COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON RULES - - - - Room 696, City Hall Philadelphia, Pennsylvania Tuesday, March 23, 2004 10:00 a.m. - - - - BILL 040024 - an ordinance amending Section 14-1200 of The Philadelphia Code entitled, "Pending Public Acquisition Districts. BILL 040092 - an ordinance to amend the Philadelphia zoning maps... BILL 040138 - An ordinance approving the first amendment of the redevelopment proposal for the Wister III Urban Renewal Area... PRESENT: COUNCIL PRESIDENT VERNA, Chair COUNCILMAN DARRELL CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK DICICCO COUNCILMAN JACK KELLY COUNCILMAN JAMES KENNEY COUNCILMAN RICHARD MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL NUTTER COUNCILMAN BRIAN O'NEILL - - - - 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 040092 PAGE THOMAS CHAPMAN, City Planning.......... BILL 040024 THOMAS CHAPMAN, City Planning.......... HERBERT WETZEL, Redevelopment Authority..12 7 BRETT FELDMAN, ESQ., Lithograph Lofts....98 8 BILL 040138 HERBERT WETZEL, Redevelopment Authority..120 THOMAS CHAPMAN, City Planning............121 WILLIAM GUZMAN...........................130 HARRY MOODY, Germantown Housing Development Corporation..............133 3 03/23/04 - RULES - BILL 04092
Good morning, everyone. This is the public hearing on the Committee on Rules. I would ask Mr. McPherson to please read the title of Bill No. 040092.
Bill No. 040092, an ordinance to amend the Philadelphia zoning maps by changing the zoning designations of certain areas of land located in the vicinity of Fountain Street and the Manayunk Canal.
Good morning. Kindly identify yourself for the record and proceed with your testimony.
Good morning, Madam President, and Members of the Rules Committee. My name is Thomas Chapman. I am the Director of the Development Planning Division for the City Planning Commission, and I'm here today to testify on Bill No. 040092. This bill was introduced by Councilman Nutter on February 5th of this year. Bill 040092 rezones a certain parcel of land in the vicinity of Fountain Street and the Manayunk Canal from the existing G-2 4 03/23/04 - RULES - BILL 04092 General Industrial to Class Recreational. A companion bill, Bill No. 030689, also concerns this same property. The purpose of the two bills is to exchange a piece of land owned by Fountain Street Partners that's adjacent to the Manayunk Canal for a City-owned property located at 116 Fountain Street. Once exchanged, the new City-owned parcel would be rezoned from G-2 General Industrial to Recreational and put under the jurisdiction of the Fairmount Park Commission. The City's property will be incorporated into the Manayunk towpath and the privately owned parcel will be used for industrial purposes. The property that is to be acquired by the City is approximately a thousand square feet, while the property being conveyed is approximately 292 square feet. The Fairmount Park Commission approved the land exchange on April 9th, 2003, and the Council Committee on Public Property and Public Works approved Bill No. 030689 on November 18th, 2003. This rezoning proposal was 5 03/23/04 - RULES - BILL 04092 recommended for approval by the Planning Commission at its meeting of December 9th, 2003. I just note that this rezoning had been scheduled to be considered by the Rules Committee at its last scheduled hearing in December, but due to the lack of a quorum that day, the bill was not able to move forward.
Thank you. From your testimony, can we assume that this is merely a swap?
Thank you. Are there any questions from Members of the Committee? The Chair recognizes Councilman Clarke.
Thank you, Madam Chair. Good morning. You said this land was being acquired by the Fountain Street Partners?
I don't believe that I have that information with me, Councilman. I can get that for you, though.
I'm just interested in what type of business it is, how many employees they have. Does this create an environment where there will be additional employees? Just what benefit would it be to the City, other than just a traditional swap of land? Can you find that out for me and give it to the Chair?
Actually, the rezoning only applies to an area of land which is probably about a thousand square feet. I assume that because it's such a small parcel of land, it's not developable. Would they be able to develop anything?
It's adjacent to a property that they already own. It just gives them additional land and it's incorporated 7 03/23/04 - RULES - BILL 04092 into -- if my memory serves me -- I believe it's just going to become like an extension.
So no expansion of the existing business or anything like that?
Are there any other questions? The Chair recognizes Councilman Kelly.
Mr. Chapman, you mentioned something about industrial use.
Any other questions from Members of the Committee? (No response.) 8 03/23/04 - RULES - BILL 040024
Do we have anyone else to testify on Bill 040092? (No response.)
Seeing no 6 one, I would ask Mr. McPherson to please read the title of Bill No. 040024.
Bill No. 040024, an ordinance amending Section 14-1200 of The Philadelphia Code entitled, "Pending Public Acquisition Districts."
Good morning, Madam President, and Members of the Committee. Once again, for the City Planning Commission, my name is Thomas Chapman. This bill, Bill 16 040024 was introduced by Councilman DiCicco on January 22nd of this year. This bill establishes a Pending Public Acquisition District for the area bounded by North 13th Street, Race Street, North Broad Street and Arch Street. After considerable discussion, the Planning Commission at its meeting of March 16th, 2004 decided not to recommend this bill be approved. 9 03/23/04 - RULES - BILL 040024 At the time of the Planning Commission's consideration of the bill, a provision of the bill that requires a statement of intent to develop or condemn had not been filed with the Chief Clerk's Office or sent to the Planning Commission, as is required under the provisions of the ordinance. Members of the Commission have had concerns with this legislation, and these concerns were heightened in light of the fact that this provision of the Code had not been complied with. Secondly, members of the Commission are concerned that this action in establishing this district could be construed as a taking and wondered if the establishment of these districts are even necessary since the City does have the power to eminent domain. This concludes my testimony. I'd be happy to answer any questions of the Committee.
Thank you. Are we correct in assuming that this site is the most probable choice for a 10 03/23/04 - RULES - BILL 040024 location of any expansion of the Pennsylvania Convention Center?
It's certainly a logical location where the expansion could take place, yes.
Well, we haven't heard any concrete plans about the expansion or how it will be financed.
If this bill were to pass, how long would property owners in this area be constrained from developing or improving their properties?
And the ordinance does say that there would have to be a statement of intent to develop or condemn the properties within this area?
And the statement has not been filed with the Chief Clerk's Office?
To the best of my 11 03/23/04 - RULES - BILL 040024 knowledge. At the time the Planning Commission considered this bill, it had not been filed and it has not been filed with our offices, at least as of this morning, anyhow.
Thank you. Any questions from Members of the Committee? Councilman Clarke.
Thank you. Mr. Chapman, I actually have some acquisition questions. I don't know if Mr. Wetzel may want to join you at the table. First, let me say I understand the intent of this particular bill, but as indicated earlier, I did have some concerns and I talked to the sponsor about some of those concerns. What I want to talk to you about right now is this whole process of traditional acquisition. When we do appraisals, are we required to have the authorization of the property owner?
Herbert Wetzel, Executive Director of the Redevelopment Authority. When we do appraisals, do we need permission of the owner? No. 6
So is the appraisal process triggered by anything in government officially, like an introduction of authorization by Council authorizing the Redevelopment Authority?
Can the Redevelopment Authority or any government entity do an appraisal without an official action by Council?
So potentially the Redevelopment Authority could go out in this particular district or any other district that we may have some interest in the foreseeable future and do an appraisal of that particular land without Council action? I'm assuming your staff -- you're the director -- are authorized to go out and do an appraisal on a land? 13 03/23/04 - RULES - BILL 040024
Yes. We have actually twice performed appraisals on the land, I think, that's described in this ordinance on behalf of the Convention Center. I think we did it in '99 and I think we did it in 2002, an update of the appraisals of the value of that real estate.
In that process in the past, have you ever had a situation where there was an appraisal done and somewhere along the line the City attempted to acquire the land and there was an objection by the property owner saying that the price should be much higher, and you use your original appraisal to substantiate your claims in court, assuming that it went to court? You basically locked in a price based on your earlier appraisal two years down the line without any measurable improvements, the City or government attempts to acquire, then this property owner, you know, opposes that taking based on the price. Your argument is that we've done an appraisal. We believe that this is what the price was, not some wildly 14 03/23/04 - RULES - BILL 040024 speculatively number that the current property owner is saying at this particular time?
Actually, the last appraisal that's done is as of the date of the declaration of taking. So if an appraisal was done to do an estimate for land acquisition and an ordinance was passed two years later, the declaration of taking gets filed, it's the value of the land as of the date of the declaration, not of the ordinance. You have to bring the appraiser back out again.
Yes. I'm sure the concern there is that the values in that particular area that's part of this particular ordinance have gone up substantially since the first cut of the numbers was done in 1998 or '99.
Thank you, Madam Chair. 15 03/23/04 - RULES - BILL 040024 How does this bill save the City money?
Madam President, it might be an appropriate time for me to engage in this conversation, since I'm a member of the Convention Center Authority Board. I think the best way to explain that might be by way of an example, Councilwoman Miller. During the past year, year and a half an individual purchased a former vacant industrial building for the purpose of converting it into condos, which is what we've seen for the last several years. And it's a good thing. But what's happened as a result of that, the value of that property has increased dramatically. So in the best case scenario, if the funding for the expansion were made available, whether it's the City and the State cooperating or the State takes over completely, that's not the issue. We're all hoping that we get the Convention Center expanded. But the value of that property has increased dramatically. I don't know the 16 03/23/04 - RULES - BILL 040024 exact value on it today. Just imagine when the development is complete, if all 60 units or so were occupied, in addition to paying the owner of the property for the fair market value, we now have to relocate 50, 60, 70 tenants -- they'd actually be homeowners because it's going to be condos. Which certainly adds to the expense. Now, that's only one instance. If my recollection is correct -- and my colleague, Councilman Nutter, is here, who, as you know, is the Chairman of that Board -- I think for every month that we do not take action, the value of those properties in the area that is being identified for the expansion -- and, yes, Madam President, that is the likely area. We don't see any other way in which to go but west of the existing Convention Center to Broad Street and north to Race so that the expansion would cover the area from Arch to Race, from 13th to Broad. If we don't do anything, as we haven't been able to do for a while because of this technical issue on the intent and the 17 03/23/04 - RULES - BILL 040024 statements and things that we were waiting for, the value of that land increases cumulatively in that area I just described by $2 million a month. Every month it's going up by $2 million. And that's without any improvements to existing properties. What the intent of the Board was by way of the statement of intent is to say to the property owner, we're not suggesting that you can't do any improvements that are necessary to maintain the property in a safe manner and those improvements that would be necessary for the continuation of the business, assuming there's a business operating in there. What we're suggesting is that you don't begin to do conversions and other things that would dramatically increase the value of the individual property or properties, which ultimately the taxpayers will have to pay for. So for me, when we had these discussions a few months ago -- we meaning the Board at the Convention Center -- my concern was, A, to save the taxpayers money, 18 03/23/04 - RULES - BILL 040024 obviously; but also to have some sort of a, I guess, smooth, seamless kind of transition, if it's possible, for the existing property owners and those businesses that are located there working along with PIDC, the Commerce Department, and other agencies because we don't want those companies to leave the City of Philadelphia. That's the last thing we want them to do. But it will give us two years to work on that relocation process with them, maybe find other locations throughout the City in which we can help them relocate to keep the jobs, maybe even enhance the jobs. So we needed this time. Although I do not have the statement, I got a call into the Convention Center Authority. It has not been delivered yet, which leads me to some questions for the Planning Commission. But just to answer your question as briefly as I could, it is necessary now. It will cost us money. It's costing us money as we speak by not taking any action.
At the end of the day, whether it's the State that eventually pays for the entire 19 03/23/04 - RULES - BILL 040024 expansion or there's a split between the City and State, it's the taxpayers that are going to be paying.
The statement of intent is what you just mentioned that you're waiting for?
And there is a two-year sunset provision that I think was pointed out in testimony. So if for some reason expansion doesn't occur, it will be all over. It's not for perpetuity. We had a conversation with an attorney who represents the Authority last week about some the questions on the legality of this. My understanding, if I can recall correctly, was that in Lake Tahoe in Nevada, the United States Supreme Court upheld a decision by that municipality to do something very similar to what we're doing, and it's 20 years that they still haven't developed that land. But the Supreme Court said it was okay 20 03/23/04 - RULES - BILL 040024 for the municipality to have this intent. They have an intent to develop it and, therefore, any improvements and things that we're talking about similar to the Convention Center, that the individual property owners didn't have any rights. But we're not going that far out, obviously. We're going two years. If we were able to convince the State Legislator in Harrisburg today and the Administration in Harrisburg to front, if you will, the $185 million that we anticipate it's going to cost to do the taking and everything else, we probably wouldn't even be discussing this conversation. I think you would approve it immediately. That is a problem that we're facing. There's no question about it. We need this to send a signal to Harrisburg that we're serious about it. And when I say, we, not only the City, but more particularly the Board, the Convention Center Authority Board, that we're serious about Convention Center expansion. It's kind of one of those things of what comes first. So we're very 21 03/23/04 - RULES - BILL 040024 aggressive. We've sent letters up to the State House Representatives. We sent them to the Senate. We sent them to the Governor urging them to move forward on this expansion because every day that we wait and not make a decision, the value of those properties continue to increase dramatically.
So who is actually responsible for doing the statement of intent to develop or condemn?
Well, I think that the Planning Commission wanted it to come from us and I think maybe legally -- I'll yield to my colleague, Councilman Nutter.
Yes. I think that's where the letter needs to come from. We supported it in our board meeting last week. It was unanimously supported by the Board that a letter of intent be sent over for the purpose of this bill.
Again, I want to 22 03/23/04 - RULES - BILL 040024 reiterate that I understand the intent of the bill. I just have some fundamental concerns about property rights. Potentially there could be a loss of revenue for a property owner in the two years for the two-year sunshine provision that an individual could convert a property and could potentially make a substantial amount of money and increase the value of their property over that two-year period. And as things sometimes happen, if the State and the City can't come to an agreement on the expansion of the Convention Center and we decide not to do that, I guess my question would be, who makes that individual whole? The other question I have is what the difference is between a declaration of taking and this particular legislation? It sounds to me that, in understanding that we've done declarations of taking before and opted not to proceed on the ultimate taking, we've kind of locked ourselves into a number. As you said earlier, once you file a 23 03/23/04 - RULES - BILL 040024 declaration of taking, you lock yourself into a number and that's the number that you use during your negotiations. What is the difference in -- or I guess I should ask the question, why don't we file a declaration of taking, lock ourselves into a number, which is the current number for today, and over this two-year period negotiate or do whatever we need to do while we're waiting for any potential funding for the expansion of the facility? And if two years out or three years out we opt not to proceed, we essentially will find ourselves, I believe, possibly in court, similar to what I think we will ultimately be in court if we pass this bill. I'm just not seeing the difference in the pending acquisition bill versus a traditional Redevelopment Authority taking. It sounds like the same thing.
I would leave that response to someone who's more versed in it than I am, possibly Herb Wetzel. But as to the first part of your question, yes, you're right. Somebody could 24 03/23/04 - RULES - BILL 040024 claim that they have been harmed financially because we have put certain restrictions on what they can do with that property. But other than that one building that we're talking about where the gentleman came in -- I think he had an idea. He knew. We had been talking about expansion. And he's a business guy who ran in, bought a property, paid probably very little for it compared to what he'd have to pay today, started making conversions -- I don't even know if he's even near completion, but he certainly has the argument now that "Now I have undertaken this project and I am now in the process of converting this building into condos, and each condo will have a value of $500,000 or three-quarters of a million dollars, therefore, you have to reimburse me." He's going to probably walk away with about a $20 million profit. And if we leave that out there as a potential for other property owners, we're not going to be able to probably afford to do it and we won't get a Convention Center expansion. 25 03/23/04 - RULES - BILL 040024 I think we have a fiduciary responsibility to the taxpayers, understanding that we do want to do the Convention Center. We all want to see this expansion happen and we have to act appropriately and I think now is the time to act. But to allow someone -- it could be anyone in this room for that matter -- to go out there and make a deal on a property today and then go in and say, "Well, I'm going to do a conversion --
But, Councilman, isn't that his right? Isn't this America?
It's his right, but is it right to allow that to happen knowing that we will eventually take that land for the purpose of expanding the Convention Center?
Well, that's my question. Why don't we just simply file a declaration of taking, triggering a number on an appraisal?
We're, like, 03/23/04 - RULES - BILL 040024 kind of going half way with this. If we fully intend on taking it, let's just file the declaration. We don't have any money right now. We've got nine million declarations of taking. We had a hearing yesterday, but we don't have the money. We do it all the time.
Again, I think I know the answer, but I would yield to either Councilman Nutter or to Mr. Wetzel.
When the Redevelopment Authority brings an ordinance before Council such as the one that's here today, the funding is in place. So estimated acquisition costs, relocation costs, et cetera have been determined and a budget has been put together with contingencies. And so we do not bring an ordinance that isn't funded to be carried out. Now, whether we carry it out fully or partially or not at all after the ordinance is passed is a different story. But the funding is in place. We do not ask for the Authority to acquire without the money being in place. 27 03/23/04 - RULES - BILL 040024 I think that's a little bit different here. I think the tough question is, does this ordinance -- not for the Redevelopment Authority -- but does this actually -- I'm assuming some property owners there might construe this to be an act of condemnation, in essence, or as you're saying, argue that "You have damaged me. You've damaged my right to improve this particular property, and how am I going to be compensated for that?" Or literally might file a de facto claim that there is a de facto condemnation that has happened as a result of that. And that doesn't suggest this isn't a good thing. I can tell you the Councilman is right. The first numbers we did for the Convention Center in '98 was about $63 million. The next time we updated it around three years it was $92 million. And I think we all know the number is well over $100 million at this point in time in terms of the value of the real estate there. But the fundamental difference is that the ordinances we bring are funded and, therefore, the 28 03/23/04 - RULES - BILL 040024 resources are there to file a declaration of taking and move forward.
Is that a requirement by any agency in a government that has acquisition powers that the funding be in place, or is it just the Redevelopment Authority?
As an independent authority with no taxing powers, we have to have the funding in place. We have to demonstrate to the court that the funding is in place. My understanding is governmental entities that have the power to tax do not have the same requirement before the court.
So if the School District decided that they wanted to condemn property, they don't necessarily have to have the funding in place?
Right. But it would not be a smart thing do, but once you start down the road, you're obligated to make payments to people. If people accept your offers, you have to have the cash. If they 29 03/23/04 - RULES - BILL 040024 dispute your offers and go to the Board of Review in court and win, you have to have the cash to pay them.
Are there any other entities in government, to your knowledge, that have the ability to condemn land?
Councilman, does the Convention Center Authority have condemnation powers?
I'm not familiar. I do know that we do have condemnation powers. I'm not familiar with whether we have to have the money or not.
The Authority at this time is not exercising any condemnation power. And actually, we haven't decided whether the Authority would be the condemning entity or whether, apparently as was done back 30 03/23/04 - RULES - BILL 040024 in the late '80s, which was done under contract to the Redevelopment Authority. If I could just share two pieces of information. At the moment, even if this bill 6 were to pass, there would be no formal condemnation proceeding or a taking in place. I think we all know in this side of the government that virtually anyone can file suit about anything at any time they want, and they often do. The underlying legislation, though, that we passed last year to create this concept does direct the Zoning Board to not grant variances in an area that's been deemed a Pending Public Acquisition District unless it would result in an unconstitutional taking. That is left at the discretion of the Zoning Board. Second, if a person applied for a permit to change the use of the property and they were denied, they have the same rights as anyone else when they go over to L&I and try to get a permit, which is to appeal, and go through the regular appellate process. I can absolutely appreciate the 31 03/23/04 - RULES - BILL 040024 concern back and forth about the property owners' rights issue. We're also, though, left and, I think, compelled to deal with the public's interests issue. What we are trying to prevent is people inappropriately or unnecessarily, in my language, ripping off the general public to go into an area that they have reason to believe, based on a legitimate entity that is legitimately pursuing funding and has expended millions of dollars in planning and drawings and contracts, to go in an area that you would have to be pretty much living under a rock not to know that the Pennsylvania Convention Center Authority is looking to expand. If someone wants to continue using their building the way they have been using it, they have that right even under this legislation. What we're seeking to do is cut down on the entrepreneurial spirit that at least one entity has already demonstrated, and I think we have reason to think that others may in an effort to unnecessarily or inappropriately profit from a big pay day when 32 03/23/04 - RULES - BILL 040024 they know that a governmental entity is coming into an area. We can't do anything about what happened last summer. But it is certainly curious that shortly after things, at least publicly, seemed like they were turning around over at the Center last summer, that these individuals decided to convert a long-vacant building from industrial use to residential use, which will cause us to now spend, instead of about $2 million to acquire that property, estimates are somewhere between 10 and $12 million to acquire the same property, plus face the relocation costs of people living in the building who were not living there before. So I'm certainly not anti-property owners' rights, but I think on this one I'm pro-taxpayer in making sure that the public is not paying more than they should. You know, I think we have a reasonable expectation that the Center will expand. There is a significant amount of activity going on in Harrisburg in conjunction with conversations that take place with the 33 03/23/04 - RULES - BILL 040024 City about that proposed expansion. So this is merely an effort to cut down on the unnecessary costs of purchasing those properties. We already know without this extra added activity by property owners that we've seen over the last five years a natural growth in value in that area because of other things that we do in the government that have enhanced property values in Center City. We're realizing about a percent increase in 12 the value of property in the designated area. 13 We can't do anything about that. That's the 14 market.
To the extent that we can curtail 15 people with malice and aforethought from 16 improving and upgrading and doing things to 17 their property solely for the purpose of 18 benefiting from the public, if we have an 19 opportunity to do that, I think we should try. 20 I certainly apologize for causing 21 any consternation with the Planning Commission or the Members of this Committee for not having the letter over. I think that, obviously, we need to be in compliance with the provision of the Code and certainly no 34 03/23/04 - RULES - BILL 040024 action should be taken, any final action should be taken on this bill until the appropriate letter is in the possession of the Chief Clerk and all of the Members of the Committee, if not all Members of Council. The only interest here, as expressed by the Authority Board last week, is in containing our costs. We're already looking at about a $600 million project. It's going to be very difficult to go beyond that. And if there was an action that we reasonably thought we could take to try to contain those costs, I think we do owe the public at least that amount of response. Whenever the taking formal action takes place, certainly people will not like whatever the value is. They won't like what the price is, and some people will end up in court anyway. We know that. That's just what happens in this process. But between now and when funding is in place, again, I would only appeal to the Members who are balancing the taxpayers' right versus the property owners' right that if we have an opportunity to try to 35 03/23/04 - RULES - BILL 040024 legally and reasonably contain our costs, I think we do owe that to the members of the general public. Thank you, Madam Chair.
In response to that, first, Councilman, I'm not privy to the information that you may be as the Chair of the Board and Councilman DiCicco as a member of the Board. I'm just a regular, old Councilman on the other side the Broad Street.
I'm not even a District Councilperson. So as a result of that, I'm not as optimistic as you are as it relates to funding for the ultimate expansion.
I hope that it happens. I'm just not quite there. I've been hearing a lot out of Harrisburg, casino 36 03/23/04 - RULES - BILL 040024 gaming, school reform, tax reform, expansion; I haven't seen any of it yet.
With respect to the taxpayers' interests, I am, in fact, extremely concerned about the taxpayers' interests, which is why I'm a little concerned about us locking ourselves into a process that could potentially create a de facto condemnation. And if we ultimately decide not to expand the Convention Center, I think any property owner would have a substantial case, both on the actual taking and subsequently on any loss of income as a result of our essentially freezing their ability to increase the value of their property.
I think the Councilman has an appropriate concern. And as Councilman DiCicco raised, apparently many who 37 03/23/04 - RULES - BILL 040024 actively practice in this area -- you know I'm certainly not a lawyer, but I think -- what is it, Lake Tahoe? The Lake Tahoe case has apparently stunned and surprised a whole bunch of people who actively practice in this particular area. I think when I was coming in, the Councilman was talking about this was a 20-year process that was going on out there. I don't know all the particulars. I'd love to read the case. And the Court in that particular matter actually deemed that a temporary interference by the government. You know, look, I think I feel confident in saying if we don't have shovels in the ground or some significant activity going on over in the particular area in question within the course of the next couple years, we probably don't have a whole lot of worry with regard to expansion of the Pennsylvania Convention Center. I think whatever is going to happen is going to happen relatively soon and we're going to know to a greater extent, I think, our ultimate faith. What we don't know is what's in the minds of 38 03/23/04 - RULES - BILL 040024 the other 21-some-odd buildings. Until I read the story in the Inquirer last summer, I had no idea -- I mean, as you tried, I'll try. I'm just a little District Councilman out in West Philadelphia, so I don't know what people are doing over on 13th Street in Center City. I'm busy trying to dodge traffic. But I was stunned when I read it in the paper. And after that, I was appalled and quite frankly infuriated. We were out of Session and we started working on this, actually, with the Planning Commission initially on this concept because it's not anything that we have. It's kind of a combination of a bit of an RC-6 zoning, which is kind of a planned zoning tool, and then some of the zoning overlay models that we use where we prevent people from doing certain things under certain conditions. So it's a cobbling together of a couple different ideas that the Authority brought in Council to look at this and said that they had never seen anything like this before. These are, again, much more well 39 03/23/04 - RULES - BILL 040024 versed people than myself. So obviously, it's not my bill, but it is a bill that I have a great deal of concern about and, at least if the Councilman would allow, I would only ask if the Committee would consider two things: One, I'm sure the Councilman would agree and I would absolutely commit to you that I wouldn't vote for the matter without adhering to the statutory requirement that the letter come in. Secondly, if the measure could at least get out of Committee with or without a recommendation, but I think that we have to at least be in compliance with our own provisions. If there's additional information that we can or should provide, we would absolutely do that. People do pay attention to what we do. And there are a variety of signals and signs that get sent in many ways. We probably send more messages around here than Western Union. So there's a hospitality community and a political community that will continue to monitor what goes on down here from a 40 03/23/04 - RULES - BILL 040024 moving-forward standpoint. I don't have to tell any of you, you were at the PCBP lunch, there are a lot of people in the hospitality community who certainly want to see the expansion. So anything that we can do that is another step forward demonstrating signs of commitment to the expansion of the Center, I think, sends a positive message. At times hesitation or less than supportive actions can also send not only a message to our local hospitality community, but as we know from all of the bad press that the Center generated for itself over the years, people send this information across the country as to what we're doing and what we're not doing. So it all kind of plays into where we are.
I'm not used to questioning a Councilmember. Most witnesses I would have cut off by now in their response.
Absolutely. It's okay. 41 03/23/04 - RULES - BILL 040024 Getting back to a couple of the issues that I raised -- And thank you, Madam President, for allowing me this line of questioning. With respect to the Nevada case, understanding that in this great country that we live in all things are regional. Is it my understanding that the appellate courts as it related to the Nevada case --
It was the United States Supreme Court. Am I correct, Councilman Nutter?
I'd like to, if at all possible, get some information.
Actually, I think the Board requested a copy because we're all very interested in it, not only for this reason. The lawyers, as Councilman Nutter said --
There's a half dozen lawyers on the Board. They're all interested.
Their eyes just 42 03/23/04 - RULES - BILL 040024 went like this (indicating) because they found it unusual. But whatever it is, the Supreme Court ruled, as Councilman Nutter said, it was a temporary interference or something like that, years. We're only asking for two. 7
The other issue 8 is the question that I raised earlier about 9 the Convention Center's ability to condemn 10 land. I think we all agree that they have 11 that authority. My question is, why doesn't 12 the Convention Center enter into a 13 condemnation process thereby locking in a 14 price based on that particular appraisal? And 15 subsequent, are they required to have the 16 funding in place? 17
I believe it's 18 because we were required to have the funding. 19
I asked earlier 43 03/23/04 - RULES - BILL 040024 is it a statutory requirement by the Redevelopment Authority? Can we get a ruling on that?
I hear your answer, but I'd like to get something a little more --
I wouldn't be surprised if it were a requirement because you're a State-chartered authority like the Redevelopment Authority is. You don't have any independent taxing powers. So it would not surprise me that their condemnation powers would be similar to that of the Redevelopment Authority and that they would actually have the money, have to have it in place. If they proceeded with a condemnation action, you're obviously sending out offer letters. If the offer is accepted, you must be willing to pay at that moment. You couldn't offer them and say, "We'll pay you if the State Legislature 18 months from now provides the money and we're going to pay you the value of the real 44 03/23/04 - RULES - BILL 040024 estate today." I don't think you could do that.
The question is, first of all, what entities in government have the powers of condemnation; and of those entities, what entities have the ability to condemn without having funding in place? That's the official question. I want to see if there are any other entities that have the ability to acquire a property but don't necessarily have to have funding in place.
We can all as District Councilpeople pool our money in from the NTI Program and just do this one big condemnation and demolition, if you'd like.
I will guarantee to reimburse you at some point when the State reimburses us.
I'm fresh out. I have some land up in North Philadelphia that I'm interested in acquiring.
Unfortunately, it's a little too far away from the present 45 03/23/04 - RULES - BILL 040024 Convention Center to expand to.
We can attach it to the Liacouras Center. We can have a satellite Convention Center.
If I may, Madam President -- and I think Councilman Nutter might agree -- that it's probably a good time for the Convention Center Authority Board to bring all of you in to do a little presentation of the drawings. There are artist renditions. They're actually pretty far along. They're almost at the point where we can say with certainty, this is what it will look like and this is how it will function. The only thing that keeps changing is the price to do the Convention Center. I think when they first looked at this a few years ago, the overall cost of the project was $450 million, $475. Councilman Nutter was generous when he said $600 million. We're probably looking at closer to $650 million. The entity that we're talking about, the process that we're speaking about today on the 46 03/23/04 - RULES - BILL 040024 acquisition and the infrastructure things that need to be done is today valued about $185 million. And that's what we requested from the State. At least give us the 185 to begin that process so that we can contain the cost. Because as I said earlier, every month the value of the land is going up cumulatively by about $2 million.
Do we have any indication as to how many properties are in this area and also how many are occupied, how many are vacant?
I don't have that number. I don't know if Mr. Wetzel does. But we certainly have the number of properties because that's how the Redevelopment Authority was able to do their appraisal. And based on the use of the property at the time they did their appraisal back in 2002 --
I have a question. He might be able to answer both of these together. He pretty much asked the question I was going to ask. Forgive my ignorance on this. You may have said this. 47 03/23/04 - RULES - BILL 040024 One of you spoke about it. It might have been Councilman DiCicco. This is probably going to go west to Broad Street?
Yes. Actually, I have an amendment that I'm going to be circulating. I'll give you the actual property line description of the expansion.
It's from 13th Street west to Broad, Arch Street north to Race. So Cherry Street would actually be closed off. There won't be a Cherry Street between 13th and Broad.
But it won't affect any side of Temple or any of these buildings we're looking at right now?
So you know how many properties -- do you know that, Mr. Wetzel?
Yes. I don't have the number with me right now. 48 03/23/04 - RULES - BILL 040024
When you have that number, could you give it to us, please? How many of these off the top of your head, is it all -- Councilman Nutter said something about R-6, which can be a mixed development. Is most of it old buildings and factories at one time used for production that have converted to other things, commercial? I know there was a Doc Johnson Sex Shop, which is now Doc Johnson's News Agency. I've never been in there.
It's been a topic of intense discussion, Councilman, and we will not affect Doc Johnson.
None of the Councilmen have been in there. We've heard it from our staff.
If I can interrupt for a minute, Councilman Mariano. I think it's really appropriate that we figure out a time that is appropriate for all the Members of City Council and it will answer all 49 03/23/04 - RULES - BILL 040024 of those questions. My legislative assistant handed me a note. We think it's approximately 30 properties. It could be a little bit more. But you need to look at the design. The old bank building at Broad and Arch would still remain. That would become part of the infrastructure of the new expansion. We're going to keep that. It's historical. The building next to it would stay.
From Arch going north would remain. And there's some surface parking lots in there and there's a lot of little things that need to be addressed.
I do understand Councilman Clarke's commitment to property holders. It would be tough to have everything you ever had invested in that, if you honestly had it -- say it was passed down from your grandfather and your father and you had that 50 03/23/04 - RULES - BILL 040024 and that's your nest egg forever and you're probably going to do better than you could have ever wanted to do. But now all of sudden you may have some plans and this comes in. How long did that happen before? Do you have any idea?
I'm going to go back to my office and find some older staff members who can actually brief me. I was not at the Redevelopment Authority at that time. There are some staff members over there that did participate in the acquisition.
I remember Boyd's was taken as part of this for the Convention Center Hotel. A lot of the retail stores were for the Marriott.
This does not contain a lot of retail. It's mostly office, parking space. There's that car wash. There's actually a municipal building there that's 51 03/23/04 - RULES - BILL 040024 police --
A former firehouse. Boyd's was not settled until, I think, 2002 for example. That had nothing to do with building -- obviously, the hotel got built and everything. It was settling claims that took a long period of time. So the last of those wasn't settled until about two years ago. So you're right. It took a long time to settle a lot of the different claims.
Thank you. The Chair recognizes Councilwoman Brown.
Thank you, Madam Chair. Good morning, gentlemen. Forgive my tardiness. First, let me comment on Frank DiCicco's offer of a presentation. I think the time is right for us to hear where you are at this juncture, knowing that it's fluid and will change from now to the point of 52 03/23/04 - RULES - BILL 040024 acquisition of the dollars. Secondly, I didn't have the benefit of hearing your testimony, but in reading your testimony, Mr. Chapman, this statement of intent to develop or condemn, what happened with why that particular step was not covered or checked off?
Councilwoman, I might want to defer that question to Councilman Nutter. I understand that it is forthcoming.
Thank you, Councilwoman. That's not Mr. Chapman's issue. The Board at a board meeting last week authorized the President and CEO to send over the required letter. The legislation requires the letter to come from the governmental entity that's making the request. I cannot tell you at the moment why the letter is not over here. But again, I would say that we need to be in compliance with the provisions of that particular section of the ordinance. And I called over to the Authority and our President and CEO is out of the office at the moment, so 53 03/23/04 - RULES - BILL 040024 I have not physically talked to him. I know that Councilman DiCicco as the sponsor of the bill has had some contact back and forth. So I think that that is in the area of a step that did not get carried out. But the Board voted unanimously last Wednesday to send the letter after a serious amount of discussion, as well as a presentation by Council that was brought on to deal with this particular issue at the Board's request at the previous board meeting. There's been a significant amount of the back-and-forth discussion within the Board, but in the public meeting last week unanimously the Board voted to support this, again, in our intense efforts to contain the cost of the project because of the concerns that we'll have a continuation of this kind of use conversion with people recognizing. Every time there's a story about the Pennsylvania Convention Center and proposed expansion, the marketplace reacts to it. And we know the values continue to grow because, whether people have as much information as we 54 03/23/04 - RULES - BILL 040024 do or not, or whether they pay attention to what Harrisburg does, every time we talk about expansion, if you're a property owner in that area you figure that the price just went up because it's increasing the value. So the letter will get over here, I would expect, no 8 later than tomorrow. But that doesn't necessarily help us in this particular hearing. But again, I would say that no final action should certainly take place until the letter is appropriately at the Chief Clerk's Office and every Member would have a copy. But it is on its way.
All right then. For my own information, what's the penalty or down side to moving forward without having that step of the letter in place and checked off? Just for my own knowledge base.
From my own perspective it would be -- to take any final action -- and when I say final action I'm not talking about Committee action. But to take any final action, I think they'd be in violation of a bill that we passed. And as I 55 03/23/04 - RULES - BILL 040024 indicated, I wouldn't vote for the bill myself because I think that we should follow the steps. It should have come in before today. It didn't. It will be here tomorrow. We can fix that, but we should not take any vote by the full Body until the letter is in place. We should be in compliance with our own legislation.
Thank you. The Chair recognizes Councilman Kelly.
I understand the intent of this bill and I think it's something that's absolutely necessary to cut down on the unscrupulous speculators that could come into these neighborhoods and try to make a windfall at the expense of the taxpayers of the City and the state. My question here would be the timetable. I guess in your opinion two years is adequate time? I know dealing sometimes with the Legislature in Harrisburg, they can drag their 56 03/23/04 - RULES - BILL 040024 feet on this thing. What I would like to know is what happens after two years or after the two-year time expires on this bill?
This legislation sunsets in two years. Two years is a target date basically that the Board believed is the most reasonable amount of time for Harrisburg to react. This expansion has been discussed almost from the day they opened the existing center. We were obsolete at that point in terms of square footage. We should be building something bigger. It's just a question of the environment in Harrisburg. I can tell you -- and Councilman Nutter can attest to this -- the Board, the Convention Center Authority Board, is a very diverse Board made up of people from both sides of the political aisle, if you will. I have a Republican Senator who sits on that Board who supports this, and he's working Harrisburg. There are people who are very well connected to the Republican party out in the suburbs who sit on this Board and the surrounding counties that would benefit by an 57 03/23/04 - RULES - BILL 040024 expansion. So there's not a person on that Board that I can think of who is not in support of this and doing their part in lobbying the appropriate people to bring this thing to some closure, to bring it to fruition. No one can say with certainty that it will be done in two years.
Well, whenever you have $568 million, there's always some discussion over who pays for it, whether it be the City's apportion, whether the majority should be State, or maybe all State.
The City has already publicly said that they don't have the money and they're not putting the money in. We have to figure out how Harrisburg makes that happen. But it's important that we keep the discussion going and keep certain things in motion. This is one of the balls that has to stay in the air. This, I think, tells the Legislature in Harrisburg that we're serious, the Board is serious, the City is serious, the region is serious about this expansion. I don't think it's a question of should we 58 03/23/04 - RULES - BILL 040024 expand; I think it's a question of our survival that we must expand.
I don't know if I'm on the Board a year yet, but close to a year I've been on the Board. It's a very interesting Board. There are a lot of things that go through their discussions. A lot of people depend on the expansion.
I've had five years in the business of trade shows and expositions for a large manufacturing corporation which I worked for. I absolutely concur that that facility has to be expanded to make full use of that institution.
I would also like to respond to Councilman Kelly's comment. First, to complete the other part of what Councilman DiCicco said, there are also a lot of Democrats who are interested in the expansion of the Pennsylvania Convention Center. So it does cover the full spectrum of interest. And second, this bill is not only 59 03/23/04 - RULES - BILL 040024 looking at the issue of what people may do and how they enhance the values and are they possibly improperly benefiting from the taxpayers. As I indicated, this measure started with the Planning Commission. It is also, I believe, a good planning tool to use where you can -- I mean, it's not like anyone can come along and say, "I'd like to have a Pending Public Acquisition District." It's only for government purpose or government-related purposes where some legitimate entity has come forward and said, "We plan to build XYZ in a certain place and we are trying to plan our future and plan our destiny." It's not a secret what the plans are. It's been known for some time. I think there have been drawings in the newspaper. What we're trying to do here is use a legitimate planning tool to lay out to the general public and share information in a variety of ways as to what the plans are. And so not only is there certainly a financial concern, but I think it's also a good planning 60 03/23/04 - RULES - BILL 040024 instrument. There might be other uses for this down the line, certainly inspired by one situation. But whether it's the Pennsylvania Convention Center Authority or the City of Philadelphia or the Redevelopment Authority or just about any other governmental entity where you have a big project, it's not a secret and you should have a planning process. We're not at the point of the declaration of the taking. Councilman Clarke raises a number of serious issues. The Authority is not at that point. We do have to have money in place. This legislation is not a declaration of taking, but it is certainly a planning tool that allows you to lay out what your future is and what your plans are for your destiny. So, Councilman, I appreciate your questions and your comments.
Thank you, Madam President. 61 03/23/04 - RULES - BILL 040024 Since the Planning Commission supported the Bill 030686, which added a chapter to the Zoning and Planning Code entitled, "Pending Public Acquisition District," is the only reason that the Planning Commission is opposed to this bill 8 because you have not yet received the letter, the statement, or are there other reasons?
Councilman, I think we were all distracted. Do you mind repeating your question, please?
What I was saying, Madam President, is, the Planning Commission supported Bill No. 030686 which added a chapter to the Zoning and Planning Code entitled, "Pending Public Acquisition District." My question to Mr. Chapman is, is the only reason that they're opposing this legislation is because the letter of intent has not yet been received?
Councilman, I 62 03/23/04 - RULES - BILL 040024 didn't hear the second part of the question at the end.
The question is, is the Planning Commission opposed to this bill because they have not yet received the statement from the Convention Center Authority Board? Would that change your opinion?
Councilman, that was clearly a concern of the members of the Commission that were in the room that day. I can't say that it was the only concern, though, because while members of the Commission did express that clearly they're not in favor of the acquisition cost for this land allowing to accelerate over the years -- clearly they're not in favor of that -- but they are concerned that this bill could be found to be a taking, that the bill in and of itself could be seen as an act of condemnation or de facto condemnation, and that other members of the Commission -- or at least one other member of the Commission noted that it could be seen as something that promotes blight in that under the provisions of the 63 03/23/04 - RULES - BILL 040024 bill you really can't improve buildings in the area for a period of up to two years. It only allows you to cure violations.
Madam Chair, I believe that we addressed that issue at the time of the public hearing. It not only allows a property owner to make improvements related to a violation, it also allows a property owner to make improvements that are not related to a violation, but just to the general upkeep and maintenance of the building. Of course we do not want the buildings to fall into disrepair. Whether you get a violation notice or not, it is clear from the legislation that if you need to put a new roof on your building to prevent water from coming in, whether you got a violation notice from the City or not, you're going to be able to put that roof on. But at the same time, we don't want you to put a roof on and then convert it to something else. That is a difference. And 64 03/23/04 - RULES - BILL 040024 that is essentially what crosses the line. But you have a responsibility in the City of Philadelphia to maintain your property. And whether you get a violation notice or not is secondary to the general upkeep and maintenance of that particular property, and those provisions were written into the legislation. They may have come in in the form of amendments during the hearing as compared to the original bill when it came in.
Madam President, if I can follow-up on that. Councilman Nutter is absolutely correct. I think what we're trying to make the point of here is we don't want to see people just for the sake of -- people make improvements to their properties that they probably would not have done otherwise but for the fact that the Convention Center may be expanding there and they know that it will increase the value of their property. To the extent that had there not been any discussion, if there were not going to be an expansion, those improvements would really not add that much value to the 65 03/23/04 - RULES - BILL 040024 property. Again, but for the fact that the Convention Center will be expanding and taking those properties, it makes those improvements that much more valuable to the owner. That's the case that the owner of the property is going to make. If you put $100,000 in, in today's environment and there is no Convention Center expansion, the best case scenario is the value of your property will increase by $100,000 or slightly higher. But because of the Convention Center expansion, that $100,000 -- and this is only by way of example -- improvement may increase the value of that property by a million dollars. And that's what we're trying to prevent here.
No. I just was making that as a follow-up point to Councilman Nutter's statement.
Very well. The Chair recognizes Councilman Cohen.
I'm having 66 03/23/04 - RULES - BILL 040024 difficulty understanding the difference between how developers generally work and this situation. It seems to me that a smart developer would have known some time ago. He'd know now, he'd know a year from now that if this property has not yet been taken, it remains a likelihood that it's going to be taken at some time. We've never tried to interfere with the developers' guess work. I'm not sure whether or not there will be this expansion. I know there won't be at government expense, if I have anything to do with it. But since I've not been successful in the past in convincing other colleagues not to use government money to make private developers rich, I suspect I won't have much success here. But I wonder how do you justify -- and I raise this to Councilman Nutter, Councilman DiCicco and others who justify this change in how development works and capitalism works and people's judgment. That may be right; it may be wrong. If Rendell and Mayor Street keep fighting each other, we don't know whether it 67 03/23/04 - RULES - BILL 040024 will ever take place. There's a great chance they'll come together. Maybe MTV will unite them and they'll be friends again and then the Convention Center will move forward. We don't know those things. Nobody knows them.
Actually, Councilman Nutter, I understand the first segment of MTV Real Life is going to be Vince Fumo, John Dougherty, John Street and Ed Rendell all living together for one month in that building at Third and Arch. (Laughter.)
With any luck they may throw me and Councilman Mariano in the same room.
I don't know why 68 03/23/04 - RULES - BILL 040024 this should get any greater protection than what occurs normally. I assume developers are scouting different areas of the City now making decisions as to which is more likely to be developed next so they can buy property. I know lots of businesses that were moved from Center City to other parts of the City in connection with the original Convention Center decision made out very well, Some of them didn't. So what is different about this situation?
I think you're somewhat right about developers. But I think, at least in my district, the 1st Councilmanic District, developers are making decisions on investing money based on what they have created. Government really didn't create the explosion, if you will, of the demand of housing in the 1st Councilmanic District, except for the fact that we did offer the tax incentives. But there's nothing going around in Old City, Northern Liberties, lower Port Richmond, as an example, that government has invested money in any of those communities 69 03/23/04 - RULES - BILL 040024 that has triggered developers to go in them and say, "Well, the City is putting something in this neighborhood so I'm going to make an investment here. The developers have actually made that decision on their own, which is a good thing. In this case, I think it's the opposite where the developers, the capitalists that you referred to earlier who you don't want to see make money on the backs of taxpayers, will --
If we do not take this appropriate action now, I think the very concern that you have will, in fact, occur because those developers are saying, "Hey, the Convention Center Authority, they're going to expand. They're going to need this building. If I go in now and buy it at a certain price and make some minor improvements to it, it's going to increase the value and I'm going to walk away with a windfall." This in effect will prevent some of 70 03/23/04 - RULES - BILL 040024 those capitalistic concerns that you have from occurring in this immediate area.
Don't you trust the courts that are going to hear the dispute if the City believes -- or whoever is involved as a party -- believes that the asking price is too high? Don't they have a right to go before a board of judges?
Don't we have any confidence in the judge's decision as to what it's really worth and what these new investments in it meant, that it meant an effort to grab more money, if that's their decision?
We already have an example of one developer who purchased a vacant warehouse building -- and again, I guess I'm kind of going against what I 71 03/23/04 - RULES - BILL 040024 originally believed in -- that if you give a developer a tax incentive, they will come and they will develop, so the 10-year tax exemption in this case is working against us. He bought the building. He's converting it into condos because he gets the tax abatement on the improvements. But at the same token he knew -- he's a local developer from Philadelphia -- he knew that at some point -- he's hoping at least that the Convention Center expansion will take place and he's going to have a windfall on that property. And what we're asking is that we prevent that from occurring because the taxpayers, whether you like it or not, Councilman Cohen, will ultimately pay the price.
We're trying to keep them from being as shafted as they may if we don't do something soon.
I have great difficulty seeing any difference in this situation than in a developer scouting around 72 03/23/04 - RULES - BILL 040024 and reaching his own decision. He takes into account everything he knows, including likely government actions to acquire property. Does it mean that we're going to pass this kind of a law with respect to maybe the airport? Because there's talk that maybe the City will sell to the State or maybe the State will grab on its own. We don't know what form it will take. But isn't that just a fact of life that things happen? Sometimes the City is involved. Sometimes private properties are involved. I just have great difficulty in seeing any difference in this situation and the other one.
At great risk to myself, I'll venture into this. But I think the Councilman is also quite well aware that, again, from a zoning and planning standpoint the government in many instances does seek to restrict the type of uses, conversions, activities. 73 03/23/04 - RULES - BILL 040024 I mean, one of the things that I know drives the Planning Commission crazy, for instance, is the multiple zoning overlays that we have in a wide variety of places in the City. There are places in the City where you have a laundry list of prohibited uses in some places and not in others. The government is always seeking to contain or restrict certain activities in certain places. I can't really comment on what happened from '86 to the time that the present Center opened, and I know you were not thrilled about that particular location but, you know, one of the beauties of our jobs is that we function in a continually changing live environment and new ideas and new theories and new concepts come along all the time. This particular idea comes out of some of the concepts of good land use planning and zoning to seek to at least create a bit more of a balance from the complete free market environment. Look, if private property owners or a person who is kind of in that business can 74 03/23/04 - RULES - BILL 040024 anticipate something happening at a future point in time and guesses right, they're the beneficiary. Now, we've had the experience here, especially in downtown -- I don't want to get into any names -- where that kind of activity went on and it did have to some extent a blighting impact on various parts of the City. Operating with the best information available, we do have reason to think that a governmental entity will go into a particular area. And so, trying to strike the balance between the property owners and what they should rightfully get in the marketplace -- which ultimately will be decided by a judge -- but again looking at the most recent example, I don't think it's a stretch to say that it was a high motivator for a person in the face of a known project to make such improvements of an extraordinary nature which once you pull the building permit and once you start the activity, you've already to some extent started your argument on what the value is. But at least for me, if you have a tool available to you to stop someone from 75 03/23/04 - RULES - BILL 040024 causing the public to pay not $2 million for a piece of property -- and you know you're going in that direction -- but now upwards of to 5 $12 million for the same piece of property 6 because the person, I guess, was smart enough 7 to try to take advantage, that horse is out of 8 that barn. But if we know that it's going on 9 and still take no action whatsoever, there 10 will come a time of, I guess, kind of the reckoning and the final adding up of what the value was at a particular point in time and what it will be when all these people decide -- if they decide to sue or go into court. And I guess the difference between those two is what we're trying to narrow down. I think we do have some obligation, if there's something legally available to us, to take some action to protect the overall interest of the taxpayers. The property owners ultimately are still going to make out better than they would if nothing goes on in that particular section. The argument here is about how much more could they have gotten based on no action from this government, 76 03/23/04 - RULES - BILL 040024 believing under the best of circumstances that a positive situation will develop in that area going west to Broad Street. I think that's kind of basically the question here. If you know that it's happening, you see that it's happening, you have a recent example of it happening, You have reason to believe that it's going to continue to happen, the question is, what did you do once you knew what was going on?
We can do nothing and let the market do whatever it's going to do and ultimately somebody's going to complain legitimately that either this City Council or some other governmental entity, you knew this was going on, You had a tool available to you, You did nothing about it. It comes at a price. And all I'm saying is, what extent can we narrow that price down? It's not like any of these people are going to go without food. It's not like any of them are going to claim that somehow we caused a demise of their financial or real estate empire. They're going to go make out somewhere. I'm just trying to cut down on the 77 03/23/04 - RULES - BILL 040024 cost of it to the same people who are ultimately going to pay the tab. But I think it is outrageous.
It is outrageous for someone to knowingly go into an area west of the Convention Center in the path of our expansion, knowing that we're going there, to convert a building that's been sitting vacant for a long period of time, put 65 condo units in it that they're going to go out into the marketplace and sell and we're now going to pay upwards of $12 million for the real estate plus relocation costs. That is outrageous.
But that doesn't have to happen. The State and City can come together quickly. Why do you put the burden on the system of developers, which you generally support and the Council generally supports it? I happen to be the one who least supports it, but in this case I think it's very unfair to select out this situation and say we're not going to follow the principles 78 03/23/04 - RULES - BILL 040024 of capitalism. The State and the City government had means to do it. They could sit down tonight and resolve the problem by making it clear what it's going to be, whether there's going to be money for it from the State or not. You're saying let the State and City dawdle all they want and let them dawdle without having to pay a price.
No, Councilman, actually, I'm not. What we are saying, in fact, without being rather explicit about it is we're actually trying to get the parties to focus on this particular issue because it does set a particular timetable. As I said earlier, if we don't know what we're doing, both the City and the State, on this particular project somewhere in the course of the next two years, it probably won't happen. It's either now, soon or never.
It's a highly political question as well as an economic question. In the area of doubt I don't know what's going to happen.
Every major 79 03/23/04 - RULES - BILL 040024 government, Councilman, is a political question. It was a political question as to whether we were going to build two stadiums. It was a political question whether we were going to build this Center. It's a political question for anything else that we're going to do. That's the business that we're in. We're politicians. It's what we do. So we're making a calculated bet, not to get into the gaming situation.
Well, I think it's a disadvantage of developers in this case. We're altering the rules in this one situation.
We either think it's going to happen or we don't think it's going to happen. But I cannot sit around and knowingly let people rip off this government, whether it's the City taxpayers or the State taxpayers, because they're all the same taxpayers and it's all coming out of the same pocket. And not try to take some action that might cause somebody to say, "You know, they got that bill over there, Maybe I'm not going 80 03/23/04 - RULES - BILL 040024 to mess with that" --
So you've taken action. Now I'm saying it's not an automatic decision. Each of us has to make that decision. I don't know how you change the rules in mid-game. That's what you're doing.
Councilman, let me go back. If this bill were to pass and somebody owns a building in that square, they can still file an application for a zoning variance. They can get over to the Zoning Board. And the bill says the Board shall not grant a variance to change the use of the building unless it results in an unconstitutional taking of the building. That's their judgment. That's a legal standard that has to be met. And if the Zoning Board says that the only way that this person can function and operate their building is by getting that variance, then they're 81 03/23/04 - RULES - BILL 040024 going to get the variance and there's nothing we can do about it. So we have set a threshold and built in, I think, protections. If you go and get a permit and you're denied by L&I, the first thing you're going to do is go right back through the same process and you're going to appeal. And you'll be right back over at the Zoning Board or the Board of L&I Review. And if they determine that the only way that you can legally use your building is by granting that permit, because to not grant it to you is an unconstitutional taking, you're going to get it. Now, it would be a little difficult if this bill were in place, it would be a little difficult for a guy with an industrial building that's been vacant for a long period of time to go to the Zoning Board or go over the counter and say, the only way I can use my building is to convert to 65 luxury apartments or condominiums. Now, that's a little bit of a stretch of an argument. That's what we're talking about. So you're not taking 82 03/23/04 - RULES - BILL 040024 completely away anybody's property rights. There is a process still for you to go through. It just requires you to go through a higher standard, which is the same thing that's in our Zoning Code right now. You've got a laundry list of prohibited uses. You go over to the Zoning Board, they're going to deny your variance when you go across the counter. If you can make an argument that the only way you can use your property is to have lap dancing going on in that building because you're in violation of 14-1605 when you went in to apply and the only thing that you can have is a dance parlor in that place, then I think you're going to get it. It's a slightly high standard to meet, though.
That will be in another hearing. We have a single subject here. 83 03/23/04 - RULES - BILL 040024
I think the selective use of this technique -- and I think I would support the notion that this apply to all development, but to just pick out this one development and say, "We're going to change the rules for this development," I don't see. I think it's unfair to the developers.
Actually, the bill is structured such that it only -- first, it only applies to governmental entities, and it requires that entity to pass a resolution 13 or have authorization that they've taken a position to support a particular project. Now, notwithstanding your particular position on the issue, I think it is well known that there is a proposed expansion of the Pennsylvania Convention Center. There are 9 million documents that go with it. There have been people hired to do work on it. There's active lobbying work going on; Democrats, Republicans, Independents, black, white, in the City, out of the City, and any other configuration that you can imagine. So it's not just a thought. It's not somebody 84 03/23/04 - RULES - BILL 040024 just had an idea, "Oh, we'd like to go westward." There are things in place. And that's a requirement, that someone of authority has to show that there is commitment for it. The Board of the Pennsylvania Convention Center Authority last Wednesday at the board meeting in public voted unanimously to support this. The Board two meetings ago passed resolutions encouraging the General Assembly and the Governor to fund expansion and specifically asked for the money that Councilman DiCicco was talking about, which would allow us to actually start the condemnation process sooner as opposed to later so we can get the properties under control. I agree with you. If we had the money in hand, we wouldn't be here. We'd be issuing condemnation notices because some people may actually want to move and want to move earlier than later. We're trying to get a building built, hopefully, by the end of 2008. That's a very compressed time period 85 03/23/04 - RULES - BILL 040024 for the size of building that we're talking about. We need to get condemnation, relocation, demolition, asbestos and all that other stuff out of there as quickly as possible. We're trying to create an environment where both sides recognize there's a time period here for people to start taking action. Because we also want the folks in Harrisburg -- not that they're not paying attention to this -- but every time we take an action to help support it, I think it helps them move that ball down the road. It's the same presentation we gave the State Legislature three weeks ago.
You make a good argument. It happens not to convince me. It's a good argument, but it's not a convincing argument to me. I don't see why the State deserves or the City or the combination of the State and City deserves special treatment. I think we either make it available for everybody or we make it available to none.
I have a 86 03/23/04 - RULES - BILL 040024 one-word comment as to why the state and the City deserve special consideration. It's called the taxpayers.
Well, we don't show concern for taxpayers elsewhere. Why in this situation do we want to show special consideration? We didn't in the sports stadiums. This Council voted in the other direction. They knew everybody involved were millionaires. They said, let's help make them billionaires. That would be better for the country, I guess. But I don't see the difference.
But I commend you for your efforts on behalf of the stadiums.
I didn't have the idea before. I just came up with it. What do you want from me?
Thank you, Madam President. 87 03/23/04 - RULES - BILL 040024 I have a couple of quick questions. One, I just want it for the record, there were references made to overlays as a comparable in the discussion. I do not believe the overlays are comparable. Although we prohibit certain uses, it is more of a permanent nature with no 8 intent to ultimately take any of those properties, so I want clarify. Because I've used overlays a substantial amount.
So it's not the same as what you're attempting to do here?
No. I think what I was trying to explain, Councilman, is that the idea has elements or bits and pieces of various zoning concepts that were like the first items of discussion, about how to get to this point. We have provisions in the Code that prevent certain activities. We were trying to prevent certain activities. We have a planning tool called RC-6 for future development. So it's not any one thing.
I just want it for the record. 88 03/23/04 - RULES - BILL 040024
If we introduce an overlay, I don't want somebody to get nervous and think ultimately we're going to suppress the value of their property.
No. No. One has nothing to do with the other. It was me sharing for the record the thought process of how you get from point A to whatever point we're at.
The other question, if anyone here can answer this, is more from a legal perspective. Who ultimately would receive the court notice? Because I believe we're going to be in court with this. I just fundamentally believe that a property owner, some property owner, will take us to court for this. Who would be in the chain of liability? I know that on occasions I've had opportunities to ask the City to be a pass-through for properties that could potentially have some environmental issues. 89 03/23/04 - RULES - BILL 040024 Right now there's an old school in my district. It was owned by the School District and the community group wants it and the City is reluctant to take title because they can ultimately be in the chain of title as it relates to environmental issues. And I guess on this particular legislation, since the Council is being asked to pass this, Council, with individuals on Council, the City of Philadelphia, although it will ultimately -- if this happens -- be the Convention Center Authority that would provide the financing. And I don't know if the City is going to do it because the last time I checked we don't have any money.
Who would be in the chain of liability as it relates to this? Would I receive a court notice one day that says, Darrell Clarke, Councilman, 5th District, voted for a bill to suppress my real estate value or my ability to enhance my real estate value? Who ultimately will be 90 03/23/04 - RULES - BILL 040024 responsible and will be the recipient of a subpoena to appear in court?
Not to give you legal advice, Councilman, but in the performance of your duties I think you know that you're basically immune from suit. But I think the short answer to your --
I'm being sued as we speak by a developer in the district who was not able to develop a property, so it's not the first time.
I'm sure you're getting legal representation from the Law Department.
I've been hauled into court on a couple of occasions. So I'm asking that question, not necessarily of you guys. At some point I need to get an answer.
I think the first part of your question, though, the simple answer on this is someone's going to file whatever they're going to file with the Convention Center and I'm sure with the City. That's the only two logical parties. We're 91 03/23/04 - RULES - BILL 040024 intertwined in our general relationship.
Okay. With respect to this whole pending acquisition process -- I guess I want to ask this question of maybe you, Mr. Wetzel, as it relates to the broader issue, because this is the bill that was passed last year that gave authorization to Councilmembers on a City-wide basis to introduce and pass a Pending Acquisition District, and that brings me back to this whole issue about neighborhood development. Right now it is my belief, and I think other Members' belief, that there is going to be a limited amount of acquisition money as we proceed under this NTI process. I guess my question is, could this be implemented in the neighborhood as opposed to utilizing very limited dollars that we have under the NTI? So if we have an area that we anticipate developing somewhere down the line but we don't have the money, could we get some agency to file a notice of intent and basically lock in prices or the ability of anybody to enhance the value or to convert 92 03/23/04 - RULES - BILL 040024 properties, but put us in a position if we got the resources to ultimately acquire that land? Could this bill be implemented in such a fashion?
It's possible. I think the distinguishing characteristic, at least for the one that's on the table now, is that there is a public entity that's going to build a public building. And so the acquisition is from private parties into the public's hands and it will remain in the public's hands. I think it gets trickier --
Well, say for instance PHDC was the developer -- and I know that the thought is that they will ultimately be terminated -- but say for now PHDC is our development arm as it relates to housing, and PHDC will be interested in building 100 houses in a location. We don't have any acquisition money. We now say we're going to do a pending acquisition zone in this targeted area to basically suppress any property owner's ability to enhance the value of their property. 93 03/23/04 - RULES - BILL 040024
I think my answer would be this is going to be a very interesting case because I do think that there will be a court challenge to this. It's a very difficult matter to deal with in the sense of, if you took a particular area that was going to be acquired, conveyed to another public entity like PHDC, who's the ultimate conveyance to private parties, are they going to build home ownership units and sell them to private parties.
Let's go the next level. The Philadelphia Housing Authority.
Well, one of the things I will double-check, I believe they actually have eminent domain powers, but I will double-check on that to be sure.
Let's go back to PHDC, and it would be rental properties that would be owned and maintained by PHDC.
That's getting close to this. There's a major difference with condemnation that occurs where the land and 94 03/23/04 - RULES - BILL 040024 the subsequent buildings become part of the public's ownership. Libraries, schools, fire stations, and in this case the Convention Center. That type of acquisition is distinguished from the powers that are granted to redevelopment authorities, which is to acquire private land and convey to private parties. If the School District has eminent domain power, but only for the express purposes of acquiring land for the building of schools or administrative buildings and it's limited to that, so they must acquire and then retain ownership of that land in that public entity. I would assume -- but I could be wrong -- that the Convention Center's condemnation powers are probably limited to the acquisition of land for the Convention Center itself. And that land must stay in public ownership. And I think that's a very important distinction here if there's going to be a court challenge. I'm assuming the case in Nevada -- and these gentlemen can answer that -- that the land was set aside for some 95 03/23/04 - RULES - BILL 040024 public purpose. Is that the case, Councilman Nutter? Do we know that?
Yes. But ultimately it was never taken and the court basically said, look, you still have your land. There was a temporary interruption in your rights. It was years. 10
I do think that's an 11 important distinction if you were in front of 12 a judge or jury, that this particular 13 situation is a public act for a purpose of 14 acquiring land to be in the public domain in 15 perpetuity for however long that is to be. 16
I'm just looking 17 at the application in another instance where 18 there's a public entity, quasi-public entity 19 looking to develop a site. We don't have the 20 money as we don't have the money in this particular case, could this bill be applied in such an instance?
But in this particular instance -- and those who know the bill better can answer it -- if I owned a series of rental 96 03/23/04 - RULES - BILL 040024 properties in this area that you're describing, and it may be zoned appropriately and everything and they're vacant now, I don't think anything in this bill would prevent you from, A, bringing them up to code and, B, renting them out.
But if you have an industrial property you couldn't convert it to residential?
That's what it's seeking to prevent. Again, to do that you'd have to get a zoning variance. If the Board determines that not granting you that variance is an unconstitutional taking they have to give you the variance, so you'd be able to do it.
If you owned 10 single family houses there that were vacant over the last 10 years, you bought them, nothing would prevent you from bringing them up to code and selling them, thereby this would not control value in the same kind of way that I think the 97 03/23/04 - RULES - BILL 040024 distinction here is, which is converting from one use to another and that conversion creates substantial value increase. In the case we're talking about --
I'm going to test it because I have a site. I'm going to introduce a pending acquisition bill for that site where I hope to develop, and we'll find out through its application. I don't have any more NTI acquisition money and this is my way of testing the case and the ability to acquire additional land without money.
Are there any other questions from Members of the Committee? (No response.)
Do we have anyone else to testify on this bill? Please approach the witness table. Kindly identify yourself for the record and proceed with your testimony.
Goode morning, Madam President, Members of the Committee. My name 98 03/23/04 - RULES - BILL 040024 is Brett Feldman. I'm an attorney with the law firm of Klehr Harrison, and I am here on behalf of the owners of 144 North 13th Street.
Excuse me, sir. Would you mind pulling the microphone closer to you?
Again, Brett Feldman from the law firm of Klehr Harrison, 260 South Broad Street, Philadelphia, Pennsylvania, here on behalf of the owners/developers of the Lithograph Lofts project at 144 North 13th Street, which I believe is the project that Councilmembers Nutter and DiCicco have mentioned as the inspiration for this ordinance. We also share the same concerns as identified by the Planning Commission regarding the failure of a notice of intent to be filed. This Committee hearing today did not come out of nowhere. This was previously scheduled at least three weeks ago. There was no letter of intent at that point. There still remains no letter of intent or statement of intent to condemn here or intent to 99 03/23/04 - RULES - BILL 040024 condemn. I don't know why, but that's something that the Planning Commission has identified as a concern. We share that. We obviously also share the concern about the condemnation in taking issues. But my testimony is brief, is just to clear up some of the misconceptions about this residential project. I believe it was referred to as -- there's a sense given in the testimony so far that this is something that is just beginning or just kind of percolating along. This is a project that is essentially done. While this ordinance might have been inspired by this project and concerns, I think the phrase was, the horse is out of the barn on this one. That's what we've been led to believe from press accounts and also from Councilmember DiCicco's office on this. This is a project that I believe is almost 95 percent done. We're expecting certificates of occupancy within the next several weeks on this project and a temporary CO within the next week or two. They received zoning for this project. 100 03/23/04 - RULES - BILL 040024 They have received all the necessary building permits, we believe. The zoning allowing this conversion on changing uses was approved. The number of residential units has been approved by zoning and then the building permits were issued. So we just want that made clear on the record that is our understanding. While this ordinance potentially was inspired by this project, that this project is now, regardless of what you think about it, is now one that will continue to go forward. There are active pre-sales now going on in these units. There are new buyers for these condominium units. These are very nice, high quality condominium units. This isn't something that was done on a shoe string here. This is something that there is a market for and buyers are now in the process of signing papers on these units. So I just wanted to be here on behalf of the clients to express where this project is and that there be no 24 misunderstanding regarding the status, and this is something that is essentially done and 101 03/23/04 - RULES - BILL 040024 to answer any questions on that, if the Committee might have any.
I don't know exactly. There is a range, Madam President, on these units.
I don't know. I don't know that, but I know there is a range. I've been told that. And that is information that I'm sure is available market wise and we could pass on.
Thank you. The Chair recognizes Councilman DiCicco.
Thank you, Madam President. Thank you, Mr. Feldman. Just let me say that there was never any suggestion -- and I hope that's not what you or your client 102 03/23/04 - RULES - BILL 040024 believe -- that there was any suggestion that the permits were not properly acquired and that you did not go through the normal legal process that enabled your client to develop this building. It was never my intention. My intention was to point out the fact that to prevent this from reoccurring because of the cost that it will be to the taxpayers should the Convention Center expansion move forward was my only concern. And that if in fact your client sells all of the units, we are then faced with additional relocation issues that we would not have to consider today because the building is basically, even though it may be 95 percent complete in terms of renovations, it is not occupied for the most part. Council President Verna asked about sale price. How many units?
I think it's somewhere in that 65 to 70 units that was mentioned. I don't have the exact number. I can get that to the Committee. That would be as per the zoning for that. 103 03/23/04 - RULES - BILL 040024
Do you know what the developer paid for this property when he first purchased it?
Do you know what the value of the improvements have been?
Do you know if any agreements of sales have been completed yet or is it just pre-sale stuff they're going through now?
I understand that they're in pre-sales. I don't know the number.
Are they actively advertising through a realtor or are they doing it in -house?
I would appreciate if you could supply the Chair with answers to those questions. I think that's very important to us.
I don't have 104 03/23/04 - RULES - BILL 040024 any other questions right now.
Madam Chair, before Councilman O'Neill starts, I just want to say I know the developer. He's a friend of mine. I have no malice towards that individual. He was a smart business person. He did the right thing. And if I were not in this seat, I would probably have tried to do the same thing myself. So I just want you to know it's not a personal thing. It's just a question of fiduciary responsibility to the taxpayers and limiting what the cost going forward would be to the taxpayers in terms of the expansion. Thank you, Madam President. Thank you, Councilman O'Neill.
Yes. Just a point of clarity. Mr. Feldman, you said at the beginning that COs were pending. You used the 105 03/23/04 - RULES - BILL 040024 term COs, right, certificate of occupancy?
In response to Councilman DiCicco's question, you said that you weren't sure if there had been any agreements of sale yet. I'm just trying to get from maybe no agreements of sale yet and COs pending. COs pending would mean the construction is essentially finished on some of the units. You would have to have more than a -- you mentioned that the first thing before the agreement of sale, frankly, that you would just plop down a deposit or something to hold it. With an agreement of sale, you're the owner.
We are far beyond construction. We're at the end of construction.
So you have to have agreements of sale. I'm just trying to 106 03/23/04 - RULES - BILL 040024 -- you can't get to that point without agreements of sale. Nobody's building units with deposits without commitments to buy.
My understanding is that they are at the point of agreements of sale being reached on particular units.
People are ready to move in is just about what you're talking about?
I can't say exactly what that status is. But as far as the L&I issuing certificates of occupancy to allow the whole building to be used for residential, that is --
I just wanted some clarity there. My question was, does the developer disclose to the buyers in this case -- this is just curiosity. I don't know whether it's a legal requirement or not, which is not what I'm after. That could be the buyer's problem or issue. Do you regularly tell potential buyers that they're buying in the path of a Convention Center expansion that may happen, or do you -- you know, if somebody 107 03/23/04 - RULES - BILL 040024 is coming in from Nebraska and buying a unit -- I mean, if they live around here they probably have some kind of constructive notice of it since it's in the paper every other week. But do you formally notify the tenant that, oh, by the way, they're not building a stadium across the street, but they're going to tear your place down for the Convention Center?
Councilman, I don't know. I'm not involved with their sales.
I'd almost like to have this hearing continued -- I know we're going to get this bill out -- to bring the developer in because now I've got much more interest that -- we weren't picking on you. The developer is a business man. There's nothing stopping him from doing that. The Zoning Board exercised --
-- questionable judgement, but that wasn't the developer's judgement. 108 03/23/04 - RULES - BILL 040024
Point of information, Councilman. I think I know exactly where you're going with your question. Drawing from my real estate experience, which is very limited, I believe that the seller is required under the Full Disclosure Act to let a potential buyer know if there is some development, as you speak to, that will be coming down the path of the property that you're buying. And there's obviously -- the public has heard enough about this in print and electronic media. So again, from my recollection -- and I'm a licensed salesperson, although I don't sell many properties -- but I believe that full disclosure is required here, would be required.
There's certainly a possibility. Some people actually move into the City from outside the area, that they wouldn't have any idea. But as you're getting back to the Chair with information on the range of sales, could you also get some information on the number of agreements, cost 109 03/23/04 - RULES - BILL 040024 of the land as was asked, cost of improvements and also this question of disclosure? Thank you.
Thank you. The Chair recognizes Councilman Kenney.
Thank you, Madam President. Mr. Feldman, did your client go before the Zoning Board to get the approval to develop this property as a residential property?
My understanding is that this project did require Zoning Board approval.
So the Zoning Board heard testimony and formally voted on it?
That's my understanding. I was not there, nor did I participate in that hearing.
Who advises the Zoning Board -- is it the Planning Commission that attends the Zoning Board hearings to 110 03/23/04 - RULES - BILL 040024 advise the Board on issues as to relative to City policy and other things?
I just know from my general zoning background that the Planning Commission does attend the Zoning Board hearings.
Are you aware whether or not the Planning Commission had any advice or counsel to the Zoning Board as a result of this request to change the zoning of this building?
Do you know who would know? The concern I have is that the Zoning Board, if they didn't know that the Convention Center was expanding in that direction, they should have known. And if they didn't know, certainly the Planning Commission knew and should have brought it to their attention on the record so that maybe 111 03/23/04 - RULES - BILL 040024 they could have held the decision in advance until they got more information. It seems almost incredible to me that they didn't know that plans to expand the Convention Center were in the works and that the Planning Commission would be there and not raise their hand and say, well, wait a minute, maybe you should be aware of this. You can understand -- despite the developer's right to make a profit -- you can understand some of the concern of Members of this Council and the public may have with the fact that this kind of occurred in a wink and a nod -- or a wink and a smile. It's going to cost the taxpayers an awful lot of money to make whole the owners of this property and to relocate the 65 or 75 condo owners or tenants, whatever they are, that you're going to have. You would think someone on the Zoning Board or someone at the Planning Commission would have said, maybe we should think about this before we do it. I know you represented the client and the client wanted what they wanted, but it 112 03/23/04 - RULES - BILL 040024 doesn't make it right and it doesn't make it fair to the taxpayer. I don't think in fact that the Planning Commission or the Zoning Board did their job too well on this particular case. Is their anyone on your firm that attended the hearing that could provide us with some information as to what happened? I know, Councilman Nutter, you're over there all the time. Are there notes of testimony or is there a public record? Maybe you should ask for the public record to see exactly what was said, because I have trouble believing a lot of intelligent people didn't know what they were doing when they maneuvered this zoning change. Madam President, I would like to see if we could make a request for the notes of testimony of that zoning hearing just to see who knew what and who said what.
Very good. The Chair recognizes Councilman Cohen.
During the work on the stadiums there was some discussion 113 03/23/04 - RULES - BILL 040024 about a parking garage or an Acme lot or something, and the City was informed by developers, they told us later that it was likely that that be would be needed for some purpose in connection with the sports stadium. They offered to sell it to the City at a very low price. The City, as governments often do, can be pretty arrogant. The City said, no, they were sure it wasn't going to be and they weren't interested. Later of course the developer turned out to be right and the City, I think, had to pay about three times what they originally were offered their property for. Does that come back at all? Is that the situation that you're aiming at? Because that's one that stands out in my mind as an example of bad judgment by the City. I can never figure out why the City's judgment was so bad at the time.
Councilman, if the question was directed to me, I recall there was an issue about at least one the properties and that there had been maybe some preliminary City discussion. Somewhere in the 114 03/23/04 - RULES - BILL 040024 course of that story the bottom line, I think, ended up being that we could have taken an action at one point in time and acquired the property for one amount of money. We didn't. And then I think through subsequent negotiation, we may have actually paid more. I think that has not too much to do with this. It may just have had something to do with when you make your judgment about when you need a particular piece of property. I don't remember all the details on that one, but there was something about one of the properties down there.
You're absolutely correct. The Acme Market warehouse was the one that the City eventually probably paid about three times more than the original sale price. And the developer knew eventually, I guess, that the stadium would need that site to develop and bought it and just sat on it. I don't think he's been paid yet. I think it's still being disputed.
Madam President, I'm sorry to interrupt. 115 03/23/04 - RULES - BILL 040024 On the additional point that Councilman DiCicco is making, the last owner of the property never even paid a dime for the property. They had an option to buy the property. It was all paper transactions. No 7 money changed hands until they found out that they needed -- I still don't think they needed it -- but they decided to acquire it as a result of the stadium deal and he made three times the amount of money profit.
Are there any other questions of the attorney at the table? And I know that Councilwoman Miller is getting rather nervous because she does have some of her constituents here to testify. I would ask, Councilman Nutter --
I'll be very quick. Mr. Feldman, you indicated that your client did in fact have an application at the Zoning Board, went through a Zoning Board process and received approval by the Zoning Board? 116 03/23/04 - RULES - BILL 040024
Do you know what the zoning classification was for the property before you went to the Zoning Board?
Mr. Feldman, if I can, I guess, try to say this in as respectful a fashion as possible, what was the purpose in your coming to the hearing today? You seem not to have much information.
My purpose today was to simply correct the type of, I think, misperception on this project as far as how far along this project is. 117 03/23/04 - RULES - BILL 040024 I know at one point it was said that it was 35 percent or 40 percent as far as construction. That is not the case. From what I'm most recently told, it's approximately up in the mid to upper 90s now. That's all I'm here for at this point.
I understand. I've never believed that this piece of legislation would have any direct impact on your particular project once you got started. I think that was pretty much the end of that discussion. One last thing. Do you happen to know where the file is for this particular property? There's apparently been a number of attempts to locate the zoning file for this particular site. Do you have any idea why it's not where it's supposed to be?
I have no idea. It should be as you can imagine, down at L&I zoning.
The questions that I've asked you -- and this will be my last question, just to wrap this up. The 118 03/23/04 - RULES - BILL 040024 questions that I've asked you, can you provide to the Chair answers to those questions? I asked you when you were at the Zoning Board, when was it approved, when did you apply, what was the zoning classification before this started, and how long was the building vacant.
I believe that most of those questions I've already got down on a list here. Most of those are public record.
I know you indicated that you were not at the Board. Who was?
You must have been standing in the wrong place at the wrong time this morning and you drew the very short straw. You may want to check about your status at the firm to get sent over here for a hearing like this with no information under these circumstances. Somebody does not like 119 03/23/04 - RULES - BILL 040138 you. Thank you very much.
Mr. Feldman, could we have responses in writing by tomorrow, please? I don't think that would be difficult.
Thank you. Are there any other questions from Members of the Committee? (No response.)
Do we have anyone else to testify on this bill? (No response.)
Seeing no 18 one, I would ask Mr. McPherson to please read the title of Bill No. 040138.
An ordinance 21 approving the first amendment of the redevelopment proposal for the Wister III Urban Renewal Area.
Please identify yourself for the record and proceed 120 03/23/04 - RULES - BILL 040138 with your testimony.
Madam Chairperson and Members of the Committee, Herbert Wetzel, executive director of the Redevelopment Authority of the City of Philadelphia, and I'm here today to speak in support of Bill No. 8 040138, the first amended redevelopment proposal and the first amended urban renewal plan for the Germantown Redevelopment Area and the Wister III Urban Renewal Area. This bill would authorize the Redevelopment Authority to acquire a total of 10 properties, six abandoned lots and four vacant and vandalized structures in support of Greater Germantown Housing Development Corporation's Wister Commons Project. The Wister Commons project is a two-phased affordable housing development proposed by the Greater Germantown Housing Development Corporation in collaboration with Conifer Realty. While Phase I consists of the construction of 10 new townhouses and substantial rehabilitation of three 121 03/23/04 - RULES - BILL 040138 properties, the overall project will include the acquisition and construction of a total of at least 75 units which will be rented and subsequently sold to low and moderate income buyers. GGHDC plans to finance this project through the sale of low income housing tax credits. Acquisition of the properties 9 will require one demolition. Since all 10 properties are vacant this development will require no relocation. Madam Chairperson and Members of the Committee, I respectfully request favorable consideration of Bill No. 040138 and would ask for the suspension of Council Rules to allow first reading on March 25th, 2004.
Once again, Madam Chair and Members of the Committee, for the City Planning Commission, my name is Thomas Chapman. This bill approves the first amendment of the redevelopment proposal for Wister III Urban Renewal Area. This bill 24 authorizes the acquisition of 10 properties for residential use. The Planning Commission 122 03/23/04 - RULES - BILL 040138 approved this amended redevelopment proposal at its meeting of February 17th, 2004. Thank you.
Thank you. The support detail states that three single family homes will be rehabilitated and that new townhouses will be constructed. 9 Since the proposed ordinance only specifies 10 that 10 properties are to be acquired, are the acquisitions only for the new townhouses or do they also include the three properties that are to be rehabilitated?
I would ask that the developer who's here today to provide more detail. But this is an additional acquisition to other acquisitions that have been undertaken on behalf of this project. So there's more properties -- these are the last 10 that round out the overall project that's going to be developed at the site.
Are we led to believe that all of the properties are vacant?
The bill 3 states that there are certain relocation costs, but in the support detail there are no 5 relocation costs. Would you please explain?
Well, I'd like to look at it. It would be an error on our part if it does indicate relocation costs because all these are vacant.
I think you ought to look at that, and if there are corrections to be made they should be made.
The bill 15 states that condemnation is not eminent, but the support detail on states that the Redevelopment Authority proposes to condemn. Please explain.
I'm going to defer that. I'd like to get back to you. I think that's a legal question regarding the notion of what's in a redevelopment proposal under state statutes, and I'd like to be able to answer that. Your question is specifically about condemnation is not eminent, and if 124 03/23/04 - RULES - BILL 040138 Madam Chairperson would allow me, I would like our legal counsel to address that.
I think that's something we should do. Are there any questions from Members of the Committee? The Chair recognizes Councilman Cohen.
On some previous occasions after testimony by RDA that houses were vacant, owners suddenly appeared and said they were living there. To make sure of that, how do you determine that the properties are vacant? What's your documentary evidence of that?
Staff at the Redevelopment Authority go out there. We also work with the developers. But there's the very real possibility, Councilman, that during a process, for example, what was vacant today, a month from now, could very well be occupied. So that's sometimes what happens. In many cases in working with the Councilperson when that happens, properties are re-vested or not 125 03/23/04 - RULES - BILL 040138 taken in some cases. But we make a good faith effort --
I heard you say that the houses that were vacant become occupied. How do they become occupied?
I can't answer specifically, but I would make the assumption that some people move into a property. Sometimes properties are sold while this process is going on and people move into them. There are a variety of ways that could happen.
Well, I would rather City Council did not act on assumption, but acted on knowledge and documentation. Therefore, I would like to ask you to put into document form of some kind your statement that these properties are vacant, and if that condition changes, you will notify City Council. Because I'm going to be raising quite frequently the question as to whether or not, are there any properties occupied by an owner or a tenant, and if so, do they agree or do they disagree so that we avoid the situation at the last minute when a bill comes 126 03/23/04 - RULES - BILL 040138 in for ultimate approval to find property owners or tenants stating they've lived in property for a long time. This would give us the basis for knowing. I don't think the RDA ought to operate on assumptions. I think you've got the operate on knowledge. I don't think the RDA ought to rely on developers. The developers have their own interest to protect. The statement may be what the developer wants. It may be true. It may not be true. Or the developer may have been sloppy in his fact finding. So we'd like to have something. I certainly would before I support any of these actions further. I'd like to know what the situation is and documentation to establish that there is no homeowner or tenant living there currently who's faced with eviction against his or her will. Could you do that?
Councilman, let me answer it this way and ask if this is appropriate. Last year Council asked us to change our process to expand notice beyond the public ads that are required under state 127 03/23/04 - RULES - BILL 040138 statute to sending certified letters to the owners of the properties. In this particular case, certified letters were sent to the owners of the properties and we also research and see if there's an off-site address as well. Because sometimes tenant-occupied properties, the landlord has an off-site address. So we do have evidence that regular and certified mail was sent to each of these properties. Is that sufficient over and above --
If there's a possibility that a homeowner or a tenant may be turned out of a lawful possession, that they're entitled to more than certified letters, and I cannot imagine my voting for -- and I don't remember the matter ever coming up that Council would be satisfied with a certified letter. Maybe that happened. Maybe my memory is not good on that. I don't know. But I know if I were aware of that issue I would certainly say ownership or rights of tenants to occupy property is worth more than certified letters. It certainly seems to me 128 03/23/04 - RULES - BILL 040138 that RDA can send out somebody from their staff to check out each one. These are 4 units that are very close, aren't they? 5
So you don't have 8 to worry about that. So you have four left? 9 Is that the 10, 6 and 4? 10
Are the four united, close by, either on Sheldrake or on a cross street of it?
It would seem to me that the citizens of Philadelphia are certainly entitled to assurance that before any action is taken where they live, either by right of tenancy or ownership, that they're going to receive a personal check to make sure that nobody lives there. And then we can accept your word. It seems to me I'd be asking for a very fair thing if I ask for documentation from you that the house is vacant or from an appropriate official of the 129 03/23/04 - RULES - BILL 040138 RDA.
If you could do it in this case, that would be good because that settles the problem and then we know we're not going to have an aftermath of having people coming to this Chamber accusing RDA or accusing us of being cold and callous with respect to handling their needs. Thank you very much. Would you send that to the President? She'll see that we get it.
Thank you, Madam Chair. I'm sure when the developer and executive director for the Greater German Housing Development Corporation gets up they can confirm that these dwellings are vacant and have been vacant for some time and does not have anyone residing in them because of their personal visitation, not a certified 130 03/23/04 - RULES - BILL 040138 letter.
I'm trying to just set up a general procedure that would apply to all homes to make sure that we don't make human errors.
Do we have any other questions from Members of the Committee? (No response.)
Gentlemen, thank you. You'll remain until the conclusion of the hearing, please. Mr. Wetzel?
Hello. My name is Bill 19 Guzman. I'm one of the owners of the properties that's planned to be condemned. I do not live at the property. We purchased it through sheriff's sale, which was a few months ago. And we planned to develop it and sell the property. So my question to people here is to find out what exactly we have to do to 131 03/23/04 - RULES - BILL 040138 be able to develop it, or is the property just going to be taken by condemnation and that's it?
Mr. Wetzel, do you want to approach the witness table and respond to the question, please?
The property in question was on the list of the properties 10 that were to be acquired for the project at Greater Germantown Housing Development Corporation, which is to develop. I had the opportunity to talk to this gentleman while the other ordinance was being heard, and I basically explained to him that the Redevelopment Authority only has the power to acquire real estate that's granted to it by the local legislative body, and that the first thing that would have to happen is, A, the ordinance would have to be passed. The Mayor would have to sign that ordinance. The Redevelopment Authority would have to send him a notice of an interest. An appraisal would have to be done and an offer letter sent, et cetera. 132 03/23/04 - RULES - BILL 040138 It is my understanding, unless I'm corrected by the Councilwoman or the developer, that this property is an essential part of the overall project and it is the desire that this property been acquired for that project.
May I ask what you paid for the property under sheriff's sale?
Yes. We paid $11,500 plus closing costs, title and insurance, so about $12,000. My concern is if the appraiser comes in and appraises the property at $3,000, for example, you know, I would not like to lose the money that we already paid, not knowing that this property was going to be condemned. We just found out. I received a letter on March 5th. The property was settled a few months ago. So the sheriff never notified -- or they probably didn't know that it will be condemned. And we were planning to 133 03/23/04 - RULES - BILL 040138 redevelop the property, fix it up and sell it, as we do with all of the properties that we acquire.
I believe the Councilwoman would like the executive director and the developer to approach the witness table, please. Good afternoon. Please identify yourself for the record.
Good afternoon, Madam President. My name is Harry Moody. I'm the Executive Director of Greater Germantown Housing Development Corporation.
Good afternoon. My name is Ernest Covington. I'm the developer for Greater Germantown Housing Development Corporation.
Thank you. I would assume that 83 East Collom Street is a key part of the development. I can't see not needing 83 if 81 is also on the list.
83 is part of three units on that particular block that had been 134 03/23/04 - RULES - BILL 040138 vacant for some time. Actually, 83 is adjacent to 81, which is a burn out unit. That entire portion of the block was extremely blighted. And what we didn't want to do is develop the rest of the block in new construction and leave those units there. So that's why those were included in this particular project.
Unfortunately I cannot figure out how 83 got on the sheriff sale list because these properties have been vacant and pretty blighted for a number of years.
They have been. Actually, I grew up on this block. I actually knew the families that lived in them. They haven't lived there for probably more than 19 years. These properties have been vacant. 20 They've been drug infested or used as drug houses over the years for some time.
It's unfortunate that the gentleman has purchased it at sheriff sale. But that property is a key part of the development, so we would want 135 03/23/04 - RULES - BILL 040138 to keep that into the package.
I guess we'll have to do whatever we need to do. I don't know what to say.
I was just going to suggest that since Mr. Guzman has recently purchased the property, unlike some of these absentee landlords who purchased property 10 years ago and sit on it and pay no 12 taxes and do nothing and then show up at a hearing, it seems that he acted in a pretty sincere way and has only made settlement on it within the last few months. That was some kind of paper screw from the Sheriff's Department in not knowing what was going on. I wonder of there is any way that the RDA could at least make him whole. I know that there's an appraisal process, but it may be in this case just maybe at least guarantee the guy recovers what he invested, which would seem only fair. Certainly if the man owned the property for 20 years and did nothing with it, I wouldn't care. 136 03/23/04 - RULES - BILL 040138
I would think too that we may be able to get the sheriff to give him his money back under the redemption program or something of that nature. But I agree that it sounds like he make an honest investment to develop that particular property, even though -- I guess if it was me, I'd actually be looking at other properties too because developing that one wouldn't just work on that block because there's so many vacancies on that block. This is a block that we've targeted for some time to do rehab. So we can follow through. I see Steve from my office getting his information and we'll do whatever we can to help him get a refund. Did you have some testimony?
Yes. I actually have prepared testimony. I have copies for all the Members.
It's also an indication that something is wrong with the record keeping in the Sheriff's Office or other areas of the City. I think it is the responsibility -- because I know of nowhere 137 03/23/04 - RULES - BILL 040138 else the responsibility could be placed. I would place it on the Redevelopment Authority to say when something like this develops we're going to work on this until it gets straightened out and an innocent person doesn't get hurt. I think Mr. Guzman is entitled to that kind of security, not to be told, you got yourself into a mess. The City should not have had it on sheriff's sale. We're going to help you a little bit or do whatever we can. I think the Redevelopment Authority ought to take responsibility because you're the ultimate conveyer. And I think you ought to assure Mr. Guzman that you're going to work with him to resolve this in a fair way. I don't know what that ultimately will be, whether he gets his money back or whether the house is included. Councilwoman Miller made a good statement as to why the house is needed. And if it's needed for the whole development, it may be that the only remedy we'll have is to get his money and be made whole. But he should not have to suffer because of the 138 03/23/04 - RULES - BILL 040138 inaccuracies of the City government and the City government's failure to notify him that the house should never have been put on sheriff's sale.
I think we all agree with you. And Councilman Miller did say that a member of her staff was getting all of the information and that they would deal with the Sheriff's Department. Sir, would you proceed with your testimony?
Yes. Just for the purposes of this Committee, the description that Mr. Wetzel gave you was for the most part a description of the development that would happen on land that they were looking to condemn. This description that I'm about to read into testimony is actually a description of the entire project. There may be some differences in what he said and what I'm about to tell you now. The Wister Commons Phase I project is a 36 unit rental development to be located in the Wister neighborhood of Germantown. The 139 03/23/04 - RULES - BILL 040138 project is a joint venture between Greater Germantown Housing Development Corporation, a non-profit, neighborhood-based real estate development organization and Conifer Realty, an experienced, for-profit development company with a very rich history in real estate development and management. The overall project is an 85 to 90 unit development initiative of single family housing units. As the developers of the project, we are planning to build in the first phase a 36 unit rental development. This development will be called Wister Commons Phase I. The project will be three and four-bedroom amenity-enriched row homes ranging from 1,450 to 1,700 square feet that will be converted to home ownership after its initial rental compliance period. This project will also be a low income housing tax credit program. This project seeks to serve a continuing need for adequate housing in this lower Germantown neighborhood, as well as significantly eliminating blight and unused vacant land in 140 03/23/04 - RULES - BILL 040138 the area. The scope of the project will supply newly constructed housing on several vacant parcels within a one square block area as well as using several additional vacant parcels in the immediate vicinity. Wister Commons Phase I is located in the Wister Urban Renewal Area as designated and studied by the Philadelphia Planning Commission. The Wister area has also been designated as a Neighborhood Transformation Initiative. While keeping in tune with its revitalization strategy, the Wister neighborhood has realized many renewal projects over the years, including the projects developed by GGHDC, which is the Greater Germantown Housing Development Corporation, which are listed on the handout that I gave you. Those are Elders Place 1, which is a 46-unit Elderly HUD 202 realty; Elders Place II, which is recently finished, which is a 40-unit Elderly HUD 202 building; Lower Germantown I, which is a 50 unit low income housing tax credit family development; Lower Germantown II, which is a 33-unit low 141 03/23/04 - RULES - BILL 040138 income housing tax credit development; Cricket Court Commons, which is a 228 unit low income housing tax credit and market rate unit development; and Cricket Court Townhouses, which is a 44 unit home ownership project that was completed approximately four years ago. Elimination of blight and vacancy in this area will continue to have a tremendous impact on the existing housing market in the area. As we continue to try to stabilize and enhance the housing stock, Wister Commons Phase I is just one phase of a planned neighborhood revitalization strategy. While this project will continue to support the significant development investment by GGHDC in the Wister neighborhood, it will also serve as a catalyst for future phases of development concentrating on homeownership opportunities that are already in the planning phases.
Thank you. Are there any questions of this witness? The Chair recognizes Councilman Kelly. 142 03/23/04 - RULES - BILL 040138
Could you just tell me for my own benefit, what is the rental compliance period?
Thank you. 11 Are there any other questions from 12 Members of the Committee? 13 (No response.) 14
Thank you. Do we have anyone else to testify on this bill? (No response.)
Seeing none, this will conclude our public hearing. - - - - 143 COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC MEETING COMMITTEE ON RULES - - - - Tuesday, March 23, 2004 - - - - Public meeting conducted by the Committee on Rules, held in Room 400, City Hall, Philadelphia, Pennsylvania, on the above date, to consider action on the following: BILL 040024, 040092, 040138. PRESENT: COUNCIL PRESIDENT VERNA, Chair COUNCILMAN DARRELL CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK DICICCO COUNCILMAN JACK KELLY COUNCILMAN JAMES KENNEY COUNCILMAN RICHARD MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL NUTTER COUNCILMAN BRIAN O'NEILL 144 03/23/04 - RULES - PUBLIC MEETING
We will now go into our public meeting. The Chair recognizes Councilman Clarke regarding Bill No. 040024.
Thank you, Madam President. Madam President, in view of the information that was requested by Members of this Committee, I make a motion that Bill No. 11 040024 be held until Thursday at 1:00 at a Rules Committee hearing that will be held at that time. (Duly seconded.)
The ayes have it. Bill No. 040024 will be continued until Thursday, March 25th at 1:00 p.m. The Chair recognizes Councilman 145 03/23/04 - RULES - PUBLIC MEETING Clarke regarding Bill No. 040092.
Thank you, Madam President. I move that Bill 040092 be reported out of this Committee with a favorable recommendation and request no suspension of Rules. (Duly seconded.)
It has been moved and seconded that Bill No. 040092 be reported out of Committee with a favorable recommendation. All in favor will indicate by saying aye. (Aye.)
The ayes have it and the motion carries. The Chair recognizes Councilwoman Miller regarding Bill No. 040138.
Thank you, Madam Chair. 146 03/23/04 - RULES - PUBLIC MEETING I would request that Bill 040138 be reported out of this Committee with a favorable recommendation and further request that the Rules of Council be suspended so as to permit first reading at our next session. (Duly seconded.)
It has been moved and properly seconded that Bill No. 10 040138 be reported out of Committee with a favorable recommendation, also a recommendation that the Rules of Council be suspended so as to permit first reading at our next Council session. All in favor will say aye. (Aye.)
The ayes have it. Bill No. 040138 has been reported out with a favorable recommendation. Thank you all very much for your patience. 147 03/23/04 - RULES - PUBLIC MEETING (Council adjourned at 12:36 p.m.) - - - - 148 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Tuesday, March 23, 2004, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE ON RULES _________________________ Lisa C. Bradley, RPR