Committee Hearing, January 26, 2005

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON PUBLIC PROPERTY AND PUBLIC WORKS - - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, January 26, 2005 11:20 a.m. - - - - BILL 040995 BILL 041000 BILL 041081 BILL 041071 (See transcript for title of the bills.) PRESENT: COUNCILMAN DARRELL CLARKE, Chair COUNCILWOMAN MARIAN B. TASCO COUNCILMAN JACK KELLY COUNCILMAN FRANK RIZZO COUNCILMAN JUAN RAMOS COUNCILMAN FRANK DICICCO COUNCILMAN MICHAEL A. NUTTER COUNCILMAN JAMES KENNEY - - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 I N D E X BILL 041081 PAGE KEN SIPOS, Public Property........... THOMAS DALFO, PIDC and PAID.......... 9 BILL 040995 KEN SIPOS, Public Property........... 11 PAUL DEEGAN, PIDC.................... 17 BILL 041000 KEN SIPOS, Public Property........... 27 PUBLIC MEETING ON BILLS 040995, 041000, 041081........................... 30 BILL 041071 JOSEPH JAMES, Public Property........ 34 EDWIN SHIRLEY, III, Inner City, Urban Cable Works................ 41 ERIC HOLDER, ESQ., Inner City........ 61 GERALD WALDRON, ESQ.................. 62 JOHN FOGARTY, ESQ, Time Warner....... 76 REGINA MARTIN, Time Warner........... 78 WENDY HYATT.......................... 92 SALVATORE DEBUNDA, ESQ., PhilaComm... 103 3 01/26/05 - PUBLIC PROPERTY - BILL 041081

Good morning. This is the Committee on Public Property and Public Works. Will the Clerk please read the title of the first bill.

Bill No. 041081, an ordinance authorizing the Commissioner of Public Property to execute and deliver to the Philadelphia Authority for Industrial Development a deed conveying, for nominal consideration, fee simple title to certain tracts of City-owned land located at 324-332 North 13th Street, with the buildings and improvements thereon, for further conveyance at fair market value.

Let the record reflect we have a quorum with Councilman Rizzo Councilman Kelly, Councilman Ramos, and Councilwoman Tasco. Is there anyone to testify on this bill?

Mr. Chairman, Members of the Committee, my name is Ken Sipos from the Department of Public Property. I am here to 4 01/26/05 - PUBLIC PROPERTY - BILL 041081 testify in support of Bill 041081, an ordinance authorizing a deed conveying fee simple title to the tracts of City-owned land, 334 to 332 North 13th Street with the buildings and improvements for further conveyance by the Philadelphia Authority for Industrial Development at fair market value with the net proceeds to be returned to the General Fund. This bill will allow the sale of surplus City-owned property through the Philadelphia Authority for Industrial Development with the proceeds returning to the General Fund. The Department supports this measure, and accordingly, I ask the Committee approve Bill 041081. I also ask the Rules be suspended so the ordinance may be passed on the second reading of Council.

Thank you. Any questions of this witness by Members of the Committee? Councilwoman Tasco.

The location, 5 01/26/05 - PUBLIC PROPERTY - BILL 041081 the 300 block of North 13th Street, what cross street is that?

It's the Old City Morgue.

If I can interrupt, it's between Vine and Wood Street.

Oh, it's north of Vine?

Yes.

Just beyond the expressway.

Thank you.

Is it near Roman Catholic.

Yes.

Councilman DiCicco.

Thank you, Mr. Chairman. I'll be brief. I want to take this opportunity to thank a number of people who were very helpful in putting this deal together. The Administration worked with me along with the Office of Department of Public Property, the MDO's Office, the Managing 6 01/26/05 - PUBLIC PROPERTY - BILL 041081 Director Office and others. This will allow the Roman Catholic High School to continue with its plan to expand its campus. Roman Catholic is probably the only Catholic high school that I can think of in the City of Philadelphia which is actually having growing pains. Many of these parochial schools over the years have -- except St. Joe's Prep. I wanted to take this opportunity to thank everyone. Roman Catholic, I think we all know, is the first Catholic parochial high school in the nation. They had some very difficult times about a decade ago. Since then, they've turned the corner, if you will. And their alumnae have been doing some great things. This is just one of many parcels that we've been trying to acquire for the Roman Catholic so they can make a true inner City campus for that high school. They want to literally take from Broad Street where the school is to 13th and to out to Wood and almost kind of cordon that whole section off to make a wonderful facility. 7 01/26/05 - PUBLIC PROPERTY - BILL 041081 Although it is a Roman Catholic high school, they do cater to inner-city children. It's a very diverse population there, and it's doing magnificent things. So again, I just wanted to take this opportunity to thank all parties who are involved in this legislation and make this a reality. It's been a long time coming. Thank you. And I believe that Councilman Kelly, I just found out, is an alumnus.

I'd like to address that, if I may, Mr. Char.

First, let the record reflect that Councilman Kenney has joined the Committee hearing. Councilman Kelly.

Thank you, Mr. Chairman. I just want to say as a graduate from Roman, it is a great institution. I want to assure my colleagues here that any school that puts a thought or two in my mind can't be all bad, I'll tell you that. I know I am one 8 01/26/05 - PUBLIC PROPERTY - BILL 041081 of the many, many thousands of people who have graduated from Roman and they have done an outstanding job. Of course, they're in all aspects of life, whether it be public or private enterprise. And I think it's a great growing institution, and I would like to see it continue to grow. I know that Father Brant is doing an excellent job there. And I want to assure all the Councilmembers here that Roman, as Councilman DiCicco mentioned, is probably the oldest school in the country, not only in the state. But we want to continue to see that grow. We want to continue to see it thrive in Philadelphia. And I want to thank you and all the people from Roman and all the alumnae members who have been making a great contribution to make sure that this school does thrive in the future. Thank you.

Thank you, Councilman. Any other questions of this witness? (No response.)

Thank you, Mr. Sipos. 9 01/26/05 - PUBLIC PROPERTY - BILL 041081 Anyone else to testify on this bill?

Good morning, Mr. Chairman and Members of the Committee. My name is Thomas J. Dalfo, D-A-L-F-O, and I represent the Philadelphia Industrial Development Corporation and the Philadelphia Authority for Industrial Development. I'm here today to testify in support of Bill No. 10 041081. The bill authorizes the City to convey the former City Morgue, a 17,000 square foot, 2-story property located at 324 through 36 North 13th Street to PAID. After acquisition by PAID, the property will be sold to Roman Catholic High School, a private high school operated by the Archdiocese of Philadelphia located at Broad and Vine Streets, with notable alumnae in attendance. Roman will convert the former morgue into educational facilities. PAID will negotiate an agreement of sale with Roman Catholic High in accordance with the terms and conditions of the Philadelphia Industrial and Commercial Agreement between the City, PAID, 10 01/26/05 - PUBLIC PROPERTY - BILL 040995 and PIDC. This sale will be based on two independent appraisals of the property and the proceeds from the sale will return to the General Fund. I would ask, as Public Property did, that the Committee consider this bill 8 favorably and ask that the Rules of Council be suspended to permit first reading at the next regularly scheduled meeting of Council. Thank you for the opportunity to testify. If you have any questions, I'll be more than happy to answer them.

Thank you. Any questions of this witness? (No response.)

There being none, thank you for your testimony. Anyone else to testify on this bill? (No response.)

There being none, will the Clerk please read the title of the next bill.

Bill No. 040995, an ordinance the Commissioner of Public Property 11 01/26/05 - PUBLIC PROPERTY - BILL 040995 to execute and deliver to the Philadelphia Authority for Industrial Development, for nominal consideration, a deed conveying fee simple title to a certain tract of City-owned land with the buildings and improvements thereon, situate in an area generally bounded by Casper, Carbon, Ontario, and Tioga Streets generally under and subject to the terms and conditions of the Philadelphia Industrial and Commercial Development Agreement between the City of Philadelphia, the PAID, and the Philadelphia Industrial Development Corporation.

Anyone to testify on this bill?

Mr. Chairman, Members of the Committee, my name is Ken Sipos from the Department of Public Property. I would like to testify in support of Bill 040995, a deed conveying fee simple title to the tracts of City-owned land in an area generally bounded by Casper, Carbon, Ontario, and Tioga Streets with the buildings and improvements thereon, further conveyance by the Philadelphia 12 01/26/05 - PUBLIC PROPERTY - BILL 040995 Authority for Industrial Development at fair market value with the net proceeds to be returned to the General Fund, generally and subject to the terms and conditions of the Philadelphia Industrial and Commercial Development Agreement between the City, Philadelphia, the PAID and Philadelphia Industrial Development Corporation. The bill will allow the sale of surplus City-owned property through the Philadelphia Authority for Industrial Development with the proceeds returning to the General Fund. The Department supports the measure, and accordingly, I respectfully ask the Committee approve Bill 040995. I also ask the Rules be suspended so that the ordinance may be passed upon the second reading at Council.

Thank you. Any questions? (No response.)

Please proceed.

Good morning, Mr. Chairman and Members of the Committee. My 13 01/26/05 - PUBLIC PROPERTY - BILL 040995 Thomas Dalfo, and I represent the Philadelphia Industrial Development Corporation and the Philadelphia Authority for Industrial Development. I am here today to testify in support of Bill No. 040995. This bill authorizes the City to convey a parcel containing approximately 8.5 acres of vacant land at an address of 3200 East Tioga Street to PAID. PIDC will market the property for sale to industrial users. The site is an attractive industrial parcel that is located in the heavily industrialized area very near the Tioga Marine Terminal. Over the past several months PIDC has received a handful of unsolicited inquiries to purchase this site for industrial reuse. After credible purchasers of the site has been identified PIDC will recommend a purchaser for the site to the City of Philadelphia. After a purchaser has been selected by the City, PAID will negotiate a sale in accordance with the terms and conditions of the Philadelphia Industrial and Commercial Development Agreement between the City, PAID, and PIDC. 14 01/26/05 - PUBLIC PROPERTY - BILL 040995 This sale will be based upon two independent appraisals of the property and its development as an industrial site. I believe that the development of this property as an industrial site will support and enhance the existing industrial district near the Tioga Marine Terminal. The net proceeds from the sale will go to the General Fund. I will would also ask that the committee consider this bill favorably and that the Rules of Council be suspended to permit first reading at the next regularly scheduled meeting of Council. Thank you for the opportunity to testify. I'll be more than happy to answer any questions you may have.

Thank you. A couple quick questions. One, with respect to the ultimate disposition of this property or any property done through PAID or PIDC, those properties come back to Council prior to the disposition?

If it's approved here at 15 01/26/05 - PUBLIC PROPERTY - BILL 040995 this point in time, it wouldn't. My understanding is this would be the Council's recommendation as to how the property would be sold.

So you're telling me that at this point you're basically being put in the position to market the property and we don't know who, in fact, or entity will, in fact --

At this point, we don't have a specific purchaser identified no; that's correct.

So we're authorizing you to negotiate a deal --

To market the property and negotiate.

Hopefully find a purchaser and then that particular item does not come back to this Council for disposition?

My understanding, this authorization would be the only authorization required by Council. It's our practice, however, to work with the Department of Public Property and the District Councilperson to 16 01/26/05 - PUBLIC PROPERTY - BILL 040995 make sure that the industrial reuse that's proposed for this site is consistent with the types of uses that are attractive for that particular location near the marine terminal.

Didn't this Council do a bill sometime ago that required ultimate disposition to come back to Council? Actually, I think I was the sponsor of the bill.

That's correct, you were.

So how are you now saying that it does not have to come back?

Because I think that's why we're coming here today, to get Council's approval. If we need to have another --

But you have no 19 idea what the development will be?

No. At this point, no. 21 Councilman, if we are required to come back to authorize the final disposition of the property, then that's what we'll do.

That was my understanding. 17 01/26/05 - PUBLIC PROPERTY - BILL 040995 Paul, you want to speak to that? Because there was some concern when we authorized PAID to negotiate a deal involving SEPTA. They negotiated a deal and then subsequently they conveyed the property without the knowledge of the District Councilperson who, frankly speaking, was somewhat embarrassed when I was at a community group and I told a community group that it has not been sold, and it in fact had been sold. And we subsequently did a bill in council to require that ultimate disposition come back to Council.

Paul Deegan, PIDC. I think the bill addressed when we take property from a non-governmental agency, a non-City agency. And since this is City property, it wouldn't have been covered by that bill. I think that's the difference. I think SEPTA is regarded as --

So why wouldn't it now have to come back to the Council if it's a government property?

I think the original 18 01/26/05 - PUBLIC PROPERTY - BILL 040995 bill was phrased in a way that whenever we sell property -- whenever we accept property from a non-City, non-governmental agency, that it would have to come back for ultimate Council approval. Where previously there wasn't any formal sign-off. See, with the SEPTA deal, there really wasn't an ordinance process in place. That's why it fell through the cracks. It was kind of a unique transaction because we don't do that many transactions with SEPTA or other authorities around the City and the State. Most of our transactions are with the City, selling City property, and we've doing that for ages coming here and getting an ordinance 17 authorizing us to sell the property. And before we make settlement, we always advise the District Councilperson who the buyer is. I think that's worked fairly well in the past. I think in your case, because it was kind of a unique transaction, it didn't require any other formal approval that you have now put in place a process where you see both the City transactions which is required 19 01/26/05 - PUBLIC PROPERTY - BILL 040995 by the Charter, the City has to do an ordinance to convey property out, but any property we take in from a non-City agency, you will also see that. That was my understanding of what the intent of that ordinance was.

If you're telling me that now that once we authorize PAID to market the property, that that property upon disposition does not have to come back to Council, there's a strong likelihood that there will be an ordinance in the very near future that will, in fact, require you to do such. I'm somewhat concerned personally -- I don't know about other members of the Committee -- that a parcel of land that has some level of substance would not come back to Council for disposition, having no idea at this point what ultimately this property will be developed into. And I know you said we get a courtesy call, which is nice, but I would like to think that there is a little more substantive process than that. 20 01/26/05 - PUBLIC PROPERTY - BILL 040995

In most cases, and I think with the previous bill, we know who the buyer is going to be. So when we're selling properties, City surplus properties, in most cases we have an idea who the buyer is and we worked with the Council office prior to coming to City Council for formal approval. In this case, there are some properties that -- until they're put on the market, we don't really know who the buyer is going to be, and people are reluctant to bid on properties where they don't know if the City's even going to be willing to dispose of it. I think years and years ago there was a two step process, but -- Go ahead.

Good morning. We just spoke briefly before the hearing about that in terms of having some sense who is coming into the community once you sell the property and convey it. We would like to know just who the buyer is going to be. Sometimes the company is not compatible with the 21 01/26/05 - PUBLIC PROPERTY - BILL 040995 community, and so after the fact doesn't help us, because I'm running into that problem now with a property now in my district on expansion. An expansion took place and it's really a nightmare for the people who live around that business. So as I stated to you earlier, I think it's important that we know who the buyer is and what kind of business it is. Not necessarily who the buyer is, but what kind of business will they operate in that facility to see what impact it will have on the community and at least have some -- either negotiate some provisos or conditions if the business is not compatible with the community.

Well, in this case, if the Committee will hold the bill, the bill 19 could be held until we do market the property. I'm not sure if that's --

Well, the problem is the sponsor of the bill is not present.

We do talk quite often with Chris Creelman in Councilwoman 22 01/26/05 - PUBLIC PROPERTY - BILL 040995 Krajewski's office. And I think between Commerce Department, the City, Public Property, and Councilwoman Krajewski's office, it was mutually agreed on that we should try to get a buyer for this property. But if the bill was held, I don't think it would harm anything if we come back and reconvene the Committee to --

I don't want to take the liberty of holding the Councilwoman's bill without having some discussion with either her or a member of her staff. But I can tell you, I'm a little uncomfortable with the process that somehow before it's disposed of it doesn't have to come back to Council for disposition.

Well, if you have more information on who the company is at the hearing when the bill comes in, I think that would address those concerns. I can see from your point of view, you kind of right, you feel that you're writing a blank check and you don't know when we're going to cash it. So I think we generally try and have as much 23 01/26/05 - PUBLIC PROPERTY - BILL 040995 information about the buyer as possible when we arrive at City Council. I think we work with every Council office on land sales in their district. I don't think we've ever settled with a land sale where the Councilperson -- in my years in PIDC and 8 four years of Public Property, I can't 9 remember any case where we settled, whether we 10 had authorization or not, with a buyer who the 11 District Councilman did not want the 12 transaction to go through. 13

You actually did 14 on the property that I referenced earlier. 15

SEPTA was the odd case, 16 yes. That's true. 17

First you sold 18 it, then you went to settlement even after we 19 had some words. 20

I'm sorry, let me correct myself. That is the one case where we did -- that slipped through the cracks. And that was because that was a very unique situation where we don't sell SEPTA property generally. 24 01/26/05 - PUBLIC PROPERTY - BILL 040995 Councilman Kelly.

Paul, I just have a question. Why is it so important to come here today without knowing who the user is going to be? Is there any reason why you're here today to try to expedite this? This bill 8 wouldn't give you the permission to sell it, you already have it. I just want to know why you would be here today rather than wait until you had a buyer in mind and then come to the Council and then saying that "We want to sell this because someone's really interested in buying it." And you could let us know then or at least inform the District Councilperson who the buyer is.

I think the District Council office has had interested parties calling them and that's why they would like to move the bill along. I think there has been interest expressed in the past.

In order words, you already has some buyers with an interest to purchase this, correct?

That's my understanding 25 01/26/05 - PUBLIC PROPERTY - BILL 040995 from the Councilperson's office, from Councilwoman Krajewski's office. But there are other inquiries.

Then you would go through the District Councilperson at this time?

Yes.

Thank you.

Thank you, Councilman. One last question briefly. With respect to disposition of property through PAID, traditionally you seek fair market value for the property. Do you have any flexibility in terms of disposing of that property as it relates to its value? Example, if there's a development that's long-term will be beneficial both to the community and the City, the numbers simply don't work in terms of the disposition price/acquisition price to make the development work. Do you have the flexibility within your agency to change the sales price of the property to make the development work, subsequently providing a 01/26/05 - PUBLIC PROPERTY - BILL 040995 better benefit to the City on a long-term basis?

If the Council ordinance 5 authorizing the sale had language in that allowed the sale to occur at less than fair market value or nominal consideration, depending upon how it was phrased, we would have that flexibility. If it is sold subject to the terms and conditions of the Commercial and Industrial Fund, then we'd have to do it at fair market value. There are times sometimes where issues come up and we have to come back to look for a change.

Okay. Thank you. Any other questions of these witnesses? (No response.)

Thank you, gentlemen. Anyone else to testify on this bill? (No response.) 27 01/26/05 - PUBLIC PROPERTY - BILL 040995

There being none, will the Clerk read the title of the next bill?

Bill No. 041000, an ordinance authorizing the Commissioner of Public Property, on behalf of the City of Philadelphia, to grant to the Southeastern Pennsylvania Transportation Authority an easement across a portion of a certain parcel of land in the vicinity of the intersection of Ridge Avenue and Main Street.

Anyone to testify on this bill?

Good morning, Mr. Chairman and Members of the Committee. My name is Ken Sipos from the Department of Public Property. I'm here to testify in support of Bill 041000, an ordinance 20 authorizing the Commissioner of Public Property on behalf of the City to grant an easement to the Southeastern Pennsylvania Transportation Authority across a portion of a certain parcel of land in the vicinity of the intersection of Ridge Avenue and Main Street. 28 01/26/05 - PUBLIC PROPERTY - BILL 040995 The bill will enable SEPTA to construct a new passenger waiting room bus shelter as part of their Wissahickon Transfer Center and Improvement Project. The project will revamp the Wissahickon Transfer Center and help ease traffic and congestion on Ridge Avenue. The construction is estimated to take nine days. As part of the negotiated agreement, SEPTA will allow the City to connect a sewer line from the Philadelphia Canoe Club to SEPTA's existing sewer line, alleviating the need to dig up Ridge Avenue in order to connect the line to the City's existing line. The Department of Public Property supports the measure, and accordingly, I respectfully ask that City Council approve Bill 041000. I also ask that the Rules be suspended so the ordinance may be passed upon the second reading at Council. Thank you. I'll be happy to answer any questions.

Thank you. Any questions for this witness by 29 01/26/05 - PUBLIC PROPERTY - BILL 040995 members of the Committee? (No response.)

There being none, anyone else to testify on this bill? (No response.)

Thank you. I'll have a two-minute recess. I'll be right back with you. (Brief recess.)

Thank you for your patience. The Committee on Public Property and Public Works will go into a public meeting. We will be reporting out three bills and then we'll go back into public hearing to hear the cable bill. - - - - 30 COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC MEETING COMMITTEE ON PUBLIC PROPERTY AND PUBLIC WORKS - - - - Wednesday, January 26, 2005 - - - - Public meeting conducted by the Committee on Public Property and Public Works, held in Room 400, City Hall, Philadelphia, Pennsylvania, on the above date, to consider action on the following: BILL 041000, 041081, 040995. PRESENT: COUNCILMAN DARRELL CLARKE, Chair COUNCILWOMAN MARIAN B. TASCO COUNCILMAN JACK KELLY COUNCILMAN FRANK RIZZO COUNCILMAN JUAN RAMOS COUNCILMAN FRANK DICICCO COUNCILMAN MICHAEL A. NUTTER

Councilman Ramos, can I ask you to make a motion on Bill 4 No. 041000.

Thank you, Mr. Chairman. I move that Bill No. 041000 be reported out of Committee when favorable recommendation, and further move that the Rules of Council be suspended to permit first reading of this bill at our next Council Meeting. (Duly seconded.)

Bill 041000, a motion on that bill and being seconded will be reported out of Committee with favorable recommendation. I ask for a vote. All in favor? (Aye.)

All opposed? (No response.)

Bill No. 041000 will be reported out of Committee with a favorable recommendation and request for Rules suspension. Councilman Ramos, can you please 32 make a motion on Bill No. 041081.

Thank you, Mr. Chair. I move that Bill No. 041081 be reported out of Committee with a favorable recommendation, further move that the Rules of Council be suspended to permit first reading at this bill at your next Council Meeting. (Duly seconded.)

So moved. Can I ask for a vote on Bill No. 041081 to be reported out of Committee with favorable recommendation. All in favor? (Aye.)

All opposed? (No response.)

Bill No. 041081 will be reported out of Committee with a favorable recommendation and a request for Rules suspension. Councilman Ramos, a motion on Bill 23 040995.

Thank you, Mr. Chairman. I move that Bill No. 040995 be 33 reported out of Committee with favorable recommendation, further move that the Rules of Council be suspended to permit first reading of this bill at our next Council Meeting. (Duly seconded.)

All in favor? (Aye.)

All opposed? (No response.)

Bill No. 040995 will be reported out of Committee with favorable recommendation and request for Rules suspension. Thank you very much. That concludes the public meeting. - - - - 34 01/26/05 - PUBLIC PROPERTY - BILL 041071

We will now go back into the public hearing. Will the Clerk please read the title of the next bill?

Bill No. 041071, an ordinance consenting to the transfer of control of the Area II cable television franchise from Urban Cable Works of Pennsylvania, LLC to Time Warner Cable Inc., and to the transfer and assignment of the Area II cable television franchise from Urban Cable Works of Philadelphia, L.P. to Time Warner Cable, Inc., both under certain terms and conditions.

I'd like to have Mr. Joe James please come to the witness table.

Good morning.

Good morning, sir.

Councilman Clarke, Members of the Committee, I am Joseph James, Deputy Commissioner for the Department of Public Property. , to Time Warner Cable, Inc. Pursuant to the terms of the City's franchise agreements with cable television providers, a transfer of the franchise from one owner to another or a change of control of the franchise requires that the City be notified of the proposed transaction and provide consent by ordinance of Council. The Federal Communication Act also provides that information about the proposed transaction be provided to the local franchising authority and establishes a framework for the review and consent of the locality. In this case, Urban Cable Works notified the City of the proposed transfer and provided the City a copy of the required Federal Communications Commission Form 394. The City requested additional information with respect to the transaction and the franchisee 36 01/26/05 - PUBLIC PROPERTY - BILL 041071 and the transferee responded with additional data which has been reviewed by the departments as well as the Law Department and the City's cable television consultant, TCS International. This information has been concluded in the white binders which were provided to Members of this Committee of Council. Based upon the material submitted and the discussions pursuant to this transfer and recommendations of the City's cable consultant, it its the recommendations that the City Council give its approval for this transaction and the transfer of the cable television franchise for Area II to Time Warner Cable. Bill No. 041071 was introduced December 9th of 2004. Representatives from my department have engaged in continuous discussions with representatives from Time Warner Cable concerning transfer of the franchise as permitted by the bill. Through the franchise transfer process, we have sought terms for an agreement that will best serve 37 01/26/05 - PUBLIC PROPERTY - BILL 041071 the needs of the communities in which Time Warner operates, as well as the needs of the City. Time Warner has agreed to assume the full obligations of the current franchise both pursuant to the terms of the current franchise agreement for Area II which runs through 2014, as well as the side agreements which Urban Cable Works entered into at the time of the last transfer in 1999. This commitment will be documented by an assumption agreement of former which is Exhibit C to Bill 041071. Time Warner is thoroughly familiar with the operations of Area II franchise because it has a history of involvement in the Area II franchise. A Time Warner subsidiary, Wade Cablevision was the Area II franchisee in the 1990s. In 1999, Time Warner joined the Inner City Broadcasting Corporation to create the Urban Cable Works partnership and with the City's consent transfer of the Area II franchise to the new partnership. Time Warner's role has been that of a minority partner, holding only 40 percent of the partnership interest. The majority 60 percent 38 01/26/05 - PUBLIC PROPERTY - BILL 041071 interest, including the greater general partner shares have been held by entities controlled by Inner City Broadcasting Corporation. P. The two-part transaction what is now proposed formally involves both a change of control of the franchise and an assignment of the franchise to a new cable provider. In the first step, Time Warner Cable will acquire all the general and limited partnership interest and Urban Cable Works that it does not yet own. In the second step, Urban Cable Works will be merged into Time Warner Cable which will be the surviving entity and therefor the new franchisee. The Time Warner Cable is a Delaware corporation formed in 2003 in conjunction with the reorganization of the parent company Time Warner Cable Television Holdings. , subsidiary, with the remaining percent stake held 5 indirectly by Comcast Corporation.

Time 6 Warner Cable either operates directly or 7 through subsidiary cable systems in 10,898,000 8 subscribers in 27 states, making it the 9 nation's largest cable operator in terms of 10 subscribers served. 11 According to the form 10-Q filed 12 with the US Securities and Exchange Commission 13 for the fourth quarter of 2004, Time Warner 14 Cable is a single biggest generator of 15 operating income of all Time Warner business 16 segments. The company's three main product 17 lines are video, including both tradition 18 cable television and advanced digital services such as digital video, high definition television, video on demand, subscriber video on demand, and digital video recording, high speed data services and digital phone service being introduced this year. The information provided to the City is sufficient for the Department to determine 40 01/26/05 - PUBLIC PROPERTY - BILL 041071 that the proposed transferee, Time Warner Cable, has the financial, technical, and legal qualifications to provide cable services to the City's franchise Area II. In conclusion, in terms to which Time Warner's commitments are acceptable to the Department, I respectfully ask the Committee that the Rules of Council be waived to allow this bill to be reported out of Committee and have its first reading at the next Council Session. Although, I must now leave to attend a meeting in Harrisburg, I will be available at a later time if the Committee so chooses to adjourn the hearing until another date when I can answer further questions that you may have on the transaction. Thank you.

Any questions of this witness by members of the Committee? Councilman Nutter.

Thank you, Mr. Chairman for this opportunity. I've read there through Mr. James' testimony, I would have, as you can imagine, just a few 41 01/26/05 - PUBLIC PROPERTY - BILL 041071 questions. In light of his request and his pending business in Harrisburg, I will hold those questions. I would ask if the Chair would provide another opportunity in working with the Committee to have a subsequent date for continuance of this hearing.

Absolutely.

Thank you.

Thank you.

Thank you, sir. Anyone else to testify on this bill? I believe we have Edwin S. Shirley, III.

Good morning.

Good morning. Please read your name for the record.

Edwin Shirley. Members of the Committee on Public Property and Public Works and concerned citizens, good morning. My name is Edwin Shirley. I am a partner at Fairview Capital Partners, Incorporated, a venture capital fund of funds in Farmington, Connecticut, and a 42 01/26/05 - PUBLIC PROPERTY - BILL 041071 member in Urban Cable Works of Pennsylvania, LLC, through Fairview's investment in City Cable Works, Inc. I want to thank you for the opportunity to appear today to testify on behalf of the bill to authorize the transfer of the Area II cable franchise from Urban Cable Works of Pennsylvania, LLC, and Urban Cable Works General, LLC, to Time Warner Cable, Incorporated. Today, I am representing Urban Cable Works of Pennsylvania, LLC, and Urban Cable Works General, LLC, which are the proposed transferors of the Area II cable franchise. The two Urban Cable Works entities have as their owners or investors Inner City Broadcasting Corporation, Pacesetter Growth Fund, L.P., Mesbic Ventures, Incorporated; Fairview Capital Partners II; and the local partner PhilaComm. In my brief statement, I want to explain Inner City's and its partner's involvement with the Area II franchise and with the proposed transfer. Before turning to 43 01/26/05 - PUBLIC PROPERTY - BILL 041071 the details, however, I want to emphasis that we have all been pleased to have been a part of the Area II cable franchise and honored to serve the residents of Philadelphia. During the past five years, approximately $45 million was spent upgrading the system and its plant which allowed for significant expanded services, including video, internet and other broadband features. This system is one of the most technologically advanced cable systems in the country. Last year, after five years of involvement in the franchise, the Inner City led investor group decided to sell its interest in the franchise to its partner in the franchise, Time Warner Cable, Inc. On June 30, 2004, Urban Cable Works of Pennsylvania, LLC, and Urban Cable Works General, LLC, entered into a purchase agreement with Time Warner Cable to sell their collective 60 percent equity interest to Time Warner Cable.

Point of order.

Councilman 44 01/26/05 - PUBLIC PROPERTY - BILL 041071 Nutter.

Thank you, Mr. Chairman. Mr. Shirley, I hate to cut across your statement, but I just received it a little while ago and I'm trying to get through it. I've seen the organizational structure that's been provided. And unfortunately, I need to better understand the nature of your testimony and your presence here today. So I certainly appreciate that you'd like to get through your statement, but I need to better understand exactly who we're talking to. Now, you're a partner at FAIRVIEW Capital?

That's correct.

That's where you work?

Yes, that is where I work.

So you are not an employee of Urban Cable Works of Pennsylvania?

No, I am not, 45 01/26/05 - PUBLIC PROPERTY - BILL 041071 Councilman.

And what percentage of Urban Cable Works of Pennsylvania does Fairview Capital own or have an investment interest in?

Let me check the chart. We are an 8 percent owner.

No, I can read the chart. I'm pretty decent at that. Let me understand this then. If you're an 8 percent owner of --

Fairview Capital II is an 8 percent owner.

Of City Cable works, Inc.; is that correct? That's what the chart says.

Yes, that's correct.

And you're 's part of an investor group that owns 20 percent of City Cable Works, Inc.; is that right?

That is correct.

And then is it that Urban Cable Works of Pennsylvania, LLC, combined with Urban Cable Works General, LLC, 46 01/26/05 - PUBLIC PROPERTY - BILL 041071 which is a 60 percent owner, that entity owns City Cable Works, Inc.? is that the way this works?

No, sir. It works the opposite way.

The opposite way?

Yes.

Okay, why don't you explain it to me?

City Cable Works, Inc., which is percent owned by -- if 14 you're looking at the chart, sir, 20 percent 15 owned by the investor group to the right, 16 Fairview Capital II, Mesbic Ventures, and 80 17 percent opened by Urban Cable Works of 18 Philadelphia, Inc. City Cable Works owns 80 19 percent of the entity Urban Cable Works of 20 Pennsylvania, LLC --

Because PhilaComm owns the other 20?

That IS correct.

Well, the reason I cut across your testimony is you identified 47 01/26/05 - PUBLIC PROPERTY - BILL 041071 yourself as representing Urban Cable Works of Pennsylvania, LLC, and Urban Cable Works General, LLC. I'm just really trying to understand that if we're having a representative from Urban Cable Works of Pennsylvania, I would think we would have someone who either works for them or owns City Cable Works, Inc., or someone of that position with one of those companies. You are part of an investor group that owns a certain percentage of a much larger entity.

That's correct.

So how is it that you're now the representative of the company? I'm just trying to understand this.

I was designated as a member of the Board of Directors of Urban Cable Works of Pennsylvania, LLC, one member of the Board --

How many members are there?

I think there are five.

What are their 48 01/26/05 - PUBLIC PROPERTY - BILL 041071 names?

Louis Wright. Pierre M. Sutton, myself, James Winston, and the late Obra Kernodle.

So those five individuals are the board members of Urban Cable Works of Pennsylvania?

I believe so, yes.

You believe so?

Yes. I can check with my attorney if you want verification.

All right. And was there a meeting of the Board to determine who the representative would be today?

No, there was not a meeting.

So who decided that you'd be the representative?

In consultation with our attorneys, it was requested that I represent the group today.

All right. I just need to understand who's in what position, who's speaking for whom so I'm clear 49 01/26/05 - PUBLIC PROPERTY - BILL 041071 on who it is I'm dealing with. You can proceed. Thank you, Councilman.

I am almost done with my statement. During the discussion of the pending transfer, we have heard concerns about two issues. Local minority participation in the franchise and concern about some possible sale down the line to Comcast. Both of those issues are more directed at Time Warner Cable than the two Cable Works entities -- please allow me to make two observations. First, as minority-owned businesses, Inner City and its fellow investors strongly support the inclusion of minorities in any and all business opportunities. Secondly, with respect to the issue of whether this transfer would facilitate some future sale to Comcast, I can only tell you what I know. The Inner City investors have no knowledge of a plan to transfer the Area II franchise from Time Warner Cable to Comcast nor has any such consideration influenced its decision to sell 50 01/26/05 - PUBLIC PROPERTY - BILL 041071 its interest to Time Warner Cable. The Inner City investors have no influence on any future sale. Of course, this ultimately is a question for Time Warner Cable and it may be a fair question, but because any future sale has to go through this same Committee, we hope the debate about a possible future sale will be held at that future hearing and will not serve to delay or prejudice our interest in prompt consummation of this pending transfer. In closing, Inner City and its fellow investors would like to express our gratitude to the City for making it possible for us to serve the people of Philadelphia. And we stand ready to answer any questions that Council may have. Thank you.

Let me understand -- first of all, thank you for your testimony. Let me understand the last part of your testimony. Are you suggesting that any concern that members of this Council or this Committee have relating to resale down the line by Time Warner either to Comcast or either to diminish the level of minority 51 01/26/05 - PUBLIC PROPERTY - BILL 041071 participation, those questions should be directed solely at Time Warner and not Urban Cable?

What I'm suggesting, Councilman, is that the Council, because of its oversight, has an opportunity at that point, in fact, has the authority to approve such a transfer. And that we're suggesting that at that point in time Council have an opportunity to address that if indeed that is a concern of the Council he had.

Shouldn't we question that now because this particular proceeding and this action will position the ultimate resale of that property somewhere down the line, that cable franchise somewhere down the line? And were it not for this action today, Time Warner would not be in a position to potentially somewhere down the line resell --

Oh, no, sir. And I agree. We are simply stating that, which is rather obvious, that because you have approval authority that it is at that point in time 52 01/26/05 - PUBLIC PROPERTY - BILL 041071 that you will have an opportunity to approve or not approve a sale by Time Warner to anyone.

We understand that, but we're talking about what's being done today. And we have some concerns today about the potential ramifications of whatever action we end up taking today or what other day as it relates to any other particular matter. So at that time if, in fact, there's some ultimate resale, relates deal with that at that time.

Yes, sir.

BUT there is an action being taken today that can position whatever will happen in the future.

Yes, sir.

Enable that to happen so...

My only response to that is that if the Council were to approve what we're requesting today, our investment group is not in a position to affect what happens in the future with regard to -- 53 01/26/05 - PUBLIC PROPERTY - BILL 041071

After the fact.

Right, after the fact. And that those questions can be directed to Time Warner.

We're aware of that.

Yes, sir.

Any questions from Members of the Committee for this witness? Councilman Nutter.

Thank you, Mr. Chairman. Mr. Shirley, let me -- again, back to the chart. Your testimony would appear to make no reference directly to -- maybe it does. You mentioned almost in passing Inner City. The second paragraph of your testimony, you talk about Inner City Broadcasting Corporation, Pacesetter Growth Fund, and a number of others. Where would I find Inner City on this chart?

At the bottom of the 54 01/26/05 - PUBLIC PROPERTY - BILL 041071 chart, Councilman, you see Inner City Broadcasting. And as you move toward the top of the chart, each of those entities are subsidiaries wholly owned or substantially wholly owned by Inner City Broadcasting Corporation until you get to City Cable Works, Inc., which is, as we said before, 80 percent owned by Inner City through its subsidiaries and percent owned by Fairview Capital, 11 Pacesetter and Mesbic Venture. 12

Can you tell me 13 why there is no one directly from Inner City 14 here today? 15

No, I'm sorry, I 16 cannot tell you. I was the designated 17 representative 18

Was any 19 discussion among the four remaining partners 20 about that? I mean, you've known about this hearing for a little while, right?

Yes.

And they are one of the major entities involved in this transaction, correct? 55 01/26/05 - PUBLIC PROPERTY - BILL 041071

That is correct.

So why wouldn't they send anyone to the hearing?

Well, with all due respect, Councilman, they did send me. And as a representative --

I understand that. But you do not work for Inner City Broadcasting Corporation, right?

I do not work for them, no. 13

So I'm not disrespecting you. I understand what your role is; we've been through that. What I'm asking is why is there no one that works for the company here?

For Inner City Broadcasting?

Yes.

I cannot answer that, sir.

Now, your testimony again makes reference to all of the investor groups, including the local partner 56 01/26/05 - PUBLIC PROPERTY - BILL 041071 PhilaComm. Am I to be left or is this record to be left with the impression that you are speaking on behalf of all of those entities?

Yes, sir. I am speaking on behalf of the collective 60 percent -- the collective group that opens 60 percent of the franchise, which does include PhilaComm which, as you know, is a group formed by local Philadelphia business persons.

And you've been authorized by all of these different investor groups to be here today as their collective representative; is that your testimony?

My testimony is -- if you asking have I been authorized directly by PhilaComm, I have not spoken to anyone from PhilaComm, no. But between Inner City --

You guys are all in this together; is that my understanding?

Yes.

And did you talk to the folks from Pacesetter or Mesbic Ventures or Inner City Broadcasting Corp.?

We have not spoken to 57 01/26/05 - PUBLIC PROPERTY - BILL 041071 Pace setter Mesbic Ventures which, by the way, are governed by the -- owned by the same general partner. We did speak with --

Owned by what same general partner?

Pacesetter and Mesbic Ventures are owned by the same firm.

Which firm is that?

It's called Pacesetter Growth Fund. Mesbic Ventures is an affiliate of Pacesetter Growth Fund.

All right. So you've had some level of contact with everyone except the PhilaComm Group?

Yes.

Why is that?

At the current time, we have no -- well, to be begin with, the one representative that I've had contact with has passed away.

I understand that. I'm quite well aware of that.

And since then I have 58 01/26/05 - PUBLIC PROPERTY - BILL 041071 had no contact -- personally I've had no 3 contact with them. You asked me why I have not been contacted by them.

Is it my understanding that there is some level of financial relationship between the local partner and Inner City?

Yes.

Or Urban Cable Works of Pennsylvania?

Urban Cable Works of Philadelphia.

Up at the top?

No, sir, close to the bottom.

Right above Inner City.

Yes.

I'm sorry. I'm looking up at Urban Cable Works of Philadelphia, LP. So there is some financial relationship between the two. I assume as this transaction moves through the process, 59 01/26/05 - PUBLIC PROPERTY - BILL 041071 there would be some need or some impact between those two entities as a result of this transaction. Why wouldn't the parties be in discussion?

I think they are being discussion.

But you've indicated you have not had any contact?

That's correct.

Someone else has had contact?

Yes.

Who would that be?

That would be representatives from Inner City and representatives from PhilaComm have had contact with each other concerning the arrangement.

Okay. Let's go back to the second page of your testimony and talk about -- you made a statement, Councilman Clarke had a question, and then you had Q and A as a result I'd like 60 01/26/05 - PUBLIC PROPERTY - BILL 041071 to further explore. Your statement is the Inner City INVESTORS have no knowledge of a plan to transfer the Area II franchise from Time Warner Cable to Comcast.

That is correct.

Are you also then saying that you are completely unaware of any discussions about such a concept?

That is absolutely correct. As we sit here, I am completely unaware of any discussion that Time Warner has had with Comcast with regard to the Area II franchise.

And you've never participated in a discussion, you've never heard anyone talk about it?

I have never heard anyone talk about that discussion, no. No, sir, I have not.

So how did you become aware of it in order to reference it in your testimony?

Our counsel has had 61 01/26/05 - PUBLIC PROPERTY - BILL 041071 some discussion with the counsel of the Public Property and Public Works area and --

Who is your Council.

Covington and Burling.

So your counsel has had discussions with the City Solicitor's Office?

I believe so, yes, sir. And also Time Warner's counsel, John Fogarty who is present has had discussions with them, and out of those discussions, my understanding is that these two issues arose out of those discussions that I referenced.

Why don't we have your counsel up at the table for a second.

Please state your name for the record, please.

Good morning. My name is Eric Holder. I'm with the law firm of Covington and Burling. I'm joined by my colleague Gerald Waldron and Murad Kalam, both whom are with Covington Burling as well, and 62 01/26/05 - PUBLIC PROPERTY - BILL 041071 we're from Washington, D.C.

Thank you. Proceed, Councilman Nutter.

Thank you, Mr. Chairman. I want to make sure that we're clear as to today's hearing. You were invited to participate in today's hearing, I'm assuming, by the Department of Public Property? How did you become knowledgeable about today's hearing?

Gerald Waldron from Covington and Burling. In our conversations with the City and indeed with your office and your staff, we became aware of this hearing.

And you're participating in this hearing in accordance with not only the franchise agreement requirements, but also in accordance with the various provisions of federal law that govern franchise transfers; is that correct?

The federal law does govern the franchise transfer process and has 63 01/26/05 - PUBLIC PROPERTY - BILL 041071 rules and procedures as part of that process, yes, sir.

So you would be in agreement that we are conducting today's hearing in accordance with Title 47 in Section 7 537, Sales of Cable Systems; is that correct?

Sir, if I might, the hearing is held consistent with the Communications Act and with the City's role in terms of approving a transfer. As both Time Warner and Urban Cable Works notified the City's attorney, there is an argument which, frankly, we are exclusively preserving by being here that because the City's opportunity to review is defined by federal law, that the parties at least want to reserve the legal argument that the time for the City's purview has lapsed. Though I do want to underscore that Mr. Shirley is here today in order --

But you're not making that argument?

Sir, Excuse me?

But you're not making that argument as we sit here today, 64 01/26/05 - PUBLIC PROPERTY - BILL 041071 correct?

No, sir. We're not making that argument today.

You are physically here, you are participating in this hearing that we're conducting in accordance with both the franchise agreement and the federal statute; is that right?

Sir, what I'm saying is we are here today to urge City Council to act, but we are not -- and that's why we shared the letter with Council. We are not relinquishing our legal argument or somehow waiving our legal argument. Nonetheless, we are anxious to see this City Council act on the ordinance.

If I might add, as I understand Mr. James' testimony, it appears to me that the City seems satisfied that the information that would be required under Section 394, in fact, has been provided?

We appreciate Mr. James' testimony. And I think, as I indicated earlier, we will have some 65 01/26/05 - PUBLIC PROPERTY - BILL 041071 additional questions for him at a subsequent time. Notwithstanding our respect for Public Property, the City solicitor's Office, and the fine work that both of them do, this City Council will reserve its rights under our responsibilities to conduct a process and have a public hearing, ask the kinds of questions that we think we need to have answered as we are required to take action in these particular matters. So everyone can reserve whatever rights they want to reserve. We're going to reserve ours, and we're the legislative body of this City and we'll conduct the process as we see fit.

That's fine, Councilman. We're here to try to cooperate with you in any way that we can, understanding the reservations that s we have expressed as well.

I understand. And understand our position as well.

Understood.

Everybody's in agreement. Very good. 66 01/26/05 - PUBLIC PROPERTY - BILL 041071 Mr. Shirley, tell me a little bit about, so I can better understand, what is the relationship between Inner City, Time Warner, the local group, the other investors. How does this all work?

Shall I refer to the chart, Councilman? Or would you just like a narrative?

Or would I just like a what?

A narrative, for me just to explain.

Well, you can refer to the chart. You can give me a little bit of narrative as long as I don't have to hear about where you went to grade school or high school or that you take care of your cats. So just tell me the story.

The easiest way to start, I think, is with the chart, if I may. If we start at the top of the chart, Councilman, you'll see that you have the franchise, Area II franchise, which is owned by -- please interrupt me if I'm going over 67 01/26/05 - PUBLIC PROPERTY - BILL 041071 material you already know.

Just keep going.

60 percent is owned by an investor group, which I'll get into later, and 40 percent is owned by Time Warner. If you look at the 60 percent going to right, the 60 percent group, that is a general partnership structure which is why you have the general partner which owns 3 percent and the limited partner piece which is a 57 percent. As it happens in this group, the owners of the GP are the same as the owners of the LP.

That's amazing.

Now, of that 60 percent, City Cable Works, Inc. is a C Corporation which owns 80 percent of that 60 percent.

Okay. And then your investor group owns 20 percent of the 80 percent?

Our investor group owns 20 percent of City Cable Works and 20 percent of the -- Urban Cable Works of 68 01/26/05 - PUBLIC PROPERTY - BILL 041071 Pennsylvania, LLC, is owned by the local group PhilaComm. 80 percent of City Cable Works is owned by Urban Cable Works of Philadelphia, Inc., which is a subsidiary of Inner City Broadcasting.

They only own 80 percent of that because you investor group owns the other 20?

That's correct. And Urban Cable Works of Philadelphia, Inc., is wholly owned by Inner City Broadcasting Corp.

Okay. Now, with regard to all the various investors, they've made an investment. Since we're in America, the assumption is that you an investment, it appreciates, hopefully, over some time, value is added, additional customers, cable growth and activities, and that ultimately in the finest rendition of the American dream, people make more money. Is that basically what we're doing here?

Yes, sir, that is the general idea. 69 01/26/05 - PUBLIC PROPERTY - BILL 041071

And the various parties as a part of their investments, I'm assuming then, now that there would be a sale to one entity which is in essence buying everyone OUT.

That's correct.

All parties would then be satisfied as a part of whatever their investment is; is that ultimately the way this works?

Yes -- well, all parties have recent agreement that would be satisfactory, yes.

And is that where we are today? Have all the parties reached agreement about their investments or their return on their investments?

I think it's safe to say that most of the parties have reconciled themselves to being better off with a sale than continuing.

Okay. Now, what is the value of the sale here? Who's buying what from whom and what's the total sale 70 01/26/05 - PUBLIC PROPERTY - BILL 041071 price?

The total consideration is $87 million for the 60 percent interest.

I'm sorry?

$87 million for the 60 percent interest.

Okay. So Urban Cable Works of Pennsylvania, LLC, and Urban Cable Works General, LLC, which are the 60 percent owners of Urban Cable Works of Philadelphia, LP --

Right.

-- will receive $87 million for their 60 percent interest; is that what you're saying?

Yes.

And this is from the transaction -- this all came about in the transaction from 1999; is that right?

The transaction, yes. The Time Warner, Inc., and the investor group bought from Time Warner, Inc., the system in actually January of 2000. 71 01/26/05 - PUBLIC PROPERTY - BILL 041071

I think we approved it in '99.

Yes, sir.

And that was for the 60 percent portion?

No, sir. What happened there was Time Warner -- well, if you look at -- Urban Cable Works of Philadelphia, LP, bought from Time Warner Cable 100 percent of the system.

Well, let me under understand this. I got the 87 million for the 60 percent interest. What was the value five years ago?

The value five years ago of the 60 percent interest?

Yes.

I'm sorry, I'm trying to count the total -- the 100 percent was bought so at -- excuse me, Councilman. Councilman, I would like to provide you that answer at a later time. The issue is that 100 percent of the system was purchased. There was debt involved. So you are asking 72 01/26/05 - PUBLIC PROPERTY - BILL 041071 what the value of the net equity was?

What did you pay for it?

It was 160 million, approximately 160

What was the debt component?

Approximately $100 million, I believe.

So from your perspective, at least -- I mean, engaged in a transaction five years ago, you're now selling 60 percent interest five years later for $87 million, what's the net profit as a result of the transaction?

The net profit -- we look at it as a return on investment, Councilman. The net return over a five-year period, gross return, is roughly to the investors roughly 2 times the investment which is over five years approximately 15 percent internal rate of return.

Could I just have a number? 73 01/26/05 - PUBLIC PROPERTY - BILL 041071

You mean a --

A dollar amount, in United States dollars

Well, it's $87 million. That's the net.

That's net?

Yes.

So that's the net return to the investors?

I'm sorry. Excuse me, Councilman. I omitted a debt portion. There was debt on the -- we did borrow on the system. That debt portion, along with the accompanying warrants was approximately 23.4 million. So the net to the investors is basically 63 million. I'm sorry.

Could you -- and I appreciate you kind of walking through it with maybe pen and paper other there. Similar to the wonderfully revised colorful chart that you provided with my last request, could you maybe give me a financial structure from '99, who purchased what, what the values were, debt, and show me a bottom line? Can you do 74 01/26/05 - PUBLIC PROPERTY - BILL 041071 that?

Yes, sir. You mean at a future time?

Yes.

Understood. We'd be glad to do that, sir.

Yes, at a future time. I think that for the moment -- you're going to get back to me on that. We've talked about the structure, value. I'll have some operational questions, but they're probably not for you. Thank you.

If I might just add that we would -- because Mr. Shirley went through this without his financial notes, that we may seek permission to revise and extend, if you will, in addition to providing the material.

What was the last part of what you just said?

To revise and extend. It may be just in terms of doing some of the math. I just want to make sure that we will 75 01/26/05 - PUBLIC PROPERTY - BILL 041071 get back to you with all the information, but there may be some changes. That's the only thing I'm saying.

I appreciate that. I do want the accurate figures as long as you comment to coming back with something that doesn't have like you at zero.

The numbers are numbers.

I understand. Thank you. Thank you, Mr. Chairman.

Any other questions from Members of the Committee? (No response.)

Thank you so much for your testimony this afternoon. Our next witness will be Regina Martin. Please state your name for the record and begin your testimony please, and whoever else is accompanying you.

My name is John Fogarty. I'm an attorney with Time Warner 76 01/26/05 - PUBLIC PROPERTY - BILL 041071 Cable. Regina Martin is with me. I will make a few remarks and then Ms. Martin will speak.

Proceed.

I'd first like to thank the Committee for meeting with us today. I also would like to extend our appreciation to the City staff members in both the Department of Public Property and City Attorney's Office who have been working with us through this process, and I think we'll be continuing to do so to deal with a number of issues and questions that have arisen and some other ones that still require resolution. I will try to be very brief because a lot of the information I think you have already heard from Mr. James and Mr. Shirley. We'd like to just briefly, again, outline the transaction. The current franchisee, Urban Cable Works of Philadelphia, is, as you heard, 60 percent owned by two partners who are subsidiaries of Inner City Broadcasting. The other 40 percent is owned by Time Warner Cable, Inc. And the transaction is rather simply that Time Warner Cable, Inc., has 77 01/26/05 - PUBLIC PROPERTY - BILL 041071 agreed with Inner City Broadcasting to purchase the partnership interest of its subsidiary entities. And when that happens, Time Warner Cable, Inc., will own a hundred percent of the partnership interest in Urban Cable Works of Philadelphia and then merge that entity up into itself and the franchise will then be held by Time Warner Cable, Inc. As Mr. James indicated, Time Warner Cable, Inc., is the second largest cable operator in the country. We think we provided information to the City which clearly establishes, as Mr. James agreed, our financial, technical, and legal ability to operate the system. And as Mr. James outlined, we are no strangers to the City of Philadelphia. Time Warner from the period beginning around 1996 through 2000 wholly owned the system here in the Area II franchise. In 2000, the franchise was transferred to Urban Cable Works, the current franchisee. Time Warner continued to own its 40 percent interest and to manage the system. So when this transfer closes, there 78 01/26/05 - PUBLIC PROPERTY - BILL 041071 will be no perceptible change to our subscribers here in Philadelphia. We will have the same management, the same policies, the same operations, the same programming lineup. We don't expect any changes in operation to result from this. Over the past several years, as indicated, we have made, we believe, significant investment and improvements in the system, and I think the person who can best address those is Regina Martin who is our system manager here.

Good morning. Thank you very much, and I appreciate the opportunity to testify. The Area II franchise of Philadelphia, as John said, has been managed by Time Warner Cable, the second largest cable operator in the country since 1996. As a general manager of the system, I have been employed by Time Warner Cable for over 20 years and have had the opportunity to serve in the City of Philadelphia since February of 2002. 79 01/26/05 - PUBLIC PROPERTY - BILL 041071 During my tenure, there have been tremendous changes in the services and operations of the system. Over the past six years, we've invested over $62 million in capital to upgrade the system and support the operation. A focus has been on growing our core base of business, introducing new services, improving the customer operations and partnering with our local organizations to improve the community in which we serve. We've partnered with a number of organizations, local organizations over the years, including the Negro Baseball League Memorial, the West Philadelphia branch of the YMCA, American Red Cross, Parkside Day at the Zoo, Women making a Difference Annual Conference, Canal Days. These are just to name a few. In today's competitive landscape for video and high speed data servers is rapidly changing. Therefore, we have worked to ensure that we have a state-of-the-art technical platform which allows us to offer new products and services that are currently not available 80 01/26/05 - PUBLIC PROPERTY - BILL 041071 from some of our competitors, such as video on demand and even local high definition channels. During the past three or four years we've added over 60 new channels and services. Operational improvements have included expanding our phone and installation and service hours to include Saturdays and until 9:00 p.m., as well as working to retrain our staff to better meet the needs of our customers. In 2004, customer satisfaction surveys conducted by CNR Research, Philadelphia's customer satisfaction scores was one of the most improved of all the Time Warner divisions. The cable system is currently two-way 860 megahertz capacity system with a hundred percent digital technology. It was the first 100 percent digital cable system in the country. Through the use of digital technology, our customers have access to over 250 channels, again, including video, on demand programming, music channels, four high definition channels, and digital video 81 01/26/05 - PUBLIC PROPERTY - BILL 041071 recorders. Future services included digital phone service as well as increasing web based customer service operations. We truly appreciate the opportunity to serve the Area II residents of Philadelphia, and we look forward to continuing to provide our customers with technically advanced products and services for a variety for the information and entertainment needs. Thank you. If are there are any questions.

Thank you, Mr. Fogarty and Ms. Martin, for your testimony. Any questions for these witnesses from the Committee? Councilman Nutter.

Thank you, Mr. Chairman. Thank you, Ms. Martin, for your testimony, and Mr. Fogarty, for your statement as well. First, Mr. Fogarty, let me thank you for your response to the letter that I wrote 82 01/26/05 - PUBLIC PROPERTY - BILL 041071 to both you and Mr. Holder back earlier this month, making a request for a variety of pieces of information. As best I can tell, you either have a tremendous amount of excess paper over at Time Warner and Urban Cable Works or you were attempting to not only be responsive but thought that you might overwhelm me with documentation.

We've been well trained by your attorneys in responding completely.

I appreciate that. The reports that you make reference to are the monthly operational reports which I requested, the penetration reports in terms of franchise utilization, audited financial statements and a copy of the management agreement between Urban Cable Works of Philadelphia and Time Warner Cable. You also seem to indicate that you've submitted all of these document to the City as well; is that correct?

That's correct. 83 01/26/05 - PUBLIC PROPERTY - BILL 041071

And you've now submitted them to me.

Yes.

Which I do appreciate. Mr. Chairman, when we reach that point in the hearing, but I'll make the request now, given the nature of this transaction, its significance and importance to the people in Area II and throughout Philadelphia, I would like to add these documents to the record of this particular hearing so that whenever that future point in time comes and people want to understand what happened with this particular transaction, they'll have all the documentation in one place as they made need it, with your permission, Mr. Chairman.

Councilman Nutter, we'll make sure that the documentation that has been forwarded to you are included in the record of this hearing.

Thank you very much. 84 01/26/05 - PUBLIC PROPERTY - BILL 041071 Mr. Fogarty, let's talk a little bit about not only today's hearing but some of the details of Time Warner, its proposed complete ownership. I understand the structure from the chart and previous conversations you're managing the system now. Ms. Martin has indicated that she is also a Time Warner employee. There was discussion earlier about both a local group participation in the current transaction as well as -- you've been around for some time. You know that historically Area II, when cable was just a twinkle in other people's eyes back in the early '80s, has been designated as a franchise area to be primarily owned and operated by minority individuals or persons of color; you are aware of that history, are you not?

I have some awareness of it, yes, from previous experience here.

And the fact of the matter is is that the franchise was originally -- the Wade Cable system franchise back at that time, a series of sales of shares 85 01/26/05 - PUBLIC PROPERTY - BILL 041071 took place over the years, ultimately resulting in a majority of those shares being owned by different majority entities. Of course, given the history of the franchise area, many components of the customer base in Area II and just general issues here in Philadelphia, of course, there is continued interest in at least that concept of participation, a sense of ownership and involvement in such an enterprise. Can you tell us today what plans Time Warner, should the transaction go forward, what is the current view with regard to minority participation in either an investment environment or partial ownership environment involving this franchise?

Well, as we've outlined the proposal and the proposed transfer is that if Time Warner Cable, Inc., would own a hundred percent of the franchise, and there are no plans for any subsequent transaction.

Are you opposed to the kind of structural participation that 86 01/26/05 - PUBLIC PROPERTY - BILL 041071 has been made available? I believe even at one point in time in the earlier history, was required. Is the company opposed to that kind of discussion or that kind of involvement?

I don't think there's any opposition to any kind of proposal. Time Warner owned a hundred percent of the system for a number of years and operated it. And then there was a change, and the franchise was owned by Urban Cable Works. You know, in this business we're always willing to entertain proposals from people who might be interested, but there is certainly no plans at this time to make any change beyond the one that's before you now, which is to transfer the entire ownership to Time Warner Cable, Inc.

Well, let me ask you this question: If you were approached by those of the necessary means, this is obviously, by Mr. Shirley's testimony, this is not for the faint of heart or light of pocket kind of enterprise. But if you were approached by individuals or an organization or a company about that kind of structure 87 01/26/05 - PUBLIC PROPERTY - BILL 041071 participation, would you engage in legitimate discussion about it?

I think if anybody came to us with an offer to invest in any of our systems and it seemed a good business deal, it's certainly something we would probably entertain. But I'm not aware of any such approach or proposals.

Well, I'm not aware of any at the moment either, but we're in the process right now. I need to ask that question so I can understand what the mindset is. If you told me under no circumstance, over my dead body, something like that, then maybe we would be having a different discussion.

Like any business, we're always willing to entertain a proposal that makes business sense to us.

Let's get to the Comcast component of this discussion. That has been talked about. You don't have to be a cable expert to kind of figure out. What's the nature of that discussion at this point? 88 01/26/05 - PUBLIC PROPERTY - BILL 041071

There's no agreement to transfer this system to Comcast.

Can I rudely interrupt just for one second?

Sure.

I want to thank students from Temple University from the Journalism School and a couple of their professors. I see Mr. Len Washington and he's accompanied by other professor. Thank you so much for coming and being able to witness democracy in action. Thank you. Continue. I'm sorry.

As I was saying, if there was ever an agreement to transfer the system to Comcast or to any other party, obviously that's something we would advise the City of. And based on the nature of the transaction, the City would have consent rights.

Would have?

Consent rights.

So your testimony earlier was that other than possibly 89 01/26/05 - PUBLIC PROPERTY - BILL 041071 an action by this body, the customers should not notice -- although I assume you'll send them something. But the customers should not notice any change in service, if not even in personnel.

I don't expect there should be any resulting from this. It's been operated by Time Warner for the last several years and obviously we'd continue that.

In terms of the brand name. Presently on all the materials, letterhead, vehicles and the like, it reads Urban Cable Works of Philadelphia and in one of the smaller font sizes available in the universe, a partnership with Time Warner Cable. Will the name of the franchise change to just Time Warner Cable? What do you call all your own franchises?

Generally, it's Time Warner Cable. Frankly, Regina might have a better idea than I. I don't know whether a decision has been made about that or not. We probably would keep -- could have the rights 90 01/26/05 - PUBLIC PROPERTY - BILL 041071 to still do business as Urban Cable Works because we would own a hundred percent of that. It would be merged out of existence, but it still could be a DBA. I don't know. Has any decision been made, Regina?

I think we would look to make that change at the appropriate time. We haven't put a timeline on that but would look to make the change to Time Warner Cable at the appropriate time.

You heard the questioning earlier with regard to different representatives. And notwithstanding the fact that I have this wonderful chart, it is still a little difficult to figure out who can tell who or whom what to do. But I would strongly encourage at the reconvening of this hearing, just so we can get to the bottom of everything and get all the rest of the questions answered, I would strongly encourage that, with every respect to the previous witness, Mr. Shirley, who is an investor and on the board of one of the entities, for this type of hearing, given the nature of this transaction 91 01/26/05 - PUBLIC PROPERTY - BILL 041071 and its complexity, there should be an on-staff or officer of the Inner City entity at such a hearing. It's appropriate and also respectful to the body and to the Committee so that we have all of the appropriate individuals in the Chamber. Given that you're trying to drive the transaction and just the wonderful nature that you have, Mr. Fogarty, maybe you would be the appropriate person to make the communication so that folks can understand who needs to be in the room as we move through this process. Could you do that?

I will do that.

I'd appreciate it. I think that would be, for the moment, all the questions that I would have for these witnesses, Mr. Chairman.

Thank you, Councilman Nutter. Are there any other questions from Committee Members? (No response.) 92 01/26/05 - PUBLIC PROPERTY - BILL 041071

Not seeing any, thank you so much for your testimony this afternoon.

Thank you very much.

Next to testify, according to this list that's been given to me, is Wendy Hyatt. Ms. Hyatt, please state your name for the record and proceed with your testimony.

Thank you. My name is Wendy Hyatt. Good afternoon and thank you sincerely, Councilman Nutter, Members of the Committee, concerned citizens. I'm glad to have the opportunity to express my views here today. My name is Wendy Hyatt, as I've said, and I'm coming here on behalf of the Grass Roots Cable Campaign, which include members of Penn PIRG, the Philadelphia Community Access Coalition, Media Tank, the Communication Workers of America, Jobs With Justice, Kensington Welfare Rights Union, and the Coalition of Labor Union Women. Specifically, the Philadelphia Community Access Coalition 93 01/26/05 - PUBLIC PROPERTY - BILL 041071 has been fighting to get public access television for the City of Philadelphia for almost nine years now. I come here to say that I'm opposed to the transfer of Urban Cable Works to the Time Warner Corporation under Bill 041071. Our current system of mass communication is evolving rapidly, and cable has emerged as a dominate player and the primary source of information for the average person. And in Philadelphia, we have specific knowledge of the systemic problems with cable monopolies. The Grass Roots Cable Coalition was formed as an outreach response to the non-civic minded practices of Comcast which, as you know, just received a $43 million tax incentive to build its new headquarters in our downtown just a few blocks away. At a time when basic municipal services like healthcare and public transportation are on the chopping block, it's only fair that such a reward come with some civic demands. So far, Philadelphia has not seen a reward from its cable companies but rather a litany of grievances. So whether 94 01/26/05 - PUBLIC PROPERTY - BILL 041071 Time Warner ultimately seeks to be a competitive cable provider replacing a minority-owned cable company or as we suspect ultimately trade subscribers with Comcast, there should be expectations set forth at the beginning. The debate around cable must be expanded. We are increasing talking about basic communications, technologies necessary to participate in today's modern society. We're here to demand unobstructed labor organizing, oversight for poor customer service, fair price, truth and transparency in reporting to regulatory agencies. We also expect that any cable company not stand in the way or otherwise obstruct the creation of public access television in our community. This is what Philadelphia has seen from its cable company so far: Consistently raised rates and poor customer service with little or no repercussions for consumers. Technology redlining of poor communities and lack of community involvement in its affairs. Lack of respect for consumers' privacies, 95 01/26/05 - PUBLIC PROPERTY - BILL 041071 specifically not seeking expressed affirmative permission from consumers before collecting, storing, and sharing information about viewing or online habits. Low employee morale. High turnover. Poor safety and union busting. And lip service to the public interest while at the same time exercising political or legal clout to eliminate the so-called burdens of fulfilling franchise agreement obligations to provide funding, channel space and technical quality to run effective state-of-the-art public access systems. We want cable workers to have an atmosphere of free of coercion and intimidation, a workplace free of employment discrimination which includes nationality, race, religion, political opinion or affiliation, or ethnic origin. We want diverse and locally oriented workforces whenever and wherever possible with minimal outsourcing of jobs. We want public access television. Public access provides a means for people to exercise their first amendment rights, to access information and express 96 01/26/05 - PUBLIC PROPERTY - BILL 041071 their views. We want cable companies to conduct their business matters in a fully transparent manner.

We want a commitment to improve consumer satisfaction, ensure equal and fair treatment of workers, support for public access, provide up-to-date technology in the public interest for all areas of the City, utilize transparent and community-centered business practices. As consumers, workers, and citizens living in the same community in which it operates, we demand that our cable companies take action immediately to make necessary policy changes and performance improvements. In so doing, it will be signaling to its customer base, workers and civic leaders that it truly cares about the communities in which it operates and from which it derives its profits. Barring these commitments, we cannot support the transfer of Urban Cable Works to Time Warner. Thank you.

Thank you, Ms. Hyatt, for your testimony. Please correct me if I'm wrong. You're here on record opposed 97 01/26/05 - PUBLIC PROPERTY - BILL 041071 to this transaction?

Yes, that's correct.

You outline a number of grievances on the operation of cable companies. Have you in your capacity as a spokesperson of the Philadelphia Community Activist Coalition made any of these grievances s known to the cable companies in Philadelphia, in particular cable companies here before us today?

Yes, we have. We have issued an official code of conduct request which is available over at the table there which has been released publicly through press conferences here in Philadelphia. And they're also available on our web site and has been sent to the cable companies.

Have you or any representatives of your groups sat down and talked to our cable operators in Philadelphia about these concerns of yours?

We would very much like that. That would be nice.

I can relate to 98 01/26/05 - PUBLIC PROPERTY - BILL 041071 some of the things that you have stated in your testimony, being an activist most of my life regardless of what my bread and butter might have been at any given time of my life. But I always found it very necessary to meet with the people that I'm criticizing and to see in there was things that we can agree on, that we can work out and so forth. And my life experience has always indicated that the more I did of that, the more I found out that everyone on the other side was not as bad as I thought they might have been. And vice versa, they realized I might not have been as bad as they might have thought I was. So I would suggest that you bring these concerns. I've heard some of the over the years as well. And you, as a good citizen that I know you are, set out to meet with our cable. These are people that do business in this town, provide a service that all of our citizens are more and more involved in than ever before. And I wanted to make those points to you.

Thank you. I sincerely 99 01/26/05 - PUBLIC PROPERTY - BILL 041071 agree. We would definitely welcome the opportunity to sit down, and what we're seeking here is positive change for the community.

And I would suggest you take that initial step and reach out, and I'm quite sure that you'll see that people will be more willing to talk than to fight from afar. Because we need the services, but we have to make sure -- Councilman Nutter brings up a very important issue around here, and that is minority participation. This Council has been very strong traditionally in the support of minorities, folks that have been left out of business and to be a part of the economic life of Philadelphia. So these are concerns that are legitimate concerns.

Thank you very much.

Any questions from Members of the Committee? Councilman Nutter.

Thank you, Councilman Ramos. 100 01/26/05 - PUBLIC PROPERTY - BILL 041071 Ms. Hyatt, I appreciate your testimony. You may know from others in the coalition, I've been generally a strong supporter of the public access issue. I've worked with many people, at least in the Philadelphia Community Access Coalition. I'm a little newer or seeing this somewhat new, the Grass Roots Cable Campaign. Maybe that's a new entity. I do want to at least make sure -- and I respect your testimony, but I at least want to make sure that the record is clear and at a minimum even. On of your testimony, you point out that this is what Philadelphia has seen from its dominant cable company. For the moment, I will take from that that you are not, at least with these comments, talking about either Urban Cable Works of Philadelphia or Time Warner, as they are not the dominate cable entity in Philadelphia at this point in time; is that correct?

That's correct.

So you're 101 01/26/05 - PUBLIC PROPERTY - BILL 041071 talking about another company, not Time Warner or Urban Cable Works of Philadelphia?

That's correct.

And with regard to concerns around public access, I would only suggest to you that any of my conversations with either of the two companies, there's never been any indication of a lack of either interest or maintenance of the commitment which is a part of the franchise agreement wherever you are in Philadelphia, but there has been a missing step in this process which from time to time gets debated within the government and certainly within this Council that the cable companies are only required to participate in the public access issue, whether it is by capital investment in technology and equipment or even on the operating side, they can only do so if there is a public access corporation established by the government. And until that time, even if they wanted to do something, there is nothing for them to do because there's no one for them to provide those services with. 102 01/26/05 - PUBLIC PROPERTY - BILL 041071 So I know it is -- and I'm not saying this about you, I mean, it is easy to complain or to criticize a public utility, a cable company, the phone company, PECO, PGW, anyone for their activities, and I'm sure there are people who have -- some of them call my office from time to time -- complaints about their cable issues. But I think it only fair at least to be clear on the record that until the City government takes an action, there will not be any public access television even with the cable companies wanting to provide service, putting aside dollars for capital equipment and the like. And so the real issue is over here with the collective us and is really not, at the moment, a cable company issue. If the City establishes a public access corporation and we go to the cable companies and they don't fulfill their commitment, then I'll be right out there with you making the charge and making the complaint. But until that time, that the government does what its supposed to do, the only real issue is with us. 103 01/26/05 - PUBLIC PROPERTY - BILL 041071

Thank you.

You're welcome. Thank you, Mr. Chairman.

Any other questions from Members of this Committee? (No response.)

Thank you, Ms. Hyatt for your testimony this afternoon. The next person to testify will be Sal DeBunda -- please correct me if I've pronounced your name wrong -- a PhilaComm attorney.

Good afternoon, Councilman. Thank you all for giving us the chair. My name is Sal DeBunda. I'm an attorney with Pelino & Lentz Law Firm in Philadelphia. Accompanying me is Aldie Loubier, a member of our firm. I am counsel for PhilaComm who's been mentioned here as a 20 percent partner in the 60 percent interest owned by Urban Cable Works. I want to thank you for the opportunity to testify on behalf of my client this morning. You've heard the name of Obra 104 01/26/05 - PUBLIC PROPERTY - BILL 041071 Kernodle this morning. Upon his untimely death, I was retained by PhilaComm to represent them. So I cannot testify here as the long-term Council of PhilaComm. I was not counsel when they entered into this transaction in 1999. I only became counsel actually in December of 2004. Before that, Obra Kernodle was their counsel. At the time that I became counsel to PhilaComm, I notified Time Warner, Mr. Fogarty, that I was their counsel. I notified Inner City I was counsel for PhilaComm. And I also notified the City of Philadelphia Solicitor's Office, and actually notified Mr. Nutter's office that I was counsel for PhilaComm. The reason that that's important is that the time that I did that, I knew about these possible hearings and the request for transfer and while we did go through Mr. Kernodle's files, we were only able to get pieces of what had been going on here. So either they're lost somewhere in his office or he had a terrible filing system, but we did not have a lot of records. 105 01/26/05 - PUBLIC PROPERTY - BILL 041071 As a result, we did ask both Time Warner and Inner City to get copies of all the documents in connection with this transfer request. And it's interesting to see today that they've given out -- they have a tremendous binder, they have charts. We have not received -- despite that request, we have not received from the City or from Inner City or Time Warner copies of any of those documents even though we had repeatedly asked for them. So that's the background on which I'd like to make this statement on behalf of my clients. The principals of PhilaComm entered into this transaction, not for a short-term windfall, but to be long-term participants in the Area II franchise. We're not in favor of exiting at this time but is only being considered because we're part of the 60 percent that's being sold. We don't stand alone as having our own interest. So we would like to not exit and we would like to find a way not to exit. In our opinion, a better 106 01/26/05 - PUBLIC PROPERTY - BILL 041071 solution would be for Inner City to exit and for the PhilaComm principals to either continue to participate in an approved Area II franchise with Time Warner or to participate with other investors or other cable operator in the Area II franchise. We would like to stay in. While we would like to participate in this hearing, we have made a request for all documents issued by the City of Philadelphia and by Time Warner in connection with this transaction, but those requests have not been responded to Time Warner. We have no 15 information on which to comment. So therefore, we would very much like to be involved. We'd like to be able to have a discussion with Time Warner about possibly staying in. But unfortunately, because we have no information, we're not in a position do that. I understand there will be continuance here, but I would like to request a continuance of this hearing until the time that we get the documents and have sufficient 107 01/26/05 - PUBLIC PROPERTY - BILL 041071 time to review them. We are basically a percent partner in the company that's involved in the transfer and we have no information. Now, that may be partially because of the untimely death of Mr. Kernodle, but I have notified them now for over a month that I have been their counsel and still have not received information. We have received some information, but not the information specifically in connection with this transfer.

12 So on that basis, I would like to 13 continuance, but I would ask for commitments, 14 since representatives are here, that they'll 15 get us the documents in time to be able to be 16 here at the next hearing or that this hearing 17 be continued until the time that we do get 18 them. And I will make that request on behalf 19 of our clients. 20

Thank you, Mr. DeBunda. Are you going to add anything to the testimony of Mr. DeBunda?

No, I'm not.

Let me just for 108 01/26/05 - PUBLIC PROPERTY - BILL 041071 my purpose of understanding your statement. You're not in favor of this transfer of cable operation to Time Warner?

We would have no 6 objection to Inner City transferring their portion, assuming all other things are met, the City is satisfied and all the things are met. We would have no objection to Inner City transferring their interest to Time Warner. Our principals would like to stay in the franchise. Councilman Nutter mentioned the minority participant. Our company is a hundred percent minority-owned, and they would like to remain involved in this franchise. They did not come into this with the idea of exiting within five years.

And you're speaking on their behalf at this hearing?

That's correct.

Your last request, it is my understanding that the Chairman of the Committee, Councilman Clarke, has indicated there will be continuance of 109 01/26/05 - PUBLIC PROPERTY - BILL 041071 this Committee hearing. Any questions?

But my point is if it's continued and we don't have the information, we'll be in exactly the same position we're in today. I don't have anything to review. I can't comment if I don't have documents. The binders have been given out, charts have been referred to. I have not seen any of that information even though I am counsel for one of the investors in the group.

Your concern is well taken. Councilman Rizzo, you have a question?

Thank you, Mr. Chairman. That disappoints me that they expect to do a transaction where you have significant interest and have not received the information. You communicated this request to, I assume, the cable franchise people here and our City Government Communications Division of 110 01/26/05 - PUBLIC PROPERTY - BILL 041071 Public Property.

They weren't sure they could give it to me. They weren't sure it was a matter of public record, was their response to us.

That's a bit distressing in itself.

I spoke to Mr. Sutton in the City Solicitor's Office.

That's not a good situation, and I certainly --

They suggested I do what exactly what I did. I contacted the cable company, Time Warner, Mr. Fogarty himself. I wrote to him and I wrote to Inner City. And their counsel and I have had conversation, Mr. Holder, but I still have not yet as of this moment received that information.

Honestly, I couldn't be supportive of anything occurring if you don't have the materials that you need to be prepared. And those are extenuating circumstances. But I think -- the Chair is 111 01/26/05 - PUBLIC PROPERTY - BILL 041071 here, that you'll have to communicate with us when you're prepared so this can be rescheduled or we need to intercede to make sure that at least from the City end that you get the cooperation that you need. In fact, if it is public information, I can't imagine, Counselor, that it not be, correct?

I agree. But what I would ask, since there are representatives here, can we them agree to give us the information?

I think we'll try to accomplish that before the end of the hearing today. I'm not the Chair of the Committee, but I'm sure that we all want to make sure that you're adequately prepared to represent your client.

Thank you.

Thank you for your testimony. Any questions from Members of the Committee?

Not for this witness, Mr. Chairman. 112 01/26/05 - PUBLIC PROPERTY - BILL 041071

Thank you so much for your testimony.

Thank you very much.

I'm sorry. Councilman Ramos.

Can I ask John Fogarty, are you going to make this information available to Mr. DeBunda?

Yes. I think one of the other attorneys in our office responded to Mr. DeBunda and advised him Time Warner has no 13 direct relationship with PhilaComm. Our relationship and our agreement is with the Inner City entities, and we advised them that it was appropriate for them to obtain that information from the people with whom they had a relationship. I believe that's why he'd had the conversations with Mr. Holder who represents Inner City. We do not believe it's our place to insert ourselves in that relationship to which we are not a party.

Anyone here from Inner City can respond to that?

For the record, this is 113 01/26/05 - PUBLIC PROPERTY - BILL 041071 Eric Holder again. I heard what Mr. DeBunda said. We have certainly endeavored to get to him the materials that he has requested. In fact, I would like to make a part of the record a letter that was sent to him dated January the 24th. It's entitled "Requested Materials." It's to Mr. DeBunda and signed by my colleague Murad Kalam that details the information that we did convey to him. There are, I will admit, other items I believe that Mr. DeBunda wants access to, and we'll certainly work to get those materials to him. But I would not like the record to reflect what I think it presently reflects that all requests that have been made of us have not been complied with. As I said, the materials that were sent to him are fairly substantial and delineated in the letter that we have sent to him along with an index of the materials that were sent to Mr. DeBunda.

May I comment? I just want to comment that yesterday I received two binders from Mr. Holder. 114 01/26/05 - PUBLIC PROPERTY - BILL 041071

Sir, just say your name for the record again, please.

Sal DeBunda. I received two binders yesterday from Mr. Holder's office. They are copies of the original 1999 documents. I got them yesterday morning. I have not, because I've been preparing for other things, been able to review those, but I did get them yesterday morning. But the thing I was talking about, I still requested copies of the response by Time Warner to the City's request for information. I have not received that. I have not received any of the backup material. I have not received any of the material in that binder you got today. So I have now received through conversations with Mr. Holder -- I want to make that clear -- yesterday morning copies about this high of documents that had to do with the original transaction in 1999. But I still have not gotten copies pursuant to my request to get copies of everything in connection with this transfer request so we 115 01/26/05 - PUBLIC PROPERTY - BILL 041071 can comment and all correspondence going back and forth. It was mentioned this morning of Counsel writing a letter, for example, suggesting that there were preserving rights with respect to running of the 120-day period, even though my clients are parties to this transaction in a sense, we have not received a copy of that.

Have you submitted a written request to the City of Philadelphia for information with respect to that?

I wrote to Mr. Sutton in early January.

Mr. Sutton?

From the City Solicitor's Office, not the Sutton from Inner City. And I had a telephone conversation in which he said they were still reviewing whether or not they could give me the information and that therefore I should contact either Time Warner or Inner City to request the information, which I did. 116 01/26/05 - PUBLIC PROPERTY - BILL 041071