projection if there is a breakdown on -- of that sort? Which is a very good possibility of it happening.
The projections will be lower than they're showing. Just like if there had been a storm and the stadium got ruined and you couldn't use it for six months 'cause you had to fix it, the revenue projections will go down.
And what happens to us in terms of our obligations. Our obligations remain the same.
That's right, just like the teams' payment on their mortgage remain the same.
So we share that risk. Just like the State's payment on its debt service on its contribution remains the same. Everybody's in the same place: everybody has obligations, everybody has to fulfill them.
Okay. So we are at risk because the economy goes down, the Phillies have a rotten year, they don't pull in 3 million fans into the seats, they don't drink as much, there are not 3 million fans, the revenue projections go down, and we don't sign Derrick Jeeter or somebody of that sort our. Obligations remain the same.
The teams' obligations, there's no risk involved right there. The enjoy -- I mean, they pay whatever it is they have to pay, but our risks are greater.
You can't make that statement. The teams will have debt on the building, the teams have loans, the teams have obligations, the teams have fixed costs, and those remain like our fixed costs remain. And in the same way, as I indicated in 267 11/30/00 - STADIUM HEARINGS my opening testimony, you're absolutely right, and I said it in my opening testimony, it's on the record. I said there is downside potential in this deal; there is also upside potential. So you can have a year where there's a players' strike and we don't get our revenue projections. You can have another year where Arthur Anderson's wrong, it's not 2.9 million, and the Phillies are right, it's 3.3 million, and you'll make more money than we're telling you you're going to make. So both things could happen.
You cited in your statement MBE projections in terms of contracts.
Those projections are also applied to the construction jobs that are going to be used, implemented during the building of the two stadiums?
I actually think that there are -- and I apologize, I'm sort of doing this. . . I think there's actually a projection of 45 -- excuse me. 45 percent of work hours would be related to minority workers, so it's a 268 11/30/00 - STADIUM HEARINGS slightly different number on the employment than there is on the subcontracting.
What I have is now the numbers. I'm not sure whether it's against every trade, I don't know. I don't want to -- I'm just not totally conversant.
Will we have a lease, a finalized lease, by the time that we have to approve these legislation?
I don't think the lease would be completed by then, no. 17
Are you going to have to bring the lease for approval to City Council?
Our request for Council is that we would no have to do that. That's the way this legislation is designed right now.
The lease would have to 269 11/30/00 - STADIUM HEARINGS conform -- I'm sorry. The lease would have to conform to the term sheets and however we want to amend those term sheets in the course of this process.
In essence, in this phrase that you have on top of the lease term sheet is very --
I mentioned, Councilman, I think, to another Councilperson, it might have been Councilwoman Reynolds Brown, that we will delete that phrase. We have no intent to change the terms of the terms sheets after you've approved them. And whatever the right words are that says that, those are the words you want to have between you and us.
And if anything changes, if any significant change is negotiated, is that lease then going to come back to City Council for a hearing?
Because if you're going to have a lease that is not finalized and --
-- what assurances do we have that you will not be changing some significant terms of the lease and not bring it back to City Council for perusal and approval?
I was just making sure I was legally correct here, Councilman. If we would change -- if for some reason, which we don't contemplate doing, by the way, we think we're done. But if for some reason, something would have to get changed in the term sheet, then yeah, we believe we'd bring these terms sheets back to you to reflect that and seek your consent. So we -- we don't have -- we're not seeking a right to take the terms sheet, go away, and then change it; we're seeking the right to have you approve the terms sheet, us have to live by it, and if we're going to change something, 271 11/30/00 - STADIUM HEARINGS we'll come back.
Thank you. Mr. Hankowsky, if you don't mind, I'd like to get a question in here and there.
And can you tell us if they include the City's labor contracts? 'Cause they're -- it's somewhat adjusted and I don't quite understand it.
Do they include the City's labor contracts, PGW's loan, the School District payment et cetera, et cetera, et cetera?
Are you talking about the document that we handed out today that showed the 5.8 million?
Whoa, whoa. 272 11/30/00 - STADIUM HEARINGS You're going to have to slow down. I didn't hear a word you said.
What does that mean to us? It's not the adjusted five-year plan.
No, it's just an analysis of what this proposed deal would do to the five-year plan. I mean, we have taken a look at the impact of the various things that have changed since the plan, including the 45 million to the School District, the loan to PGW, the labor agreements, and we've compared that to the increases in revenues that happen in 2000, which increased our base. And that's resulted -- and we look at it in our maintaining a positive fund 273 11/30/00 - STADIUM HEARINGS balance at the end of '05, and we can get you that sheet that shows us.
That would be fine, and we'd like you to have enough copies for each member of Council so that you could walk us through it.
Thank you. We've had some Councilmembers that have been waiting for some time. Councilman Rizzo?
Thank you, Madam Chair. My question is to PIDC, Bill Hankowsky. It confuses me to -- I don't know understand why, knowing the potential for two new facilities in South Philadelphia, even though the first choice you mentioned was at Broad and Spring Garden, then the Mayor's choice, and then we abandoned both of those, and then the focus was back in South Philadelphia. 274 11/30/00 - STADIUM HEARINGS I thought one of the missions of PIDC -- and I apologize if this question's been asked because I've been in and out of the chamber a few times during the day. How could we -- I want to talk about the one that got away. How could we not foresee the need for the Acme facility and let someone else buy that facility, knowing that we potentially were going to build stadiums and need parking lots, need all of the things to operate a sports complex. How could we -- I thought PIDC was out there, you know, a bit of speculator, buying up things, knowing that they would have a potential use. How could we allow that to get away?
Well, let me respond in a couple of ways. I mean, one is, I would hope we would never characterize PIDC as a bit of a speculator.
You're correct, PIDC does look at buying property in the City on a periodic basis, but we're totally constrained by available resources. We would not have the resources to buy -- we don't have the resources to 275 11/30/00 - STADIUM HEARINGS buy that property unless, through an action like we're talking about today, there's an authorization to borrow to do that. That's just one comment. In terms of the property, I mean, we did look at that property at the beginning of the calendar year because at the time, when the site selection work was underway, and it was unclear, you know, where the committee was going to come down, you know, before a decision made a decision was made. At the point where a decision made, that we were going to pursue 12th and Vine and the T-Warehouse site, we ceased our discussions. We had no authorization in a funding sense to go buy it, so -- and Acme, as you know, closed the facility in February of this calendar year. Basically, it was in a position where they were not going to carry it, so they put it on the market, and it got sold, it got put under agreement.
But, again, that's one of the comments, as you can -- the reason I'm asking the question is, it's constantly being 276 11/30/00 - STADIUM HEARINGS asked how we allowed that to happen. And you say that you didn't have the wherewithal to make a deal like that. Based on what all was going on, you don't think if you had approached whoever you needed to approach -- the Administration and the Council -- that you couldn't have gotten some approval or gotten the wherewithal to make that deal when you had an opportunity to make a deal? I mean, it doesn't -- based on this big picture, I would think it would have been easy to convince people that this would be a prudent purchase, a prudent investment.
Based on the fact that you were looking at a site that everybody knew wouldn't work.
Well, that -- that wasn't where we were -- I mean, I totally respect your position, Councilman; I always would respect your position. 277 11/30/00 - STADIUM HEARINGS
Okay, fine. Also, maybe you could explain for the record, everyone looks at the First Union Center complex and constantly compares this transaction with the transaction that occurred at the First Union Center.
Everyone suggests that this was built with private money, that there was no public money involved in this transaction before. I hope you don't mind me asking you to repeat the deal that was done there publicly, even though you --
-- explained it in a briefing. I would really appreciate it because, again, I think that the message really needs to get out there, because you certainly taught me something when you explained the situation at the First Union complex.
Right. The First Union 278 11/30/00 - STADIUM HEARINGS transaction had some analogies to this situation. It was a partnership to the State, the City, and a private party, who controlled sports teams -- controlled one at the time, subsequently controlled both of them. We funded the site preparation work with public dollars.
Yeah, we spent -- ooh, I have a recollection we spent 3 million to knock down -- at the time to knock down what was the old, you know, JFK Stadium. We spent money to also, which, I think was $1.4 million -- because you might remember, the Eagles practice bubble used to be next to the JFK Stadium, so we had to flip it up to the Vet lot and build those fields up there. I think that was a $1.4 million project. We -- the State put in a grant of 8 million, the City put in a low-interest loan of 8 million. The State put in an additional 279 11/30/00 - STADIUM HEARINGS million in three separate loan that totalled 5, all of which ran through PIDC in a kind of structuring way. And then most -- probably all of that was significant, you know, in and of itself, because I think the total City dollars were in the neighborhood of 32 million. I don't know if what I said adds up to it, but that's my recollection. And a project cost that about, I think, 212 million, from soup to nuts, comparable to the billion number here, you know, just from beginning to end. But then, very significantly, what we did was, we provided a revenue stream, and we provided a revenue stream that consisted of the revenue from the parking on what's called the South Lot, the lots that surround the two arenas on the 55-acre site, which they get 100 percent of for all events, including a football event or a baseball event. And we also provided them with 100 percent of the revenue basically from the lot that's around the Vet that excludes the VIP but includes the other, which was 5,755 spaces. And, in fact, if we created more than that number of 280 11/30/00 - STADIUM HEARINGS spaces, got more than 50 percent of that. The current ballpark numbers for the combination of those parking revenue streams, when you add them up, is in the neighborhood of 5, 5.5 million per annum. If you, you know, capitalize that, kind of the old fashioned way, worth about 50 million. If you put in another third, so maybe we put 80, we put 80 into a building. The building itself was like 170? Half?
And significant private, by the way. I mean, both sides did a lot, as I think they are doing in these transactions.
But my point, every place I go, every community meeting, it's constantly being thrown up that we're taking care of the fat cats, and that another fat cat built it all himself with no help.
Thank you. The Chair recognizes Councilman Cohen.
Thank you, Madam President. First, is it a fact that in the State legislation with respect to the State contributions, that there is a provision that if the revenue estimates do not yield certain amounts of increased revenue to the State --
-- as a result of the stadium activity, that the teams will have an obligation to pay to the State in the form of rent some amounts to make up for the deficit in increased revenue? Isn't there such a --
There is a provision in 282 11/30/00 - STADIUM HEARINGS the State legislation, and I think it creates 10-year periods. I'd actually have to look it up, Councilman, but my recollection is it's 10-year periods, during which there's a mathematical calculation of the revenues that the Commonwealth will receive and whether it -- and then there's numbers that it has to meet. I'm not sure if it's the debt service or a portion of the value of the grant. Yeah, there is such a provision. I can also tell you that the likelihood of that occurring is almost nil because the way --
The likelihood -- no. 16 The likelihood, yeah, of the events occurring because they included, I believe -- and I'd have to check. I believe it includes taxes generated by construction, et cetera. The base was set so low that you'd almost need a calamity for there -- and it would almost be like they couldn't operate for ten years for there not to be enough taxes to justify that the teams would have to do the payback.
Well, did the City 283 11/30/00 - STADIUM HEARINGS learn from that provision to perhaps draft a more effective provision or at least some provision to provide for a circumstance? If it's a provision that is not likely to occur, the inclusion of such a provision will certainly not cause any problem because the teams would have the same assurance that you would have. But suppose, you know, that it's not going to be triggered.
But shouldn't there be some form of provision like that to trigger something?
Because isn't it a fact that basically all risks involved here is the risk of the City? The bond issues have to be met every year, no matter what, and it's the City that pays the bond, not the teams. Now, why isn't there that kind of a provision?
Or maybe a more effective one. You may well be right in your analysis of the ineffectiveness in the State provision, but it certainly makes a lot of sense, 284 11/30/00 - STADIUM HEARINGS that kind of a provision, particularly if it will be effective.
Right. Councilman, as we said briefly out in the hall a minute ago, we will probably be disagreeing a few times over the next couple of days.
And I at least want to take one exception to the way you characterized this question. I do not agree that the City is the only party taking risk here. Everybody is taking risk here.
We have crafted a transaction where we have placed very significant risk on the teams. We have placed the risk of any cost overruns related to demolition, related to the site work, related to the cost of the 285 11/30/00 - STADIUM HEARINGS buildings, related to capital costs to run those buildings, related to the operation and maintenance of those buildings, related to their debt service on their borrowings. And I should point out that in a number of transactions around the country, the public kept some or all of those risks -- pays maintenance costs, had cost overrun exposure. You had some real calamities out there. In Cincinnati, it was very significant. I mean, tens of millions of dollars the public put out because of cost overruns. So we estimated a transaction -- we do have a risk, I'm not disagreeing that we have a risk; I'm only saying that we are not the only risk-taker. In fact, I think we -- the teams' share, if not, have greater risk than we have in the transaction.
But a lot of that will depend on the fine print that you don't want us to look at that tests your judgment. I'm a pretty good lawyer, and I would like the opportunity to see whether what you say, with the best of intentions, is in fact so, because it's my 286 11/30/00 - STADIUM HEARINGS experience that when risks are undertaken by companies, frequently there are exceptions to those risks listed in the fine print.
And they may be necessary exceptions, but there are exceptions. And we ought to have the deal, don't you think, to make a judgment as to the share of the risk between the City and the teams?
Because don't we really take a very big liability in this?
Well, again, let me -- I haven't fully addressed your first question, which I would also like to.
All right. See, words your are very soothing, but you're not going to be here very much longer.
And if you come here, you're going to be coming here openly in support of business interests.
I probably won't be around. I don't think you'll be seeing much more 287 11/30/00 - STADIUM HEARINGS of me.
Now you're representing the City in trying to develop partnerships, so we're not be able to pin you down.
Maybe we can pin the Mayor down for, some people say, three years; others say seven years.
But then there will be another mayor who will blame everything that's happened on this mayor.
But I'm just saying, why don't we have that kind of protection?
Well, let me -- I do want to get to that -- I do want to be responsive.
Well, what's so difficult about making that kind of language available to us? Why do you want to hold back showing us that language until after we enact the legislation? 288 11/30/00 - STADIUM HEARINGS
I can tell. In any negotiation, it's kind of easy -- and I don't mean this in any provocative way -- to sort of say, Well, why don't you do this instead of that? Or get this provision in or whatever? And --
Right. And we had a whole list of things we were trying to accomplish in this transaction. There were a whole list of things that we sought, there were things the teams sought, and we believe we've crafted a good transaction where we've gotten things from the teams that we wanted, and they can run the range from aggressive MBE to --
Was there ever 289 11/30/00 - STADIUM HEARINGS anything in writing listing those groups of requests or desires or goals?
Well, the reason I can't is you so often manage to veer the question in an entirely different direction.
Well, I'm asking, if there is a list, could we have that list so we can be as well informed as you? What were our goals in the negotiations? I don't know what they were.