Here is what I believe is a realistic time frame. And, again, I've been speaking for a lot of different parties here and I'm doing the best I can.
And I know each of these parties will have a chance to speak directly, but I'll do the best I can in representing where I 74 12/10/02 - RULES - BILL 020738 think the discussions are. What we need is to have this site entirely rezoned by December 19th. That's what I am respectfully requesting this Council to do. By December 19th, I don't know that we necessarily will have a situation where there are agreements of sale signed, committed agreements of sale for all of the properties in which the PRPA is interested. I do think a more realistic goal --
I'm sorry. Let me interrupt you, and I apologize. Do you have a deadline by which you'd like to see that transaction take place? You've obviously laid it out very clear. There's no confusion. I just want to reassure Mr. Primavera that I am still not confused, at least on this matter. I could be confused on other matters. You're clear about your deadline for this particular transaction. Have you determined one for the CSX/port transaction?
What I would like to see by December 19th, in order to give everyone the assurances they're looking for, is at a minimum an agreement in principle or a conceptual agreement that sets forth a process by which these properties are conveyed to the PRPA. 75 12/10/02 - RULES - BILL 020738
Let me ask this question. If this matter were to go forward and we get to December 19th, a matter sitting on our calendar, there is no agreement -- or I think you called it an agreement of sale, an agreement in principle, conceptual agreement by December 19th between CSX and the port, from your perspective, based on what you've now laid out, what action should we take?
Assuming CSX and the PRPA are still engaged in goodwill discussions, which I believe is the intention, I would still strongly urge that an amended bill 020738 be passed by this Council.
Well, how long have they been engaged in these good-faith discussions?
I think the discussions have actually been taking place for a year, give or take. But the intensity of the discussion --
Councilman, point of information. I think that that question will be 76 12/10/02 - RULES - BILL 020738 best answered by Mr. McDermott from the PRPA. The recent discussions that I myself, Senator Fumo and others have been involved in about five or six weeks maybe at the outset, five weeks, six weeks. But the other discussions, I think the timing of that could be better answered by Mr. McDermott.
Okay. No problem. Mr. Cuorato, my last question was the second question, which goes back to, actually, the question that Councilman O'Neill asked which is -- and I think the Councilman's question was, is there an agreement on the matter in front of us -- let me rephrase that. Is there agreement between the City Administration and the port on the Administration's position, which is rezone the entire site and move forward? Now, I need a yes or no answer to this particular question.
Thank you very much. Are there any questions for Mr. Cuorato? (No response.)
Seeing none. Mr. 77 12/10/02 - RULES - BILL 020738 Smith, we appreciate your coming to the table. You're later on the list. We ask Senator Fumo, please. Good morning. Please identify yourself for the record. SENATOR FUMO: Good morning. Senator Vincent J. Fumo, First District of Pennsylvania.
Please proceed. SENATOR FUMO: Thank you. I've been sitting here for a little bit of time listening now, and I must say that, first of all, I'm very impressed with the perceptiveness of the Members of the Committee. You sit on your chair and you want to give the answer. And then you find one of the Councilman, particularly Mr. O'Neill, figuring out part of the game here and you become very impressed by that. Let me give you a little bit of the history here. And there are going to be other people that testify that can give you a little bit more in depth. The Philadelphia Port Authority, the PRPA, Jamie McDermott, being the Executive Director, went down to talk to CSX 14 months ago. They were basically blown off. They got some politeness and nothing happened whatsoever. 78 12/10/02 - RULES - BILL 020738 Then the story started to surface about Ikea. "Oh, bring Ikea to Philadelphia. " And quite frankly, as I've told Ikea, they themselves are a magnet for people shopping. And I recanted when -- God, it's got to be or years when they first 8 opened up in Montgomery County and I went out there 9 to buy furniture for my children. It took me 20 10 minutes to find out where they were, yet I still got 11 to the place because I wanted to buy the product. 12 And so did a lot of others get to the place. So the 13 argument about the fact that, gee, if they had this 14 particular plan that's been put up there by Mr. 15 Primavera and they'd have to be behind one of these commercial buildings would hurt their traffic is beyond ludicrous. I think what happened here -- and I wasn't at the meeting, but I do trust Councilman DiCicco -- is that you are exactly right. What the Councilpeople here have seen is that Councilman DiCicco, in an effort to do his job, to balance, as it will, with the wisdom of Solomon, the interest of the port and the interest of Ikea and retail, try to strike a balance here because leverage is very 79 12/10/02 - RULES - BILL 020738 necessary. 5 million profit. We do not yet know what the developer will make by selling -- and there was a fallacy here. I checked with CSX. Ikea is not going to buy the property from CSX. They are going to buy the property from Goldenberg, the developer. What he's going to charge them, we do not know. And I think that's relevant for discussion. Because as Councilman Ortiz pointed out, the zoning itself is a contribution of the City. 5 million. Goldenberg stands to make a substantial profit. Those are contributions and that should not be taken lightly. What happened was that the port got absolutely nowhere. And it wasn't until three or four weeks ago that I called a meeting because I was tired of being put in the middle of this, but I am a player here. I represented the port for years 23 in April. Councilman Kenney then was a young 24 administrative assistant to me. And we went down 25 and slept -- and it's true -- slept through some 80 12/10/02 - RULES - BILL 020738 meetings of the port as to what they were doing in those days and decided that this port had to be kept viable. What we have today is nothing unique. We have a sexy entity called Ikea that wants to come to Philadelphia that creates a big buzz. We have a lot of people going to make a lot of money. And the port, well, that's just something that's boring. A bunch of guys get up at four o'clock and unload some ships. You know, what's really that about? The average citizen of Philadelphia doesn't understand the value of the port to this City, doesn't understand the economics. They understand they want to shop at Ikea, but they don't have a clue as to where that stuff even comes from. And I think one of the conditions of this deal should be that their product be shipped through the port of Philadelphia, something which has not been allowed to be discussed because of the steamroller effect of the public relations of getting Ikea here. " That's nonsense. If they were going to Cherry Hill, they'd have went to Cherry Hill six months ago.
They would not have put up with this type of a battle. There's a reason why 81 12/10/02 - RULES - BILL 020738 they want to be here, and it's the customer base. We have learned in government that retail is where it is because of the customers. You pay money to bring a manufacturer in because he can go anywhere because you want the jobs. Retail goes where the people are that are going to buy the product. This is where Ikea wants to go, despite all the hoodwinking. And I don't blame them. You leverage New Jersey against Pennsylvania, Pennsylvania against New Jersey; it's common practice anymore. In fact, it's a shame that local governments have been subjected to that. We see, you know, "If we don't build a new stadium, my God, the franchise is going to leave. Hurry up. " Well, that's almost the same type of mentality going on here. Ikea is not going anywhere. They want to be in Philadelphia. In fact, the original site was the incinerator site -- that was the second one. The Councilman knows better than I do. The incinerator site was not a good location. You know, it's prime waterfront real estate. And if we ever do get riverboat gambling, that's going to be there, not an Ikea. So this steamroll effect has come 82 12/10/02 - RULES - BILL 020738 along. I am distressed by Mr. Cuorato's testimony. I understand he has a job to do. And it's nice to say that the City supports the port. That's great. But there's an interesting definition that, if you will, former Speaker O'Donnell used to tell me and it always rings true. There's a big difference between being supportive of something and being committed to something. If you have ham and eggs in the morning, the chicken is supported, but the pig's committed. And what we've got here is a nice, supportive thing. Yeah, we're for the port. We're for motherhood. We're for apple pie, the American flag, whatever else you can think of. But it was aptly pointed out, I think, by Mr. Nutter or Mr. O'Neill, the City has leverage here. What is Mr. Cuorato doing testifying here when he hasn't used his leverage to protect the port? Now, as far as the meetings, he came to my first meeting and so did, by the way, the president of the Pennsport Civic Association, who I understand may or may not be represented by Mr. Primavera. But in any event, he brought along an interesting person, Pat Gillespie, who's been a 83 12/10/02 - RULES - BILL 020738 friend of mine for years. During the meeting, as we went back and forth, and the people from CSX discussed quite candidly with the port the history of what was going on, Pat Gillespie said something very poignant. He looked at the people on the left side of the table, which was basically Ikea, CSX and the developer, and said, you know, I came here today to help you, but you've been messing with these guys for months. When are you going to move your 11 rear-end and worry about them? He was as outraged 12 as I was. And that's when I found out it was a 13 14-month-long process. 14 But by that time, the people in charge of this development had felt they had won the PR war. They had felt that -- they were even pounding their chest, that they went into City Council and started to break a tradition of the District Councilman being in charge of his district by having poor Thacher Longstreth introduce an ordinance 21 conflicting with the local Councilman. First time I remember that. But they were cocky. They went so far as to tell Mr. McDermott that they even had his board tied up, and he didn't mean anything. It was when I called Brian Preskey (ph) and said, what's 84 12/10/02 - RULES - BILL 020738 going on here. And he did not know. And he supports his executive director. That's the kind of arrogance we're talking about here, when you've got one side of the story only getting out. And that's the kind of arrogance that happens when you've got this much money involved in this process. Now, let me tell you, by the way, when we had the second meeting, Mr.
Cuorato did not show up, nor did he send a representative. And when we had the third meeting, which was the conference call just the other day, he was not on the conference call, nor was his representative. That's no 14 offense at him. I know he takes orders. Let's take a look where this thing boils down to. Only because I stepped in and let everybody know that, even if they were going end run the District Councilman and try to amend the Bill on the floor, that there are interested people who were going to sue for spot zoning. And I remember turning to Mr. Goldenberg, if Ikea wants to try to open up under those circumstances, tell him to go to Cherry Hill because the case will be in litigation for 20 years. I told CSX and Norfolk Southern and Conrail, if you want to see a shell game, deal with 85 12/10/02 - RULES - BILL 020738 those three entities. I told them we had more money litigate this than they had in taxpayer money. It was first time they listened. They thought they had City Council tied up. They thought they had everything tied up. That was the wild card, and I still have it to use, if I have to. Let's see where we are today. After these meetings -- and I might add, this is the first time that we got anybody off their rear-ends. No offense. I think one of the problems is Mr. Primavera represents CSX, the developer, and Ikea. He wants to get a deal. He goes back and forth and he has a conflict. He's got to try and get CSX spend the least amount of money that he can. He's got to get Ikea open. He's got developer Mondayer. They may not be a legal conflict, but. It sure is a conflict when it comes to protecting the port of Philadelphia. We've got visual aides too. I've asked Representative Keller to join with me because he has additional information about the port, with a little more patriotic nature, I guess. You see in front of you an aerial photograph of the general area in which we're 86 12/10/02 - RULES - BILL 020738 talking about, all of which happens to be in the First Councilmatic District, which Mr. Longstreth seems to ignore and forget about. What you have on the left labeled as No. 5 is the CSX yard. As we've been told, that yard is about 44 acres. What you have on the right is Pier 124, Pier 122, a parcel called the Loop, which is the green shaded area, the Whiskey Yard, which is in purple, and the Savage Yard, which is labeled No. 4. The port has said, in return for its signing off on this deal -- and I believe that both Councilman O'Neill and Councilman Nutter asked Mr. Cuorato if they were in agreement or not because of this. The port has said -- and I say as well -- that if CSX gets conveyed to the port, those parcels of land, then they are willing to bless this deal on the whole parcel at CSX. Now, that's what they asked for 14 months ago, went back and forth, and it wasn't until I finally threatened a lawsuit that some of these people realized we were serious. We then met and, again, at the suggestion of Mr. Gillespie, we were going to have a meeting every week. So we met the following week. All of a sudden, after 14 months, when the debate 87 12/10/02 - RULES - BILL 020738 got serious we hear, "Well, gee, if we give you 124, we got to go to something called the Surface Transportation Agency in Washington, and we need environmental studies, and we need appraisers, and our appraiser is busy. " I think where we are today, the best place we are today is that CSX and Conrail -- and I don't know what Norfolk Southern has to do with this, but they were there -- can get an appraisal done by mid-January. Okay. We sat down in my office. We asked Mr. Goldenberg what he thought, as a developer, these various parcels were worth. 5 million. Now, as was testified to, some of this land is owned by CSX; some of it is owned by Conrail. Ironically, on the win/win here, when the port completes what it wants to do with this land, Conrail gets increased tonnage. They're going to ship more stuff by rail.
But they weren't concerned about that because, I don't know, their theory was they weren't making money. I don't know how they make money, but God only knows. Some accountant does. But anyway, they get increased tonnage. We 88 12/10/02 - RULES - BILL 020738 get increased jobs. The port's plan is to take from the tip of 124 over to what I continue to call the Lavino Shipping Yard, but it's the Packer Terminal, and fill that in. That then gives them a thousand-foot frontage along the river, which Representative Keller tells us, now that we're a strategic port, we need. In addition, the reason why the battle is over how much real estate is when the port goes out to answer an RFP for car storage, which is what that big parcel of land right next to the CSX lot right now is used for, that's the Poshelot (ph), they have to have a hundred acres roughly in order to respond to the RFP. Their land plus the CSX yard gives them that acreage. They've said, "What we need to do is combine other parcels. " And their magic number is reached by conveying the properties. Now, recognizing that everybody wants to get this thing done, and so do I, what we finally came down to -- because it's a myriad of bureaucracy. It's unbelievable, when you try to deal. Here is the bottom line to get this deal done 89 12/10/02 - RULES - BILL 020738 today. We don't need appraisers. We don't even need environmental studies. The port is willing to take the land, as is, on the environment. They'll worry about that part. They've already said that a number of times. What I have proposed -- you may not know this. But when CSX merged with Conrail, part of the deal was that they were to put up $15 million for economic development. It was kind of a give-back to the community because they were making money on the merger. They gave back $10 million to help build Kvaerner, which was that great other entity in my district which made the "Fleecing of America," and I was on with Tom Brokaw. But anyway, they did come up with that $10 million. The other five million is something called the B Fund. It's to be used for economic development, but it has to be rail related. There is nothing better than this that meets that definition. This is economic development and it is rail related. What I proposed yesterday -- and I haven't heard. Maybe they're going to accept today. But I'm sure if they were, someone would have told me. What I proposed yesterday was that Conrail meet their moral obligation of spending that $5 million, which by the 90 12/10/02 - RULES - BILL 020738 way, was never earmarked and placed into a separate fund. It's just something they keep on their books so, you know, the internal bureaucrats don't want to part with that 5 million. It'll take them 100 years to come up with the next great economic development project that meets rail requirements. 5 million profit or enhancement or whatever you want to call it that you're going to get on the sale of the CSX yard. 5 million to the PRPA with the following conditions: That the PRPA use that money to buy this land. And whatever's left over, CSX gets back. Because what we're finding out from the appraisers of the PRPA, for example, the Whiskey Yard, they pegged at a $135,000 an acre. The appraiser for the PRPA says it's $48,000 an acre. So this deal could be worth even a lot less than the $5 million moral commitment. So I said yesterday, sign off on that. " I don't care who owns it. Go buy it. They'll condemn it if they have to, if they have the funds to pay for it. 5 million. And if it's million, you get back a million and a 6 half. You know, there's an old saying, "Bulls and bears will make money. " In this case, everybody wants to be a pig except the PRPA. And the overriding interest here should be the citizens of Philadelphia and the Philadelphia economy, which includes the port. Now, that deal can be signed in 30 seconds. It's not contingent on appraisals. 5 million. 5 million will be found by me.
But it's not going to be that much. " All right. " "Well, wait a minute. It's not worth 92 12/10/02 - RULES - BILL 020738 that much. It's worth $50,000 an acre," back and forth. But that's the way to resolve this. That letter comes from Mr. Primavera to the port's counsel, Peter Tucci, this afternoon. Signed, sealed, delivered. Deal done. Everything over. And God bless them. 5. And let the developers make what they're going to make. And let Ikea make what it's going to make. But protect the port, the non-sexy item. That's the crux of the deal. I found a way to do it quickly, because anything else, if we're going to wait for agreements of sales and everything else, we need appraisals. End of story. Give them that B Fund, which I don't think Conrail ever wants to part with, but they should be made to part with. And they should be made by you. They should be made by the Administration to part with that money. And they also add in the extra money. And guess what? We're buying it back from them. It isn't going anywhere else. It's a big circle, but it short circuits the bullshit, if you pardon my words. The BS, whatever. 93 12/10/02 - RULES - BILL 020738 And I've been good so far. You know that. Don't laugh at me, Ortiz. It short circuits that whole operation, and it gets the deal done in time. And everybody can walk away from this happy, without all this aggravation. But that's what it means to be committed versus what it means to be supportive. That's the crux of the issue. We wind up with jobs in commercial and much better paying jobs at the port. We take care of the port, which has been our good friend for so many years, and we wind up adding jobs and Conrail gets more tonnage. And CSX and Conrail gets back the money they're giving us. I mean, it's a shell game. And it's really starting to tick me off because it's so simple to solve. But no. Nobody wants to devote the time. Nobody wants to have the courage to stand up to the PR. And I thank the Councilman for doing that. I think it's very important. And I think it's very important for District Councilmen to be able to serve their districts. I'm appalled at what Councilman Longstreth did. But that's the way to solve it. And I'm now ready for any questions. 94 12/10/02 - RULES - BILL 020738 Do you agree, Billy? REPRESENTATIVE KELLER: Yes.
Let the record show that State Representative Keller is at the table with Senator Fumo and is also available to answer any questions. Are there any questions for either of the gentlemen at the table? Representative, do you have testimony to offer? SENATOR FUMO: He's going to come back on the strategic port issue and some of the others.
That's fine. Any questions for the Senator? (No response.) SENATOR FUMO: Well, that's either very good or very bad. We'll wait and see.
I just have a question. Senator, you mentioned Pat Gillespie being at the meetings and being very supportive of what you were trying to accomplish -- what the port was trying to accomplish, what you were trying to help them accomplish. 95 12/10/02 - RULES - BILL 020738 SENATOR FUMO: Well, reluctantly. He didn't go there with that. His eyes were as opened as mine were at that meeting.
Do they have a position on this at this point? SENATOR FUMO: The port -- CSX?
No. Pat Gillespie. SENATOR FUMO: Oh, no, I haven't heard from them. The latest I've heard from CSX is, "We will use some of the $5 million, but only as credits against our own property." Now, nowhere in that agreement did it say that it had to be used as credits against their own property, because, obviously, Kvaerner was not a credit against their own property. Now they're trying to rewrite history. The issue is, here they want to be -- and I hate to say it -- but they want to be pigs. They want to hold onto the 5 million they promised to citizens of the Commonwealth to spend here, and they want to take every nickel they can out of the profits of CSX because they think they're in the front of the bandwagon. And I think it's time for everybody to stand up to them and everybody else to 96 12/10/02 - RULES - BILL 020738 say, "We all want to do what's right. We want to do everything that's right, and the port should not be forgotten."
I appreciate your conservatism on the evaluation upgrade of the land between the buyer and the re-seller -- SENATOR FUMO: Yeah. I wasn't allowed to call it profit either.
-- between the CSX and the other -- whoever moves the property. I believe the $13 million is -- not a fraction, but a much smaller part of that based on things that have been told to me by pretty reliable sources. And I think this can be done tonight -- I mean, you know, if we come back here tomorrow. We're not talking about somebody saying, "You're going to get $60 million; we want $50 of it." SENATOR FUMO: Right. And we're not talking about anything that requires appraisals, any kind of study or anything else. It's CSX stepping up -- I don't even require Conrail. Because if Conrail says, "Well, I want more than that per acre," good. The condemnation proceeding will take care of the value of that land. But it will be paid 97 12/10/02 - RULES - BILL 020738 for with CSX's profit, part of their profit, a little bit of their profit.
I think that's the way to go. SENATOR FUMO: Thank you.
Thank you. Two questions. One, Mr. Chairman, a question of you, whether you know or not. Do we know whether there are any CSX representatives with us today?
Yes, there is. They are not scheduled to testify, but the opportunity is there.
I'll be intrigued to ask them a couple questions. One question for Senator Fumo. From your perspective -- and thank you for the presentation. What is the status as you've laid things out, who could do what, how it could get done, discussions, meetings, some public, some private, however it all shakes out, from your 98 12/10/02 - RULES - BILL 020738 perspective, I mean, what is the status of all of it? SENATOR FUMO: The status is I'm waiting to hear back from CSX and, I guess, Mr. Primavera regarding the proposal that I've made. What I tried to do in framing the proposal was to limit it to as few players as possible so I don't have to get a run-around with this guy and that guy and to make it with a minimal pain to CSX. And I don't think that -- first of all, I think they're obligated to spend the B Fund and they ought to stop playing around with it. And secondly, I think $2.5 million out of a conservative profit of $13 million is not a lot of money for them to put up. I also told them that if they didn't do this deal, I would urge Councilman DiCicco not to let this bill be amended and keep it the way it is. And come February, we'll find enough money for the port to go condemn the whole site for 6.5 million, as far as CSX is concerned. And then maybe they'll do a deal with Ikea, and they can make the profit, which is not a bad idea either. I don't know why we're allowing CSX to make this kind of a profit. But if they're going to make that kind of profit, 99 12/10/02 - RULES - BILL 020738 they ought to be good corporative citizens and protect the port.
Thank you, Senator. Mr. Chairman, you may recall from the earlier testimony -- and if you could possibly get us some score cards because I'm having a little trouble keeping track of some of the players. Do I understand from the earlier testimony that Mr. Primavera represents CSX and the developer and Ikea? Is that the situation?
That's my understanding. SENATOR FUMO: And morally, Pennsport.
Well, I'm just trying to understand who represents who. SENATOR FUMO: Thank you.
Okay. Thank you. The Chair now asks State Representative Keller along with Mr. Candelaria, who's the president of Local 1291 of the ILA, to give joint testimony. 100 12/10/02 - RULES - BILL 020738 Good afternoon, gentlemen? Please identify yourselves for the record. REPRESENTATIVE KELLER: I'm Bill 5 Keller, State Representative of the 184th District.
Good afternoon. I'm Sal Candelaria, President of International Longshoremen's Association, Local 1291.
Thank you. Please proceed. REPRESENTATIVE KELLER: Thank you, Mr. Chairman. It's good talking to you today. Madam President, fellow Councilmembers, I'm here today because I think I've been getting as many faxes and e-mails as all of you have. And just -- I know we had some great testimony here, but just to set it straight, I don't believe anybody, myself included, nor the ILA, probably any elected officials are against Ikea. I think we all understand that Ikea should come to Philadelphia, and we welcome them into South Philadelphia. Just to highlight that, I went to the Whitman Council meeting when Mr. Smith made a presentation. And not that I don't trust them, but after he gave the testimony, I did a James Carvell 101 12/10/02 - RULES - BILL 020738 and drove out to Ikea, just to talk to some of the employees out there. " She also said she has 13 a 401K that the company contributes to. And she was 14 trying to get ahead and she took three college courses, and when she completed them, they gave her a tuition reimbursement. I believe that's the kind of corporate citizens we want in Philadelphia and we want in South Philadelphia. So those 400 jobs will be very important to us. It was never about Ikea or trying to keep Ikea out of our neighborhoods. What it was about, it was about the port. And myself and Sal, you know, we're longshoremen, so we think the port is very important. The jobs -- you know, I worked 102 12/10/02 - RULES - BILL 020738 down the waterfront for years. Sal and I are the only guys who took jobs that paid less than the current workers are getting down the waterfront. They're good jobs. They're the jobs that we should have in the neighborhoods. This is one way for port expansion. As the Senator said, we were lucky enough to be designated a strategic port. A strategic port in this day and age is very important. What that is, is if the military goes to deployment, they'll come through the Port of the Philadelphia. There are only ports in the United 14 States designated as strategic ports. And with the great work of the Philadelphia Regional Port Authority and Jamie McDermott and their board, we worked for three years and we got that designation. That is very important to Philadelphia. That is one step in how we're going to get the port back to the position it should be. And why it's important, it's not just for the deployment of the troops that come through, but in Susquehanna, right outside Harrisburg, the military has -- the Defense Logistics Agency has a depot out there. The largest shipper in the world 103 12/10/02 - RULES - BILL 020738 is the Department of Defense. Half of everything they ship comes from Susquehanna. All right. Eighty-five percent of that goes through ports. Zero percent of that goes through the Port of Philadelphia. Now that we've been designated as a strategic port, our plan is to go get that cargo. And that's sustainable cargo. That's every day we will be getting that. And that's why it's very important that we do this. Along with the strategic port, there is a Port Readiness Committee which had its first meeting yesterday. And what they have to guarantee -- and even if the Port Authority or the stevedore says, you know, "We're busy today. " They come down and they'll federalize the port. They'll take the port over. So, you know, I mean, it's real stuff. At that Port Readiness Committee, they said, "What we'll need if we deploy is 2,000 feet of bulkhead space and 35 acres of lay-down space for the tanks and the military equipment. As you can see, that addition of that additional property will be very important to us as a strategic port. And that's why it's important that the port is 104 12/10/02 - RULES - BILL 020738 considered and we get that property. As far as an economic engine, as the Senator said, it's not very sexy, the port.
And people go down to look at the port and help the port and they always come back with an eye missing or an arm missing. So not too many people want to go down and help us. But it is a real good economic engine. It provides real jobs. Sal will tell you that -- what are we getting paid now, $25 an hour?
$27 on master contracts, but $21.70 -- REPRESENTATIVE KELLER: $27 an hour is what you get paid, plus benefits. So they're real jobs. And I sit every day and I watch in the papers where it is important to the City that the Convention Center is always on the front page, about how important it is and it's an economic engine for the City. And I believe that the port is more of an important economic engine. If we have to get some publicity because they're always fighting over at the Convention Center, me and Sal will fight here today if that help will us get the port some notice. But that's what's really important to us. And it's one of the few times, it's one 105 12/10/02 - RULES - BILL 020738 of the rare few times -- and you hear the cliche all the time, it'll be a win/win/win situation. When we get this done -- and I do believe we will get this done because it has to get done, you know, the neighborhoods are winning, our districts are winning, because they are 400 to 500 hundred good jobs. And that's good. And the City will win because we'll be collecting tax revenues, hopefully, from people from New Jersey for a change. And that's good for the City. The port will definitely win because that's what we need. We need to get on the map. We need people to consider how important the port is. And for the strategic port, that will really help us. Of course, the railroads will win also. Because, as we've said, they'll make a nice profit, which I'm not against profit. So this is the one time where it is truly a win/win/win situation. If we stay together and stay on the track we're on now, I do believe that the negotiation, although they've been going on -- we've been talking for 14 months, but I believe the negotiations really have only been a couple weeks old. And I think we'll get where we have to be. 106 12/10/02 - RULES - BILL 020738 However, just to let you know, and I'm sure everybody will appreciate this, there will be one loser in this. I bet Henry Bryant from the Inquirer that we would get this done. I bet him a quarter. So everybody will happy that the Philadelphia Inquirer Editorial Board will lose on this. And I want that quarter. I don't care if it's illegal.
Thank you very much for your testimony. And may I publicly state that I also thank you for all the work you've done over your career, both with this issue and the port. And also the dredging stuff that you've been involved in, in making this port a federal facility, and just kind of turning around this port around and bringing it back, with your cooperation, with labor and your understanding and knowledge of the port from your experience down there, so I think it's -- you've served that part of the City and the whole City well, the people who work there, and hopefully we'll have a great future. REPRESENTATIVE KELLER: Thank you, Mr. Chairman. And just as an added note, this may be a stretch, but I believe this could go -- if we get 107 12/10/02 - RULES - BILL 020738 this property, 122 and 124, this could go a long way in solving our dredging problem, because the dredge material we need to fill it in, instead of paying $90 a cubic yard or whatever, some outrageous price they cost, we could just pump it right in there. That's how Packer Avenue was made. That's all from dredge material from the river. So we could just extend that and that would be an added benefit.
I'm just rather curious, exactly where are Piers 122 and 124 located? REPRESENTATIVE KELLER: It is as far down south as you can get on Delaware Avenue. The point that you see sticking out above Pier 124 is the Navy Yard.
Is what, the Navy Yard? REPRESENTATIVE KELLER: The Navy Yard. That's the naval homes -- see those homes on the right hand side? That's the homes that are down the Navy Yard. So it's at the southern tip of Delaware Avenue. 108 12/10/02 - RULES - BILL 020738 Madam President, that's your district, isn't it?
I just was actually -- two things. One, thank you, Representative Keller, for coming here today. And my earlier remark, when I said recently you got involved, was only referencing the three meetings that have taken place between PRPA, Senator Fumo and myself, CSX and the developer. The first two meetings you were out of town or not available, but you were available for the conference call meeting yesterday, and I want to thank you for that and thank you for your testimony. And again, just to set the record straight, Senator Fumo, I think, misunderstood the boundaries, because as a Senator he represents everything you see on that map. The district that I represent basically ends at the southern end of the CSX yard. The green, the yellow, the purple and the reddish savage yard are all in Council President Verna's district. But they're not an issue as to zoning. That's why it's not been as involved as it 109 12/10/02 - RULES - BILL 020738 is today. REPRESENTATIVE KELLER: Not yet.
All right. Again, good afternoon, everyone. First off, I'd like to start out by saying, not only do I support Ikea done the proper way, I'm a customer of Ikea. Every piece of furniture -- I eat on an Ikea table, my coffee table. And only due to the fact that -- Frank, you're also my neighbor, not only my Councilman -- I can't get any pre-built furniture in my house, so I have to bring it up in the boxes and assemble it. And listen, I could save the trip to Plymouth Meeting if it's here. But with all that said, I don't want Ikea here if it's going to cause us -- let me rephrase that. I believe that it's a win/win situation, like State Rep. Keller said. I commend you and I thank you for this process. Because I believe that this may be the mechanism that we need to achieve our ultimate objectives, and that's to serve the port in the best way possible. I work in tandem with State Rep. Keller 110 12/10/02 - RULES - BILL 020738 and anyone else who wants to assist the ILA in turning this port around. So as a novice at these type of hearings, I came in a little cold. But I'm going to spend some more time around, so I can learn a little better. And I heard some different things -- testimonies this morning, and I like the idea of -- I want both without a doubt. I'd rather have that land there. That's more conducive to my memberships' needs and the thousands of retirees that I still have in the City of Philadelphia in all of your districts. They didn't go anywhere. They're still around. Those old longshoremen live a long age. But I am supportive -- I am in agreement with having something a little more concrete to assure us that we'll get the land, as Representative Keller said, that's needed for us to obtain what we have to do. I would like to see that deal done this afternoon, if possible, that I was not aware of. But I am supportive of Ikea. And I want that other land because that's more beneficial to my membership. And I had an executive board meeting yesterday via phone. And our position is that, if 111 12/10/02 - RULES - BILL 020738 we could work out the particulars, we would like to see Ikea come, but the right way. And I credit you with -- for the possibilities of finalizing this deal, because I'm sure that this brought the attention to a lot of people. And if they don't want to give us that land for the port, I'll put it on record, I will oppose Ikea. And that's the only way I would oppose it. And I do represent, for the record, Whitman, Pennsport, along with my dear friends who do that. Because that's where my membership lives and that's where I grew up. And I'll always be supportive of that port community. I thank you for your time.
Thank you very much. Any questions for these witnesses? Councilman Nutter.
None for these witnesses, Mr. Chairman. I have one for Mr. Cuorato, but I'll wait.
Thank you for coming in and thank you for your testimony.
Next on the list is 112 12/10/02 - RULES - BILL 020738 James T. McDermott, Philadelphia Regional Port Authority.
Thank you, Mr. Chairman, Madam President, Councilmembers. I greatly appreciate this opportunity to address the Council on this. There has been so many misstatements --
Jim, I'm sorry. You have to formally identify yourself for the record.
I'm sorry. My name is James Thomas McDermott, Junior. I'm the Executive Director of the Philadelphia Regional Port Authority. I am going to ask that my recorded statement be put into the record. But because of all that has been said, a lot of what I was going to say in my recorded testimony has been said. I just want to take a minute and give everybody -- because you've heard the name PRPA thrown around all morning, and I just want to make sure that everybody here understands exactly what it is that we're talking about. In 1989, the State of Pennsylvania, at Senator Fumo's urging, stepped in and purchased the holdings of what we all knew to be the Philadelphia 113 12/10/02 - RULES - BILL 020738 Port Corporation. The Philadelphia Port Corporation, a lot of those finger piers that I'm going to identify for you on that map had shut down. The infrastructure had been let go. The dollars weren't there to continually support the upkeep of the marine terminals. The Commonwealth purchased for $57 million those facilities that primarily are there. The only two facilities that are not in that photo that the Philadelphia Regional Port Authority owns are Piers 38 and 40, which are just a little north of Washington Avenue, and a 107-acre facility up off of Allegheny Avenue, which is the Tioga Marine Terminal. That's where all the fruit comes all winter that we all enjoy so much. But in 1989 in the agreement of sale, the Commonwealth was given, vis-a-vis the Philadelphia Regional Port Authority, specific powers, because these kinds of issues were contemplated even back then. And so we have -- at least our Council tells us we have -- and I have copies. Which I'll submit with my testimony, of the statutes, the relevant statutes, which tells us that we have zoning supersession rights in what we will 114 12/10/02 - RULES - BILL 020738 call the Port District. And certainly Councilman DiCicco, what we're talking about here today is in the Port District. That's east of I-95 and along the Delaware River there. We also were told by our Council, Reed Smith, that we also could step in and take this land in a condemnation proceeding. Both of those concepts are costly, time consuming and expensive. And we're not about any of that. And, in fact, this is our proposal, no 11 one else's but the Philadelphia Regional Port Authority's proposal. We submitted this to the City of Philadelphia. We said to them, we want Ikea here. We want the other stores here. We want that area to be so designated. However, in exchange for us giving up our rights of using that land some day in the future, for the lay down of vehicles or the lay down of military equipment that will go off of Packer Avenue, we needed some consideration from CSX. The facilities that we're talking about right there starting in the yellow, Pier 124 has been abandoned by CSX for over 20 years. That facility has not handled a ship nor moved cargo in over 20 years. We have done preliminary --
Is that the pier 115 12/10/02 - RULES - BILL 020738 that the State invested a substantial sum of money in?
Okay. Thank you. I didn't mean to interrupt you. Sorry.
8 million. 8 million. That facility has not been dredged in years. There's probably four or 19 five feet of water there at low tide. It's 20 virtually a useless pier that has sat abandoned. The next piece of property that I want to speak to is 122. And Councilman, that's what you're referring to. Delaware River Stevedores, President Bob Polima (ph), which leases our Tioga Marine Terminal, has a, I believe, a month-to-month 116 12/10/02 - RULES - BILL 020738 lease on that facility. And that facility had also been closed for many years. The Delaware River Port Authority gave money, over a million dollars, I believe the figure is, a million and a half dollars, to dredge that facility, as well as to repair some of the infrastructure on that facility so that that pier put could be back to work. I'm very proud to say that we're marketing that facility and that facility is back to work and, thanks to public dollars DRS, is working ships there. The next piece of property also in green is what we call the Loop Track. And we need ownership of that land to lay down the bulk product that 122 discharges and needs acreage to lay down. That's approximately, I believe, acres of land 17 there. Once again, there is some leases on that 18 area. You can see those white circles there. There 19 are tanks there. Apparently, Agway was there for many years working and now there's another tenant of the railroads there. We are not about interrupting Delaware River Stevedores' lease. We're not about interrupting the leases of working businesses in the Loop Track. We will assume those businesses, welcome them and, hopefully, they'll become port 117 12/10/02 - RULES - BILL 020738 users. The next piece of property has been abandoned for approximately years. That's the 5 site in purple. It's known as the -- we call it the 6 Whiskey Yard because at one time it was the rail 7 access in and out of the old Pub Liquor site, which 8 is to the left of the Walt Whitman Bridge. 8 acres. 10 As Representative Keller testified, now 11 that we are deemed a strategic military port, that 12 land is perfect lay-down space for either containers 13 that are existing on Packer Avenue now and will need 14 a new place when the military uses Packer Avenue, or 15 to lay the military equipment down or, finally, to 16 extend our Poshelot (ph), which is on the south side 17 of Delaware and Oregon Avenue, and somehow attach 18 that property to that, and get that magic hundred 19 acres that we've all been talking about. 20 The acreage in the red is -- we call the Savage Industry's acreage. It is unused land owned by the railroad that's been leased to an entity called Savage Industries. The railroad has stepped up to the plate and is trying to have some conversations with Savage to see if, in fact, they 118 12/10/02 - RULES - BILL 020738 would sublease that land to us. That's acres of land. We would extend the Poshelot (ph) going west along the north side of the Walt Whitman Bridge and, once again, add another very valuable acres of 6 land. 7 Let me just step back a minute and show 8 you what we do own down there. I think that's 9 important, that we're not a fly-by-nighter here. I 10 mean, this is real land, 5,000 jobs, $340 million in 11 business revenue and over $25 million paid in state 12 and local taxes on the acreage and lands and businesses that work off these facilities. We're what's called in the port business, a landlord port. That means that the 82 employees of the Philadelphia Regional Port Authority don't operate our facilities. We lease them out to different terminal operators. And if I could, just for a minute -- because I think it's important that you understand the proximity of this Snyder Avenue yard to the port. In the picture that was previously up with the big red box, I just want to point out, that's a ship across Delaware Avenue. And there are four ships. You can see the bow of the ship, 119 12/10/02 - RULES - BILL 020738 the SS United States.
That is a vessel. That is a ship. And on the left-hand side of that, every week is another ship. On both sides of the next pier, to the right of the SS United States, are two ships a week. That warehouse right there, the large one, Bob, the new paper warehouse, point that out. That's a PRPA facility that moves -- rail cars go into that facility and take huge roles of paper out of there. That's an active paper plant across the street right to the right of the Snyder Avenue yard. I just wanted to point out what we're talking about here in terms of proximity to trucks and rail. Once again, the jewel of our facilities, as Representative Keller said, the Packer Avenue Marine Terminal, 107 acres leased to cargo systems. It's a multi-purpose facility. It handles containers. It's got freezer capacity, refrigeration capacity, and it's capable of working six ships at a time. This summer on a weekly basis there were five vessels being discharged there weekly. Moving north, going underneath the Walt Whitman Bridge, that's the old Pub Liquor site there. That site is approximately 75 acres -- 120 12/10/02 - RULES - BILL 020738 By the way, Packer Avenue is at capacity. There is no room at Packer Avenue for a new customer right now. And we've just signed a contract with the military to guarantee them 35 acres and 2,000 feet of berth space. Pub Liquor site: Steel, slab steel, mattress-sized pieces of steel are discharged at Packer Avenue by longshoremen, and Teamsters truck those slabs over to that site. And that site, if you went down there today, is piled eight high. It's got rail access into the facility and is owned by our terminal operator at Packer Avenue, the Holt family. We ultimately intend to expand Packer Avenue that way, as well as Representative Keller said, to the south to cover in 122 and 124. Moving north, we own Pier 98, which was built by the Army Corp of Engineers pre- 1918, served both world war efforts and currently cannot handle a ship because of the decrepit nature of its aprons. However, the buildings are used as a maintenance and repair shop that support the Packer Avenue Marine Terminal. Once again, moving north, Pier 96. That's the automobile terminal. A ship goes on the 121 12/10/02 - RULES - BILL 020738 south side of that facility and discharges automobiles into the Poshelot (ph), which we own, which is the 57 acres that currently discharges overflow vessels from Wilmington, primarily a lot of Volkswagens. If you go down there, you'll see Volkswagens and Fords. The reason that this yard became initially cantankerous with us, the CSX yard, is Volkswagen is going to leave Wilmington. They've made that announcement. We intend to bid on that work. We need a hundred acres minimum to be able to attract Volkswagen to Philadelphia. And that's why we thought that Snyder Avenue yard was so very important initially. The next pier is Pier 92. It's the old Southwark PECO Power Station.
Jim, can I interrupt you just for a moment? As I understand your testimony, prior to the promotion of this particular resolution to the problem, there was a possibility for the use of the CSX yard for the overflow capacity of the Poshelot (ph) facility?
Respectfully, Councilman, we intended to add that land as if it 122 12/10/02 - RULES - BILL 020738 was ours.
So prior testimony, that that particular land is useless to port interests is not accurate --
That's correct. And I would particularly emphasize now, as a strategic military port with our first orders for January 4th, we need land.
So let me keep moving here. I apologize if I'm taking too long. The next pier is Pier 84. When the City owned it, it was abandoned. We put it back to work. It's a Teamster operation. It's leased to dependable distribution. It moves cocoa beans. Approximately vessels a year can comes through 20 that facility. And all the candy bars that M & M 21 and Mars make come through that facility. The 22 cocoa beans are trucked and railed up to upstate 23 Pennsylvania. 24 Pier 82. A weekly banana service, an entity called Banacol (ph), we lease that facility, 123 12/10/02 - RULES - BILL 020738 which you can see now we're directly across the street from where we're talking about. We lease that to Horizon Stevedore, Inc. There's 52 vessels a year at that facility. Every Monday and Tuesday the vessels are discharged in the refrigerated warehouse base and then trucked or railed out of that facility to the supermarkets. Pier 78 and 80, I'll combine them. And the new paper warehouse there -- that's what we call it, the new paper warehouse. That's our forests products center. That handles two vessels a week, 52 weeks a year. And it's huge roles of paper that get trucked and railed out of that facility. As I indicated, we own Pier 38 and 40, which is essentially across from old Swede's Church. They take scrap paper every week out of Philadelphia and take it back over to Finland to make the finished paper products. These are 5,000 real jobs; longshoremen, Teamsters, machinists, boilermakers every day going to work with guaranteed 40-hour-a-week pay, a lot of overtime in our winter months. So these are jobs. These are real. We can touch them. You saw their president here today. I say all that to you to tell you that 124 12/10/02 - RULES - BILL 020738 we're not opposed to Ikea, not in the least. But I heard someone say on a Sunday talk show on the TV the other day that this can be the new King of Prussia. King of Prussia doesn't have thousand-foot vessels across the street from it. It doesn't have the railroad going right by that very site on the Philadelphia belt line. So that's the situation that we're facing. And I want to thank Councilman DiCicco and state emphatically that we need this to be the two-step process that you suggest. Because we've had a lot of happy talk, a lot of positive meetings. But I went down there 14 months ago and told them when this went up for sale that we were going to be here. This day was going to come unless they dealt with us and dealt with us reasonably. We left them the law. We notified everybody we had to notify. And all we were told was, we didn't think you guys -- we didn't understand whether you were the DRPA or the PRPA or what it is that you guys do. I think that we have put forward a very reasonable solution. You heard Senator Fumo on the costs. We have retained and are moving forward with Keystone 125 12/10/02 - RULES - BILL 020738 Appraisals. Harvey Levin is the principal there. I understand he does a lot of City work. 5 million. He says Pier 122 and Pier 124 have a negative value. And we are busily working on the Savage Yard site, as well as the other lands, to try to come up with a fair market value. Understand that for us, fair market value isn't giving the Port Authority anything for giving up its rights. We have, according to Reed Smith and according to our statute, the right to take this land today at fair market value. I'm not going to say you can do that overnight. I'm not going to say that's free or that's not a lot of cost involved and we haven't been fighting. And I'll close by saying this: I was the executive director nine years ago when we traded 55 acres that Councilman Kenney talked about earlier today. 5. There was a second component to that. We were told, What are you worried about? We're going to get the Navy Yard. " There is 126 12/10/02 - RULES - BILL 020738 water-borne capabilities at the Navy Yard. The Navy wisely kept it all.
Every job opportunity and business opportunity that we think makes sense and we send over to PIDC is flatly rejected. So there is no 7 more land, as we were promised eight years ago. We were promised this would never happen again. We took that as gentlemen and now it's happening again. And we're not objecting because it is in the best interest of the City. It is the highest and best use of that land. We want that there. But we need the accommodations and the help of this Council. This isn't winks and nods and hope that this is going to happen. Not like last time. This time we need your help. And Councilman DiCicco has helped us by the bill he has put forward. What leverage would I have? I wouldn't be sitting here today probably boring some of you if Councilman Longstreth's 44 acres are going in. Ball game over. I've got to move and try to condemn that land. And we've had that land appraised. 75 million in its current zoning. I'll stand with 127 12/10/02 - RULES - BILL 020738 Keystone and the way they determined that. So we ask you for your help today. I acknowledge Senator Fumo and I acknowledge Representative Keller and all the help that they are to this port each and every day. And Councilman DiCicco, I thank you very much for this opportunity today.
Thank you, Jim. I appreciate your testimony. And I think one of the important parts or one of the overall macro issues in your testimony is the explanation to the press and to Members of Council and to the public at large that the port exists and it's important. And, again, we'll reiterate the other theme, that's it's not necessarily sexy. But it is well-paying jobs that really make this region an important hub for economic development and commerce. I don't think some -- a lot of times that's not understood or appreciated. And, again, I think what you're saying to us is, we don't mind the encouraging of retail and commercial. We think things like this are inevitable and good for the City, but just keep us whole and allow us to compete.
That's correct. And I'll also point out why these lands -- even though 128 12/10/02 - RULES - BILL 020738 there may be environmental concerns, the land south of the Walt Whitman Bridge are important to us primarily because these vessels are getting larger and larger. And in our lifetimes, the Walt Whitman Bridge will be an impediment to the container ships and to a lot of the different types of vessels that we see. Already, the Ben Franklin standing at 135 feet is a -- container ships can no longer go to Tioga.
Yes. A couple questions for Mr. McDermott. Two questions I have. One, when Keystone did the appraisal that you just referred to at the end of your testimony, did Keystone do any appraisal on the 129 12/10/02 - RULES - BILL 020738 valuation for highest and best use?
I don't believe so. If I could just affirm. I don't believe so.
It was determined that that was highest and best use. Industrial.
And you've been in all the meetings that have been referred to that some people have been in and other people haven't been in for 14 months. Do you think that if it becomes clear to all the parties, as I think it will be if it isn't already, that this bill is not going to come out of City Council without the port being at the table signing off on it that this could be done in 24, if not a few more than hours? 20
That's correct. I 21 believe the deal that Senator Fumo put on the table 22 and put on the table a couple of different times in 23 meetings is a deal I can sell to my board. Let me 24 explain --
That's the deal -- 130 12/10/02 - RULES - BILL 020738 I want to make clarities. I've talked to you and others on this in the past several weeks. The deal isn't the Fumo deal or the Senator Fumo deal or Vince's deal. This is a deal that he learned about at a meeting he alluded to in his testimony that the port has been trying to effectuate for some time.
No, I understand. At Representative Keller's urging this summer, we put a master plan together for the port knowing that this was going to be an issue. This was an in-house plan done by our Strategic Planning Department on how we can take care of the port for the next hundred years and also allow good solid retail to go into the Snyder Avenue yard.
Thank you. I think you guys have been very nice at the port. I think your demands are very low. And I would hope within a very short period of time, meaning between now and Thursday morning, we can get this thing resolved.
Thank you very much. 131 12/10/02 - RULES - BILL 020738 Councilman Ortiz.
Mr. McDermott, I think we had a much longer debate when we had the 55-acre lot being put forward in this Council. And, actually, we had a much longer Council meeting because it went into the evening in terms of the proposed Wal-Mart, Home Depot boxes that were going to go in there. Some of you remember that I was very vehement because I thought it was a bad deal for the City. It was, I think, prime real estate riverfront land that could have been utilized. I think Wal-Mart and Home Depot can probably go any place across the City. But I remember those promises that were made at that point and we argued very vehemently for that. It surprises me that none of those things have been kept. But for matter of clarification, I think it is good to remember the way things were done prior before we take this issue.
Thank you, Mr. Chairman. Good afternoon, Mr. McDermott.
Mr. McDermott, first of all -- and I guess I should have asked this earlier when the Senator was here, but as I keep hearing reference to a particular deal that's on the table, I guess my question is -- and I know my colleague, Councilman DiCicco, has been involved throughout the process. Not being very knowledgeable of the port beyond maybe going to Dave and Buster's, I think the closest thing I have to a port in my district is Boat House Row. I'm getting a lot of knowledge today. Is there anything in writing that lays out the scenario that's before some of the individuals because it's -- in a brief presentation, it's somewhat difficult for a person who's not familiar with the site and hasn't participated in the various discussions what the actual, quote/unquote, deal would be, at least with respect to some of the individuals involved in the process.
Yes, sir. We gave to the City of Philadelphia at some point, I guess in September, six requests that the Port Authority had as it pertained to Snyder Avenue. This morning, I've only spoken to the rail components because I 133 12/10/02 - RULES - BILL 020738 want to echo Jim Cuorato and tell you that he has been very up front with us. There is a role that the City is going to have to play in this, and I trust that he is moving in that direction. That was in reference to the old Delaware Avenue -- the service yard. So, yes, we have put this in writing. This has been in Ikea's hands, CSX's hands, everyone's hands for -- since September.
Jim, Council President requests if we could get a copy of that at this point. If you have any personal notes -- I think there's some personal notes on the back of there.
Does it reference the different locations, the Whiskey Site --
Yes, it does. I'll read just the headings. Expand the Packer Avenue --
You don't have to read it. If you could just provide a copy of it during the course of the deliberations here.
I have some notes on the back of that. It's the only one I have, but --
Can we just make copies of this? And I assure you the back will 134 12/10/02 - RULES - BILL 020738 not be copied.
Not having a lot of knowledge about the port's -- with respect to your organization, I think I may have heard of it from time to time, but I'm not very familiar with it. I'm trying to get a sense of -- I understand the creation of the organization. And, subsequently, the organization was able to acquire land through what process? Because during your testimony you referenced the fact that you either helped develop or lease various portions of the port. How did you become title holder to the properties in question, just to familiarize myself with the organization?
In 1989 the State -- the Commonwealth of Pennsylvania purchased the holdings of the Philadelphia Port Corporation, which I understand to have been a City agency that was the manager for the City of these different marine terminals that I've just outlined. I believe the purchase price was $57 million. The agreement of sale is probably 12 inches thick. It's a leather bound book. And since then, the Authority has approximately put a $100 million of state capital 135 12/10/02 - RULES - BILL 020738 dollars into these different facilities. These are essentially, in our business, these finger piers that you see are antiquated. They're yesterday's news. And our ultimate plan is to ultimately have Philadelphia have three or four super terminals similar to Packer Avenue and ultimately do away with those finger piers and marginalize the berthing and then fill in behind them. And as Representative Keller said, we're trying to do this in consistency and with, hopefully, the dredging of the Delaware River from 40 to 45 feet.
Your ability to finance projects is solely depending on state capital assistance, or do you have the ability to leverage financing through bond proceeds or yourself?
We have done bond issues. We're currently refinancing a bond issue at the Port Authority. Governor-Elect Rendell has pledged an $88 million bond issue to the Philadelphia Regional Port Authority for a lot of these improvements we're talking about. We have the capability to take commercial loans. We've done that. But, Councilman, 90 percent has been relying 136 12/10/02 - RULES - BILL 020738 on the Capital Budget, which is the Legislature approving a budget and the Governor releasing the funds.
But you do have the wherewithal to maintain financing beyond that?
I don't know where the State's going to go. I know there are a lot of promises made during the course of the election, but we are all suffering from fiscal decisions that we have to make in the near future. So I'm just concerned as to whether or not you had the ability to finance projects beyond the State.
Are there any other Members of the Committee that have questions before we go to other Councilmembers? Councilman Nutter.
Thank you, Mr. Chairman. You have made reference in your 137 12/10/02 - RULES - BILL 020738 testimony with regard to the issue -- and I'm reading from your testimony now on -- "That is why when this public discussion began, we thought it was prudent to alert all interested parties to our concern and remind them that we have the lawful authority to keep that area zoned for port industrial purposes." You had made reference to, I believe, having copies of the referenced statutes. Could you point my attention to that? And if you have an extra copy, I'd certainly like to have an opportunity to look at it. Thank you. Can you direct me to the appropriate citation?
Yes. I'll read, "Location of Port Facilities and Project."
697.21. "The Authority may pursue its purposes and exercise its powers and authority under this Act to locate port facilities and port-related projects within the port zone, notwithstanding any zoning ordinance or regulation adopted or enacted by a 138 12/10/02 - RULES - BILL 020738 political subdivision under the authority of any statute or under the authority of any Home Rule Charter authorized and adopted under any statute or the Constitution of Pennsylvania."
That would mean to me that -- and I'm an attorney, but I don't practice law and I don't pretend to be an expert on this. But it would mean to me that if Council went and rezoned the 44 acres over our objection, that somehow we could override that Council action and petition for that 44 acres to remain in what I call the port industrial zoning that it's currently in.
Can you tell me based on the statute, what is designated as the port zone and is there -- I'm assuming there must be another provision in the statute that describes or lays out what the port zone is?
The port zone -- it runs from Bucks County to Delaware County and it's one mile going west from the river.
Is that 139 12/10/02 - RULES - BILL 020738 described in that particular statute as well?
If you don't mind, this is Bill McLaughlin, our Government Affairs Director.
Mr. McLaughlin, please identify yourself for the record.
I'm Bill McLaughlin. I'm the Government Relations Director for the Port Authority. The Act 50 of 1989 which created the Philadelphia Regional Port Authority mandated that we cooperate with the coastal zone management process and develop a port zone and file that with the Department of Environmental Protection. That zone is roughly -- and I can produce a map, Councilman, not today, but we can provide you with it. It's roughly from the top of Bucks County to the bottom of Delaware County and about a mile in from the river. And in that zone we're told we can exercise the prerogatives of the Act.
If you could provide to the Chair a copy of the appropriate section of the statute that you refer to which describes the, quote/unquote, port zone, I would 140 12/10/02 - RULES - BILL 020738 greatly appreciate it. Mr. McDermott, you've also made reference to legal advice that you've received from a particular law firm. Has that advice been reduced to writing?
Councilman, with all due respect, if I may check with the law firm to make sure I'm not violating any attorney/client privilege.
I understand. My question was going to be if you were at liberty to share it.
And if I am able to do that, I'll provide it to the Chair. 141 12/10/02 - RULES - BILL 020738
I would greatly appreciate it. Mr. Chairman, with your permission, I'd like to ask if there is, in fact, a representative from CSX in the audience, if that person could approach the table for a question.
My name is Kevin Hurley. I'm Assistant Vice President for CSX Real Property.
Mr. Hurley, you've had either the pleasure or the discomfort of hearing a lot of testimony, a lot of comments and a lot of discussion back and forth. Could you share with us, for the record, your views on the items that have been discussed from the various perspectives, whether it's the port 142 12/10/02 - RULES - BILL 020738 perspective or the City perspective, and now you represent, naturally, the CSX perspective matters? You're obviously an integral part of any of these projects going forward and play a central role in possibly resolving an item of very serious nature, but also serious dispute between and among a variety of parties. Can you tell us, for the record, where CSX is on all of these matters?
Well, I understand that, but the way this works is, once you come on the field, you can always be called on to play. You're in the game.
Councilman, again, without risking the ire of the Chair, I am prepared to address these comments.
You risk it every day, Mr. Primavera. That isn't going to stop you.
I thought on the agenda that we were going to be next and we would make a formal presentation. I don't know 143 12/10/02 - RULES - BILL 020738 whether you would be willing to wait for that formal presentation or whether you have a specific question of Mr. Hurley. But I was going to, on behalf of CSX, since it's a large organization and Mr. Hurley doesn't own it, but I am authorized to speak on behalf of CSX and make a presentation. But if you would like to ask him a specific question, I won't interfere with that. But the presentation will be mine to make and then you can ask him specific questions off of that presentation.
I appreciate your accommodation in allowing me to ask the questions that I'd like to ask. I would like to ask Mr. Hurley the questions -- or at least the one question that I laid out to him. I understand that he may not own the company, but he is a representative. He's here in our Chambers. The Chairman, for whatever reason, has accommodated me the opportunity to ask the question, so I'd like to ask the question.
Okay. Your question isn't a simple one. It involves a great deal of history. Going back, I guess, to when CSX 144 12/10/02 - RULES - BILL 020738 acquired a portion of Conrail and was able then to invest in South Philadelphia in order to free up the property that's in question now for rezoning. CSX, at the time it acquired Conrail, made a pledge to the City and to the State to make investments in the State and the City relative to economic development, specifically rail-related economic development. In addition to that, they made a pledge to support the City's efforts at that time to attract Kvaerner Ship Yards to the City. That pledge was to provide financing in the amount of $2 million for five years to support the Kvaerner operation. We also agreed to provide -- or committed to make available a fund of $5 million that was to be used for rail-served economic development throughout the City. This was to be done on a project-by-project basis, projects submitted to CSX and then to the Governor's Action Council to determine whether they qualified for funding for that program. To date, no proposals have been made to CSX.
I'm sorry. How 145 12/10/02 - RULES - BILL 020738 long has that been?
With regard to the specific issue at hand today, I think it's fair to say that we've been negotiating in good faith with the Port Authority since we received their -- it was referred to as a wish list, the items that they felt necessary to support the expansion of the port.
Now, is this specifically Piers 122 and 124; is that what you're talking about?
That's correct. In addition to the Whiskey Yard and what's referred to as the Savage Yard.
Mr. Hurley, I apologize. I did get your name down. What I did not get was, what is your position with the company?
For CSX Real Property. 146 12/10/02 - RULES - BILL 020738 We act as agent for the transportation company in real estate matters.
I think it was in the same time frame that Jamie McDermott referred to, around September.
No, no. This wish list, I'll refer to it since that's what it was referred to previously, was presented to us sometime in September. And we've been working since then with them to try to address some of these concerns. Given the fact that CSX does not own a great deal of the property that's of interest, and there are --
Say that again. Does not own? 147 12/10/02 - RULES - BILL 020738
CSX does not own a great deal of the property that is of interest to the port. We have a partial interest in it. It's less than 50 percent interest in most of the property.
The other owner of Conrail is Norfolk Southern, and they have a majority interest in the properties that are owned by Conrail.
Are you speaking to your portion of an interest, Piers 122, 124, the Whiskey Yard and the Savage Yard? You said that CSX does not own all of those in its entirety?
CSX does own 148 12/10/02 - RULES - BILL 020738 that in its entirety?
Thank you, Councilman, because, you know, if you had not jumped in with that, Mr. Primavera would have jumped in to make sure that I was not confused about what Mr. Hurley had said. Not to be confused with Mr. Smith, who had had the previous confusion from the other discussion.
In this particular case, it is appropriate that Mr. Primavera is representing his client.
Oh, no question. For which he's said nothing so far. Mr. Hurley is doing a great job.
As long as the truth is available, I won't object. When we waiver from that, I feel the need to object. Thank you.
As deemed by Carl 149 12/10/02 - RULES - BILL 020738 Primavera. Mr. Hurley, please continue.
I think I need to point out when CSX made the commitment to the City and to the State to make an investment in South Philadelphia, we did just that by spending $20 million on a new intermodal yard. The intermodal yard that operated at the subject site was not an efficient operation and it wasn't large enough to support the intermodal business that was being generated by the port. We spent $20 million on a piece of property that we acquired through the Conrail acquisition in Greenwich Yard, which is just south of Oregon Avenue and just to the left of the area shown in green on that map. When we did that investment, we did it with the understanding that -- external understanding that it would be something that would be a benefit to the port, and I think to date it has been. We also believed that this would free up this property for a resale on our part so that we could recoup some of the investment that we did from the construction of the new intermodal yard. 150 12/10/02 - RULES - BILL 020738
Well, let me ask this question, Mr. Hurley. What is your perspective on the ability to make -- putting aside the various colors up on the map. I'm starting to get a sense that somewhere on that map represents an opportunity for all the various parties to get what they want, whether it's Ikea, Lowes, Best Buy, ILA, all the various parties. Their solution seems to be up on the map in the various colors. Your company is a central linchpin to all of that. What's your perspective on the opportunity to create, in the best use of the term, a deal that results in everyone getting what they want up here without some of the back and forth and the acrimony that goes with the current situation? How realistic is that?