Please identify yourself for the record. and proceed with 2082 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 your testimony.
Thank you. My name is Steven Curtis. I'm President of the Community College of Philadelphia. Good morning, President Verna and members of Council. I apologize that we're missing a few people since you are moving at a good rate today.
My board chair, Rhonda Cohen, I think she's on her way, but I apologize that she's not here at this moment. And we also had a student that I will at least reference, even though she isn't here with us this morning. We had a hectic few days. We were very pleased that we were able to achieve a tentative settlement with three units of our union yesterday. And this is also a busy time for us during the spring semester as we push toward the end of year and are planning for many new initiatives next year. So with that said, I'll just make a few remarks and then answer any questions.
This has been, on the one 2083 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 hand, an exciting year for us and also a very challenging year because of all of the events that have taken place nationally and locally, and I'll just take a couple of minutes to update you on our latest initiatives, our latest achievements, and to offer a brief progress report on what we have viewed as one of our principal strategic goals for this year, and that is putting City residents back to work. In the 2002 State of the Union Address, President George Bush made job creation his national priority and called upon all of us -- educators, political leaders, and business executives -- to put America's unemployed workers back to work. And I am delighted to report to you that at the time that he made that request, Community College of Philadelphia already a plan in place and a very successful initiative underway. This semester, the College is serving as a launching pad for 122 Philadelphians who have lost a job but not the desire for a better life. These students, the vast majority of whom are in their mid '30s or older, are part of Opportunity Now, a new tuition-free program for Philadelphia 2084 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 residents who have been permanently laid off from full-time employment. As part of this initiative, the College is offering students who are laid off between September 1st of last year and September 1st of this year up to free credits for one semester in 8 the calendar year 2002. The students, or 9 applicants, are responsible for the cost of 10 textbooks, supplies, and fees. 11 The opportunity now students 12 collectively experience is a portrait in human resilience. Some were economic casualties of September 11th who lost jobs as the beleaguered airline industry struggled to regain stability and profitability. Others were downsized during restructuring as corporate giants such as Lucent and CIGNA trimmed payrolls. Still others have been leto go from mom-and-pop businesses which forged the cornerstone of the nation's and the City's economic viability. A student who I would have recognized, but I still want to at least mention, Sandra Brockington-Gould, is among the Philadelphians who came to us after she was laid off in December, 2085 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 having worked more than years with a major media company. Brockington-Gould, who has a bachelor's degree already from Temple University, sees Opportunity Now as providing her with the guidance that she needed, supplying a support team to advise her on career options, and helping her assess how she could leverage her skills in the present marketplace. She's adding new skills to her resume with her current course load, and just two months into the semester, she is looking ahead with renewed optimism and making A's on her exams. She serves as inspiration for all of us and a role model for our younger students still learning to handle life's pressures. Another powerful testimony to the value of this City's investment in Community College of Philadelphia is Jeanine Hoffman, a self- described C-average high school student who has become an academic all-star. When she enrolled at Community College, she was unemployed, searching for a job and a career choice. This May, she will graduate with high honors and will enroll at the University of Pennsylvania this fall, where she intends to 2086 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 major in political science. There are many more Philadelphians, like Jeanine, who have the potential to excel if given professors who see their potential, mentors who care, and an employer who thinks they are worthy of investment. That's a big if, but it is our goal at the Community College of Philadelphia to make that opportunity available to everyone. In January 2003, the College will offer other opportunities.
We expect to complete construction of our new Center for Business and Industry, a state-of-the-art training and economic- development system that could help more workers and companies become partners in progress. The Center will blend the expertise of academic and economic- development experts into one program so that they can assist area corporations, nonprofits, and governmental agencies to create programs that range from basic workplace skills and specialized training to an associate's degree and certificates for all education levels. The College has been recently approved to receive one half a million dollars for workforce training from the Workforce and Economic 2087 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 Development Network of Pennsylvania (WEDnetPA). As part of our groundbreaking ceremonies last November for our new Center for Business and Industry, WEDnet checks were presented to four companies whose employees will receive training with this funding. As we look forward to next year, I want to thank you again for this Council's commitment to us. The City's recent funding over the past two years was vital to our success. With your support, we completed the first year of offering full-degree programs at each of our regional centers, with at least six such programs at each site; we expanded curricula; revised courses to keep students current with technological advances and changes in their fields of study; we expanded GED, adult literacy, and English as a Second Language offerings in community centers around the City; we increased the number of high school students enrolled in college-credit courses through enrollment kinds of programs; we quadrupled the number of online courses taught as part of our distance education initiatives. We've accomplished much, but there's 2088 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 still much more work that remains. We will need your continued assistance if we are to continue to create a student-centered campus that provides the service the students need if they are to succeed in school and at work. 1 million. We respectfully ask for your support for this proposed budget. I have detailed in the written testimony, and will not do so here, the cost-effective manner in which the College has managed itself and some of the strategies we have pursued to make productive and efficient use of the City's resources. Suffice it to say that in category after category, we are more cost-effective than most of our sister community colleges across the Commonwealth. 5 million for the coming years 2002-2003. There are several factors that will 2089 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 contribute to the increased costs. One is the normal annual increases that will result from the contract settlement with faculty and staff; another is constant pressures that all of us face in terms of health-care costs. Current-year health-care costs rose by percent over 2001 costs, and we 8 project another rise of about 15 percent for 2002. 9 We are also about to replace outdated 10 student and administrative systems that will 11 eventually lead to improved admissions, 12 registration, and financial- aid processes for 13 students, and increased productivity within many 14 administrative support functions. That will also 15 allow us to expand our capability for distance 16 education. 17 Another factor every year in the budget 18 is the revenue derived from the Commonwealth, and 19 for your information, the Governor's Executive Budget proposes a small increase for the State's 14 community colleges that is specifically to cover increased enrollment at our colleges. Enrollment at Community College of Philadelphia, for example, increased 10 percent last year and a similar amount this year. The Executive Budget does not change 2090 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 the actual reimbursement per full-time equivalent student; it simply increases the pot to cover the additional students.
So, in essence, it is a status-quo budget recommendation for us. As the current fiscal challenges facing the College mount, great American cities such as Philadelphia face new demands for revenue stemming from the heightened need for security and the slowdown in sales brought on by the recession. We understand that we are seeking additional funding at the exact time that City and State coffers are filling far more slowly. It is precisely in these times, however, that the residents of our city turn to us and need us the most. That is why our enrollment is increasing so dramatically and why our concomitant costs will also rise accordingly. Given the projected revenues and expenditures for next year's budget, it will be necessary to raise tuition for the 2002-2003 year, though that is an action that the College always takes as a last resort. Despite having the least affluent student body in the State, current tuition is already the highest among Pennsylvania's 14 community colleges. We will, therefore, make every 2091 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 effort to keep tuition affordable. Our partnership with the City of Philadelphia has changed many lives, and the year ahead is full of great promise. With the support of the Mayor and this Council, we shall undertake some key initiatives in the coming year. Briefly, these include: Expansion of career-planning and job- placement services; extension of new core-to-core and dual-admission agreements with area four-year colleges and universities (currently, we have five such agreements); the opening of a new ACT Testing and Training Center that will use state-of-the-art technology to deliver services to businesses as well as individuals; the opening of a new Women's Center on the Spring Garden Street campus; and development of additional career and transfer-program offerings. Community colleges have been a great American experiment created to provide poor and middle-class students with both the right and the 2092 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 means to a better life. Philadelphia can be proud of its success. More than 500,000 Philadelphia residents have entered our doors since the College was created in 1964. It is remarkable when people summon the courage to chart a bold new direction, as Jeanine Hoffman and Sandra Brockington-Gould have done. When the residents are courageous enough to take that risk, we need to be there to support them. With your help, we will be. Thank you again for your continuing support.
Thank you very much. How much will your tuition increase for the '02-'03 school year be?
We don't know the answer to that yet. We just finalized the tentative contracts last night, so we're still working those figures. I think it's fair to say in a normal year when we've received, you know, some good support from the City, as an example last year and the previous year, and the State, we still wound up 2093 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 increasing tuition 2 to $3, so it is likely to be a little bit more than that this time. We're definitely looking to keep it in the lowest single-digit number that we can, but I can't give you exact answer yet. As soon as we work out those numbers, we'll be glad to forward those numbers to you.
So you can't tell us whether the projected $2.5 million shortfall actually includes the higher tuition.
It won't include the higher tuition yet. We will use tuition and we will probably make some cuts, you know, within our budget in order to make up that difference.
Do the community colleges in the surrounding counties have programs comparable to Opportunity Now?
Yes. What happened, our Opportunity Now we actually modeled on another community college, and that was in the Reading area. Since then, I think every community college in the State is doing a variation on that program; they are not all exactly alike. In our case, as an example, we allow 2094 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 students to register for any of our normal courses at whatever time they come. In some other colleges, they do it is on a space-available basis. We haven't chosen to do that; we're treating these students as any other ordinary student. But over time, everybody is eventually starting a similar program.
Thank you. The Chair recognizes Councilman Goode.
Thank you, Madam President. I just wanted to commend Dr. Curtis and his staff for all the great things they do, but particularly in terms of the expansion of the workforce-development initiatives. In past budget hearings, I've talked about how other cities and states use community colleges in a more significant way. I think as we really combat welfare-to-work problems that will come and other workforce- development challenges as a result of 9/11, I really commend them and ask them to further expand their vision. And I just want to say thank you.
Thank you very much. 2095 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 I know I just briefly alluded to a couple things today, but we are trying some new things. We also think in terms of specifically workforce and industry training. As we have our new facility available, that will allow us to do some more things on our campus; of course, we will continue to do many things onsite. And, as you've indicated, we've tried to address the needs of many different populations within our city through creative strategies -- like the Opportunity Now is an example. So we will continue to do that. Thank you.
Thank you. Any other questions from members of the committee? (No further questions.)
Thank you very much. We appreciate the opportunity to speak with you today.
Thank you. 2096 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001
City Representative and the Director of Commerce and the Civic Center. (Witnesses come forward.)
Good morning. Please identify yourself for the record and proceed with your testimony.
Good morning, President Verna and members of City Council. My name is James Cuorato, and I'm the City Representative and Director of Commerce. With me today are our deputies on the Commerce side and the City Representative side of our office. I also expect the Director of Aviation and the President of PIDC to be here as well. Although I know we're starting a little bit earlier, I'm sure they'll be here I am here today to present testimony on behalf of the Department's FY 2003 Operating Budget request of $228,558,333, an increase of $26,378,277, or 13 percent, over the estimated FY 2002 levels. 2097 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 8 million. 3 million, consists of the Convention Center lease service fee. 01 million for basic department operations, which will be carried out with the same staffing level as Fiscal Year '02. 75 million funding level. The Commerce Department functions as the coordinating entity for the City's economic development programs and initiatives. Commerce directly manages the Keystone Opportunity Zone Program, the State Enterprise Zone Program, the 2098 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 City's Neighborhood Economic Development Programs, and Community Development Block Grant contracts, economic development-related capital improvements, international business development, and business services through the Mayor's Business Action Team. Commerce also contracts and work closely with PIDC and the Philadelphia Commercial Development Corporation on loan programs and other business services. The Office of the City Representative provides support to arts and cultural activities, supplies technical assistance to local cultural and arts organizations, and staff support to the Art Commission. The office also operates the Percent for Art Program and Art in City Hall. The Office of the City Representative also plans and implements official City ceremonies, including judicial swearing-ins, mayoral inaugurations, special events and tourism initiatives such as the Book and the Cook, the Philadelphia Holiday Festival, the Philadelphia College Festival, the Mayor's City Hall Ball, Liberty Medal Presentation, Philadelphia Marathon, and the City Hall Tour Program. 2099 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 The Division of Aviation oversees the various planning operational and developmental activities associated with Philadelphia International Airport and Northeast Philadelphia Airport. 8 million over the FY '2002 estimated level. Despite the events of September 11th, which affected a number of sectors of our economy, the year 2001 marked a number of significant accomplishments in economic development. Among those accomplishments were the following. We added eight new Keystone Opportunity Zones, bringing our total to 20. To date we have utilized this program to help 56 businesses; Fleet Bank, Citizens Bank, Pew Charitable Trusts, and FMC Corporation signed renewed leases in the City; the City continues to enjoy a strengthened downtown residential market. Among the projects which will be open this year include The Phoenix, the dockside project, and similar high-scale projects which will get underway at 2100 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 Seventh and Walnut, 18th and Walnut, and 15th and Chestnut. This administration's unprecedented commitment to neighbor economic development was reflected in 2001. In virtually every area of the City, we worked with community-based organizations to enhance their neighborhoods and set the stage for future growth. All of the projects we worked on will help to revitalize and strengthen neighborhoods and create jobs for residents. In the after-math of the September 11th terrorist attacks, we moved swiftly and decisively to bolster our hospitality industry, which was severely impacted by the attacks. 5 million and has proven to be an overwhelming success. Over 25,000 room nights have been booked in our hotels directly as a result of this program.
These and many other developments made 2001 an outstanding year, and we look forward to continuing the momentum that has been generated. The Department will have several new initiatives in the coming year. The first is the 2101 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 expansion of our new Business Outreach Program, an extensive effort to reach a broad cross-section of the City's business community to determine their current and future needs and explain the availability of City services. A second initiative will be the full implementation of a targeted marketing effort aimed at the high-tech and biotechnology sectors of the economy through the recently-formed Innovation Philadelphia, which has already begun to partner with major academic and research institutions, technology companies, and life-science companies. Directly related to our efforts to strengthen the knowledge economy, the Department of Commerce will continue to take a leadership role in promoting student retention. We have recently reactivated our student retention committee and continue to promote new ideas and programs to keep our students here in the City. The retention of downtown office workers is critical to the City's continued fiscal health, but Philadelphia faces serious competition from suburban office markets. In addition to new efforts to attract knowledge economy companies to 2102 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 Philadelphia, this administration will continue to encourage and support existing downtown corporations through a targeted tenant-retention effort. In an effort to better serve all of our businesses in the City, Commerce has worked with the Mayor's Office for Information Services to redesign its Website to more effectively meet the needs of the business community. The new site is expected to launch shortly, and we will revise all of our collateral marketing material to reflect the new design scheme. As for the Airport, the Airport continues to play a major role in the regional economy. 2 billion annually to the greater Philadelphia region. S. airport due to heightened security mandates and an historic downturn in passenger activity. The primary focus of the aviation industry changed overnight from capacity, competition, and customer 2103 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 service to safety and security. The City of Philadelphia, as operator of International Airport and Northeast Philadelphia Airport, has been working closely with federal, state, and airline representatives to implement new security directives issued by the FAA. Among our major initiatives for this year are the opening of the new international terminal and the completion of a comprehensive master plan study for the Airport that identifies facility improvement needs for the next 10 to 20 years. The areas of study included the air field terminal area, land side features and access, and airport support facilities. Simultaneously, the required federal environmental documents will be prepared to secure regulatory-agency approvals for the Capital Development Program. 9 million to meet existing service levels. Madam President, that is our basic 2104 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 overview of the different divisions within our office and concludes my prepared testimony. I would like to take this opportunity to thank you and all of the members of Council for your support throughout the year, and my colleagues and I are available to answer any questions that you might have.
Thank you. The Chair recognizes Councilman Goode.
First let me thank you for letting me maintain my special alumni status at the Commerce Department, and I just have a couple questions for the record. First, have you had a chance to review the new jobs tax-credit bill, and what do you think of it in terms of being a tool for economic development and job creation?
Yes, Councilman, I have had a chance to review it. I think there are 2105 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 always going to be issues whenever the budget -- there are budget implications to a bill like this, and I certainly will be working with the Finance and Budget Office. From our perspective, it's a very creative idea, and I think it has a lot of promise as far as generating new-job development in the City. We certainly can use any additional incentives. Again, I would just like to confer with my colleagues in Budget and Finance to determine those impacts, but I think it is an idea that has great promise.
Okay. Second, I don't know if you're at liberty to comment on this, but from an economic-development perspective, is there a magic number in terms of wage-tax cut that makes us actually competitive within the region in terms of business attraction?
No, if Councilman Nutter's going to ask the question, then maybe I'd better 2106 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 answer it now. (Laughter.)
I don't believe that there is a magic number. What we have found -- and we've done our own survey of businesses this past year, and we'll be doing that program again. What we found is that the business- privilege tax and the wage tax were -- actually scored about equally as far as those taxes that businesses were looking for reductions in. My sense is that certainly further wage- tax reductions would be helpful; that's obvious from my perspective and what we're trying to do, which is attract new businesses to the City. But we have had, I think, a good deal of success in promoting Philadelphia's strengths and making the argument that there is great value to being in Philadelphia in an attempt to offset, you know, the obvious arguments that the wage tax is too high and that this is a burden on our employees. I believe that the Mayor's program of reducing the tax in FY '03 and then taking a look to see if we can reduce the tax further is the right course of action at this point. I don't -- I 2107 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 certainly would not object if there were situations in which further reductions would be possible because it would make our job easier but, again, from the experience that I have, from the surveys that we've done, the business-privilege tax seems to be equally as burdensome, if you will. So to the extent that we're able to accelerate those reductions, I think it will help us.
Thank you, Mr. Cuorato. I just thought it was a better question coming from me than Councilman Nutter, but he may ask the question anyway. But thank you very much for your answer.
I imagine that Councilman Nutter will not let me off the hook. (Laughter.)
Thank you, The Chair recognizes Councilman Clarke.
Good morning, Councilman. 2108 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001
The KOZ Districts that we've created, it appears that they're relatively successful, but some of the inquiries that we've been getting -- I know myself and, I think, a couple of other Councilmembers -- is the potential of creating residential developments. Have we given any thought to how we may address it. I know right now, the policy is there are no residential developments in KOZes, but I've personally received several exciting proposals in a couple of the KOZes in my area, and I wonder if we're giving any thought to looking at a revocation of some of those particular locations or some changes in the State's policy associated with the KOZes. Can you talk to me about that?
Sure, Councilman. We have given substantial thought to this issue because I do think it's going to come up. It has for one project in your district, I know, and I believe we were able to work that out. There are no State legislative or statutory restrictions against residential development in the Keystone Opportunity Zones. It 2109 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 is a City policy, and the policy of this administration, that we would not support residential development in Keystone Opportunity Zones. And it's basically an issue of fairness because for residential developments, it applies to the wage tax, and you always get into that situation where, you know, why should some people have to pay it when others don't. However, I think what we're going to see particularly as our neighborhood economic development programs and the Mayor's Neighborhood Transformation Initiative move forward, I think we are going to see more situations where residential developments need to be considered in Keystone Opportunity Zones, and there may be ways that we can address that. For instance, there may be ways that developers can make payments in lieu of the taxes that are due, and there may be other ways to address it. I don't believe it will be an impediment to development. I believe that we'll be able to work this out, similar to the fashion that we did for the Temple residential project. But it is going to have to be addressed. 2110 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001
Okay. You referenced the biotech industry in your testimony, and my if my memory is correct, at some point last year, there was a commitment from, I think, Governor Ridge, actually, for a substantial grant to several municipalities around the State who were interested in the biotech industry and the creation of a greenhouse. What's the status of that program?
That is a -- that's a State program, which will establish three life-sciences greenhouses in different sections of the State, and one has been theoretically targeted for Southeastern Pennsylvania. What the State is looking for is a regional effort and one that demonstrates cooperation among a number of entities that are involved in this effort. Through Innovation Philadelphia -- that's the organization that we established this past year -- we are at the forefront of those efforts to put that coalition of groups together. The estimated cost, I believe, is $30 million that the State is targeting. I am confident that we will be very 2111 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 competitive in being able to attract one of those three life-sciences greenhouses to Philadelphia, given the strengths that we have, which is strong research facilities, great universities, and a good infrastructure to support it. We have all the ingredients that are necessary, and I believe we'll be able to be successful in that regard.
I believe it's sometime this calendar year, but I'm not certain. We can certainly get that for you.
Are we looking at the old post office site or somewhere in proximity to that?
Somewhere in the West Philadelphia area would seem to make the most sense, given the universities, the University City Science Center, the incubator facilities, and the research facilities, that would seem to make the most sense, yes. 2112 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001
Okay. I have a question with respects to the Avenue of the Arts in general. I know this is not directly related to the Commerce Department, but in that it has created a substantial amount of jobs and potentially even more with the creation of the Kimmel Center and some of the other venues on South Broad, and I'm a little concerned about the northern side of Broad Street and our ability to stimulate the economy up on the northern side. Is there any involvement from the Commerce Department, or do you plan on being involved at a level that will sustain the group and sustain the excitement that is happening on the south side?
Councilman, I can tell you with absolute assurance that Avenue of the Arts North is one of the top priorities with me personally and with our department and will be for this coming year. I think we all agree that we've had a great deal of success with Avenue of the Arts South with the opening of the Kimmel Center, but my feeling is it is time to turn our attention to Avenue of the Arts North. 2113 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 And I think it is going to be more challenging. I think everyone would agree that it's not going to be as easy, but we certainly can do it, and we're taking a number of steps to get that jump-started. We've recently succeeded in securing $2 million for the initial renovations to the Blue Horizon, which is not only America's best boxing venue, but also a place where the ownership has plans to expand their operations to include training and banquet facilities. I think that the Blue Horizon can be one anchor on North Broad Street. We have gone out again and renewed our call for proposals for the Jump Street project, and I am very optimistic that we will have a quality developer in place --
I've been told by the lawyers we're going to actually have to change that name. We will not be able to use "Jump Street," I'm being told, unless a particular developer wins the solicitation.
Okay, scratch my reference to the title of the project, but that project, I 2114 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 think, will again serve as an anchor. We've opened discussions with Temple University about taking a more active role in helping to develop the North Broad Street area. I don't think anybody certainly expects them to participate at the level that Penn has, but I think that they can take a much more substantive and active role. And there are a couple of other projects that we're working on. I also have committed to fund Avenue of the Arts, Inc., the nonprofit organization which is an advocacy group and oversees the development, with the understanding that the attention will turn from South Broad to North Broad. And I can assure you again, it is a very, very important area for me and I will be personally involved in it.
Great, okay. One last question with respects to the neighborhood commercial corridors. In the past, we've had the ability to fund infrastructure improvement, appurtenances, sidewalks, I guess some water and sewer lines to some degree. Given the 2115 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 potential of us quickly approaching our debt limit, will we in the future be able to continue that program?
Well, I certainly hope so, and I guess that's a question that probably Finance or the City Planning Commission could address more specifically as far as the availability of funds. I can tell you that I personally believe that those projects are extremely important and integral to getting neighborhood economic development started and can make a dramatic difference. It doesn't sound like a lot, but if you look at some of the areas of the City that are blighted and run down and there's just the hope of development and we can go in and put in curbs, sidewalks, and new lighting, in some cases, it makes a dramatic difference and really does help the development process along. (Mr. Dubow comes forward.)
Rob Dubow, Budget Director. The Capital Program maintains the current $1 million level of funding for 2116 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 neighborhood commercial development centers throughout the life of the program.
Five-Year Plan, okay. Okay. Thank you. Thank you, Madam Chair.
Thank you, Madam Chair. Mr. Cuorato, Councilman Clarke was right in an area that we've had some discussion about in the past, which is the million dollars for the Neighborhood Commercial Corridor Program. I believe I asked initially at the Capital Budget hearing about this particular issue, and then I believe you were here for another hearing, but not a budget hearing. It may have been a transfer ordinance hearing, and I asked about that issue and whether a million dollars was enough for a citywide application for the program as well as, I believe I 2117 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 asked, was there a particular dollar-amount request that had been made to deal with citywide projects and whether the million dollars was enough to cover all of those projects. Was there -- is there a list that was put together in an attempt to more broadly serve a variety of areas throughout the City that would be in excess of the million dollars that's in the Capital Budget?
Yes, Councilman. And actually, it was not a list that was put together in response to your question; it's an ongoing list that we have of neighborhood capital projects throughout the City that it would be good to do, and we gather these lists through our own outreach, through dealing with CDCs and different community groups, through conversations with members of the City Council, and it's a pretty extensive list.
Okay. Is that a list that can be forwarded to the Chair so that we can better understand what our needs are throughout the City?
How was the million- 2118 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 dollar figure arrived at? I think Councilman Goode has the answer.
The truth of the matter is that there is a list that you've requested that I think you'd be very pleased with in terms of capital budget needs in neighborhood commercial corridors over the years. The problem is, and the problem has always been, actually, the Planning Commission and the Capital Budget Office and their cutting back of what they want to give in terms of neighborhood commercial centers. And part of that is the definition of those improvements. The improvement are supposed to last for a certain amount of years. Therefore, if a commercial corridor has had work done, let's say, ten years ago and it's supposed to last for twenty years and they're in need again, they may be put on the list, but because of the definition of how long the improvement is supposed to last, in between the Capital Budget Office and the City Planning Commission, then we'll say that we shouldn't make an investment in that commercial corridor in terms of infrastructure until there's some difference in terms of business development 2119 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 there.
Councilman, my answer to that question would be just that the Capital Budget has to serve a broad array of interests, and this is one. There are priorities. We make our case and Capital Budget does the best they can in giving us the money that we need to do these projects. I certainly won't sit here and pretend that it's enough to solve all of the -- or implement all of the projects that we'd like to do, but we understand there are certain limitations, and we do the best we can with the funds that are provided.
Okay. Can you give us an update -- I think it was last year, last calendar year, that it was announced that there was going to be this outreach to the business 2120 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 community, I think, in all of the various districts, and a certain number of businesses were going to be contacted, and Commerce would talk to them about their concerns, their issues, their needs as a business person here in Philadelphia. Can you tell us what happened out of that program, how many -- in general, how many businesses were contacted, some of your sense of what came out of it, and is there a report of that program that can be distributed?
Sure. This is a program that we called, quite simply, our "Outreach Program," and the concept was really quite simple. We wanted to just go out and do what amounted to cold calls on businesses. And the program was staffed by representatives of the Department of Commerce, PIDC, PCDC, and we often went out as teams of two to three people. We brought a survey with us so that we could solicit input and feedback from businesses as to what their experience is in dealing with the City and doing business in the City. We -- are our target for last year was 300 businesses; we did visit 300 businesses, and 2121 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 they were geographically balanced. We tried to do 30 in each Council District and came close to that; there were some where we did a little more, some where we did a little less.
We visited every size business from the smallest mom-and-pop shop all the way up to multi-national corporations. And I think it was a good experience for us, and it is a program that I intend to continue and try to do even more to step up the number of businesses that we can do this year -- again, at random, geographically distributed. What we found -- and, yes, Councilman, there is a report that's available and is being finalized right now, and I'd be glad to make that available to you. I don't think there were any big surprises, but we were not looking for any great revelations. Part of this program, from my perspective, was pure outreach to let businesses know that the City of Philadelphia cares about them and wants to help them grow here. We did get some interesting data on, for 2122 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 instance, which taxes were most troublesome or burdensome. As I mentioned earlier in a response to a question from Councilman Goode, we found that the business-privilege and wage tax were about equally split as far as which they'd like to see reduced. And there were a lot of comments about just creating a more business-friendly environment. People expressed some frustration at trying to deal with different departments over the phone and having to wait in lines and not being clear on processes and things like that. So all of that material and data we're going to use to work with the Managing Director's Office and the operating departments to see if we can improve the system. But I think at a minimum, to generate good will as an outreach gesture, I think that the program was successful and it's one that I'd like to continue.
And what is your level of expectation at being able to implement some of the either recommendations or resolve, obviously, if an individual business has a 2123 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 complaint, but I'm sure many of them have quite similar issues or concerns or complaints about our, quote/unquote, system. What's your expectation in terms of being able to implement or reform some of the more vexing components of our -- of anyone's ability to do business with the City?
Well, my expectations are high, and I say that because I've talked to the Managing Director, and she's aware of the preliminary results of our survey, and I believe that we can make some specific short-term changes to the system that will make it more business- friendly. We heard, for instance, that there's a lot of interest on the part of businesses in being able to do more over the Internet, electronically, and we've been working with the Managing Director's Office and the Mayor's Office of Information Services to implement some of those initiatives. It's -- it really is -- a lot of it also just comes down to attitude and instilling in people in the various departments that interact with the public that, you know, it's important to 2124 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 instill this business-friendly attitude, and even things as simple as just being courteous on the phone and referring people to the right person in the government who can help them. I mean, we heard stories of people who would say that they were called and referred three and four times before they got to where they needed to be. So these are correctable things and things that we're talking to the Managing Director's Office about, and I think we can have some good success.
A couple last questions. You spoke about the KOZ Program a little while ago in response to Councilmember Clarke. Could you get us a listing. Since the KOZ program started now, we have -- I guess we have KOZ 1 and then we did a second round of KOZs early last year, I think?
Can you get us a listing showing the businesses that have moved into the different KOZ areas and any information about them just in terms of either what they do, numbers of employees, that kind of thing? 2125 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001
Sure, Councilman. Actually, I think we just distributed to all members of Council a comprehensive report providing all of that information, but I will make sure that we get another copy to the Chair. We do have very specific information about every business that's moved into a Keystone Opportunity Zone.
Okay. And going back to the business survey that you did last year and the outreach, when do you think that report will be ready?
Okay. And will it list the various businesses that were contacted or are you trying to keep that, to some extent, in-house?
We have all of the surveys. The report does not include the list of businesses that we surveyed, but we can certainly make that information available.
Okay. I mean, I would certainly encourage to the extent that you 2126 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 can, and I don't know how you want to handle it but one I'm sure all members are concerned about the different businesses, and to the extent that they are grouped by district, it might be easier to utilize the information. I received an inquiry from -- and you may have received other inquiries about this, and I know that this entity, the Philadelphia Film Society, that, from their information, runs the third largest film festival in the country behind, I think it's L.A. and San Francisco. I know that the City -- and then there's the kind of the separate film office, which, I think technically is not a part of the City but works in the City. In any event, apparently 60,000-some-odd people come and attend this particular festival here in Philadelphia, and certainly from an economic standpoint as well as the promotion of the City and the region, it may warrant kind of being on the radar screen in terms of possible support going forward. Could I ask you to be in touch with the Philadelphia Film Society, and I can give you some information about them, but I think they're looking 2127 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 for, or possibly hoping for, some support from the Commerce Department to help promote this particular event throughout not only the City, but the region, if not the country. Apparently, a lot of people from around the United States and possibly internationally come to this particular event.
Councilman, I'm very familiar with this event. It's April 4th through April 15th, and we've already been in touch with them. I think the event is fabulous, I think it's going to be a wonderful event for the City. It's growing every year. And we have already committed to fund them.
Very good, very good. Now, lastly, you were somewhat bludgeoned by Councilman Goode in this particular area, and if there's anything left to you with regard to tax policy, I did want to ask -- obviously, you've been involved in the business last year, you've been Commerce Director for some time, and you have kind of a previous tour of duty in the Commerce Department. Tell me, at the present time, while 2128 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 we're having all of this discussion, about tax policy. What do you see as the Commerce Department/City Rep role in that discussion? You've got the Budget Office, the Revenue people, and maybe some other -- and obviously Finance. Where is Commerce in that discussion?
Well, Commerce is an advocate for business growth in the City of Philadelphia. Any tax reductions will help -- will help me do my job -- will help make my job easier. I mean, that's an obvious statement. I understand the balance that needs to be struck between the overall City budget delivery of services and tax levels as it relates to business attraction. Our role, I think, is to just continue to be an advocate for business, to continue to voice our opinions as far as what is burdensome, where relief could be most helpful. But I -- I don't see my role specifically as being a crusader, if you will, to be out calling, for instance, to cut the wage tax in half, because I think that would be irresponsible in the overall City budget picture. 2129 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 I am satisfied that if we can continue to -- if we can continue our program of reducing taxes and especially the business-privilege tax, that we'll be able to continue to attract jobs to the City of Philadelphia. I will give you just one example. We are working with a very large company that's in the suburbs right now that is considering locating either into the City of Philadelphia or to New Jersey, and this is a thousand employees. I've been spending a lot of time on this, along with Peter Longstreth of PIDC. The wage tax has not been a significant issue in these discussions; it's an issue, but not a significant issue. What we've been able to do is point out the strengths and the assets that Philadelphia has and why this business should be in Center City, Philadelphia, and I think we're making a very compelling argument. So we will continue to do our job the best we can to attract business here and keep the businesses here growing. I will be an advocate for reducing taxes because it will make our job easier, but I will do that in the context of the overall 2130 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 picture.
I understand and I appreciate your honest explanation and description of your situation. Have you ever been in a situation where wage tax was a serious element of discussion, if not a potential barrier, to someone either staying or locating to Philadelphia?
Do you think it's ever affected the final decision that someone's made?
And I guess my last question is, for many of the businesses, do you think they would, in terms of making their plans, either look at it as a positive or a negative that there's a possibility that even the incremental reductions would stop?
Councilman, are you asking me if I think businesses perceive that the halt in the wage-tax reductions is a positive or a negative?
Yes. 2131 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001
My sense is that most businesses would perceive that as a negative.
I apologize that I wasn't here at the beginning of your testimony, so you may have covered some of the questions I have, but I was fortune enough to be able to be included in the presidential visit this morning, where the President picked Philadelphia to talk about volunteerism throughout the United States of American, and that's what delayed me arriving here.
Well -- but he can't help me with a problem in North Philadelphia, but 2132 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 you can. Yeah, I have my priorities straight. I'd like to -- Councilman Clarke asked me if this was political testimony, and I say yes it is. I will comment on the President's position on the wage tax after I ask these few questions that I have. Two major initiatives that hopefully will move ahead this year, if you could give us a feel for the Convention Center, and if you've already commented on it, I can read the transcript at a later date, but if you could just briefly tell me what's going on with the expansion at the Convention Center.
The expansion of the Convention Center is one of the major initiatives that we're going to try to undertake this year, and it's really absolutely crucial to the future growth of our hospitality industry. There are plans to expand the Convention Center west to Broad Street. If we are successful, that would move us to the eighth largest convention center in the country. If we do not expand, we will slip and slip quickly, as far as our share of conventions, because cities up and down the East 2133 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 Coast are already taking steps to increase their space and either expand or build new centers. The situation, Councilman, is that the total project budget is roughly in the 450 to $500 million range. The general prevailing theory -- and I do not mean at all to be presumptuous by this, but the general prevailing theory is that about half of that would come from the State and half of that would come from the City. If we are to move ahead with this project, the State funding would need to be put in place through the State Capital Budget this year, and I think that we will know that within the next six months or so. I have made the statement publicly and will say again that I believe the expansion of the Convention Center is an economic-development project that can stand on its own merits. When you look at the potential economic impact of expansion versus the cost, there is no question that it is a project worth pursuing. The hospitality industry is united behind the expansion, and it is just very important. And hopefully, we'll move ahead this 2134 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 year.
Well, that's great to hear. Councilman Nutter just reminded me, we were talking about the wage tax. Was the President here long enough to qualify that he has to pay -- pay any wage tax during that visit?
Okay, good. I just -- My next area that I'd like to talk about in the area of expansion is our airport, but before you respond, I just want to tell you the great things that I see personally at the Airport, and I think the Airport, the Aviation Director, and the people that work there, the worst, probably most difficult times in the history of our airport, they did what they needed to do, and our airport police did a great job, and the Division of Aviation. Just an outstanding effort that our airport -- the effort was just outstanding, and I want to publicly recognize. And then that leads me to talk about -- 2135 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 in getting to know some of the folks down there, talk about the expansion and the need for expansion at the Airport. Could you just fill us in briefly on what's going on with the expansion? I think Mr. Isdell's here.
Mr. Isdell is here, and I'll give you just the general-overview answer, and then if you want more detail, Councilman, Mr. Isdell can provide that to you. First, let me thank you for your kind words about the performance of the Airport, and I will -- and I'm not just saying this because he's seated right next to me now, but I will tell you that I think in Charlie Isdell, we have one of finest aviation directors in the country, and the job that Charlie done in guiding the Airport through what are difficult and unprecedented times the following September 11th attacks has been just absolutely amazing. We have been through numerous security meetings with different regulations. We were one of the first airports to reopen after the terrorist attacks, and Charlie was successful in implementing all of the FAA's new regulations. He is at the 2136 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 forefront in making sure that the new international terminal is a state-of-the-art facility, and we'll have the new inline baggage screening built into the project as we go along. So I am very proud of the job that Charlie has done, and I'm sure he appreciates your praise as well. What we have done over the past several years is, I think, a very good job in expanding the terminals. We have gone -- by the time the international terminal opens at the end of this year, we will have doubled our gate capacity from approximately 60 to approximately 120, which, just in a short period of time, is a very, I think, significant accomplishment. What we're going to do now is turn our attention to the airfield because, quite frankly, if the Airport is to operate more efficiently and grow in the next 10, 20 or even 30 years, that's where the focus has to be. So there are various schemes that are being studied as a part of a master plan that the Airport is undertaking. It is a very arduous process, a very inclusive process that Charlie has 2137 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 spearheaded, and we've come up with a couple different scenarios involving dual runways. The basic ideas is to build new runways such that they can operate simultaneously and increase your ability for departures and landings without the stackup of planes that we all find so annoying. That is a very broad answer to your question. The master plan is nearing completion. Charlie is getting ready to go through the public dissemination process, and certainly he can speak for himself if there's anything I've left out.
Oh, I think you've covered it well, but just again to restate that lots of additional new police officers learning their way, the cooperation down there -- as a matter of fact, I won't name names, but when I was there recently for Senator Specter's visit when the new security rules changed, I met some of the federal employees from the Federal Aviation Administration, and they told me that Philadelphia is probably -- and this one gentleman had served in many airports throughout the United States, and he said the working relationship here that they have is just very, very -- just the best that he's 2138 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 personally experienced. So I think that says a lot for Philadelphia, for the Commerce Department, the people that work at the Airport because not too many compliments come from the federal government when it comes to the working relationship with either the state government or the local government. So again thank you. I have a couple more questions, and I think I have a little bit more time. Could you talk about something I have interesting in, the Center City office retention program. At a Chamber meeting, I've talked to some folks that have an interest in that. Could you just explain how that retention program is going to work?
Sure, Councilman. This is another outreach effort that we want to launch and actually will be starting this month. We have identified 50 major tenants in Center City office buildings who employ at least 200 people whose leases expire in the next five years. So we've set forth a program that is designed to keep them here in Philadelphia and keep 2139 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 them growing. We're working in conjunction with PIDC and the Center City District. Paul Levy has also been very active in helping us with this program. The program will start with a personal letter that each CEO will receive from the Mayor basically nothing the fact that we know their lease is up soon, and that a team of people from our economic-development organizations would like to come and meet with them. We will then go and meet with them, and Peter Longstreth and Paul Levy and I have committed to do these meetings ourselves. We will go and meet with each company and find out how they feel about being in Philadelphia, whether they intend to renew their lease, whether they're looking to relocate, and if there's any way that we can help them. Again, as with the business outreach program, at a minimum the effort is good will, and my expectation is that we may find situations where we can actually help businesses grow with some of our programs.
I'm going to use some 2140 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 of Councilman Nutter's strategy. I have three last questions. Could you comment on waterfront development, a little bit about what's going down at the waterfront?
Okay. On the waterfronts, I think there are a number of -- there are a number of activities that are happening right now. At the risk of losing any remaining credibility I have on the Penn's Landing project, I will tell you that I still insist that project will begin this year, late this summer, as was publicly announced in December; I'm speaking of the Family Entertainment Center project at Penn's Landing to be developed by the Simon Property Group. Again, that's our key project and one that I believe will establish us as one of the premier waterfronts in the United States. It's a very complicated project, as I've said so often, and it includes both space for Penn's Landing, a new Please Touch Museum Children's Museum, the Simon shopping retail experience and, of course, the aerial tram that links us with Camden, New Jersey. So that project should be underway this year. 2141 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 Dockside, the luxury apartment complex, which is 240 units, is set to open this summer. Our understanding is that the preleasing is going extremely well there, which reinforces the fact that the residential market in Center City is still very strong and that the waterfront residential experience is still very strong. We were successful in retaining the Moshulu as a floating restaurant. There had been plans for the ship to be moved to New Jersey. The ship, as you know, is docked next to Pier 34, but was not in any way involved in the pier collapse. However, they had planned to move to Camden. We went to the ship's owners, found them an excellent spot in the Penn's Landing marina, and they have decided to stay in Philadelphia, so we will retain those jobs as well as what I think is a very exciting waterfront attraction. And, finally, we will be -- this -- actually work will be underway very soon demolishing the old incinerator at Delaware Avenue and Spring Garden Streets, which will not only open up what should be a great development site, but present us with a another great opportunity to 2142 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 bring development in. So there's a great deal going on along the waterfront, and it's a key part of our overall economic-development strategy.
That's great a waterfront landmark, and I'm glad you were able to go after that and retain that. That opens up some of the news reports about the Burlington Coat Factor, Penney's, Ikea Nordstrom, Macy's, lots of things in the pipeline for Philadelphia referencing Center City and the neighborhoods. Could you talk about the retail environment in the inner-city and also in some of the neighborhood shopping centers?
The retailing environment is very strong in the City right now, and I would characterize the environment in a couple of different ways: There's the Center City market, and that remains extremely strong. The Chestnut Street and Walnut Street corridors we continue to have a lot of interest in, and our department is directly involved in discussions with tenants all the time. We have a network set up where we deal with 2143 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 building owners, as they're negotiating with prospective tenants, you know, we're there to provide assistance and, in some cases, financial support. We're there to help streamline the process if there are certain permits that need to be expedited or just any issues -- valet parking we've helped with on occasions. Sometimes it's small things, sometimes it's larger things. So we're very, very close to the situation, and I can tell you that the Chestnut and Walnut Street corridors remain very strong and very much in demand. Also you mentioned the Burlington Coat Factory, Councilman. I think this really exemplifies the situation that we have, which is, when J.C. Penney's announced that they were leaving last year, the first reaction, I'm sure, among a number of people was one of consternation that we would be left with an empty shell, which would not be good for the Gallery and not be good for the Market Street East area. What we found out pretty quickly was that not only would we be able to fill the space, but that there were multiple parties interested in 2144 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 moving in there, and it put in us a situation where we were able to basically choose the right fit with the right economic terms. That followed up on Old Navy's commitment to do a major store in the Gallery and, I think, is a sign of the strength of that area. Also, although we're not in a position to announce anything, I can tell you that Nordstrom's and Macy's are both interested in downtown Philadelphia. That would be certainly an enormous project and one with a lot of work that would have to be done, but I think just the fact that they are interested gives you some indication that the retail environment in Center City is very strong. What we're finding in the neighborhoods is that areas that are generally underserved, or perceived as underserved, have a great deal of appeal and attraction, and retail developers who have been in the suburbs and have no further growth opportunities there are looking back to the cities, and I think that will benefit us, not only in our current situation but as we move forward with the Mayor's Transformation Initiative. 2145 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 I can tell you, on more than one occasion, developers have come to us and said that not only do they no longer feel welcome in the suburbs, but they are basically being rebuffed, and the reaction that they get when they come to Philadelphia is that we welcome them with open arms. And I think it's going to pay off; we have retail projects at various stage in a lot of different neighborhoods in the City, and that will continue to be a focal point for us.
This is my final question of you. And thank you, Madam Chair, for indulging me. I've heard through some of my contacts with some of the information-system folks that you're developing a Website that's going to be very helpful, not just to the business community, but to all in general. Could you just tell us when and what that's going to be like?
One of the things that we found, Councilman, is that there are a lot of businesses who do -- who like to transact business over the Web or find information on the Web. And 2146 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 quite frankly -- and I say this with no disrespect to the designers of our current departmental Web page, but I did not think that it was up to the standards that it should be. Our department and our delegate agencies -- and I include both the Commerce side and the office of the City Representative, both arts and culture and special events. We have an enormous amount of information that we really need to make sure gets disseminated to the public. The best way to do that is through an effective and well-designed Website. So we've hired a local firm to design the site for us, and it is near completion. I would say within the next 30 to 60 days, it should be fully operational. And it is very -- it is both eye-catching, attractive, fun, and probably, most importantly, and I hate to use this 'cause I know it's a cliche, but it will be very user-friendly. So any businesses that sign on or any business person who's looking for information from someone outside the City who might be considering Philadelphia to somebody who's here now and just wants information on anything that's going on in 2147 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 our world will be able to find it quickly and effectively through that Website.
Well, that's great. Thank you and congratulations on all the good work. And you'll have the Budget Director get back to me in reference to the President's wage tax.
Thank you. The Chair recognizes Councilman Clarke.
Thank you, Madam Chair. There was a question I forgot in my last round, but before I do that, I'd like to just follow up on a couple of questions that Councilman Rizzo asked, one with respects to the Convention Center expansion, and my question is, the recent reports that our repeat business has diminished as a result of several labor issues and other issues associated with the existing center, and the other related to the waterfront. I know there was a proposal to build the World Trade Center, and I 2148 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 wanted to get the status of that, if that's real. Then I wanted to ask another question after that one.
Okay. Councilman, on the Convention Center, our repeat business is not what it should be; labor issues have been cited as one reason for that. But I think -- I think that enough progress has been made, and will be made, so that that will not be an issue when it comes to Convention Center expansion. Just this past Friday, we had a hearing before the House Tourism Committee, and that subject came up, and both the chairman of the Pennsylvania Convention Center Authority and Pat Gillespie, the business manager for the building trades, committed, in unequivocal terms, that they will put into place any labor agreements -- they will implement any labor agreements that are necessary in order to make expansion a reality. So with a commitment of both management and labor, I do leave we will be able to resolve that that as an issue. And you are correct, there is no 25 question that that issue is out there because we 2149 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 were questioned about it at the hearing. On your second question, Councilman, that had to do with the --
-- the World Trade Center, I actually have a meeting scheduled next week with the developer to get an update on that project. I am a little concerned about the project for a couple reasons. It is a high-rise, it is a proposed high-rise office tower with a World Trade Center designation to it, and there is now, unfortunately and tragically, a stigma attached to that that may make this a more difficult proposition. We actually carved out the area that the office tower would be built on and made it a Keystone Opportunity Zone as a further incentive for development. I still do think it is a viable project. The World Trade Center -- to have a World Trade Center in Philadelphia is certainly something that we should work to achieve, but it is also not in the critical mass of Center City office activity. So in other words, to build an office 2150 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 tower or build office space at that location, we're going to need an anchor tenant, somebody who's willing to go in there and take up most of the building because, from a speculative -- to build that office speculatively, it would not be financially feasible.
So I'll have more information after I meet with the developer next week, and I'll be glad to provide that to you.
Okay. My last question is NTI-related, and I know in talking to Mr. Traylor that the Commerce Department is going to be involved, but I'm not sure as to what degree. Can you talk to me specifically about the involvement of the Commerce Department as it relates to NTI and it talks about neighborhood economic-development corridors. Also, as it relates to office space in neighborhoods, when we talk about maybe Class B, C office space, I understand that there is a retention program in Center City, but are we doing anything about creating office space opportunities in neighborhoods and commercial corridors also? 2151 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001
Okay, I'd like to answer your question just briefly and generally on NTI, and then I'll ask Mr. Traylor to answer more specifically. I have seen our role in NTI as an important one in that, as we go into neighborhoods and as parcels of land are made available, there may be residential developments, but there's also going to be commercial components to that. The demand spurred by new residential development will generate what I believe is some very significant commercial-development opportunities. That's where I think we need to come in and either through negotiations with developments -- in some cases using our programs -- get those commercial projects in place to complement 'cause you have a neighborhood that's got the commercial amenities that they need. Let me ask Mr. Traylor to just comment more specifically.
Councilman, as you're aware, the prototype -- the first prototype area that NTI will be working on is in your district, and we're using -- we plan -- the Commerce 2152 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 Department plans to use this prototype activity in the way that I think it's intended generally for NTI activity, and that is to make it the area where we begin to really start the fine-tuning of the process. There's been a lot of good planning in connection with NTI, but we recognize the fact that this is also unprecedented activity. I mean, there is no -- we will have been the first city to go through this type of planning process and the degree of demolition and land-acquisition activity that will be involved in this. So what we've done is, we've started making certain that we look at that area, that prototype area. Even though we recognize that most of the activity will be residential development, we want to make certain that where there is a need for regenerated commercial-corridor activity, that that's taking place; or even if the housing placements indicate that there is a need for new commercial corridors, then we want to make certain that that's being well-planned for. Our first survey out into that area -- and we're doing this in cooperation with PIDC and 2153 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 PCDC and with our brown fields specialist, who is based in our office. We already recognize some astounding possibilities, even in that small prototype area for commercial activity. We plan to coordinate wherever we're seeing that. In this prototype area, the second prototype area, which will be in Frankford, or any of the subsequent development areas, we plan to coordinate very closely with the Councilpeople what we recognize as commercial and maybe light- industrial opportunities in these areas. So we're on the case, and we think that it's off to a good start.
Office space. Office space in neighborhoods is a concept that I think is worth a further push from our part, because a lot of times, mixed-use projects make the most sense. What I've seen is a trend towards starting out small, which is fine, which is to say, you know, ground-level retail and then maybe two levels of office space above, but it's smaller projects. I think it's certainly a concept that's 2154 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 worth pursuing, and we have programs that can finance those. It's a matter of generating the demand, and that's certainly something that we can take into consideration as we do our marketing on a citywide basis.
Okay. Yeah, that's important. Particularly in the Cecil B. Moore Avenue area, we're finding that there's an interest in having office space in close proximity to Temple University, so I think that's something we need to look at seriously. All right, thank you. Thank you, madam Chair.
You're welcome. The Chair recognizes Councilman Nutter
Thank you, Madam Chair. I hate to come back, but when Mr. Cuorato made reference to the Convention Center expansion, that did raise a couple of questions. You said -- you would anticipate that the project costs would be somewhere in the neighborhood of $450 million to $500 million? 2155 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001
And the proposed funding schedule is, for the moment, 50/50 between the City and the State?
And you also indicated that the expansion -- I didn't take down your exact words or phrases, but I did capture that in your view, it was a stand-alone project or that it could fund itself?
Councilman, what I said is that the expansion of the Convention Center is an economic development -- I view it as an economic-development project that can, and will, stand on its own merits, which is to say, for the amount of public investment that we're talking about here, if you look at the return and the impact on the local, regional, and state economies, it is a project well worth pursuing.
Okay, all right. I'll come back to that Now, how would the City's pay its share?
How would the City pay its 2156 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 share?
Not yet determined, Councilman, and I know that's an issue that we're going to have to face. It is one that the hospitality industry is aware of. We have not broached the idea of an increase in the hotel tax, but I know that that's out there, but we have not yet determined how we would do that.
All right, and is there any funding for this proposal in the current budget before us?
Okay. Now, I mean, just, I guess, for the conversation, obviously we want to have a, quote/unquote, world-class facility, and I know you expressed certain that other cities specifically on the East Coast are or have expanded their centers, and we don't want to lose our place in the convention center world. What I am concerned about is to the extent that this is a 450 to $500 million project, with possibly half coming from the City, how does that, from your perspective, how do you juxtapose 2157 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 that with the need to significantly and dramatically improve the standards at our various school buildings and the impact that that has on Philadelphia?
I would just -- I would come back to my statement about the Convention Center expansion being a prudent investment and an investment that would make significant returns to the City and the region. I don't --
You don't think that investment in schools is -- I mean, I know you're not saying that the investment in schools is not a prudent investment.
I am just saying that I do not link those two issues. I do not -- I certainly do not advocate a position that we should do Convention Center expansion and not pay attention to renovating schools. I just see them as separate issues with separate funding sources. My argument and position on Convention Center expansion is that as an investment, it is a 2158 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 wise one and one that will reap many benefits for the City, both in terms of keeping our hotels vibrant and filled, keeping those employees working, and adding on new workers. And as far as the impact it would have on the other aspects of the hospitality industry, my argument to you is that that is an investment worth making, but I certainly am not saying that it should be done at the expense of schools.
Well, I understand that, and I'm not saying that it's not an investment worth making, either. I think what I'm basically trying to understand is that in the -- kind of in the fundamental laws of the universe, that there's only so much money around, and that certain investments need to be made, and that we have certainly paid a tremendous amount of attention to hospitality and tourism, and we have benefited from the investments that have made, and we should make others. I'm just trying to figure out -- I mean, as -- and maybe we need a dual runway for this, but as -- I mean, to kind of use the Airport example, I mean, there are a variety of projects or proposals 2159 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 that need to kind of, quote/unquote, take off. The question is, where are you in the line in terms of certain things happening? And, I mean, this one seems fairly stuck at the gate. I mean, we just take it to its illogical conclusion. And I'm just trying to figure out at what point in time, not only for economic-development purposes, but for good public-policy purposes and to improve the overall quality of not only education but how we are viewed by many people in the economic-development community 'cause they don't only look at taxes; they also look at quality of workforce, quality of schools. Many of the people who might come here for work and to live, they might actually have some children that they'd like to send to school. And if the decision is taxes and, Do I send my child to private school, parochial school, or public school, if you're not satisfied with one certain system, then you have to factor that into your economic equation as well. I'm trying to figure out when that one gets on the radar screen and is actually looked at 2160 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 as a part of economic development. I think education is economic development as well in that it actually contributes to the overall quality of what we have to offer here in Philadelphia.
Councilman, I'm not disagreeing with you at all, and if I may just add on to your airline analogy here, the ideal world would be that these would be two flights that would take off simultaneously once we have this dual runway system.
Okay. Lastly with regard to the present facility, now -- or when you talk about that the expansion would be an economic- development project that stands on its own merits. Just from a pure numbers standpoint, we receive a certain amount of revenue from the Convention Center but we also pay a certain amount to cover various costs; is that correct?
And is the net of that about a 10 to $11 million cost to the City? (Mr. Cuorato confers with Rob Dubow off the record.)
Mr. Dubow tells me it's 2161 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 more in the to $18 million range in a given year.
Right. You get a 9 certain payment from the Center. The current 10 budget, FY '03, seems to indicate, at least on the 11 budget-in-brief page, , $19 million that we 12 get, and I think Page... 13 The City subsidy in FY '02 appears to be 14 $30.7 million; in FY '03, it appears to be 32.3; is 15 that correct?
'03, Councilman, $32,378,000, which is about $1.6 million over '02, approximately.
Okay. So, I mean, obviously, we get other benefits from having the Convention Center beyond what the City takes in, but on the pure City side of this transaction, we take in less than we expend.
Okay, all right. 2162 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 What's the timetable for -- I thought your earlier testimony was that you were trying to get money in the State, what is it capital --
For the current budget that the State is in -- process that the State is in?
Okay. And I thought you also said that depending on how that goes, that -- I mean, the phrase goes -- what is it, "As Wichita goes, so goes somebody?"
Yeah, it's a great jazz tune by Pat Metheny, actually. You're saying that if there's no State capital assistance dollars, what happens?
If there are no State capital assistance dollars this year, we are left -- we are left with pretty much having to make 2163 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001 the decision whether we will just -- we will plan the expansion and hope to resuscitate the funding issue at the State level or shelve the project.
And do we have a request in front of the State presently?
Okay. Do we have other capital requests in front of the State?
There are a variety of projects that were submitted by the Administration for different projects.
Councilman, we can -- I don't have the list with me, but we can get that for you. 2164 3/12/02 WHOLE - OPERATING BUDGET CONT'D. 020001
Okay. So the record should not reflect that it was an infinite number or an incalculable number; you just don't know the number right now.
It is not an incalculable number; I just don't know it right now.
All right, I appreciate it, and you'll get that to us?