Miss Cutler, can you tell me, what's the specific mission of the Parking Authority?
There are several. Some are stated in law, as in the state-enabling 109 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 legislation which created parking authorities in the State. That is, in fact, to acquire and construct parking facilities. That is part of the enabling legislation of parking authority law in Pennsylvania -- and in fact, in most parts of country. There are internal policy missions as well. Obviously, since 1983, we have, on behalf of the City -- we have, on behalf of the City, done all of the City's on-street parking management. And so clearly, a mission for the agency is to manage a limited parking supply in order to move traffic, have goods delivered, and provide parking in the City of Philadelphia. So I would say that those are the two main missions of the Authority.
I raise that because it's always been my understanding that basically that second purpose that you mentioned -- I agree with the first purpose enunciated in the law, which was tied in with it, was for -- the public role in parking was to deal with those situations in which the private sector was unable to fulfill the need of Philadelphians or the need of people 110 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 who are within the area of Philadelphia at any given time, whether they're residents or not, to have ample parking facilities.
Well, it's not clear to me, Councilman, that there is a public-private piece in there. I mean, clearly, the overall mission of the agency at this point, both on-street and off-street, is to try and provide adequate public parking in the City of Philadelphia.
Even if, say, if the private industry were able to provide all of the parking needed, you think, nonetheless, there might be an additional public parking need?
I think there are many public-policy questions that certainly get answered when a governmental entity does parking as part of the mission, yeah. So I think there is a role for both the public and the private side to both develop parking and operate parking in any city.
Mm-hmm. Well, I'm not sure I may be in agreement on that. This was one area where I always conceded because, as you 111 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 know, I'm not wedded to the fact that only the private sector can do everything. I think there are public services that ought to be performed by public employees. Parking was one area where I always felt that the particular mission of the Parking Authority was to come in and provide for the parking needs of the City where the private sector couldn't, and I always felt that the private sector kind of had a prior right if they could do it. But all of this is generated -- my questions are generated that it seems to me that in this case, the Parking Authority is moving from being a -- and I'm not necessarily saying it's wrong; I'm just trying to define what it is. That the mission of a Parking Authority now involves an economic development role. And the reason for my concerns in general -- let me state the issue so you could, you know, deal in your answer with it. I have been kind of silently applauding the Delaware River Parking Authority for its sudden emergence at various times in the economic development field saying money is being made 112 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 available for this development or that development. It was something that I've been aware of, maybe have heard before, but I've only become aware of it over the last few years. I thought that means they're doing very well. They must have developed surpluses over the years and they're trying to, you know, invest it and help the economy generally. But then I read at the beginning of this week that they're thinking of raising the tolls by as much as 50 percent. And then I begin to wonder, Well, is it that the bridge-users are the ones that paying for the development? I don't know the answer as to whether there would be a need for an increase in parking tolls if the money had not been invested, you know, in economic development projects, the Delaware River Parking Authority money. Now, that's what's caused a lot of questions in my mind. What is the role? Is the Parking Authority now going to be cast in the role of being a partner? I'm not saying it's necessarily bad; I don't have any opinion on that, but I am wanting to get information. 113 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 Is the role of the Parking Authority changing? Are you going to be supplementing the PIDC or coming in where, for reasons they cannot or believe it's not appropriate for them, are you coming in to be a partner?
-- on the matter. Parking authority law was created sometime in the '50s. And, in fact, when with it was created across the country, its mission was to do economic development. Many cities, including both of the former cities I did this in used the Parking Authority to do economic development stimulus for the parking portions of the development. It had not been done in Philadelphia for a variety of reasons and has certainly been taking place in Philadelphia since my arrival here in 1994 because I believe that parking is an economic development activity. So we will certainly continue to get involved in developments where there is a need for 114 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 a public parking component. And I think that is both the legal role of the Parking Authority and the necessary role of the Parking Authority.
Why is there a need in this development for public parking? Wasn't there original contemplation that it would be a private parking development?
There was absolutely an original theory that it would be a private parking development. When the developers attempted to sell this project on the private side of the universe, they could not get anybody to pay them the amount of money I can pay them. And the reason for the difference is because I get to borrow tax-exempt, which is a much lower borrowing rate than a private business gets by for. So they tried, believe me. There was a great deal of discussion. The Parking Authority did not come looking to get involved in this project. This was done well after the fact of several private parking entities saying, We do not want to come into this deal, we cannot give you 38 million. So we stepped in, in fact, to keep this 115 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 project going, which is, in fact, I believe the role that the Parking Authority should play, which is the parking component of economic development projects.
Well, to Mr. Fina, does the PIDC pay a developer's role in projects? I know we give loans, you know, at favorable rates, that PIDC arranges a whole lot of things, puts them in order and tries to, you know, develop the necessary pieces that go together to, you know, create a project. But I don't have the impression that the PIDC has been a developer, you know, to the extent, for example, that the Parking Authority is going to be. Maybe that's not the role of PIDC. So I don't know, I'm asking. I'm trying to get clarification. It seems to me that the Disney project, which is a very attractive project and which has enormous public support because of the Disney name. Had the project been -- say if you had come to us originally and said, We have the chance for a Disney project but they're not really interested but they say if we take all the risks involved, they will be prepared 116 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 to put something on, we might very well have agreed to do that, you know, because of the popularity of Disney in general. I mean, that's a possibility. But looking at it from a development point of view, that's not been the approach we have used, and I am concerned that this Disney development is charting a new course. And if so, I think it just ought to be, you know, very fully discussed. It may well be the right course, but it might not be, but it's leading us in into, I believe, a different channel than we've ever done. And what's disquieting about it is that it's coming in sort of just like an amendment, as if it's not significant change. I think it's a really significant change. A significant change doesn't necessarily make it undesirable; it's just that it's a significant change, and I think we all ought to be aware of it. We tried to help projects with tax abatements, with TIFs, you know, with every kind of ordinary arrangement. But now we're into the risk-taking process. And that to me, you know, makes us a co-developer, and I don't remember us 117 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 being that in the past. And that's the whole question that I'm raising. When people have raised with me, Why are there public garages, why don't we permit private operators? The answer I've always given is that field's always been open to private operators; we only come in as a government body when the private sector doesn't meet the needs, and somebody's got to provide for parking, and that's the area where the public sector comes in. But here, it seems to me, that we're becoming a developer where we don't have to be. Didn't I read in yesterday or this morning's paper that there are two department store chains that are showing interest in the downtown area east of Broad, I think around 11th Street that the papers reported? It seems to me that this parcel of land is a very attractive parcel of land. And I just find it very difficult to see the City being a separate developer, but if it is to be, you know, or a co-developer, but if it is to be, I think it raises an interesting question which we ought to be talking about. Maybe this is the role. Maybe, you know, cities 118 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 are going to have to become developers, you know, if the private sector doesn't come back. But my understanding -- I think Mr. Hankowsky was the first one that mentioned it to me, and I've been observing it since, and he seems to have been right in that area, that there seems to be a return to an understanding in the private sector that urban areas are places where the private sector can operate successfully. So I've stated all of my concerns, and I would like to hear your responses from all of you at the table.
Am I right in my analysis, am I wrong? And where am I right or where am I wrong?
If I could, let me answer in part and let Miss Cutler answer part 2. With regard to the question of have we ever been a developer before? we'll start with the premise, and I was going to say, that we're not a developer in this deal. But to that question, the answer is, we've been a developer since 1958. We developed a 119 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 food distribution center publicly. Today, we own the seafood market, the produce market. We have developed a multi-tenant building on American Street because no one in the private sector would do it. PIDC owns it, and we've leased it out. In fact, we leased it out to a day care center that's employing welfare-to-work women who are getting jobs, so they have day care in that neighborhood that they didn't have before. If we hadn't built it, no one would have built it. We have been a developer. Through the Redevelopment Authority, the Reading Head House, the Hard Rock Cafe is a tenant of the Redevelopment Authority of the City of Philadelphia. We did that project because the private sector wouldn't do it and couldn't get it done. We have been a developer of One Parkway, where the City now houses itself. It's owned by PIDC, we lease it to the City, and we serve that role, again, as a way to do it in a most cost-effective way for the public. We were the developer of the project where -- which will open in about 60 days, I hope, 120 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 to bring the Amtrak Reservation Center here, bring 400 jobs, because the private sector wasn't going to put a proposal on the table and get those jobs here, and they would have been -- they weren't here in the first place, but they probably would have even left the region. So we have done many things in different instances to achieve the purpose of getting some project development and benefit done. All of that said, -- a segue, I'm going to hand the mike over, so to speak -- that is not what is happening here. And Rina might want to respond to that.
Yes. In this particular case, Councilman, I do not view my role as a developer. In this particular case, I am planning on purchasing a fully built garage at the end of the construction period for an agreed-upon price. So in this particular project, unlike other projects, I actually do act as a developer. This is not one of them. And in this case, I would like to reiterate, that way before the public side got involved -- the public side in this case being the Parking Authority -- this 121 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 garage was shopped to almost every large private parking operator that I am aware of in the City of Philadelphia, all of which said no. 5 At the point I came into this deal, this deal was going to die, unless the Parking Authority stepped in, looked at the deal, and purchased this garage at the end of the day.
Then let me ask Mr. Hankowsky, does what Miss Cutler just said indicate that Disney has such questions about the economic viability of this project that they're not really willing to put very much of their own credit on the line? Is that -- why -- they're a huge organization, financially speaking.
I think we're absolutely, in that question, mixing apples and orange.
Disney has signed a lease. Disney is prepared to pay rent, pay base rent, participation rent, occupy space, and invest their own $80-some million to outfit that space and put in all kinds of interesting attractions. They're committed to do that. That's their 122 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 commitment and it's their risk that people will come to it and pay such that they will get a return on capital. What they're saying is, We believe for that to be successful, you, the developer, who we have signed a lease with, need to do a couple of other things: rent some more space to some other people so that there's a critical mass of activity, and you need to do that, then there will be other tenants who will sign leases and will put their credit at risk to do that. And there needs to be a level of parking and a garage to service this complex. The Parking Authority has evaluated that economically. This is not a -- we are not granting this money to this developer such that, you know -- with no return. This is an economic transaction that says, Here's a parking garage that the Parking Authority believes, both by studies done by the developer and independent studies, that will create a revenue that will pay for the cost of this garage, that it makes sense. It has the ancillary benefit of being a condition to make the Disney project successful so 123 4/8/99 - COMM. OF THE WHOLE - 990110, 990186 that when people come, they have a place to park and, in fact, go there. So I don't think there's any relationship between the fact that Disney is putting their money at risk, equity in investing of the property, and putting a long-term commitment to pay their rent and do their piece, and other people need to do their pieces.
Thank you. Mr. Reid, I understand that you want to withdraw your request for suspension of the rules so that both bills could be moved at the same time.
Thank you. Do we have anyone else to testify on Bill No.'s 990110, 990186? 124 4/8/99 - COMM. OF THE WHOLE - 990114 (No response.)
Seeing none, I would please ask Mr. McPherson to read the title of Bill No. 990114.
Bill No. 990114, an ordinance amending an ordinance approved July 1, 1997 (Bill No. 970120) which created the Philadelphia Navy Business Center Tax Increment Financing District by accepting three certain areas from inclusion in the District by approving the amended project plan for the redevelopment of the District submitted to City Council by the Philadelphia Authority for Industrial Development, and making certain findings and declarations in ordinance with the Tax Increment Financing Act.
Before you go on with your testimony, I would ask all Councilmembers who are in their offices and listening to the testimony to please come down to the chambers so that we could cast a vote on these bills today. Thank you. Mr. Hankowsky?
I will, in respect for time, summarize. I've included written testimony 125 4/8/99 - COMM. OF THE WHOLE - 990114 that was part of my testimony on both TIF bills before Council today. This bill is fairly simple. We submitted it, as you know, which, because Council approved it, an application to create Keystone Opportunity Zones. That application has since been approved by the State. We included in that application a portion of the Naval Business Center. Previously, that had been inside a Tax Increment Financing District. We now need to take it out of the District. It represents 12 percent of the area of the original district. So this bill simply deletes it from the TIF so that those acres are no 16 longer eligible to be TIFed. They're in the Keystone Zone, and we readjusted in the project plan the tax projections, etc., to reflect that.
How were you able to make the determination of the acres that you wanted to be included in KOZ?
That's a great question, Council President. We actually engaged the accounting firm of Deloitte Haskins and did an analysis sort of 126 4/8/99 - COMM. OF THE WHOLE - 990114 from a business perspective, a client's perspective of the differential benefits of the TIF mechanism versus the KOZ mechanism in order to determine sort of what property might make sense. As an example, it seems as if KOZ's would attract manufacturers more than TIFs would attract manufacturers, so we have taken the Ship Yard, the portion not being used by Kvaerner, but the other industrial buildings, existing buildings, and put them in the KOZ so that we could actually have companies in by renting and putting in, you know, an assembly or pipe fitting or, you know, some type of manufacturing operation. And then we took the site that we believed was the most desirable from an office perspective. And, again, KOZ seems like it would drive office tenants more than TIFs would drive office tenants, which is right at the front of the Naval Business Center, and put that in the KOZ. It seemed for distribution and warehousing, TIFs would be better, so we left our Distribution Center in the TIF and did not include it in the KOZ. 127 4/8/99 - COMM. OF THE WHOLE - Public Meeting So there was a fair amount of actual thought in this.
Thank you. Are there any questions from members of the committee? (No questions.)
Anyone else to testify on this bill? (No response.)
Thank you very much. This will conclude our public hearing. - - -
We will now go into our public meeting. Again, I would ask all Councilmembers who are in their offices to please come down to the chamber so that a vote can be taken on the bills that were just heard. Councilman DiCicco, the bills were in your district, so I would like to recognize you regarding Bill No. 990110.
No, I believe 128 4/8/99 - COMM. OF THE WHOLE - Public Meeting the amendments are to Bill 186.
Okay. All right, I make a motion that Bill No. 990110 be reported out of this committee with a favorable recommendation. (Duly seconded.)
It has been properly moved and seconded that Bill No. 990110 be reported out of committee with a favorable recommendation. All in favor signify by saying aye? And the record will indicate that Councilman Kenney did cast his vote as "aye" before leaving. All opposed? The ayes have it, the motion carriers. The Chair recognizes Councilman DiCicco regarding Bill No. 990114.
Madam President, I make a motion that Bill No. 990114 be reported out of this committee with a favorable recommendation. (Duly seconded.)
It has been moved and properly seconded that Bill No. 990114 be reported out of committee with a favorable 129 4/8/99 - COMM. OF THE WHOLE - Public Meeting recommendation. All in favor will signify by saying aye. Those opposed? The ayes have it, the motion is carried. The Chair recognizes Councilman DiCicco regarding Bill No. 990186. And an amendment was proposed.
Madam President, I make a motion that the amendment to Bill No. 13 990186 be approved. (Duly seconded.)
It has been moved and seconded that the amendment, as read earlier today, be approved. All in favor will signify by saying aye. Those opposed? The ayes have it, the motion is adopted. The Chair recognizes Councilman DiCicco.
Madam President, I 130 4/8/99 - COMM. OF THE WHOLE - Public Meeting move that Bill No. 990186, as amended, be reported out of this committee with a favorable recommendation. (Duly seconded.)
It has been moved and properly seconded that Bill No. 990186 be reported out of committee with a favorable recommendation, as amended. All in favor will signify by saying aye. Those opposed? The ayes have it, the motion is carried. And this concludes the public meeting of the Committee of the Whole. Thank you very much. (Adjourned at 1:53 p.m.) - - - 131 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Thursday, April 8, 1999, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE OF THE WHOLE BILL NO.'S 990110, 880186, 990114 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter