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.