And I would urge that, you know, on this project, someone should do it.
And I think that's why we hoped that either the study that the Council is doing do that, or we could look at doing in on our own, because displacement of spending, you know, in the local economy is a big 301 3/10/08 - RULES COMMITTEE - 080027, 080028 issue, and it was dealt with at some length in the Gaming Task Force report.
But, you know, the assumptions about, you know, what level will be new, they -- you know, they make certain assumptions, and different consultants could make different assumptions. And I think that the more -- somebody should at least make sure that the assumptions of 75 percent to 90 percent new spending is a good assumption, I think the better. So that's a long answer, but that's the --
No, I understand, 'cause that, certainly along with the traffic issue, is certainly a concern. You know, you don't want to hurt existing businesses that have been, you know, pushing for a while if -- and I'm not saying it would do it. Like you said, you're not sure, but I'm just -- 302 3/10/08 - RULES COMMITTEE - 080027, 080028
Oh, right. And it's complicated. It depends on what's within in the casino itself. It depends on -- the traffic has an impact, obviously, if it's hard for people to get to other businesses, that sort of thing.
So the answer gets very complicated, but now that we know what this particular project looks like, we -- I think we can do a better analysis of the displacement factor.
You're welcome. Any our questions? (No further questions.)
Thank 303 3/10/08 - RULES COMMITTEE - 080027, 080028 you.
Our next witness? MR. McPHERSON: Jim Paylor, International Longshoremen's Association. (Witness comes forward.)
Good afternoon. Thank you for your patience. Please identify yourself for the record --
My name is Jim Paylor. I am president of Local 1566, from the Port of Philadelphia, and I also am a vice president with the International Longshoremen's Association, which gives me the privilege of working in ports from Portland, Maine, to Corpus Christi, 304 3/10/08 - RULES COMMITTEE - 080027, 080028 Texas, including Puerto Rico and the Great Lakes. I'm here today to testify based on what I think is a common issue of employees, workers, and the people who live in the South Philly community. I think it comes down to one issue: It comes down compatibility. And I think -- or I hope when I conclude today, you'll understand what my concerns are. I've been in front of this committee and other committees numerous times, and at the expense of being somewhat painful to you, I'd just like to give a quick summary of where the port is today, meaning the Port of Philadelphia, and then get into the impact of casinos. When I was in front of City Council a few months back, there was an issue concerning where we were going to -- or as a port, and I was concerned that the industrial Port of 305 3/10/08 - RULES COMMITTEE - 080027, 080028 Philadelphia was being bookended by a Food Center project that was going to interfere with potential growth moving south, and then where the casinos are going to be located, that they would have a severe impact and will have a severe impact on the facilities, which are outlined in the presentation that was given today, which are Piers 38, 40 and Pier 39, which are a few blocks north of the Foxwoods site, and also Piers 78, 78 annex, Piers 80 and 80 annex, Pier 82 and Pier 84. These are all active facilities as we speak. There's the longshoremen, Teamsters, truck drivers, warehousemen, freight forwarders, and many office personnel that work out of these facilities. There has been some changes, okay, I'm sure that the committee is aware of that the Governor has now changed his mind on the port expansion project. He's been lobbying for the drudging, and as a result of the 306 3/10/08 - RULES COMMITTEE - 080027, 080028 drudging project moving forward and the possibility of other investors coming in and spending millions and billions of private money for port expansion, for the first time in many, many years, I think that there's a reason to be somewhat optimistic as far as our industry is concerned. I testified in previous meetings about the potential growth. And by 2020, the cargo that's coming into the United States is expected to multiply at a level where it should at least double, and it's raising concerns in Washington that, will we believe to handle the imported cargo? is the infrastructure in place? meaning the pier facilities themselves, the roads necessary to move the cargo to and from the piers, and including railroads; is that infrastructure available? What we've seen recently, knowing that there's not enough space 307 3/10/08 - RULES COMMITTEE - 080027, 080028 in the maritime industry or along our coast to accommodate those cargos, that the -- any waterfront real estate is now being considered prime real estate, and there's parcels -- or facilities, I should say, that are being sold for millions and billions of dollars. And that's being seen in the port of New York, which is probably our closest competitor. It's being in Baltimore. And the good news is that watching that experience, we've now seen the interest go from little in the Port of Philadelphia to tremendous. The Governor has changed his position based on the ILA working along with the maritime industry, the Philadelphia Marine Trade Association, and the Philadelphia Maritime Exchange. We have put together a group called "The Stakeholders," and our 308 3/10/08 - RULES COMMITTEE - 080027, 080028 interest is basically to lobby for port development. And what we did at the challenge of Governor's office is, we went and found potential investors.
They're AIG, American International, and there's Coleman Sachs, and just recently, I met with Galaxy International Fund, and they came in with a group that they called their "dream team," and they brought $7 billion to the table, and that $7 billion now wants to be invested and not just in the 820 acres that was being projected but they want 700 acres in this area. And the reason why they want to come into this area is something that I testified to earlier, is that we're the only port in country, the only port, that has three prime railroads that are located in a maritime-related facility. And I presented that diagram before, and I have it here again today. 309 3/10/08 - RULES COMMITTEE - 080027, 080028 That's the good news. The bad news is what we're concerned about still is that the facilities which I talked about -- Pier 82, Pier 38, their future is at risk if the casinos go there. And the reason why we know that is that we have had to analyze what it takes to bring cargo into this port. 2 million man hours, and as a result of the concessions that the longshoremen have made that included freezing our pension plan in 1996, freezing the wages. 50 above what they were in 1981. We've eliminated manning, okay, so there was major concessions all put in place by our crafts in order to maintain the cargo that was here and to attract new cargo. The forest products that go 310 3/10/08 - RULES COMMITTEE - 080027, 080028 into 38 and 40 and into Piers 82 and 84 are some of the cargos that we had originally and, as a result of the concession, have almost doubled and sometimes tripled in their size or their volume. The other thing that's necessary to bring cargo into the port, other than the cost of who's performing the work, is that you have to be able to move that cargo as quick as possible. You have to be able to store it beyond the owner of the cargo's needs, and you have to be able to move it without any obstacles when the owner of that cargo says send to whomever, the inquirer or wherever else. One of the things that we've done in the Port of Philadelphia is that we make sure our people are high-skilled, they're trained, and they're dedicated; and as a result, we have a reputation for being the 311 3/10/08 - RULES COMMITTEE - 080027, 080028 highest productive along the East Coast. That type cargo is called niche cargo 'cause it's different than containers, it's a different operation, but that's been the life blood of the Port of Philadelphia. We have 70 percent break bulk, which is cargo similar to plywood, paper, and fruit, and only 30 percent containers. That's starting to change, okay? It's starting to shift. It's more like a 40 percent of containers, and it's going to grow if we get the port expansion. We're concerned that there's not enough support to protect the other cargos, the break bulk cargos, because the interest is in containers, and the threat of casinos has created a situation where the owner and operator of J&H Stevedore and Penn Trucking Warehouse, which is one in the same, who operates out of Piers 312 3/10/08 - RULES COMMITTEE - 080027, 080028 38, 39, 40, and Pier 82 and Pier 80, has not purchased the majority stocks. N. Murphy Marine Services, which is down in Wilmington, Delaware, and we feel that he's doing that to hedge his bets here, that if the facility cannot operate in a product fashion and we can't move the cargo across the piers, in and out of the piers, that he wants to have a backup facility where he could then take that cargo within close proximity to the City of Philadelphia, because that's where some of their cargo goes, but far enough away where he's not dealing with some of the bureaucracy of our port, unfortunately. That's as we speak. What are the issues?
The issues are, very simply -- and I came into the meeting late today, but I heard the conversation and some of the questions that were raised by your panel -- how can the casinos, okay, 313 3/10/08 - RULES COMMITTEE - 080027, 080028 provide a situation with traffic flow that won't interfere with existing businesses? And I believe that the stevedoring business is the business that should be looked at the most, the reason being it's an industry that still requires people who may not be college-educated but pays a wage and a benefit that's family-sustaining. You could buy a house in South Philadelphia on the wage of a longshoremen or a truck driver. And I've asked at many meetings -- one with the Delaware Valley Regional Planning Commission, one with the City Planning Commission, and one with PennDOT, and sometimes there's meetings that included all three of those entities. And the question that was asked all the time was: Did any entity perform an economic-impact study on how the casinos will affect the existing 314 3/10/08 - RULES COMMITTEE - 080027, 080028 businesses? And in all cases. The answer to that was no. And it doesn't surprise me, but it was no. 5 Now the issue of congestion, okay, is one of the things that you're analyzing. And I can't sit here and say to you I'm an expert on traffic flow because I'm not. But what I am is someone who sits in that traffic almost on a daily basis 'cause my office is at 1341 Delaware Avenue. And I know it used to take me 14 minutes to go from Spring Garden 15 Street down to Oregon Avenue; now it takes at least a half hour to do so. And my time may not be as valuable as the truck drivers, but the truck driver's time is valuable because they have to move that cargo that we're talking about. And that's where we have a common interest with the neighborhood, because the other businesses that are there are educating themselves, 315 3/10/08 - RULES COMMITTEE - 080027, 080028 something I had to educate myself too. And it is: What is the total impact going to be? And sometimes we make things too complicated, or we listen only to the dollars and cents and not to the general impact. My experience has taken me with the community people to learn about the social ills, and I know you probably heard a lot about that today, but in this case, I just want to concentrate on the economics. I have traveled, like I said, and I've been to different cities who do have casinos, and there's three that stand out: One is Atlantic City, and with all due respect to Atlantic City, it's a pretty one-dimensional city based around beach and entertainment, and the casinos are there. But, as Councilman DiCicco said, if you drive down to Atlantic Boulevard, you see what surrounds the 316 3/10/08 - RULES COMMITTEE - 080027, 080028 casinos that at one time were residential properties, okay, and it's not the time of development and they're not the type of businesses that you want in our neighborhoods. " I don't think you would find anyone. And the same thing with New Orleans. New Orleans has been through some very trying times, but even prior to Hurricane Katrina, they had casinos. " They go there for the French Quarter or Duval Street or some of the other things that New Orleans provides. And I think the 317 3/10/08 - RULES COMMITTEE - 080027, 080028 same thing exists in Philadelphia, okay? If the casinos didn't generate the prosperity in the inner cities of those other places, why do we have to look further? Why do we have to look into what people are going to put presentations together to make it look like they want it to look like? Why don't we look at what the reality of the issue is. In all of those other cities, you see the decay that surrounds those casinos. You see unhealthy other activities.
I notice, riding down Delaware Avenue just recently, there's been two major capital improvements: One is on a gentleman's club that spent about a million dollars, a new Atlantic City casino-type sign that now blinks and flashes; and the other one is from a show-and-tell adult facility that's on Delaware Avenue. They're the ones 318 3/10/08 - RULES COMMITTEE - 080027, 080028 spending the money speculating the casinos are going to bring something into our area. The longshoremen live in the same communities that the people that are raising the objections, okay? You have to look into the economics of what it will do to those persons. Tell a person who's lived in the Fishtown area or in the Pennsport area or in the Whitman area that the value of their homes is not important; it's the jobs that are going to be generated and construction and the other things that are going to come into our area. And they're going to say, Well, why? And they've been fighting it for years. At other meetings, I've showed that -- and I want to say this delicately 'cause I made a mistake. I offended people by raising the issue, but I think it has to be raised in a way where it's understood. 319 3/10/08 - RULES COMMITTEE - 080027, 080028 In other meetings I presented, which I have here today, segments of a collective-bargaining agreement from the Borgata in Atlantic City, and I have that here with me today, only segments of it. 50 an hour. And then I presented, which I have here also, it's an Excel sheet that shows how a person on $12 an hour pays for their mortgage in our neighborhood, pays for electric bill 18 or a cable bill; and at the end of each month, there's a serious deficit and there's no money left over for recreation and there's no money left over for education and there's no 23 money left over for clothing. It's called "the working poor," and we're creating more of these jobs, and it's 320 3/10/08 - RULES COMMITTEE - 080027, 080028 unhealthy for everybody. " That sounds nice, and a lot of people get a lot of exercise. But in my opinion, that's the only way the workers that will work in the casino can get to and from work, because they can't buy a house in South Philadelphia and pay for a car also. When I look at the design -- and, once again, I'm not an expert, but I think it's a knee-jerk reaction to address a complaint of where are the people and where is the traffic going to go and what impact is it going to have. My understanding is that when the impact study was going to be done, it would be done by an independent 321 3/10/08 - RULES COMMITTEE - 080027, 080028 company, number one. And Councilman DiCicco, you remember when we were down at Old Swedes' Church, we talked about, can we really get an independent analysis done that wouldn't have any political stringholds tied to it, and I would hope that if it hasn't been done already, if it's being done, that that impact study does include having participation from a lot of the different businesses in that area. The other thing that I noticed here -- and, once again, being familiar with Delaware Avenue -- is that you've never had to take pedestrians into consideration, and I drive it almost daily, okay, 'Cause there's not many people walking across Delaware Avenue. Really, the only place that you do see some pedestrian traffic is when they're going into the SuperFresh or where Wal-Mart and Home Depot is. But in most cases, most 322 3/10/08 - RULES COMMITTEE - 080027, 080028 people are driving because the packages that they're carrying out of those facilities warrant some type of transportation, so there's not much pedestrian traffic.
And when I see what's going here on Tasker Street or Morris Street, the Morris Street ramp, if you put a left-hand turn on the Morris Street ramp, you would be required to close down Water Street because that's coming southbound on Delaware Avenue that turns right, past the Wawa, and goes up onto the southbound 95 ramp is always intersected by Water Street and traffic on Water Street. To bring traffic coming northbound and put a left-hand turn in there, number one, I don't think Morris Street is wide enough -- I'm sure that could be dealt with -- but the traffic you would probably have to close Water Street down. When I look at the Tasker 323 3/10/08 - RULES COMMITTEE - 080027, 080028 Avenue and the Reed Street and the Washington Avenue access proposals, you could see that they did the same thing that they did in Atlantic City when they widened the Atlantic City Expressway. They want to make wider roads getting to the casinos, okay? But in this case, every one of those roads comes either to and from out of the neighborhoods; they're not access ramps onto 95. So where I thought the design was supposed to eliminate or keep traffic from coming into the community, when you read this -- and I'm only reading it for the first time -- it seems like they're preparing to have more traffic come to and from the surrounding neighborhoods. So that in itself, in my opinion, tells the people who have been fighting this that their fears are real, that the older person who 324 3/10/08 - RULES COMMITTEE - 080027, 080028 may have even inherited a home that's been there for a hundred years is going to lose some of the values, they're going to lose the quality of life. They're all economic issues, as far as I'm concerned 'cause they add to the stress of living in South Philadelphia. The new person, okay, the person that's only years old that 12 paid 20 times the amount than I did 13 for my house on Durfor Street is now 14 looking at -- my mortgage may not -- 15 may be more expensive than the value 16 of my home. And if we allow this 17 impact to come into our community, the 18 value of my home is even going to be 19 less, and I'll be working harder to 20 pay for something that's worth a lot 21 less. 22 So the impact is not just on 23 the businesses; it's on the total 24 environment. 25 And with that, if you want, I 325 3/10/08 - RULES COMMITTEE - 080027, 080028 could give you more detail on the waterfront. I don't know how necessary it is other than, if our jobs are being displaced why would you want to displace a family-sustaining job and a family-sustaining wage with employees, with all due respect, okay, that are working for a wage that cannot buy a house in our own area. They have to supplement it somehow. And they could get into -- and I've had this said to me through this analysis, "Well, a husband and a wife do have to work," and I understand that; it's pretty natural to what we're doing right now. Then you have take into consideration day care, which is expensive also, and you got to work out a whole 'nother economic issue like I did. It doesn't pay to work for those type jobs when you're coming -- -- or when you're especially displacing other family-sustaining jobs. 326 3/10/08 - RULES COMMITTEE - 080027, 080028 What my concern is, sitting here, which I think is a representative of my own people who live in the communities that we're talking about, is that I'm confused on where are we in this city? 'Cause depending on what letter I read, it sounds like the City has certain right, whether it's over zoning, whether it's over riparian rights, whether it's over the entertainment district zoning that you're involved in And then I read another document that says no, the State has control over those things. Or then I hear other things where we're going to go to court to make sure the State takes it out of City Council's hands.
Well, no matter what this thing plays out to be, where I think that you have the responsibility -- and I say this with all due respect 'cause you've done a great job -- is that you have to analyze what our 327 3/10/08 - RULES COMMITTEE - 080027, 080028 responsibilities are. And the way I understand it is, our responsibilities are to the people and not to the person who contributes to campaigns, but to the people themselves. And I think we lose focus on that sometimes. Harrisburg, when you read the paper, says, Well, if Philadelphia doesn't do the right thing, well, we're going to take it out of their hands, or they're going to pay for it down the road. I understand that that's part of business; you have to have some relationship with Harrisburg for certain, but they shouldn't be able to strip you of all your rights -- not City Council, nor the people that work there, nor the people that live there. And I'd be glad to answer any questions.
I don't think there are any questions, 328 3/10/08 - RULES COMMITTEE - 080027, 080028 but I want you to know I personally enjoyed your testimony. I thought it was very informative. Thank you very much.
Our next witness? MR. McPHERSON: Is Dave Barry from the United Auto Workers. (Witness comes forward.)
I'm going to get some water. I'm not used to this kind of stuff.
Sure. Good afternoon. Please identify yourself for the record and proceed with your testimony.
My name is David Barry, and I want to thank the members of this Council for allowing me this time. As a Foxwoods employee in Connecticut, as a member of the United 329 3/10/08 - RULES COMMITTEE - 080027, 080028 Auto Workers union, UAW, I'm here to offer testimony to the proposed Foxwoods development plan from the perspective of the Foxwoods employee. The bottom line: Foxwoods has broken its promises to us and our communities. I have worked as a dealer at Foxwoods Resorts Casinos for years and I have lived in 11 Connecticut all of my life. As a 12 Foxwoods employee, I have experienced 13 the impact of Foxwoods' management 14 decisions on me and my coworkers as 15 well as our community. 16 When the Mahantucket Pequot tribe proposed building the casinos, they promised our communities good-paying jobs with great benefits. They were good jobs at first, but over the years, wages have stagnated, and the benefits and the working conditions have gotten worse. Foxwoods has grown into a multi-billion-dollar-a-year gaming 330 3/10/08 - RULES COMMITTEE - 080027, 080028 enterprise, and with that growth, Foxwoods has become like so many other giant corporations: Employees are just treated as numbers. 25 an hour. That's right, the base pay has gone up only 50 cents in while 11 Foxwoods' profits have gone through 12 the roof. 13 Meanwhile, the price of 14 gasoline has tripled, electricity and 15 oil have gotten harder and harder to 16 afford, every other expense has skyrocketed. The only reason we can make a living and support our families is because of the generosity of the customers from their tips. Last February, the federal courts ruled that the National Labor Relations Act gives casinos employees on tribal lands the right to organize a union. Within weeks, Foxwoods told 331 3/10/08 - RULES COMMITTEE - 080027, 080028 the community and all the employees that they would get a percent raise. 4 The truth is, most of us received 5 nothing at all; many of us got pennies. We would have been further ahead if they had given us the stamps to mail our bills rather than the pennies per paycheck that we calculated. I am sure -- I am -- I wasn't sure if I -- I'm sorry. It sure wasn't the 5 percent that they had promised, and one thing dealers can do is math. When we decided to organize the union with the UAW, Foxwoods' management said it would respect our rights to organize but, instead, violated these legal rights at every turn to intimidation, harassment, and unfair discipline. During the time leading up to our union vote, Foxwoods illegally disciplined some of our union committee members. They ran captive 332 3/10/08 - RULES COMMITTEE - 080027, 080028 audiences hours a day, seven days a week. They threatened that it would be futile to form a union because they would never come to the negotiating table. They segregated Asian workers into separate anti-union meetings with Chinese translators. Whether my coworkers were Cambodian, Vietnamese, or Korean, as long as they looked Asian, they were sent to the Asian-only meetings. The National Labor Relations Board, the NLRB, investigated charges filed by the union on behalf of Foxwoods employees. The NLRB found merit to the charges and is bringing Foxwoods to trial on 35 counts, involving discrimination, threats, unlawful discipline, including warning suspensions, and a discharge. I have submitted of the Labor Board's complaints with my testimony. And the trial sent March 25th on these 333 3/10/08 - RULES COMMITTEE - 080027, 080028 violations. In the face of all this, we stood strong, we stood together, and we won 60 percent of our vote in our union election in November. Despite our decisive vote, Foxwoods management is continuing legal delays. They've filed objections to our election because they refuse to accept the results of the election. They have threatened to go all the way to the Supreme Court.
Foxwoods claims that this is about tribal sovereignty, but let's be clear: This is an irresponsible corporation using whatever legally tactics they can come up with to try to fight its own employees. Through the UAW, we are now pursuing state legislation in Connecticut to ban smoking in the casinos. Foxwoods employees face high incidences of asthma, emphysema, and cancer due to secondhand smoke. As a 334 3/10/08 - RULES COMMITTEE - 080027, 080028 table-games dealer, I have to breathe highly contaminated levels of secondhand smoke eight hours a day, day in and day on it. Foxwoods used to have a totally smoke-free area that employees with asthma or other health problems or pregnant women would be assigned to. About three to five years ago, they discontinued that. Workers with asthma and emphysema were told that they had to either produce a doctor's note clearing them to work in the smoky casino or resign. No one should have to choose between the financial security of their families and their lives. We have raised our concerns to management about exposure to secondhand smoke for years now. They've had plenty of opportunity to do something about it, and now their position on the proposed legislation is one of arrogance: You can't make 335 3/10/08 - RULES COMMITTEE - 080027, 080028 us. We are not surprised; for years, this has been Foxwoods' way of dealing with the employees and our communities. I hope our experiences will help you to make a thoughtful decision for Philadelphia. We are all for economic development, if it is a smart development that brings good jobs and allows hardworking people to support their families. It's up to you to make that decision, what is right for your community, but please, one word of caution: Don't bank on Foxwoods' promises; get everything in writing. Thank you again for your time.
Thank you very much. We appreciate your 336 3/10/08 - RULES COMMITTEE - 080027, 080028 coming in to testify. Oh, I'm sorry. Councilman Green?
Thank you very much. I just have one quick question. I've asked other people from the union this question who are here today, and I just told them I'd be asking it of you on the union's behalf to get it on the record. Would the location of the casino have any bearing on the desire or ability to organize casino workers -- or on UAW's desire or ability to organize the casino workers?
Thank 337 3/10/08 - RULES COMMITTEE - 080027, 080028 you. Our next witness? MR. McPHERSON: Cynthia Philo. (Witness comes forward.).
Good afternoon. Please identify yourself for the record.
I'm Cynthia Philo. I'm here testifying as the chair of the Pennsylvania Downtown Center, as well as a member of the board of directors of the International Downtown Association. I have testimony that's prepared today. It's short. Hopefully, it will be sweet, and I'll just start.
The Pennsylvania Downtown Center is headquartered in Harrisburg and is the only statewide nonprofit organization dedicated soley 338 3/10/08 - RULES COMMITTEE - 080027, 080028 to the revitalization of the Commonwealth's core, or traditional, communities. Community leaders and citizens across the Commonwealth are working diligently to ensure that their downtowns and neighborhoods that surround them remain viable centers of activity, both economic and social. , is a world leader and champion of vital, liveable downtown communities. Both organizations address issues including that of gaming as well as the impact on our urban centers. Today, I would like to focus my comments on the need for an independent economic-impact study as it relates to gaming and the surrounding business community. In order to create a true synergy with the surrounding 339 3/10/08 - RULES COMMITTEE - 080027, 080028 community, the City would benefit from an independent economic-impact study to see how gaming fits into the fabric of a neighborhood. Most studies that have been undertaken by both the casinos and city governments relating to economics have focused soley on the following: the employment or job creation by casinos; on the impact of various tribal communities that have a stake in gaming, whether or not the members of the tribe are receiving adequate benefits from gaming revenues; whether there's tax revenue generated to the city; as well as studies related to the mental health impacts on municipalities with gaming. Nothing has really focused on how gaming in particular affects the growth, either positive or negative, of nearby local businesses, especially with regard to retail, restaurant, or cultural. A number of gaming sites have gone into the areas of 340 3/10/08 - RULES COMMITTEE - 080027, 080028 communities that are distressed, with no surrounding business or residential elements nearby. In those cases, the introduction of a new business, which is the casino itself, serves to boost the economics in the particular area. Often, the architecture of the gaming facility encourages the customer to stay inside the facility. This works well when there's nothing else surrounding the casino, and may be beneficial to the overall economy of the casino and, in the long run, the city government by way of tax refers. However, in Philadelphia, our gaming facilities are being placed along a vibrant waterfront with many businesses already existing in the area. In fact, our gaming venues are to be located right in core downtown communities. How will gaming connect to the urban economic fabric of this type of a neighborhood? Can this be 341 3/10/08 - RULES COMMITTEE - 080027, 080028 done in a positive way for all concerned? This is where a study can be most beneficial. The question came up, I believe, that Councilman Greenlee had said to Terry Gillen with regard to the Commerce Department: Can the Commerce Department do this type of a survey or an economic study? And I would recommend personally, coming from my opinion, it really needs to be truly independent so that both the casinos, the City, as well as the business community feel that it's a true independent view of what is out there, and they can buy into that study. Additionally, along those lines, the Pennsylvania Downtown Center is particularly interested to understand whether or not gaming is truly a tourist destination for areas where casinos are located. The Commonwealth describes a 342 3/10/08 - RULES COMMITTEE - 080027, 080028 tourist destination as one in which a person drives more than 50 miles to get to and stays overnight. Tourists that do this tend to not only take part in what the casino has to offer by way of retail and restaurants, but they tend to venture outside the casino, into the neighborhood, and also partake in local shopping, dining as well as tours and cultural activities.
If an individual is not traveling such a distance, they may be staying soley inside the gaming venue and not stimulating the economy in the downtown core or the surround community. Further, whatever types of dining and shopping are offered on the inside of the casino can have an impact on the surrounding shopping and dining community. We want casino-goers to eat, shop, and tour in our downtowns. If casinos have all the same places that 343 3/10/08 - RULES COMMITTEE - 080027, 080028 our downtowns have, will casino-goers even venture forth into the neighboring community to spend their dollars? Should there be an agreement with the individual casinos to avoid duplication of local businesses inside their establishment; in other words, to help grow local employees? Or can arrangements be made where diners, shoppers, and tourists leave the casino at some point to go into downtown to do some of their business? Knowing the answers to these type of questions, which are very important because it impacts the entire group, would be highly beneficial to the City government and casinos as well as the community. Without a clearer understanding of the larger economic issues that may impact the immediate and surrounding business/residential 344 3/10/08 - RULES COMMITTEE - 080027, 080028 areas, we may not be able to truly make sound judgments as to the future revitalization through gaming. And I would recommend that this Council move forward with going through and doing a true independent economic-impact study. Thank you. )
Thank you very much. Our next witness? MR. McPHERSON: Representatives from the Philadelphia Neighborhood Alliance. (Witnesses come forward.)
Good afternoon. Please identify yourself for the record. 345 3/10/08 - RULES COMMITTEE - 080027, 080028
Good afternoon, Madam Chairman. My name is Matt Ruben. I am with the Northern Liberties Neighborhood Association and the Philadelphia Neighborhood Alliance.
Shawn Rairigh. I'm with the Philadelphia Neighborhood Alliance, also with Fishtown Neighborhood Association and with Neighbors Allied for the Best Riverfront, NABR.
I am Caryn Hunt, I'm with Philadelphia Neighborhood Alliance, and I'm a delegate from Passyunk Square Civic Association.
Madam President and members of Council, thank you so much for the opportunity to have us testify as part of this hearing. We will be as brief as possible and will be going in the order from your right to left, our left to your right. 346 3/10/08 - RULES COMMITTEE - 080027, 080028 I want to make a few brief points. First of all, I would like to say that I very much appreciate what Council has done, particularly Councilman DiCicco and you, President Verna. We understand the importance of the bill that is before the Council, particularly given the Supreme Court's actions in previous similar situations with the SugarHouse Casino. We understand the thrust of the bill, and I, for one, certainly appreciate, you know, the reason that it's here and what it's trying to do. That said, I have serious concerns about the bill, at least in its currents form, and at this juncture, would recommend not recommending this bill to the full Council, at least in its current form, and there are a few reasons that I want to briefly go over that, some of which have been very well covered by Ms. Gillen and by other witnesses 347 3/10/08 - RULES COMMITTEE - 080027, 080028 today. First off, as we know from the PICA report, probably the most willfully ignored report in the history of PICA, Philadelphia casinos, according to credible studies, the Foxwoods site, in particular for today, could end up costing the City $200 million a year simply in terms of the cost of dealing gambling addiction and the criminal justice and social service costs associated with that. This is a cost whose existence has never been refuted, as far as I know, by any credible source, by any credible study by either of the two proposed casinos for Philadelphia. This is a significant cost that was not included in the original Five-Year Plan produced by the City under the previous administration, and it's a cost that needs to be taken into account along with many others, if we are to paint a clear picture of what 348 3/10/08 - RULES COMMITTEE - 080027, 080028 exactly the economic impact of casinos are. Secondly, as Ms. Gillen and others have noted, there has been no 6 sufficient evidence that the full 5,000 slot machine Phase II or III buildout can be sufficiently or feasibly mitigated or even accomplished any way that is profitable given the current tax structure that the State has put on casinos. So we have a situation where there is no evidence whatsoever that is credible that Foxwoods can actually provide the full revenues at this proposed location. And that reinforces the Philadelphia Neighborhood Alliance's conviction that this is an improper location for this casino, because it cannot produce the revenues that we are all depending on and is being promised by casino development. 349 3/10/08 - RULES COMMITTEE - 080027, 080028 Thirdly, if there's one thing that all of the scholarship shows us, it's that proximity kills. All of the negative impacts of casinos pose a greater risk and are more accentuated and are more difficult to deal with the closer a casino is to established residential communities. And to the best of my knowledge, no one in the country -- or perhaps anywhere -- has contemplated putting a casino this large in thriving residential communities this dense; it is a giant social experiment, and we believe that at this point, it is a more or less entirely uncontrolled experiment. Again, the closer you are to a casino, the more the negative impacts affect your community, the more people who are liable to become addicted to gambling, the more problems you have with traffic, and so on. In addition, and as Mr. Rairigh will testify in more 350 3/10/08 - RULES COMMITTEE - 080027, 080028 detail, you have lost opportunities. This is not destination gambling; these are slot machine facilities, they are convenience gambling. And convenience gambling does not belong in a prime destination spot like a waterfront.
You give up the opportunity to develop an incredibly valuable and lucrative mixed-use and commercial developments that require the specificity of waterfront and destination locations. A convenience facility can, and should, go somewhere else to allow the City to reap the full benefits of its waterfront. I'm certainly for quality of life, but for this hearing, economically as well. In addition, you also have other opportunity costs that Mr. Rairigh will talk about, including the sabotaging of existing businesses that was also just brought up recently. 351 3/10/08 - RULES COMMITTEE - 080027, 080028 Finally, it seems to me that casinos, based soley on the tax structure are not private development; they're public policy. The State of Pennsylvania and, therefore, our city and, therefore, our public are partners in this enterprise with a tax rate that is over 50 percent. And, therefore, it is incumbent upon all of us at all levels of government and the citizenry to participate in the regulation of these casinos at all levels, in all aspects. If the State is granting a license based on revenues produced by a 5,000 slot machine buildout, then Foxwoods needs to demonstrate by a reasonable standard that it can build in a profitable way and that it can mitigate 5,000 machine buildout -- and it has not even come close to doing that at any time, as far as I am aware. If this bill is going to go 352 3/10/08 - RULES COMMITTEE - 080027, 080028 forward, I think at the very least, it needs some amendments in order to provide safeguards and to make Foxwoods meet a reasonable standard for casino development. And this is by no means exhaustive, but among them: Number one, it must be made clear that any traffic study, any proposed traffic mitigation, must be for the full 5,000 machine buildout; that is not, in my understanding, currently spelled out with that degree of specificity in the legislation and certainly has not been proposed or provided by Foxwoods thus far. That's one thing that has to be done. In addition, there must be a study, an independent study, on the preparedness of our social service infrastructure for the inevitable social pathologies and social impacts of gambling. And in my view, the casino should have to fund an 353 3/10/08 - RULES COMMITTEE - 080027, 080028 independently conducted -- in other words, there should be an independent consultant but funded by the casinos to assess our social infrastructure, and they should have to pay whatever money is necessary to bring our social service infrastructure up to speed. In addition, any nonprofit that is established, which is a part of the legislative criteria here, should not be providing enhanced municipal services; those should be provided by a casino and the City and State government. Any nonprofit is merely compensation to build up cultural and social infrastructure to compensate for the inevitable negative effects of a casino. And, finally, Foxwoods should be required to participate -- and this, in my view, should be the new subsection 3(a)1 -- to participate in a public process to evaluate the feasibility and workability of other 354 3/10/08 - RULES COMMITTEE - 080027, 080028 alternative locations for their casino, because, in our view, that is the number-one best way to mitigate, is to move them to a better site. )
I don't want to take up any more of the Council's time, so I'll stop there and turn it over to Mr. Rairigh.
Thank you. I'll try to be brief. Basically, I should introduce myself a little more. I'm here today for the Philadelphia Neighborhood Alliance but I also am a part of Fishtown Neighborhood Association and a group called NABR, Neighbors Allied for the Best Riverfront. We started prior to the casino issue; we started worrying about the waterfront when we were getting proposals for 40-story towers and 8-story parking garages and things like that, so we are not anti-casino; we're just careful about 355 3/10/08 - RULES COMMITTEE - 080027, 080028 the kind of development we want to see on the waterfront. In my eight years of planning experience, where I especially worked in the revitalization of Philadelphia neighborhoods, this becomes a very interesting case, the casino thing. And it just proves that place matters. What we're here today to decide is whether this set of uses should be allowed at this location in the City. And I would like to remind Council, as they've heard many times today, that the jobs, the union activity, the tax revenues, and even the social costs that are associated with casinos will happen no matter what the site is in the City. Casinos, as long as they can attract gamblers, as long as there is access, the revenue you hear projected by the casino folks today will remain the same no matter the site, but the costs may not. 356 3/10/08 - RULES COMMITTEE - 080027, 080028 And, ultimately, what we should be worrying about from the City government's perspective is the base economics. Base economics is a term I learned my first year of planning school. Basically, it means we should build our base economy; that is, the dollars coming in from outside the city. Those dollars should stay here and then fund grocery stores, small stores, things like that. With the casino located where it is, next to the neighborhood, with very troublesome access to it along Delaware Avenue, a higher proportion of the casino revenue will come from Philadelphians soley because of the location. These are not -- they're not near the -- the casinos are not located near where the out-of-towners are, so every dollar spent in the casino really is no longer being spent at existing businesses in Philadelphia and existing entertainment places in 357 3/10/08 - RULES COMMITTEE - 080027, 080028 Philadelphia. Instead, if the CED zoning were given to locations where out-of-town money already exists -- and I'm not going to speculate on those locations -- you could imagine a higher proportion of the casino revenue will come from outside the City and region, becoming a base economic item. In addition, much like putting smoke stacks on the edge of town, the pollution goes into the neighboring state. If you attract out-of-town gamblers, they take their social problems home. I don't really recommend we get a lot of social problems, but at least they go home at the end of the day. So if not casinos, then what? There are also neighborhoods representative for the waterfront plan that you heard from Mr. -- that you heard from the PennPraxis folks 358 3/10/08 - RULES COMMITTEE - 080027, 080028 earlier today, where I helped craft the plan principles and vision there. As part of that, NABR got together and created our own waterfront charrette, you might call it, where we invited anybody and everybody, members of the public. We had a team of planners, architects, urban designers, and engineers come and look at the two sites. And you can from the last or two of the Foxwoods site -- you can see that folks are not anti- development. There's clearly a large mixed-use, mixed-density development shown there. And that is ultimately what fits into the vision for the waterfront. And let me remind also, Council, that wage tax is our largest source of City revenue, slightly less than half of the revenue pie in the City. So if you're really want to increase City revenue, putting new 359 3/10/08 - RULES COMMITTEE - 080027, 080028 people at this site.
People that don't live in Philadelphia or work in Philadelphia, you want them there at this site. Well, luckily, waterfronts are seen as ideal places for people to live especially nowadays, especially luxury residential development. Every city knows this and is remaking waterfronts to capture these new residents, these new high-income residents that pay more in wage tax. You see from our vision plan a mixed-use, mixed-density community. It's community-driven vision includes open space and extension of the street grid, it's walkable, it's healthy, it supports existing transit infrastructure, all low-cost items for the City. There's over one thousand units of housing proposed there, over 60,000 square feet of commercial space. 6 million in real-estate transfer fees alone, about 3-and-a-half million in property taxes every year, and more as tax reassessment goes forward, and 2 million in new wage-tax revenue. This is even if only half of the residents there are from out of the City. This doesn't include construction jobs. And, of course, a complexed, mixed-use, mixed-density project like this will have construction jobs lasting much longer than any single box with slot machines in it. So I guess to sum up really, the opportunity that you see presented before you is really being lost. And the fact is that this could be under construction today if it weren't for the casinos, that this could also be 361 3/10/08 - RULES COMMITTEE - 080027, 080028 completed today if it had been started four years ago instead of casinos. And, moreover, unlike the casino projects, this development will actually spur additional investment in nearby neighboring properties. So I give you the answer. The answer is simple: We can have our cake and we can eat it, too. Zone the casinos elsewhere; you still get the revenue, you still get the problems, but you also get this site to become what its potential is, a mixed-use residential and commercial development. And if you choose to zone this site for CED zoning, you're basically choosing less revenue for the City and less chance for future development in that area of South Philadelphia.
Hi. I'm Caryn Hunt 362 3/10/08 - RULES COMMITTEE - 080027, 080028 from PNA and from Passyunk Square Civic Association. The question of the day is: Will Foxwoods bring more economic benefit to the City than harms? And the answer is: Not at its current locate. The port industries will be harmed, we'll be playing catch-up with the infrastructure problems for years to come, and in the process, destroying thriving neighborhoods. Their impacts will be felt citywide and, therefore, they should be measured citywide. These are not destination casinos that we're talking about; these are convenience casinos, so called because they'll be conveniently placed near large populations so that the discretionary wealth of an area is made available to them. But it's important to keep in mind that it's not going to be very convenient to get to the Foxwoods 363 3/10/08 - RULES COMMITTEE - 080027, 080028 location. In Colorado, Central City Casinos suffer because folks from Denver don't -- won't drive the extra mile to get to them; they'll go to Blackwood because it's closer -- by one mile. It will take years of infrastructure improvements to make the Foxwoods location work. In the meantime, gamblers in the vicinity will find it faster to travel to Harrah's or Philadelphia Park or maybe even Atlantic City rather than navigate the traffic tsunami that the Inquirer predicted -- has predicted. So far, the idea for these casinos, especially Foxwoods, seems to be: Build now, pay later. On the jobs and revenues. The job-opportunity claim for local residents is a myth. Using statistics from the Pennsylvania Gaming Control Board's recent diversity report, only 364 3/10/08 - RULES COMMITTEE - 080027, 080028 208 out of 1,098 Harrah's employees are residents of Chester City; that's less than percent. Fifteen percent 5 of their employees live out of state. 6 Apparently, Harrah's did not provide 7 that many jobs to residents in Chester 8 City, where they really need 9 employment; they hired from Delaware 10 Montgomery, Philadelphia, and Chester 11 Counties. 12 The numbers are similar at 13 Philadelphia Park. The diversity 14 report indicates that there are 15 Philadelphia residents that currently 16 work at both locations. These 17 Philadelphians don't need casinos in 18 their neighborhoods to get these jobs. 19 The seven other Pennsylvania 20 casinos that are up and running are not located in densely populated urban neighborhood, and they're exceeding their revenue projections. Foxwoods, Philadelphia, and the State of Pennsylvania will receive the same or 365 3/10/08 - RULES COMMITTEE - 080027, 080028 better revenues no matter where in Philadelphia it's located. Although Econsult is a reputable company and used many solid numbers in its report, its study is essentially a sell document for Foxwoods. And as such, it glosses over some serious issues. For instance, Professor Fred Murphy, who has spoken before you before disputes Econsult's ancillary spending numbers. The effects of the diversion of local discretionary dollars to casinos has been well documented elsewhere. And other studies exist that show casinos detract from historical tourist sites. Econsult does not account for negative consequences of casinos such as social costs, Foxwoods assumes no 22 value to the riverfront property without their casino project. Additionally, there is no way that Phase III of Foxwoods' project is 366 3/10/08 - RULES COMMITTEE - 080027, 080028 going to be profitable enough for them, given the current State percentage rate. Are they counting on that rate to decrease? You know, what is the basic assumption there? Other assumptions Econsult used derived from Mayor Street's Advisory Task Force, certainly not as independent an inquiry as it could have been. This study was a first- round attempt to grapple with issues of casino impacts on the City, again glossing over costs.
The Innovation Group, which has played such a key role in the State's gambling expansion, has said that the adoption of slots in Pennsylvania should create a reverberation effect in the region, enticing other states to step up competition for gambling dollars, perhaps even causing New Jersey to build casinos outside of Atlantic City. What will casinos in Camden do 367 3/10/08 - RULES COMMITTEE - 080027, 080028 to Foxwoods' numbers? Casinos are posting revenue declines all over the country -- in Connecticut, in Illinois, in Atlantic City, even in Las Vegas. And this is all just to say that projected revenues over time are impossible to accurately predict; just as is the consistency of state transfers. Nonetheless, the PNA is not here to advocate turning away any of those casino revenues, neither the one-time construction monies, nor the long-term casino jobs benefits, or whatever nontaxable, charitable benefits are slated to flow into our communities. We are only advocating taking a sober, rational view to the cost-benefit balance. A build-now-pay-later scheme is not going to work. We've looked at the costs, and that's why we advocate re-siting. In order to truly assess the 368 3/10/08 - RULES COMMITTEE - 080027, 080028 economic impact of Foxwoods on the City, the effect would have to be measured citywide. Let's see if other locations would not work better. A study would have to include: A comprehensive costs-benefits analysis on the impacts to the City for every stage of the buildout of the proposed location, as has been mentioned before. In this case, including: The impacts to the port industries, to local businesses, bars, restaurants, and entertainment venues throughout the City; An analysis of the costs associated with negative public health effects; An analysis of the financial impacts to Medicare and Medicaid; Consideration of the economic well-being of seniors; A survey of our social service agencies' readiness, like they did out 369 3/10/08 - RULES COMMITTEE - 080027, 080028 of the University of Pittsburgh to assess the readiness of the social service agencies in Pittsburgh; A finding that the project will impose additional law-enforcement costs relating to the apprehension, prosecution, imprisonment, and rehabilitation of compulsive gamblers in the City of Philadelphia of no more than half the $14 million host fee paid by the casino, or let's at least know what that number is; And an analysis of the lost opportunity cost of developing riverfront real estate for casino operation, including an assessment of property values from alternative developments, long-term tax revenue and economic benefit to the City that such developments would bring It should also demonstrate a net addition of jobs and revenues to the City over a period of ten years, not a loss. 370 3/10/08 - RULES COMMITTEE - 080027, 080028 Such a study would then be reviewed by an independent economic consultant, with additional commentary provided by consultants representing Foxwoods and the affected neighborhoods, and should, for some period, be open for public comment as well. This is the way to look forward, to plan, and to prepare for the casinos that are coming to our city. The sooner these casinos are re-sited to minimize harms, the sooner they can be operational. The State will get its revenues, we'll get the jobs, everybody wins. But the problems represented -- or presented by the current location are unmitigatable; and that's why we recommend voting no for at this location. And the last thing I'd just like to say is, Professor Murphy did a 371 3/10/08 - RULES COMMITTEE - 080027, 080028 really good independent report based on the Econsult numbers, and I do have a copy of that report here, along with -- there's a bunch of other stuff.
But the Professor Murphy report you really should take a look at because he just -- he uses a lot of their numbers, but he changes the assumptions and he comes up with different conclusions, and it's very interesting to get a different perspective.
Thank you very much. Are there any questions of the witness? (No questions.)
Thank you. (Applause.) MR. McPHERSON: Our next panel is the Philadelphia Entertainment and Development Partners and Steve Mullin 372 3/10/08 - RULES COMMITTEE - 080027, 080028 of Econsult. (Witness comes forward.)
My name is Steve Mullin. I'm a principal with Econsult Corporation.
Okay, thank you very much. I appreciate the opportunity to testify here today about the potential economic impacts of Foxwoods Casino, as my firm has studied that. I also -- on a quick side note, I was very happy to hear one of my former students, Shawn, comment about base economics, which is a 373 3/10/08 - RULES COMMITTEE - 080027, 080028 course I taught him. And so even though we don't necessarily see eye to eye on the conclusions there, I was very happy to hear him report and come up with the points that are very, very important, too. So it makes that part of me feel good to see a good former student working. And I appreciate the comments about Econsult and our work, and I'd like to note what we did present. I thought I'd give a very brief overview of the work we did as part of the submission and the application. And then, since I know that in the most recent legislation that's being proposed, you're talking about a two-mile radius, and talk about -- so just some comments about that, even though we didn't do any direct -- in our earlier report, we didn't do any direct analysis of that two-mile radius. We did a little bit in one mile, but that was really more for 374 3/10/08 - RULES COMMITTEE - 080027, 080028 characteristics of the site there. What our potential economic-impact study was, we found significant citywide and statewide impacts in the -- basically the three areas that have been talked about in one way, shape, or form: economic spending, overall economic spending; overall employment; and earnings by both direct employees and earnings by employees and indirectly affected businesses there. And we also forecasted positive tourism and riverfront revitalization effects of the Foxwoods Casinos. And, actually, Foxwoods Casino, with SugarHouse, are what a lot of people have referred to as "bookends" along the riverfront. I would note that as we look at a two-mile radius, we -- the impacts could be on commercial, whether it's office or retail or entertainment businesses, hotel and 375 3/10/08 - RULES COMMITTEE - 080027, 080028 hospitality venues, and port-related development. And the other types of impacts that are non-sectoral will be employment and property values, including residential property values. These are all things that we have looked although didn't include in our study, but I would like to note our views on those in general here. We think that the overall business impacts will be virtually nil for most of the two-mile radius. As you get further west, we think that impacts on commercial and retail businesses in that two-mile radius will be very close to zero and actually somewhat positive for the closest areas. And I'll note part of the reason why we -- the basic reason why we think that's the case is that -- is that the economy is so big inside that two-mile radius. And, remember, it's really only a half a radius 'cause the 376 3/10/08 - RULES COMMITTEE - 080027, 080028 Delaware River, it's half a circle there. 2 billion in that area. We also took a look at how many accommodation and food-service establishment and entertainment establishments: 884 in that area. So part of what we were looking at was, what's the impact? There's already a lot, a huge amount, and even the numbers that Foxwoods was talking about relative to that huge amount is fairly small. The numbers are big but they're -- in relation to numbers that are huge, we think that that will be -- that there will be a 377 3/10/08 - RULES COMMITTEE - 080027, 080028 relatively small -- and we also happen to think that's positive, I'll note there -- impact there. We think that there will be no 6 discernible impact on commercial office land use in the two-mile radius, the primary commercial office uses in Center City, both east and west, primarily east in that radius of Center City.
We also believe that the immediate neighborhood businesses are likely to have no negative impact via loss of demand as the casino venue generates spending from outsiders and imports substitutes. Now, that's what Terry had mentioned and several of the other speakers too, and it's always worth another look to see what those numbers are, and we say new spending from outside of Philadelphia and from Philadelphians who are spending, doing the same type of expenditures, primarily Atlantic City before. 378 3/10/08 - RULES COMMITTEE - 080027, 080028 And our view is that the numbers that the task force came up with, saying 75 to 90 percent of new dollars for -- when I say "new" and including import substitution, we think that those numbers -- we thought originally that they were reasonable. We used those in our Foxwoods picture and our study. And we also think that that's -- we don't see any reason to say that that's radically different now. Now, people could study that and take another look -- and take a look, but we don't think that they'll find a significant difference there. We also think that the -- unlike -- sometimes people will say, Well, you put a large department store or a large venue someplace and that will draw from others. The types of venues that -- non-gambling venues that would be included at Foxwoods would not sort of run the gamut, and 379 3/10/08 - RULES COMMITTEE - 080027, 080028 we think that the impact there would be relatively low because, once again, we think it will be a very small portion of those almost a thousand food-service establishments in the two-mile radius, and even less as you go further away. We also think that there would be a positive impact in the -- for basically three source of positive impact in the neighborhoods and to neighborhood business. First will be the payroll that's spending nearby, generating demand for neighborhood retail and restaurants. We note that -- it's our view that the development -- and Shawn had it exactly right -- and economic base development of neighborhood retail is primarily serving the current neighborhoods. Now, that doesn't mean there aren't people who say, We want to try to get customers from outside, but primarily serving the 380 3/10/08 - RULES COMMITTEE - 080027, 080028 neighborhoods. The way that those types of businesses thrive and do well and start up in the first place is based on the income of the people in the neighborhood. So a portion of the payroll that will be spent nearby, we think, will be a positive impact on those businesses. We also think that there will be some indirect spending by Foxwoods to -- directly to businesses in the neighborhood, and we don't know exactly what that percentage will be, but to the extent it's greater than zero -- and we're pretty comfortable that it will be greater than zero -- there will be other money going into the immediate surrounding area that will generate income for people, which will then support -- help support other businesses. It's our view that the neighborhood -- once again that the 381 3/10/08 - RULES COMMITTEE - 080027, 080028 neighborhood economic -- the neighborhood retail is a function of income of the people in the neighborhood, not a function of the businesses that go in there. They follow. And then, finally, in that Special Services District proposal and expenditures on that -- by that in the area is also something that we think will generate additional demand in the area. We also think that employment in nearby businesses will have little to no negative impact, and that's primarily a function of what I've just talked about, about the estimate -- our estimate of the economic activity. We think that the indirect employment will be positive, and that's the spending -- that's the jobs that are supported by the spending of both payroll and indirect and induced spending in that area.
382 3/10/08 - RULES COMMITTEE - 080027, 080028 We also think that they're looking at little or negligible impact to expanded port operations, including PRPA's planned RFP for the container port further south there and primarily due to location there. And also, when looked and talked to people at PRPA about what they were looking at, their view is that -- or at least some there think that the casinos -- that potential casinos further north would not be a hindrance to the proposed port expansion. And, finally, in one of the areas -- oh, yes. Finally, in one of the areas that is considered -- one of the areas considered... a real -- I'm trying to think of the word. Something that generates a lot of anticipation and nervousness and uncertainty, and that is the impact of the casino on residential property values, which is something that is 383 3/10/08 - RULES COMMITTEE - 080027, 080028 absolutely a legitimate concern and absolutely an economic impact. We've taken a look at many of the studies that have been done in other cities, especially one that was done in Henderson, Nevada, that has sort of circulated around, and I know that people have said, And here, because of this, based on this sort of information, we'll have property values decreasing. It's our opinion that the property values in the -- as you get further to the west, there will be little or no impact, but even in the residential areas immediately to the west of I-95, there will actually be a positive impact on property values for the following three reasons: One is that it will react -- the property values and demand will react positively to the elimination of blight and underutilization along the riverfront. )
We think that that will ripple out from the immediate adjacent neighborhoods. And it will be augmented by the induced development that the casinos will bring along the riverfront too. We do not think that the Henderson study that's been used is applicable at all here; and that is, once again -- and some -- and other people have noted that we've got to be careful about studies from Atlantic City and others, where you're looking at an economy that is predominantly casino and casino-related but not necessarily -- and which Philadelphia would not be at all in this case. We also think that this scenario is even more likely now, given the current state of the real estate market, where inducements along -- say, along the riverfront here would be even more necessary with 385 3/10/08 - RULES COMMITTEE - 080027, 080028 the -- with the -- I won't say "collapse," but at least the slowdown of the residential and not as much slowdown of the commercial office markets. So that -- so I just wanted to sort of step through some of the points here and know that they're probably not necessarily the same points that you've been hearing most of the afternoon. But I also do want to note that when Terry was talking about taking an independent look, we do think that an independent look will support the findings that we have.
Thank you. And may I say that your student is sitting back there shaking his head, and I don't think he agrees with you at all.
But 386 3/10/08 - RULES COMMITTEE - 080027, 080028 that's beside the point.
On your last point about the independent study, I just want for the record -- it's obvious that we do have different points of view on this Foxwoods Casino site. Would you have any objection to an independent study that would examine your findings?
No, not at all. As I mentioned, I think that they will find our assumptions reasonable.
Okay. You mentioned something about the PRPA. For those of you who are not familiar with it, that's the Philadelphia 387 3/10/08 - RULES COMMITTEE - 080027, 080028 Regional Port Authority. Their mission is to encourage port development. What was it you said about them?
Yeah, I was at a -- I attended a talk where John Estee (sp?) was talking about the planned expansion that the State is looking at. And one of the questions that someone at the planned container-port expansion, one of the questions someone in the audience asked, who wasn't me, but I perked up, was that did he see any problem with any of the casino proposals there? And he said he did not think that that would be a -- that that would be a problem. Now, as I think about it, I'm interpreting his response to mean that he didn't think there would be a problem if there were a casino. I didn't -- there's a possibility, but I think it's a remote, that he was saying, Well, I don't think there are 388 3/10/08 - RULES COMMITTEE - 080027, 080028 going to be casinos there so I don't think it's a problem. I think he was -- I think he was responding to casino location just north of the port.
Well, you know, for the record, and for those who may not know, Mr. Estee was, up until a couple of weeks ago, Governor Rendell's chief of staff, so I think it's important that we recognize the fact that his boss has been -- and we all know for years, when you were 15 commerce director, he's always been 16 encouraging riverboat gaming or some sort of gaming along the Central Delaware River waterfront.
For the record, I called the executive director, Mr. McDermott, of the PRPA about a week ago to ask if he or anyone from PRPA would be testifying today. They indicated that no one would be 389 3/10/08 - RULES COMMITTEE - 080027, 080028 testifying; however, an employee, whose title I don't recall -- his name is Robert Blackburn, who is a resident of Whitman, speaking as a resident, said that, in his opinion, he would be opposed to the casino at the current site. Again, not speaking as an employee of PRPA but as a resident who would be immediately impacted and whose quality of life would be impacted. But needless to say, there was no written testimony, nor was there anyone here to testify here today. I do have one other question. When you talk about that radius, that half a radius, 'cause the rest of it's the river --
I might subscribe that I would agree that the further west you go, the less impact it might have on businesses the further west you go. How far west, I'm not sure what that line of less versus more 390 3/10/08 - RULES COMMITTEE - 080027, 080028 would be.
And if you have some indication of that, I would appreciate it, but I look at this as a practical thing, and I've talked about it a number of times in testimony, in previous hearings in relationship to the Foxwoods site, and we have similar problems up at the SugarHouse site as well. But in relationship to the Foxwoods site, which is Delaware Avenue/Columbus Boulevard, two blocks or so off of Second Street, everyone knows that's part of the culture of the environment, which is the neighborhood environment of Second Street, there are a number of bars, and there are a number of venues where people go to socialize. Within two blocks, a massive facility like the Foxwoods facility would be built. I'm a South Philadelphian. I 391 3/10/08 - RULES COMMITTEE - 080027, 080028 started my adulthood hanging out in bars in my neighborhood 'cause that was the social thing to do. I can't imagine those same guys sitting in McNichol's or Jung's or name any one of the bars down there, when they have the availability to be able to walk across the street or two blocks away and spend their disposable income in a place where they think they may have an opportunity to strike it rich and smoke. Well, actually, I can't say -- 'cause some of the -- when we did the smoking legislation, if you remember, that was one of my hang-ups, to let the local bars that were not serving a certain percentage of food to continue to have that choice, and I was specific in that request on the amendment because I was concerned about the what if casinos come, at least you may give those bars, you know, an opportunity to compete 392 3/10/08 - RULES COMMITTEE - 080027, 080028 because it's not that I'm going to run to the casino 'cause I could smoke there but I could still smoke in the bar that I hang in. But there's that temptation. There's that, you know, sitting in the bar, watching the games, watching the Eagles play, watching the sports, the football games, you know, the betting, or whatever goes on, it's all going to not happen, in my opinion, in an establishment that's going to allow the smoking, it's going to allow probably -- I'm not sure what the game plan is yet on the drinks 'cause I think that's still being argued in the legislature and I don't know if that's been resolved yet, whether drinks will be comped or not. Eventually, I think they will be comped, whether that's the case today or not 'cause that's the nature of the gaming industry, to do as much as you can -- and this isn't being critical of them -- to 393 3/10/08 - RULES COMMITTEE - 080027, 080028 keep your patron indoors, in your facility, and not leave until you're ready to go for whatever reason. So I -- at the end of the day, my belief is that there will be free drinks permitted at some point in time. That will all change. And there has to be -- Steve, I respect you, and we've had a great relationship.
But I can't imagine these casinos -- 'cause SugarHouse has the same problem with at Northern Liberties, which is finally being developed and more people are moving in, and there's some great places for people to socialize. That disposable income not -- literally walking two blocks east, I -- did -- was that taken into consideration? And can you even figure out how that would play into this?
Yeah, I think I 394 3/10/08 - RULES COMMITTEE - 080027, 080028 understand -- I think I understand exactly where you're coming from on that. My response would -- I do have to note one thing: Is there a potential that a business -- any individual business might lose customers? The answer is absolutely yes. But in the -- where I think the -- where I would differ with you on your analysis there is to say that if it's a zero-sum game and somebody has to be here in this seat or in this seat, then I would agree with you. But I don't see this as a zero-sum game at all; I see the growth of the pie. So even if there's a slice coming out, it's a larger pie, and I think that that's where -- that's where you can have your story, which is very, very logical, still happen but still have a positive impact. 395 3/10/08 - RULES COMMITTEE - 080027, 080028
I understand your rationale for the bigger picture, but I just mentioned a couple, and Jimmy can probably speak to this better than I can. There are -- there's a significant number of those neighborhood social-gathering places, all right, bars, taprooms, taverns, in addition to the Mummers clubs that rely heavily -- and Jimmy, again, can to talk to this better than I can -- on their members who hang out at the Mummers clubs, and it's a part of that social environment. And they're talking about not a couple of little businesses; you're talking about a large portion of the population and the fabric of the -- the economic fabric of Second Street in particular that I think will have a very severe, dramatic decline in businesses. It's kind of like when the Acme Market -- and I'm not picking on 396 3/10/08 - RULES COMMITTEE - 080027, 080028 Acme, but when the supermarkets started in my neighborhood, it was the beginning of the end for the Ninth Street Market, it was the beginning of the end for all of the mom-and-pop stores, because it just made it more convenient. So if I have the opportunity to walk two blocks, three blocks to a gaming venue to spend my disposable income, drink the same alcohol, watch the same sports game, do all of the same things but still have the opportunity to maybe, you know, score a jackpot, where am I going to go?
There's a certain loyalty, but I think the loyalty may end because it's just too you -- and, look, it's part of doing business in casinos. You make it -- you offer the incentives. I get these things in the mail -- a room for $20 a night or $50 or whatever it is, come 397 3/10/08 - RULES COMMITTEE - 080027, 080028 down. It's all about bringing you in, and that's good business. What's bad business is for the businesses that are in nearby proximity who may fold up and close their doors and then we wind up with a lot more vacant properties. That's sort of a question/ statement, and that's my concern.
Yeah. No, I -- I don't know if you want me to respond, but I do think that I -- I'm not saying that things might not be different, but I think that that impact, that ultimate impact will be a lot smaller than people think on that. And in the -- and I'll note again, 'cause you're -- you are thinking specifically of particular bars and places, and there's no 22 question about that. We found 188 accommodation and food-service establishments in zip 19147, 188 of 'em part, so part of 398 3/10/08 - RULES COMMITTEE - 080027, 080028 when we're looking at things is what's the ripple effect, what happens with millions of dollars more going in and income and stuff like that. So we are looking at a broader picture than that. But I will also note -- and this is a little bit -- a little bit different, because you've identified specific places that have been around for a long time and are a part of fabric, but we also do know that things like taverns, bars, restaurants many of 'em start up and they have a notoriously tough time staying alive to begin with. So there's a lot of turning and, you know, tough competition even with or without. So it's just our thinking that the -- that ultimately, the additional income will generate -- will generate more than the offset. And, again, I don't want to say, oh, you know, that bar is never 399 3/10/08 - RULES COMMITTEE - 080027, 080028 going to close or anything like that 'cause I don't mean that at all in my testimony.
Well, but the 47 and 48 zip codes, I mean, they're next to each other.
So you could take that same example and just extend it as far down as Oregon Avenue, which is zip code 48, and there's probably another couple hundred, so you got 4 or 500 --
Yeah. Actually, 48 has another 140, so you're talking about 350.
And then you get to Passyunk Avenue, which we've been working on for years and it's finally starting to be developed and 400 3/10/08 - RULES COMMITTEE - 080027, 080028 these small, little restaurants are a part of the fabric of that community that's developing. You're ten blocks, you're away only ten blocks away.
You're welcome. The Chair recognizes Councilman Kenney.
Thank you. Just on top of that, what is the average financial demographic of a Foxwoods customer? What's the income level on average in Phase I? Do we have a number on what type of person we're talking about as far as what they make a year? I mean, I'm sure that you're not going to have your James Bond guy in there playing baccarat with the white tux to begin with, so you're going to have a person who is probably 401 3/10/08 - RULES COMMITTEE - 080027, 080028 a working person, who has X-amount of dollars in disposable income monthly. Do we know that that demographic is?
I don't actually, but I have to believe that the Foxwoods group does know which --
-- group's there, they're looking at. Jim? (Witness comes forward.)
I'm Jim Dougherty. Councilman, I would like to be careful how I answer the question because some of this is confidential information that, once it becomes public record, I now have --
Well, if you can give me a bigger range, if you 402 3/10/08 - RULES COMMITTEE - 080027, 080028 can give me want to give me large range.
The average income I would -- would be in the neighborhood of between 30 and maybe 75,000.
Okay. So if we take that individual, I would probably be safe in terming that a blue-collar worker of some kind.
And I mean blue-collar and white-collar, office type of people.
So if you're making -- let's go to the high end, you're making $75,000 a year and you're married and maybe your wife's working and maybe she's making another 40, 50, maybe she's making as much as you are, and you got, say, two kids, three kids. That family unit has a certain 403 3/10/08 - RULES COMMITTEE - 080027, 080028 amount of disposal income that they have monthly that's available to them beyond their mortgage and their insurance payments and their utilities and their car payments and all the other stuff -- and tuition and all of the other things. So I don't know what that number is, and you probably don't know what that number is; or if you do, you probably can't tell me. But let's just say, for argument's sake, that that family unit has about 200 to $250 maybe a month, $200 a month in disposal income to spend beyond food and necessities and all of the other things. Isn't that a finite universe of money with all of these people? Don't they have to make choices to be your customer or not to be your customer based on the amount of money that they have a month that they can spend not on necessities? Is that 404 3/10/08 - RULES COMMITTEE - 080027, 080028 fair?
So I go back to Councilman DiCicco's -- and we've had this discussion for a long time, the two of us back forth, as far as the effect it has on blue-collar or working-class, working-class neighborhoods 'cause it's not just blue-collar workers. They have to make a decision on how to spend that money, and they have to make a decision to take that $100 or that $150 or $200 and go to a Foxwoods or a SugarHouse casino to gamble that money and, hopefully, to make -- obviously to hit the jackpot and strike it rich. Doesn't that, Steve, impact those businesses that also entertain discretionary dollars? If I'm going to go to a local restaurant in my neighborhood and spend 75 to $100 and 405 3/10/08 - RULES COMMITTEE - 080027, 080028 all I have is the 200 a month that's my choice to make. If I take my 150, $200 to the casino and spend it there, I don't have the ability -- clearly don't have the ability to spend it at a local restaurant or tavern or other entertainment venue. Is that an unfair characterization?
That's -- that's completely fair and, I think, very accurate on the micro-behavior of an individual family. Once again, I'll go back and say: If we're talking about a zero-sum game, where the pie -- and, by the way, in the pie on this, I meant number of people with incomes, the inflow and outflow of people moving in and moving out, the aggregate income of the neighborhood, that can increase. And even if both you and I 406 3/10/08 - RULES COMMITTEE - 080027, 080028 didn't go to one place, you know, where we'd go two times a week, now we only go one time a week, that doesn't necessarily mean that that place isn't going to have more customers.
Why would -- see, that's where I think we -- where we -- I guess we fall down on not understanding the premise. How do you wind up with more customers in a local restaurant/bar when you're trying to maximize your customer base across Delaware Avenue? How do those two things --
Especially in the beginning time, where it's really novel and interesting, you're going to really be an attraction away 407 3/10/08 - RULES COMMITTEE - 080027, 080028 from -- I mean, if I'm going -- if I have a $150 in my pocket to spend on a Saturday night and I'm passing McDaniel's Pub on the way to Foxwoods, McDaniel's isn't going to get that money that night.
It may not be getting it for the next six months to a year if I really like it over there.
I -- I -- that -- but it's, again, yours. My estimate would be that the net money that goes into these two zip codes, or into those neighborhoods, exceeds the amount of money that gets -- that will get spent by people in that neighborhood at the Foxwoods Casino.
But it represents a reduction in overall revenue for those businesses potentially. 408 3/10/08 - RULES COMMITTEE - 080027, 080028
If the employees -- if you now have a thousand more people employed and there's more indirect jobs that are created, those people more disposable income that they now can go to some of those outlets.
I don't know -- I mean, I don't know that. And your contention is, that's the case?
My sense is, because of the size of the draw, that the net -- and, by the way, the size of the draw with both direct employment, indirect employment, indirect spending, and spending by the neighborhood services district and anything else, by the way, that might be spent through -- from state or local taxes there, that 409 3/10/08 - RULES COMMITTEE - 080027, 080028 that net -- that that would net positive compared to the amount of money that people in this area would spend at Foxwoods.
But it also assumes that the bulk of the jobs would go to people living in the 19147, 48 zip code, and if that's not --
Well, if you're telling me that there's more disposable income potentially generated by the investment of the Foxwoods Casino, that would assume, in my mind, that the people who are living in those two zip codes would be the primary beneficiary of the new positions created; therefore, their disposable income would be more.
But if that's not -- 410 3/10/08 - RULES COMMITTEE - 080027, 080028
When you say "primary," I don't know if you mean "primary" meaning they will be the direct employees or that that's where the bulk of the payroll will go to.
Even with a relatively low percentage of payroll, I think that the net would still be positive.
Well, all right. I mean -- well, I'm not going to argue -- we're not going to argue back and forth.
I just want to make sure the record's clear that there's some real serious concern about neighborhood economic development.
Look, if you guys get there, and everybody can be accommodated as best as possible or if it can't be moved, or whatever the 411 3/10/08 - RULES COMMITTEE - 080027, 080028 end is, you know, I wish you well, I hope you kick Atlantic City's butt. But, in the meantime, I don't want to see what happened around Atlantic City to some of those wonderful restaurants and eateries and places that you -- And Frank's right, you want to keep those people indoors; you don't want them leaving. As a matter of fact, when they did Atlantic casinos, it's marvelous -- you can walk from casino to casino all the way down the Boardwalk and never hit the Boardwalk once. So, I mean, we understand the need to keep the people in there at those machines, but I just -- I have some serious concerns, not only on the port jobs, which was another discussion, but on the five, six, ten people working in each of those individual businesses, unless you're willing to guarantee, if they go out 412 3/10/08 - RULES COMMITTEE - 080027, 080028 of business, you can hire them at Foxwoods, I don't know what their future is like. So just to register concern.
Any other questions? Do we have anyone else to testify? (No response.)
Thank you. Thank you, Mr. Dougherty. Mr. Mullin, good seeing you.
This 413 3/10/08 - RULES COMMITTEE - 080027, 080028 hearing will be recessed until April 4, '08, at a. 4 M. thank you all very much. 5 (Proceedings end at 5:15 p.m.) 6 * * * 7 8 9 10 414 C E R T I F I C A T E I HEREBY CERTIFY that the proceedings of the City of Philadelphia Council Committee on Rules are contained fully and accurately in the stenographic notes taken by me on Monday, March 10, 2008, and that this is a true and correct statement of same. __________________________________ JOSEPHINE CARDILLO Registered Professional Reporter (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)