COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE COMMITTEE ON PUBLIC PROPERTY, PUBLIC WORKS - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, 6/6/01 1:40 p.m. - - - BILL 010191 - (Held) - Authorizing the Director of Commerce and the Commissioner of Public Property to acquire by amicable negotiation or by condemnation fee simple title to a certain parcel of property owned by the Redevelopment Authority of the City of Philadelphia and the New Eastwick Corporation. BILL 010378 - Authorizing Commissioner of Public Property to enter into lease agreement with the Philadelphia Authority for Industrial Development for further sublease to Urban Cable Works of Philadelphia L.P., to lease certain parcel of land located at 5201 Umbria Street, Philadelphia, Pennsylvania, under certain terms and conditions. PRESENT: COUNCILMAN JAMES F. KENNEY, Chair COUNCILWOMAN JANNIE BLACKWELL, V. Chair COUNCILMAN DARRELL L. CLARKE COUNCILWOMAN JOAN KRAJEWSKI COUNCILMAN MICHAEL A. NUTTER COUNCILMAN FRANK RIZZO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 6/6/01 PUBLIC PROPERTY & PUBLIC WORKS COMMITTEE I N D E X Page Bill No. 010191 Charles Isdell, Director of Aviation. . . . . 4 Philadelphia International Airport Bill Kramer, City Planning Commission . . . . 7 Ken Sipos, Public Property. . . . . . . . . . 8 Richard Carroll, Esquire. . . . . . . . . . . 14 Philip Korb, Esquire, New Eastwick Corp. 21 Jim Tyrell, Deputy Director for Properties 29 Nicholas Scafidi, Redevelopment Authority 42 Bill No. 010378 Joseph James, Dept. Of Public Property. . . . 54 3 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 P R O C E E D I N G S
Good afternoon, ladies and gentlemen. This is the Committee on Public Property and Public Works. The hearing is now in session to hear testimony and act on two bills. The first is Bill No. 010191, which is an ordinance authorizing the Director of Commerce and the Commissioner of Public Property to acquire by amicable negotiation or by condemnation fee simple title to a certain parcel of property owned by the Redevelopment Authority of the City of Philadelphia and the New Eastwick Corporation and their successors and assigns located on the south side of Bartram Avenue within the limits of Philadelphia, Pennsylvania, and containing an area of 708,402 square feet, or 16.2626 acres, and any and all other real property interest in such parcel. Please identify yourself for the record and proceed with your testimony.
My name is Ken Sipos, Department of Public Property, testifying on behalf of Commissioner Perez.
Charles Isdell, Director of 4 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 Aviation, from Philadelphia International Airport.
And I am Bill Kramer from the Philadelphia City Planning Commission.
Chairman Kenney and members of the Committee on Public Property and Public Works. My name is Charlie Isdell, Director of Aviation for the City of Philadelphia. I am pleased to appear before you today to testify in support of Bill No. 010191. This bill will authorize the City of Philadelphia, through the Department of Commerce, Division of Aviation, and Department of Public Property to acquire approximately 16.26 acres of real property located on the south side of Bartram Avenue within the limits of Philadelphia, Pennsylvania, for use by the Philadelphia International Airport. The property will be acquired by negotiated purchase or by condemnation. 5 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 The purchase price or condemnation award, when determined, will be paid with monies from the Aviation Fund, with no General Fund impact. The property is surrounded by PNC Bank to the west, I-95 to the south, the south side of Bartram Avenue to the north, and on the east by the Airport's existing employee parking lot. Currently, the Airport is severely constrained in employee parking. The Airport currently has 2400 parking spaces for employees. Although the Airport has grown significantly since the existing lot opened in 1996 and now employs more than 20,000 people, which is a 33 percent increase since that time, servicing nearly million 16 passengers a year, which is also a 33 percent 17 increase since that time, the employee parking 18 capacity has remained unchanged. 19 Currently, during peak hours when major 20 shift changes occur, there's a dearth of available 21 parking spaces. This results in employee lateness 22 and occasionally insufficient staffing to provide 23 maximum customer service. In addition, the 24 Airport's workforce will increase dramatically with 25 the opening of Terminal F in June of this year and 6 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 the new international terminal a year later for the reasons specified, the Airport has an urgent and immediate need for additional space for employee parking. The location of the property and its proximity to the existing lot allows the Airport to use the property for this purpose almost immediately upon acquisition. The property is currently owned by the Redevelopment Authority of the City of Philadelphia, and the New Eastwick Corporation holds certain development rights with respect to this property. The Division of Aviation has had discussions with the RDA and New Eastwick Corporation regarding the proposed purchase of the property. No agreement has yet been reached. Irrespective of the outcome of these discussions, we need, and therefore request, Council approval to acquire the property. We greatly appreciate the opportunity to speak to you today in support of Bill No. 010191 and we'll be happy to answer questions you may have. We have a letter of support also from Maggie Powell, the Executive Director of the 7 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 Eastwick Project Area Committee, and we have met several times with them earlier this year and they are supportive of the City's acquisition. We've also brought with us an aerial photo to illustrate the exact location, and we also have with us, if necessary, a representative of the Airline Station Managers Council at Philadelphia International Airport whose employees are very anxious to get the additional parking availability.
Thank you very much. Does the Planning Commission want to give testimony?
Good afternoon, Mr. Chairman and members of the committee. For the City Planning Commission, my name is Bill Kramer. The City Planning Commission has reviewed Bill 010191, which was introduced into Council on March 29, 2001 by Councilmember Blackwell for Council President Verna. This parcel is located on the south side of Bartram Avenue, west of 84th Street, and is zoned C-3 commercial. The property contains approximately 8 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 16.3 acres. This is a vacant property that is owned by the Redevelopment Authority of the New Eastwick Corporation, and once conveyed, will be used by the Philadelphia International Airport for employee parking for its airline support businesses, concessionaires, and government agency tenants. The Airport needs to create additional employee parking facilities for its airline support businesses, concessionaires, and government agency tenants. The existing employee parking lot, which is adjacent to this lot, is no longer adequate due to the rapid growth in Airport employment since the opening of the lot in 1996. The Planning Commission, at its meeting of April 19, 2001, recommended that Bill No. 010191 be approved.
Chairperson Kenney and members of the committee. I'm testifying for Commissioner Perez. I'm here today testifying in support of Bill 010191. The bill will permit the 9 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 City to acquire certain properties located adjacent to the Philadelphia International Airport for ancillary purposes. The Department of Public Property supports the measure. Accordingly, I respectfully ask that THE City Council committee approve the bill. I also ask that the rules be suspended so that the ordinance may BE passed upon the second reading of Council. Thank you very much.
Thank you very much. Mr. Isdell, could you tell me how many spaces will from the construction of this parking lot?
We estimate a minimum of 1200 of, a maximum of 1700. There is an illustration that was included with our testimony submittal.
And these spaces will be used only by employees in some form of the Airport?
Yes. In order to access the lot, you need to have an employee I.D. badge with a swipe -- that you can swipe. 10 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191
And just out of curiosity sake, how do the employees get to the terminals to their place of work from this lot or from the existing employee parking lot?
The proceeds from the sale would be going to the Redevelopment Authority or to Eastwick Corporation?
I'm not sure. (Mr. Isdell confers with colleague off the record.)
The answer would be determined during the negotiations, which we have not completed yet. How much would go to the New Eastwick Corporation would also depend on whether or not it's a purchase versus a condemnation acquisition.
The New Eastwick Corporation is a nonprofit community development corporation, or what is it? (Mr. Isdell confers with colleague off record.)
It's actually a development 11 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 arm, I believe, of the Korman Corporation.
Okay, but the property's owned jointly by the RDA and Korman?
I believe that the Redevelopment Authority owns the property and that New Eastwick Development Corporation has options to develop the property, which have not been exercised up till the present time.
So that we would actually be providing -- the Airport Fund -- sorry, what you testified --
The Aviation Fund would be providing money to the RDA to then either buy off the options to the New Eastwick Corporation?
Okay. And who would be making the decision on the purchase price; would it be made by the Airport?
Yes. It's our intention to negotiate a purchase -- an acquisition by purchase with the RDA that would include consideration for the option that exists currently. And we don't, at 12 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 least at the present time, although we have an estimated cost, we would prefer possibly to share that with you privately rather than publicly.
Yeah, I understand. The only thing that confuses me, and I guess the confusion comes about as a result of the fact that I had assumed that New Eastwick Corporation was a community CDC or some other nonprofit.
How many year options did Korman Corporation have to purchase this property? (Mr. Isdell confers off the record with colleague.)
I guess the confusion is that -- and I don't understand -- I mean, I have a general knowledge of real estate, but I guess the question is that if the Korman Corporation, through its arm New Eastwick Corporation has not exercise their options to date, why are they even in the mix right now? Wouldn't we just be taking this from the RDA?
The contract was signed in 13 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 1961.
Okay. And does the Korman Corporation or New Eastwick pay the RDA an annual fee or do they lease that property from the RDA? (Mr. Isdell confers off the record with colleague.)
If you want to bring anyone to testify on the specific legal issues of this, it's fine. I guess the question is, what equity does New Eastwick Corporation have in this land other than the right of options that have not yet been exercised, apparently? (Witness comes forward.)
Please identify yourself for the record. You could pull that 14 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 microphone closer to you.
My name is Richard Carroll, and I'm an attorney under contract with the City concerning the acquisition of Parcel C out at the Airport.
If you could move over to the other chair and then just speak more directly into the microphone.
My name is Richard Carroll, and the law firm that I work for, Ronald A. White, PC, has been under contract with the City to provide legal services connected with the acquisition of the real estate that we're talking about.
No, it began as a much 15 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 larger piece, but it has come down to the 16.2 acres that we're discussing right now.
Yeah. The question is, why is the New Eastwick/Korman Corporation involved in this transaction at all? I need an explanation as to, if the RDA owns the property and the Airport needs the property and this corporation is in the middle with some option rights that have or have not been exercised since they've had the ability to do it, what equity, what investment do they have?
It is our position that the Redevelopment Authority of Philadelphia retains legal title to the property in trust for the Korman Group, the Korman Group having acquired equitable title to the entire 400-some acres 40-some years ago -- well 40 years ago, when the original redevelopment plan was promulgated and signed. There was actually an agreement of sale for the 16 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 entire to 500 acres under consideration, which exists to this day. That is why the Korman Group and its assignees and designees and the RDA are still mentioned. In the event of a negotiated purchase, as Mr. Isdell has pointed out, the distribution of the compensation would be left to the parties. I am not a part of that. In the event of condemnation, it's our position that the compensation would be awarded to the holder of the equitable title, which is the Korman Corporation.
And has the Korman Corporation/New Eastwick Corporation exercised its option rights to develop that land? Obviously they haven't 'cause it's not developed.
But this parcel is lying fallow. 17 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191
I don't believe that anyone is obligated to pay taxes at this time on the land.
Than, again, I'll defer to the legal expertise, but I still don't understand the need for Korman to gain any benefit from the sale of this property from one City agency to another. Where is Korman's investment? where is Korman's -- I mean, if Korman had maintained the land and paid taxes on the land, had development on the land that had some equitable value and the RDA owned the land rights and Korman owned everything above it, and the Airport needs the parcel, which it does --
-- then I would see Korman's need to be compensated. At this point, I don't understand why Korman would receive any proceeds from a sale between the RDA and the Airport. It seems to me to be a transaction between the RDA and the Airport.
I understand. Sir, I 18 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 believe that Korman would lose the benefit of its bargain. In the original redevelopment contract, Korman stood to make a profit, of course, it's a profitable organization, and it's authorized under the terms of the original agreement to develop and sell off portions.
It's been going on for 40 years, and there's been extensive --
So I can sit on a piece of property for 40 years, I don't develop it, I don't improve it, I don't pay taxes on it, and then the Airport needs it so now I make a profit from it?
I'm sorry, but don't understand why Korman's in it. If Korman had exercised over a 40-year period, as is done with other parcels around it, to invest money, to develop 19 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 it, and pay taxes, and we need it by condemnation or by negotiated sale, I say, of course, we got to compensate Korman for what it is they've done on that property over the years. But if they've done nothing and they haven't developed it and they haven't paid taxes on it, why are they in it? I mean, I know they have a right to be because they have this 40-year -- and how many years was the option; was it a 40-year option?
They're renewable, sir. And my understanding is that certain covenants that run with the land will expire permanently in 2004.
However, there is an attorney here who represents the Korman Group who has advised us that there may be a few more years. That's immaterial, as far as I'm concerned. Korman's interest will be extinguished one way or another, either by sale or by condemnation. So whether it runs to 2025 or 2004 is immaterial.
But is it material that the land over a 40-year period -- arguably 40 years -- has not been developed and has not paid any 20 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 taxes on it? Where is the need for compensation?
I think I can answer that very shortly. Out of some 1100 acres, about 450 remain for active residential and commercial development. There has been considerable activity in the 40 years in Eastwick complicated by environmental problems and other problems. Korman still has the active right, and for all we know, the intention of building on the 16.2 acres that we have just --
But after 40 years now, I guess the question is, any day now --
Well, I know we kept out some motels on the parcel next door within the past ten years. I think the PNC Operational Center is no 17 more than six or seven years old, and that was developed on the parcel next door.
I mean, I'd be happy to hear an explanation from Korman or the representative of Korman or New Eastwick. Understand. I mean, understand, I mean, when we first sat down for this hearing, I had expected to run this thing through. I assumed we were buying 21 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 this from some community development corporation or some private owner. I still can't understand the relationship between RDA and New Eastwick/Korman and where the loss to the Korman Corporation is on a parcel that's undeveloped and untaxed for 40 years, other than the potential rights, which, apparently weren't too strong over a 40-year period, but now, all of a sudden, it's kind of strong today. (Witness comes forward.)
Chairman Kenney, my name is Philip Korb, K-O-R-B. I'm an attorney for New Eastwick Corporation. With me is Mr. Jerry Segal, who's senior vice president of the Korman Company. I think the most important picture to understand is that this is not a case where there's this vacant piece of ground which the Korman Company has ignored, which it's now trying to make a killing on. The Airport development is a development for which the Korman Company -- the New Eastwick Corporation, which is really a joint venture of Reynolds and the Korman Company, have been the named redeveloper on a redevelopment agreement with the 22 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 Redevelopment Authority for many years, and they have been developing at tremendous investment on their part hundreds of acres. This parcel is not some parcel sitting there that they're going to suddenly going to get rich on. The Airport interplex, and you can see it as you drive on Route 95, is a hotel park. There are a series of hotels that have been constructed and PNC. This is a development by the Korman Company, which has moved down the road as they build, they continue to move. This parcel, Parcel C, is simply the next step. It didn't get developed till the land in front of it got developed. It's now ready to be developed. The Korman Company is moving along, it's doing all of the development that Mayor Rendell asked to be done, which was the construction of hotels. This is the next in a series of developments, which we are in the middle of working on and are proceeding with and now have to stop because of this project.
Because of the imminent 23 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 condemnation. This is not something which we're going to sit on for years. We're not simply an option holder.
And there's been a huge amount of development, hundreds of acres of development, and this is the very next piece to be developed in the normal course. New Eastwick is not simply an option holder; it's the named redeveloper with an absolute right to buy property, and we do it all the time. We just closed a week ago on acreage right there for a restaurant that will serve these hotels, and this is the next order of business.
Well, why wasn't this property purchased from the RDA by New Eastwick? Why wasn't the option exercised in 40 years?
It's not an option; it's really an equitable ownership interest. We have an agreement of sale. The redevelopment agreement we have recorded allows us, whenever we're ready, to buy pieces of ground. And we've had a simple 24 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 procedure with the Redevelopment Authority for years, which is, as we move along development, we're ready to build our next hotel, we buy that piece of ground and develop it. And we'll do it as we go, and this is simply the next piece to be done.
But isn't this different in that when you acquired the prior pieces, you had your equity invested in the development of the hotel, in the development of whatever's being developed. The question here is that you're not -- you weren't building a hotel on this, you weren't building a restaurant on this, you weren't building -- nothing was being built on this and nothing's been built on it for 40 years. I mean --
There are two reasons why this hasn't been built yet. The first reason is that you build the next piece of ground and then you move along. This is now ready to be built. We actually have been delayed in doing it, and I didn't show up today to complain to the City about this, but I will tell you one thing that has delayed our ability to complete hotel development on this site as of this moment is the 25 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 City's failure to fulfill its legal obligation to us to construct roads and infrastructure to complete the road to serve that particular parcel, which it's contractually bound to do. I'm not here to complain about that, but we would have been thrilled --
But I guess going back to the original question, who owns the parcel?
Legal title is held by the Redevelopment Authority. Equitable title, the real ownership interest by equitable title is held by New Eastwick. We have an agreement to buy that land as we're ready to develop it, and it's the same with that entire parcel, and we do that.
Well, I guess the question then to the Airport or the to the Public Property Department is, why wasn't a deal structured to buy the parcel, the equitable interest of the parcel from New Brunswick, come to us and say, This is what we've negotiated, this is what we'd like you to approve, as opposed to doing an open-ended ordinance, which we'll never see again, and a place will be negotiated through the Aviation Fund, and we won't even know what it was sold for, what the RDA gets, and what New Eastwick gets, although we're 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 being asked to approve this today. I'm not arguing the lack of the need for parking spaces, and I'm not necessarily arguing a lack of the need for developing this parcel in this way. What I'm saying, as the committee chairman and as a member of Council, as I'm being asked to vote on the imminent sale, negotiated sale of this parcel, and I won't know what the price is and I don't know what the distribution of the proceeds are going to be between the RDA and a private, for- profit corporation.
Chairman, let me make clear that I can't answer that because have nothing to do with the ordinance. And I will tell that you far from this being an opportunity for the Korman Company to make a buck off of this deal, we --
There's nothing wrong with making a buck. (Unintelligible, parties talking over each other.)
We had nothing to do with this ordinance being introduced, we weren't even aware of it. Our first goal and our preference would be don't take our land, we're ready to -- we 27 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 want to develop the land, we've been developing everything around it, and this is the next thing we'll develop-- we're going to make -- and we will be developing it for purposes that we think are good for the City and profitable for us. We're not -- we have nothing to do with the decision to proceed in this manner.
I have no quarrel with your desire to develop or your desire to sell or your desire to make a profit; I think that that's what your job is. My job, however, is to try to determine in an open-ended request that there is negotiation going on, that this property is going to be -- the equitable rights to this property are going to be exchanged for a fee or at a cost, and I don't know what the cost is and I don't know what the distribution is going to be. I mean, I don't argue with the project, I don't argue with the use, I don't even argue with you guys wanting to building another hotel on it. All I'm saying is that I would at least, from the committee's point of view, would like to know -- and I know you can't tell me because the information is proprietary, but at some point in time, you're 28 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 asking us to agree to an open-ended deal which we won't know the answer to ever on what it costs and who gets what.
Mr. Chairman, if I could have our deputy director for properties, Jim Tyrell, respond.
I mean, again, understand, if you came in here today and said, Look, this is what we negotiated, this is the price, this is what the RDA's getting and this is what New Eastwick's getting, then we could make a value judgment as to whether or not it's worth it and approve it or disapprove it. But to say we don't know how much it's going to be yet and we don't know who's getting what yes, I don't know what I'm supposed to do. I mean, I do have some fiduciary responsibility for the expenditure of public dollar, whether it's Aviation Fund dollars or not. I mean, if this were a simple Aviation Fund outside the purview of our responsibilities here, you could have made the deal on your own, you wouldn't need us. But if you have to come in here for us to approve this, I'd at least like to know 29 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 the details of the sale. It seems like a reasonable question.
Well, I think we can certainly share with you; we prefer not to do it in a public hearing. Our estimated --
I understand, but I've done other Public Property transfers and sales like this where the Public Property Department's come in and Mr. Sipos has told me exactly what they're paying for it. I mean, why can't we know what it's going to cost? Or why don't you come here after you've already consummated the deal and had an agreement of sale?
Mr. Chairman, it's actually -- the probable method of acquisition is going to be through an act of condemnation. Therefore, we will not set the amount of compensation; it will be set by fair market value appraisals and decided ultimately by the Board of View.
Do we have an appraisal? 30 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191
Well, then why are you here? I know you're here because you need the parking spaces, but if you don't have an appraisal, how do we even know what the far end of this parameter of possibility is? I mean, is it -- I don't even know what the numbers -- I mean, at least if I had an appraisal, I could say, Well, I know what it's going to be generally.
We have appraisals that are somewhat dated, about months, and I can tell you 18 exactly what the appraisals provide for in terms of fair market value for this parcel.
I just think we're being asked -- and no offense to the Korman people, no offense to you guys. I just think that we're being asked as a committee to authorize the movement forward of the sale of this parcel when I don't have an up-to-date appraisal, I don't know what it's 31 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 going to cost, and I don't know who's getting what money, and it's a private, for-profit company involved in the deal. I don't know how we do that.
The Airport actually agrees with you in a sense that our preference would be to deal with the Redevelopment Authority, and we have had those conversations. The distribution of proceeds ultimately lies with the Redevelopment Authority and New Eastwick Corporation since they are the parties of the agreement that rest with the ownership of that parcel.
The Aviation Fund is comprised of what dollars? What's the Aviation Fund -- who fills up the Aviation Fund?
The tenants and users of the Airport through rates and charges that they pay us.
I can certainly assure you that it is our intention to negotiate a purchase that is within all parameters of federal and, you 32 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 know, legal mandates that require us not to divert revenue, to make purchases at fair market value. And there really is no way that we could not --
I don't necessarily want you to be here. I wouldn't care if you had the legal authority to go do these deals on your own. But the fact that you're sitting here, I have to ask these questions. I can't just say, yeah, go ahead and do it and we don't care what it costs, and then we don't even know what the proceeds distribution is going to be. I mean, it's not even like one City agency selling to another; it's not even like one City agency buying it from a nonprofit. It's a for-profit company, which is a terrific for-profit company. However -- I mean, I got to question -- again, I go back to my initial concern about a 40-year period of time when this parcel wasn't developed. And now what is its value? I mean, don't know the answer to these questions. Councilman Nutter.
Thank you, Mr. Chairman. I do share many of the chairman's 33 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 concerns. How long has this discussion been going on?
Actually, it started in late 1999. There was actually an ordinance 9 introduced, which was later withdrawn, to buy this parcel as part of a much larger acquisition, and due to community opposition in Eastwick related to the -- more than anything else related to the size of the projected acquisition, that ordinance was withdrawn.
And in the intervening period, we were asked, and as I mentioned earlier, we met with the Eastwick Project Area Committee on several occasions in the last six months. We're basically asked to scale back the original request.
I understand that, that's fine. I don't need that level of detail for the answer to that question. But thank you for offering. 34 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 You've done other property acquisitions on behalf of the Airport?
Whether in your current capacity, previous capacity. How much property has the Airport bought recently?
The most recent acquisition was in 1999. I think it was -- I don't know how many acres of parcel on Island Avenue. My deputy, Mr. Tyrell, probably has better specificity.
Yeah, Mr. Councilman, we have acquired several different parcels. One was a 49-acre acquisition from the Redevelopment Authority in 1989. We acquired a little over 125 acres as a part of the new runway construction project.
The 49-acre parcel was from the Redevelopment Authority and the 125-acre-plus parcel was from several individual land owners.
Okay. Had you negotiated the transactions prior to your coming to City Council?
The Redevelopment Authority was negotiated. The other 125 acres was not.
Okay. I think it does appear to be somewhat unusual and I think the chairman is correct that more oftentimes than not, when Public Property does come -- I'm not necessarily saying just on behalf of the Airport, but when Public Property comes to a hearing like this, seeking our approval to purchase, maybe 36 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 sometimes sell a piece of property, we usually do have much more of the financial information available so that it makes the record clear as to what went on. And, you know, there will always be heightened scrutiny about transactions between the government and third parties. When third parties do transactions between and amongst themselves, I mean, that's kind of their business. It sounds like we're potentially going to be in a situation where you want our approval to be able to do something but we can't know the details of ultimately what you do until after the fact. Is that the case?
No, I don't believe that's the case, Mr. Councilman. I think the detail that you're looking for in terms of the purchase price cannot be determined until the process of condemnation has been thoroughly exhausted.
This bill gives us the authorization to proceed with the acquisition. And that means enter into negotiations with New Korman Corporation and/or acquire it through 37 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 condemnation.
Why wouldn't you come to an agreement on a price before you came here? Is something going to change?
Well, you have the authorization to have a conversation with anyone you want to have a conversation with, and you don't need that from City Council, right?
I mean, basically what this bill is asking for is a settlement prior to the details of the settlement sheet.
If we were to -- we could have gone through negotiations with the Korman Corporation, but we're, again, proceeding through a condemnation process, which we can't even begin to initiate unless we have Council authorization.
I understand that. I mean, we've not -- I don't think we've really had much of the pleasure of each other's company in the past, right? 38 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191
Okay, all right. Why don't I make this suggestion to you. On any other day, I'd love to engage in this kind of discussion with you and the semantics of words and the meanings and separating participles and the like. Today is not that day. So what I'm saying is, whether or not you have authorization for condemnation or not, you do have the ability to begin to engage in a discussion about a possible purchase price without authorization from City Council, correct?
We did actually have a couple of meetings with the New Eastwick Corporation. We did not walk away with consensus on a purchase price.
There was disagreement on the value. We actually could not even come to terms with negotiating a process by how we would each go 39 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 about determining fair market value to set the purchase price.
So do you think ultimately, you're just going to end up in court?
My guess is the only way we will be successful in acquiring the parcel is to go through a condemnation process.
We had some preliminary conversations in 1999 when the first ordinance was introduced. Those conversations didn't get very far at all because the ordinance was withdrawn for reasons unrelated to any conversations we were having, and those conversations did not get to the point of talking about dollars. I just want to clarify the timing that there were those preliminary conversations in 1999, when the first ordinance was introduced, but we have not had any conversations at all in connection with this ordinance -- a negotiation or even knowing that there was an ordinance until two months after it was introduced. We had been moving along, preparing for our next development on this parcel when we learned 40 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 of the ordinance. And I also would want to make a comment that once this ordinance became known to us, we've had to stop our development. And our biggest concern is that we're sort of -- we're hamstrung by what we can do --
This ordinance was introduced on March 29th. We only discovered that there had been an ordinance introduced about two weeks ago. We were not engaged in any conversations during this period with the Department of Public Property. And I only want to make the comment that --
It sounds like you guys have a great relationship. You don't have to respond to that. Who pays the taxes on this property?
Title is held by the 41 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 Redevelopment Authority, and so it's exempt from taxes.
I thought you said you somehow owned the property. You have equitable interest?
When we get fee title -- and the way we've done development here for decades is, as we're ready with each project, we take legal title to those several acres, the project is done, and then we move on to the next one. And we sort of take a bite of the property as we move along, and this is the next area to be moved along. My comment about timing is that we need some direction as to whether there's going to be a taking or not. Can we continue with our development or must we stop? Right now, we can't say to a potential user, Oh, we have this next property ready to go. In this case, we had to withdraw agreement documents because we had to stop because no one is going to proceed with this uncertainty. We just 42 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 would just like some certainty as to is the property going to be taken or is it not.
Is there anyone here from the Redevelopment Authority? Would you come forward, please. (Witness comes forward.)
I would like information relative to any -- is this the last parcel that's owned title of the -- the title's held by the RDA but there are equitable interests, or equitable interest, in these development parcels? Is the last parcels or are there other parcels?
Mr. Kenney, my name is Nicholas Scafidi, S-C-A-F-I-D-I. I believe that there are other parcels that are still held by the Redevelopment Authority and in which the Korman Corporation has some rights to eventually purchase and develop.
Well, what I would like is a list of those properties, the size of those properties, how long this arrangement has been 43 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 in effect, and if you could give me some history of how this 40-year-old deal was structured. Because from my perspective, despite the good works of the Korman Corporation in developing this area, it seems to me to be a pretty good deal to be able to hold on to a piece of property for 40 years, pay no taxes, and then decide at your leisure when you want to take title and develop it. I mean, that's not how many developers in this city, you know, do things. You go buy a property or you own a property and you decide to develop it. I mean, if I can sit there with in perpetuity rights of development and not pay any taxes on a property, and then at some point in time, even if I'm not going to develop it, potentially gain a profit from its exchange to another City agency, when a different City agency owns title to it in the first place. I don't know who structured that deal 40 years ago, but maybe it should be revisited. So I need to know in the Airport area what is owned by the RDA, what is under options to other people, including Korman or New Eastwick, and I need to know just what was all going on down 44 6/6/01 PUB. PROP. PUB. WORKS - BILL 010191 there, because that seems to be -- maybe at the time it was how things were done. It doesn't seem to be in the public interest today, that situation.
Mr. Kenney, I will provide the information you requested. Just by way of information, the deal was originally struck, I believe, in 1961. It was not a 40-year deal as such at that point. It's been extended a number of times.