Committee Hearing, November 14, 2000

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE THE COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, November 14, 2000 10:45 a.m. - - - BILL 000609 - An ordinance amending an ordinance approved February 3, 1999, (Bill No. 980705), which created the Jump Street Tax Increment Financing District. BILL 000610 - An ordinance creating the Avenue of the Arts Garage Tax Increment Financing District and approving the project plan of the Philadelphia Authority for Industrial Development for the redevelopment of the Avenue of the Arts Garage Tax Increment Financing District. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILWOMAN JANNIE BLACKWELL, Vice Chair COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK J. DICICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN RICHARD T. MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 11/14/2000 - COMMITTEE OF THE WHOLE I N D E X Robert Fina, Senior Vice President, PIDC . . . James Cuorato, Director of Commerce. . . . . . 5 E. Solms, Exec. Dir., Ave. of the Arts Inc. 149 Floyd Alston, President, Beech Interplex, Inc. 151 George Schaeffer, Project Manager. . . . . . . 153 Regional Performing Arts Center Marilyn Rivers, Executive Director . . . . . . 159 Women's Christian Alliance Shelly Yanoff, PCCY. . . . . . . . . . . . . . 185 Stanley Fields, Academy House Resident . . . . 187 3 11/14/00 - WHOLE - BILL 000609, 610 P R O C E E D I N G S

Good morning, everyone. This is the public hearing of the Committee of the Whole. I would ask Mr. McPherson to please read the title of the first bill, Bill 7 No. 000609.

Bill 000609, an ordinance amending an ordinance approved February 3, 1999, (Bill No. 980705), which created the Jump Street Tax Increment Financing District by approving the amended project plan for the redevelopment of the district submitted to City Council by the Philadelphia Authority for Industrial Development. (Witnesses come forward.)

Good morning, Mr. Fina. Please identify yourself for the record and proceed with your testimony. Do all Councilmembers have a copy of Mr. Fina's testimony? If you do not. . . (Councilmembers respond off record.)

You do not? Does everybody else have a copy of Mr. Fina's testimony? 4 11/14/00 - WHOLE - BILL 000609, 610 All right. Mr. Fina, I believe we have enough copies.

All right, if you have copies, fine. Good morning, President Verna and members of City Council. My name is Robert Fina. I am Senior Vice President with Philadelphia Industrial Development Corporation, PIDC, and I'm appearing on behalf of the Philadelphia Authority for Industrial Development, PAID. I'm here to provide testimony on Bill No. 000609 and Bill No. 13 000610. Before I continue my testimony, Mr. Cuorato, the Commerce Director, would like to provide his testimony because I believe he does have another engagement.

All right. I'm sorry. I do believe he did say that. Mr. Cuorato, please identify yourself for the record, and I guess you could submit your testimony at this point in time regarding both bills, so maybe we ought to read the title of Bill 24 000610 also.

Thank you, Madam 5 11/14/00 - WHOLE - BILL 000609, 610 President.

Just a moment. Mr. McPherson's going to read the title of Bill 610 in order for you to testify on the two bills.

Bill No. 000610, an ordinance creating the Avenue of the Arts Garage Tax Increment Financing District and approving the project plan of the Philadelphia Authority for Industrial Development for the redevelopment of the Avenue of the Arts Garage Tax Increment Financing District.

Mr. Cuorato.

Good morning, Council President Verna and members of City Council. My name is James Cuorato. I am City Representative and Director of Commerce for the City of Philadelphia. I'm here this morning to testify regarding Bill No. 609, which would amend the Tax Increment Financing District for the Jump Street project on North Broad Street, and Bill No. 610, which would establish the TIF District for the Avenue of the Arts Garage at 15th and Spruce Streets. 6 11/14/00 - WHOLE - BILL 000609, 610 As Mr. Fina said, he will be testifying as to the specifics of each of these bills. I wanted to provide the members of City Council with our basic strategy for presenting TIF proposals for your approval. While we are developing a specific set of criteria upon which to evaluate future TIF proposals, I believe that these two projects clearly meet all of the goals that we will establish for creating TIF districts. Our strategy will contain three basic guiding principles in evaluating projects for TIF designation: The first will be the, quote/unquote, but-for argument, which is to say that it must be clearly established that a project cannot proceed "but for" a TIF District being a part of the funding; The second major criterion will be that the project have a noticeable and positive impact on its surrounding neighborhood; The third criterion will be that a project be consistent with the overall planning for the community in which it is being developed. 7 11/14/00 - WHOLE - BILL 000609, 610 For both of the projects here before you today, these criteria will be met. Regarding the Jump Street TIF, I would note that this is an amendment to a project that had been previously approved by City Council. Mr. Fina's testimony will address of the issue of the need for additional financing. As to the second and third criteria, the Jump Street project will have a very positive impact on the North Broad Street Avenue of the Arts north area. It is also consistent with our goal of revitalizing this area of North Broad Street. As for the 15th and Spruce Streets parking garage, the parking is entirely consistent with our comprehensive Avenue of the Arts plan and will provide the much needed parking for the Avenue of the Arts in general and the Kimmel Center for the Performing Arts in particular. These two projects represent what I expect will be the final two TIFs that the Administration will be presenting to City Council this calendar year. By the 2001 City Council session, we will be prepared to discuss in more specific detail our overall policy on tax 8 11/14/00 - WHOLE - BILL 000609, 610 increment financing. Inasmuch as these two bills are critically important to our developments on both North Broad Street and South Broad Street, and in that both projects meet the broad goals that will be a part of our overall strategy, I respectfully request your approval of these two bills in order that these two projects can move forward. Thank you very much for your consideration of this testimony, and I would be glad to answer any questions that Councilmembers may have.

Thank you. Mr. Cuorato, you say you're developing a specific set of criteria to evaluate the TIFs in the future? It is my hope that you will definitely be in touch with Council's technical staff as you are developing the criteria so that we can have some input or knowledge about them in the future.

We absolutely will do that, Madam President.

Thank you. The Chair recognizes Councilman Ortiz. 9 11/14/00 - WHOLE - BILL 000609, 610

Yeah. I have only one question, Mr. Cuorato. The but-for question, it really needs a very amplified answer. This is a locale that generally will be market-driven, as we say in the business. It is a locale that people would want to be at. Extensive building is going on, and will keep on going on there. It will not end with the arts center. So that traffic will be an ongoing -- I'm asking -- I don't care about the garage I thought they were both, open 'cause you testified to both.

They are.

You testified to both, so I'm -- I'm questioning as to the garage because -- I -- I question the necessity of subsidizing and giving tax benefits that really take away from the school in the long run to a business that will be self-sufficient, given the current and future development that will be going on in the area and -- and a very clear explanation as to what makes it unprofitable without the subsidy. What makes it that ten years and fifteen years from now, this will not -- or very clear in the very near future, this will be an unprofitable 10 11/14/00 - WHOLE - BILL 000609, 610 building situation? I guess I really do not understand it.

Councilman, Mr. Fina's testimony is going to address the specifics of the but-for argument for the garage, and there are some provisions in this one that will enable us to have the TIF repaid even sooner if the garage is profitable, which Mr. Fina will explain to you in more detail. My basic philosophy, though, as I had mentioned at a prior Council meeting, is going to be that TIFs should not be viewed as an entitlement by developers and that we are going to have to be absolutely convinced that the projects would not go forward if some sort of subsidy is not provided and that they are projects that we actually want to happen, which is to say they are consistent with our planning for the community and would have a very noticeable and positive impact on a neighborhood.

But anyone would come forward and say, Well, I'm not going to build that unless you give me a TIF, it is not profitable, it is not doable, it is not -- and -- 11 11/14/00 - WHOLE - BILL 000609, 610 and we keep on approving these because they were supposed to be going to the places where no 4 development could be taking place. In front of the Arts Center, surrounded by the Wilma, surrounded by all of the other entertainment centers that are going on, all of the restaurants that are taking place, the Academy of Music, and so on down the line, I don't think that this is a place that is going to just lie there without any sort of interest from any developers.

The specific proposal for the garage, we believe, did meet the but-for argument, and it is critically important to both the Avenue of the Arts development and --

But I haven't heard the answer as to the but-for. That's --

Mr. Fina is going to provide that as part of his testimony, which he can do now.

Okay, I can wait. Thank you, Madam President.

Thank you. Are there any other questions? The Chair recognizes Councilman 12 11/14/00 - WHOLE - BILL 000609, 610 DiCicco.

Thank you, Madam Chair. I just want to pick up on what Councilman Ortiz was speaking to. I think what -- I hear what he's saying and I think for the average person to look at what's going on out there, you would assume that because of all of the other development, yes, there's a higher interest to do developing in that particular community. But the question remains as to what the cost of doing the development is. I mean, I'd like to build a restaurant there tomorrow; I can't afford it. Well, let me say that again: I would never want to own a restaurant again. But the point I'm making is that even though the area is a very attractive place to develop, it may not necessarily mean that you have the wherewithal to get it done, because the more attractive and more vibrant the community becomes, the more costly it is to do the project because -- maybe not in the case of the garage, but the property values go up, the cost of acquisition go up and a lot of other things that you have to 13 11/14/00 - WHOLE - BILL 000609, 610 factor in. And I think the financing piece to it is really what is at the heart of it this, not necessarily a community where people would want to develop versus a community where people would not want to develop. It's the cost of developing.

Madam Chair, Madam Chair, if I may. That is the market. I mean, that's the way that this society works. That's the free market system. That if you want to make some money, you invest, you put your own money in, and you take some risks. That is what capitalism is all about. I mean, we -- we are -- we are now putting ourselves into this situation in which I agree with you, you know, that -- if a place develops and the Avenue of the Arts takes off, well, obviously, the land is going to cost more. But if it costs more than your investment and then the -- usually, the profit is greater down the line, because you have -- you have created the environment. That is what the market system is all about. I thought that, you know, the other 14 11/14/00 - WHOLE - BILL 000609, 610 way we go is towards the more socialistic type of system in which government begins to subsidize and give to the -- give to wealthy individuals. And -- but if it is not needed, I can see it where there is a place in which -- in North Philadelphia, in American Street, in Kensington, in 25th and York, places where we would need attractive incentives. But in Center City, in front of the new -- new concert hall, right next door to the Academy of Music, the Wilma, all of the other restaurants, I just want to be convinced that this is a necessary subsidy from the taxpayers, that, in essence, takes away, down the road from the school system. I -- I mean, who are we satisfying and who are we hurting down the line? And I think that question has to -- that is the question that really has to be answered, and I don't think we have answered that question in a satisfactory manner in this Council over the years. That's all. Thank you, ma'am.

Councilman DiCicco, were you finished with your questioning or comments? 15 11/14/00 - WHOLE - BILL 000609, 610

Yeah. Again, and not to be argumentive, but I think when we look at the Avenue of the Arts, had it not been for $300 million of State money, which is public dollars, invested into the Avenue of the Arts, we would not have the Avenue of the Arts, we wouldn't have the other development that has occurred as a result of that. So government always plays a role, and I think it is appropriate for government to take a role to encourage development. And I don't think we're ever going to get away from that because there's just not enough money in the private sector, in most cases, for a developer to come along with his or her own money to make a project work. It would be great if they could, but there's always some sort of assistance that is going to be necessary, I think, in the majority of cases. Thank you.

What is the projected cost for this development?

Again, I identified myself previously for the record. I'm Robert Fina. 16 11/14/00 - WHOLE - BILL 000609, 610 The total costs is projected approximately $32 million.

Councilman Kenney, do you wish to be recognized?

Thank you. Thank you, Madam Chair. I don't have as much problem with the but-for -- what was the cost -- but-for cost, 'cause I do -- I do understand the numbers and I understand that this is a required mechanism that we use to spur on this kind of development. I guess my general question is, I always thought the Parking Authority was established and created partly to control on-street parking and the movement and flow of parking on the street, but also to have the capability to issue bonds and to do other things to create structured parking and other types of off-street parking. While I recognize that this is a private company and we're trying to work out this mechanism for them, why wouldn't the Parking Authority decide to do this type of development to build a structured garage, to have the retail 17 11/14/00 - WHOLE - BILL 000609, 610 spaced, and to plow some of the revenues that the Parking Authority would earn back into other City-type projects? I mean, obviously, we depend on the Parking Authority for a substantial amount of revenue from ticket-writing and other things and from the operation of off-street parking lots. In this location, with this lucrative opportunity to make sure that -- obviously, this -- hopefully, this garage will be filled most evenings and during the day. Why wouldn't the Parking Authority, with less costs to the City, be doing this type of project?

Councilman, that's a very good question, and we did consider that for some time and met with the Parking Authority on that subject. There are several reasons why we concluded this would be a better mechanism. The first one is that the land is privately owned by Parkway Corporation, and it would require a process that would eventually lead to condemnation, the timing of which would not support the demand for parking that's associated with the completion of the Kimmel Center. 18 11/14/00 - WHOLE - BILL 000609, 610 The second one is that the Parking Authority would sell bonds that were guaranteed by action through the City Council, with the City guaranteeing those bonds, and we thought there would be a better mechanism to apply the TIF. And as I will talk about the TIF in my testimony, we have what we're calling not just the but-for, but "a claw-back." And that claw-back means that if the garage does well, the public pays off its debt with profits from the developer early, or earlier than projected. So we're trying to create mechanism that is the least onerous on the public to develop this garage in a timing that is most efficient for supporting the Kimmel Center.

Maybe you could explain to me the difference between this particular project and, say, almost a similar style project on Rittenhouse Square, where, I believe, the Parking Authority actually went out and bought the private land, which was -- the land, which was privately owned and was going to actually do -- well, I think was going to do the construction of a garage in a very -- probably a 19 11/14/00 - WHOLE - BILL 000609, 610 more lucrative area or a more expensive area. I will say Rittenhouse Square is a more expensive area than 15th and Locust at this day as we speak. Why the difference there as opposed to here? Both are privately owned parcels, the Parking Authority could be involved in either or none, and they decide in one case -- and I know you're not speaking for the Parking Authority, in one case to be involved in the Rittenhouse Square project, which is similar in style and scope, I guess, probably the one at 15th and Locust is larger. But what's the difference between the two?

Councilman, I appreciate you're noting that I can't really speak for the Parking Authority. They actually began that project prior to our planning for this particular garage. As you will note, they are still not proceeding with that project; I expect they will, but I'm not certain. Also the bonds that the Parking Authority did use to acquire that in our proposal to build it are, again, guaranteed by the City of 20 11/14/00 - WHOLE - BILL 000609, 610 Philadelphia. We're trying to avoid that mechanism, and I can't really speak as to the validity of moving forward with that project presently or in its present form.

I guess on this particular issue, 'cause I'm going to support this issue, but I think in the future, maybe we ought to be looking at the Parking Authority and the ability to use the Authority more than we do as it relates to the provision of off-street parking opportunities for our Center City and even neighborhood developments. It seems to me to be probably a better way to go and more direct benefit both in an increased revenue stream to the City through the Parking Authority and, as Councilman Ortiz suggests, an avoidance of the loss of down-the-road revenue for the schools.

I think that's right, Councilman Kenney. I think that the situation with Avenue of the Arts was such that because of the land ownership situation and the timing constraints, it was the prudent way to go, which is with the TIF and having it privately developed. 21 11/14/00 - WHOLE - BILL 000609, 610 But I certainly agree with you that we can look to have the Parking Authority more involved in developments like this.

And just one final question. You had mentioned -- you had told the Council President that you would be providing a cost benefit analysis on all of our TIFs? When do you think that that will be available? Do you have a general time frame for how long it would take to get that? A couple of months, a month, two months?

Councilman, what PIDC does is a routine, and we occasionally provide it to City Council, is that we do provide analysis on every TIF, and I could demonstrate, and I have the information available presently, that demonstrates that every TIF we've done so far, the City and School District would be better, as far as total tax revenue from those projects now than they did prior to the TIF and the development occurring. Every TIF we've done so far indicates that -- every TIF that's closed and developed, and we have data on that available. Every TIF we've done that's been 22 11/14/00 - WHOLE - BILL 000609, 610 approved by City Council we project will do better. A lot of them have not gone to construction yet and are not generating taxes, but those that are, there are more taxes to the City and to the School District than before the project was built and before the TIF was approved.

And that analysis is based on the fact that there was nothing there to begin with, correct?

In many cases, that's correct.

I mean, I understand that.

That is correct.

Okay, thank you.

I'm a little curious. This is an existing parking lot. How many cars are they able to park, do you know?

128 automobiles are parked there at a maximum.

128?

Yes.

I suggest Councilman DiCicco go into the parking business 23 11/14/00 - WHOLE - BILL 000609, 610 rather than the restaurant business. As I read from this printout that you gave us, with 128 parking spaces, there is generated $1.2 million? Am I incorrectly reading that? Operating cash flow?

From the existing lot, that's correct.

With 128 automobiles. How many automobiles will they be able to park with the garage?

660 automobiles. Madam President, that's prior to taxes. There are a number of parking taxes associated with a parking lot or a parking garage, so that's gross revenue, I believe, the million 2. Oh, I'm sorry, you're -- I'm wrong. That's correct, it is a million 2 gross profit, gross profit.

That's what I thought.

It may be helpful if I go into my testimony 'cause I think many of these questions would be answered.

I think that Mr. Cuorato has to leave and I think that there 24 11/14/00 - WHOLE - BILL 000609, 610 are a couple of members that haven't been recognized yet. So if you don't mind, Mr. Fina, I would like to recognize Councilman Goode.

Thank you, Madam President. I'll be very brief; I know you have to run to decide on who the next economic development head of PIDC is going to be, but since you are the Commerce Director, I'd like to discuss just briefly with you related to your testimony the whole issue of even coming up with a new TIF strategy. Is it, in your opinion, better to come up with a strategy that will give tax incentives to individual developers rather than actually looking at the costs of dramatically cutting the wage tax and business privilege tax? I mean, what do you think the better strategy is? since I'm assuming that we couldn't do both.

I'd like to do both, Councilman Goode. I think that -- my approach is going to be that TIFs only be used when absolutely necessary. I have had discussions within the Administration about the possibility of reducing 25 11/14/00 - WHOLE - BILL 000609, 610 the wage tax and the business privilege tax, even more so than the current five-year plan calls for because, frankly, in the three months that I've been on the job, I have met with dozens of businesses, and that is what I am hearing back from them, that the tax structure is onerous and pleas for help in that regard. So if your question is, where would I rather see the attention focused on more TIFs or reducing taxes, I would rather reduce taxes.

And with each TIF that we do, doesn't that dramatically impact our ability to cut the wage and business privilege tax because we're giving up revenues to individual developers rather than giving breaks across the board to actually change the business environments in the City?

Well, I wouldn't look at it as doing TIFs is only a revenue reducer; I would look at the positive aspects that we're getting from the TIF projects that we're supporting. And, I mean, I will speak for the TIF policy going forward, which is to say that it will 11/14/00 - WHOLE - BILL 000609, 610 be used when necessary as an economic development tool to get a project moving forward that we want to see, that is good for a neighborhood, that provides jobs, that's consistent with our planning for a neighborhood -- not necessarily because a developer comes forward and says, I want to do this project, I have a gap, I need a TIF and, therefore, we just do it.

But you would agree that with tens of millions, if not hundreds of millions of dollars, in TIFs that have been done, essentially, we have not changed the business climate in Philadelphia, we haven't changed the business climate within very narrow areas in which we've done several TIFs and that TIFs actually do not change the business climate or the business environment except for that individual developer.

Councilman, I would respectfully take issue with that. I think the TIF has been an enormously advantageous tool for us to have. I think for a number of projects and -- for a number of projects for which TIFs have been approved, I don't think that those projects would have been able to go forward without that 27 11/14/00 - WHOLE - BILL 000609, 610 specific tool.

My specific question is simply that it does not change the business climate for anyone other that the individual developer.

Well, it's -- the projects that we've approved TIFs for have provided hundreds of jobs for Philadelphians, which, I think is, certainly a positive benefit, and they pay wage taxes.

I'm talking about the actual environment in which we do business, whether it's the Avenue of the Arts area, whether it's any other area in which we've done TIFs that's a specific geographic area. It has not impacted that environment for anyone other than the individual developer, or else we would continue to do TIFs in the exact same places.

Well, I -- I just -- I mean -- while most of the TIFs have been in the broadly defined Center City area, I think you could argue that the projects for which TIFs have been supported have made this business district much more viable, much more vibrant. I know most 28 11/14/00 - WHOLE - BILL 000609, 610 of the projects have been hotels but, no, I -- I think it's had a very positive impact on the City.

Okay, thank you. I have no further questions.

Thank you. Councilman Cohen, you're next to be recognized. Do you have questions of Mr. Cuorato? Because he had indicated that he had to be at a meeting. Or is it for Mr. Fina? Are you questions for Mr. Cuorato or Mr. Fina?

I'm not getting your question.

Do you want to talk to Cuorato or the other guy?

Probably both.

All right.

And I am not promising to be brief.

Okay.

And that's because I'm trying to struggle with the justification for TIFs, whether they're good for the City or whether -- and the developer or whether they're really only good for the developer. 29 11/14/00 - WHOLE - BILL 000609, 610 Mr. Cuorato, in your explanation as to the basis for giving TIFs, it seems to me that we have gone in a totally round circle. We no longer are interested in whether a developer needs TIFs; all we're interested in is whether or not it's a good project for the City. And if it's a good project for the City, you're saying that we should grant the TIFs, and you did not include at all the question of need by the developer. In fact, it seemed to me you went out of your way to say that that's kind of irrelevant. Now, when we first started down this road, the total justification was the need for the developer, otherwise the project couldn't go through. You're saying now that we eliminate that totally as a factor. A developer who could make, say, what would be considered a good profit without a TIF, nonetheless, is entitled to a TIF if the project is good for the City. Do I understand you correctly?

No, you do not, Councilman. In fact if you -- the testimony that I gave this morning, the very first point that I brought up, that the first criteria that would be 30 11/14/00 - WHOLE - BILL 000609, 610 used in judging TIFs is whether or not there is an actual gap, which is to say that if a developer comes in and has a project that it would be good for the City that we would want to support, they will have to prove that there's a funding gap, a financing gap that only a TIF could approve; otherwise, we're not going to support it. So that -- that is not the case. That would be the first guiding principle that we would follow in evaluating TIFs. And in fact --

Unless, I was wrong, you did not even mention it in your reply to Councilman Goode.

I may not have mentioned it in my reply to Councilman Goode because I thought the question was a little different, but in my testimony, it's the first point that I mentioned, it's the first point that I brought up. And, in fact, there have been -- even in the several months that I've been the Director of Commerce, there have been a few developers who have come in with projects that I did not feel were able to demonstrate the financial need, and we have just said no, we're not going to support a 31 11/14/00 - WHOLE - BILL 000609, 610 TIF. So that was the first point that I made in my testimony.

So then you're stating the need of the developer is the first requirement that has to be shown, the need with respect to that particular project, I assume, rather than the need generally of the developer.

The developer would have to demonstrate to us, through a very detailed proforma, that the project could not go forward without the subsidy, which would be a TIF funding.

Now, how does a developer do that?

They demonstrate to us, and you will see this morning, Councilman Cohen, in the specific details that Mr. Fina's going to present on these two projects that they would present to us their sources and uses of fund, which is to say the cost of a project, which we can evaluate and determine whether it's realistic or unrealistic, and the sources of funds that they have for the project, which are equity and debt financing in most cases, traditional debt 32 11/14/00 - WHOLE - BILL 000609, 610 financing. And we -- we do push; we do not simply accept what a developer presents to us. If an equity investment that a developer's proposing is too low, we will say that. If we believe more traditional financing can be secured, we will say that. We do not simply accept a developer's numbers. If they come to us with a project, we will push very hard. If we are convinced that traditional sources of funding have gone as far as they can go and there is still a gap and it is a project that we believe is good for the City, I think that warrants us presenting a TIF proposal or putting a TIF proposal together. But, otherwise, we would not.

And you're saying there has to be an equity involvement by the developer?

In virtually all of the projects that we have seen, or that I have seen, there is an equity investment by the developer, and then there's traditional debt financing or mortgage financing. And oftentimes for the 33 11/14/00 - WHOLE - BILL 000609, 610 projects that we look at, that does not equal the uses of funds in order to have a project fully developed. And if we think a project is good and worthwhile and good for the City, that's when I think we are warranted to step in and help.

Now, when a developer prepares a financial statement for you, does the developer employ any experts in the financial field, or does the developer just put together his own figures as best he can and present them to you?

Most developers that we deal with are experienced and have either in-house capability to do that or will have financial advisors or consultants working with them.

Now, on the other end, how about the City? How does the City analyze the developer's requests?

In similar fashion. For most of the requests, the expertise is in-house. For extraordinary circumstances, if we feel we need to go outside and get outside financial advice or consulting, we will. But in most cases, we have the expertise in-house to make those 34 11/14/00 - WHOLE - BILL 000609, 610 decisions.

What is this expertise in-house that we have? Could you name names and tell us the backgrounds and tell us the training they've had to make financial evaluations?

Well, Mr. Fina, who is seated right here with me, can describe his own qualifications and background. He's had extensive experience in very complicated financial transactions, and his ability to analyze a proforma is excellent. And I've worked with Mr. Fina on --

He's a fine man, has great intentions, and does a great job. But what I'm interested in now is not in making a recommendation for Mr. Fina for some promotion to a higher position, which he undoubtedly deserves, but I'm just interested in knowing how the City of Philadelphia protects itself by having the most expert, knowleged people available to any government in evaluating developer' requests.

We have, between the expertise at PIDC, at the Department of Commerce 35 11/14/00 - WHOLE - BILL 000609, 610 and the City Finance Department, I think we --

I'll tell you why, Mr. Cuorato, I raise this question. It is common knowledge throughout the whole United States for years that regulatory agencies, for example, begin to seem almost like the regulated agencies after a while, and that the main interest of regulatory agencies generally becomes the interests of those agencies that they're regulating. The more people work together, develop working relationships, the more similar their views become, so that in effect, there is never any really objective analysis. For example, it strikes me -- in this particular project, I don't know when it was acquired by Parkway, the lot, for example. Do we have figures, do we know what Parkway paid for the lot? Is the lot being considered at all as part of the equity investment? And when it is so considered, at what value is that lot listed as having equity value? And are the other resources of the developer ever considered in a project, or does each project have to stand on its very own? And if there is a period of time, as most projects 36 11/14/00 - WHOLE - BILL 000609, 610 require a period of time before the income is fully realized, whose burden is it to provide for that period of time. My view would be that it's the developer's responsibility, not the City's responsibility. And the developer has had on opportunity over many years, in most cases, to develop that equity reserve. But I would like the answers to those kind of questions that come not directly from me or from Mr. Fina but from people who are well recognized in the economic field. So my question to Mr. Fina is, when a developer brings in these documents, who examines them? Because I don't think it ought to be the agency that makes the final decision. I think there ought to be a separate objective evaluation by an independent agency employed by the City seeking to represent the City's interests. Mr. Fina, are you going to reply to my question or --

Forgive me, Councilman, I'm not sure what the question was, but if you're asking -- 37 11/14/00 - WHOLE - BILL 000609, 610

The question was, what is the expertise that the City of Philadelphia employs in analyzing any developer's documentation in support of a project request for TIFs?

I would only reiterate what Mr. Cuorato said, that the expertise exists at PIDC, the Commerce Department, and the Finance Department. At PIDC, my staff, I have -- just to go over their credentials, if I may, I have three people working for me. Two have MBAs from Penn in business that do financial analysis, another one has a Ph.D., a third person has a Ph.D. They have the academic expertise that you're looking for credentials to test that. At times, we will hire a consultant if we believe we need a consultant to further analyze a project if it's more complicated than our experience. I've been doing this for approximately twenty years. By no means do I consider myself the best, but I have 20 years' experience in analyzing projects in various agencies, under various criteria, and I employ all of that expertise as well as the staff that I mentioned. 38 11/14/00 - WHOLE - BILL 000609, 610 I'd be more than happy to meet with you to go over the resumes of the people who work on this and how we go about analysis. My testimony will provide some insight into our analysis, and the information that I provide Council on a regular basis will provide some insight into our analysis, and I think, you know, it may provide some of the answers that you seek.

Do you -- do you prepare -- for each project that's before you, do you prepare an analysis in written form supporting whatever recommendations you reach?

We have a rather extensive analysis, some of which I've outlined with my testimony that was circulated. So to answer your question, yes, we provide written analysis for each project.

Let me ask you, in this particular project, is the land itself that's currently being used as an open-lot parking surface -- parking area, is that part of the equity that the developer puts into the development?

Yes, it is. 39 11/14/00 - WHOLE - BILL 000609, 610

And can you tell us what the value is projected as the equity involvement?

The value we project, based upon income and other appraisals in the area, $7,950,000.

What was the first number?

$7,950,000. This parcel has been acquired by the developer over the past 12 years, and this represents the market value that 13 we have applied to the parcel. 14

And do we have any 15 figures on what the cost of acquisition was when 16 the developer first acquired it 20 years ago? 17

We do have that information, 18 yes. When the developer began acquiring the 19 parcel some 20 years ago, the probably cash out, 20 without carrying costs in any way, is somewhere close to $4 million.

And you have that in documentation?

We have received documentation to that effect, yes. 40 11/14/00 - WHOLE - BILL 000609, 610

And you say the value for equity purposes here has not quite doubled.

That's correct.

And do you apply that kind of evaluation to every aspect of a proposal presented by the developer? Do you go to that kind of an analysis?

We do an analysis on every proposal from every developer, yes.

Now, when you say, as you testified before, that every one of the TIFs we have granted you can document that the School District and the City did better after the grant of the TIF than before. What do you mean by that? How did the City and the School District do better? What makes you say that? What do you conclude happened?

That the taxes that inure to the benefit of City and the School District have increased and are substantially greater than they were before the project was built and before the TIF was approved. 41 11/14/00 - WHOLE - BILL 000609, 610

Well, wouldn't that be in every case? Whenever there is a development, isn't there increased revenue coming from the project, no matter how it's financed?

That's usually the case, but some of these parcels that were developed that were vacant and not generating any taxes for 40 years, there was nothing ever happening before the TIF was approved and the project; therefore, we went forward. And we have statistical data that will --

But wouldn't that have happened if the project had been developed without a TIF?

But, Councilman, my point is that they weren't developed. For 40 years, a property in Eastwick, near the Airport, where the PNC building, was vacant. Since then, not only did that project get built, with 1100 jobs, but there are four hotels and two restaurants that have been built that are not in the TIF but that are there and would have never been developed, and those property owners will tell you without PNC Bank, as approved by this Council, that TIF 42 11/14/00 - WHOLE - BILL 000609, 610 occurring and that project being built. So we do have statistics that prove that the specific TIF District has improved, and we have related data that indicates that develop has occurred surrounding the TIF District. At least in the PNC Bank operation facility, it's very clear.

Do you have any standards as to how long property has to lie around being undeveloped in order to feel that you've got a case to prove that were it not for the TIF, the project would have been continued to remain undeveloped? Like, for example, let me take the development of Northern Liberties in recent times as one community, or Old City. It seems to me that much of the development in those two areas occurred because developers saw the economic possibilities without respect to TIFs. There was some that recently we've given TIFs to before we gave abatements to in some cases, but that the vast majority of development occurred without TIFs and abatements. I'm trying to find out what standards 43 11/14/00 - WHOLE - BILL 000609, 610 you apply to make a decision of the but-for the grant of the TIFs, this would not have developed.

We look at the economics of the project that's proposed, and plus each TIF District must be a redevelopment area, certified by the Planning Commission as blighted and blighting under the State definition.

Well, take this area of this development. Do you consider this now a blighted area surrounded by everything in Center City? That's desirable. And for that, maybe the Parkway deserves a good bit of credit for its past activities, but can it now be considered a blighted area in any way?

Under the State definition, an underutilized property, which a parking lot is considered, it's considered blighted. That's under the State definition.

Just underutilized property is considered blighted?

That's one of the criteria for determining blight, yes, sir.

Is that a definition that exists in the law? 44 11/14/00 - WHOLE - BILL 000609, 610

Yes, sir.

In the federal law?

In the State, the Commonwealth of Pennsylvania.

All right, that's an interesting concept. Okay, thank you, Madam Chair.

You're welcome. Are there any other questions of Mr. Cuorato? The Chair recognizes Councilwoman Tasco.

In looking at the bottom line of a project's development, when you look at the financial statement, you look at the projected profit income that would be generated from this project over the years? Do you look at that?

Yes, Councilwoman, we do.

So if you look at that and you see a large profit being generated from a project, couldn't that developer use the projected profit to increase the borrowing power 45 11/14/00 - WHOLE - BILL 000609, 610 for the project rather than asking for a TIF from the City?

If the projected profit we believe is too large -- we make some reasonable determinations about what would be a sufficient rate of return for a project to succeed. If the proforma shows excess profits, we will question the developer about that, and more than likely, if a project looks like it can be successful without a TIF, we will not support it. I think when Mr. Fina presents details of the 15th and Spruce garage today, you will see that there is a provision that if the garage is successful beyond a certain point, that the TIF would be repaid sooner. But to answer your question, yes, we do look at a developer's projected return and take that into consideration.

When you look at the garage and where it's located and the cost of parking, and it's across the street from the Avenue of the Arts -- what's the new building?

Kimmel Center. 46 11/14/00 - WHOLE - BILL 000609, 610

The Kimmel Center, right. There's a lot of activity going on around there. And analyzing the financial statement, what does the profit look like. What does the bottom line look like? Does it look like the developer could, in applying for the loan that you talk about, be able to -- it's only, what, $6 million they're asking for from the City, $6 million?

Mm-hmm.

I mean, that's a small amount when you look at the total cost of the project.

Councilwoman, with my testimony, I had provided what is called a "project financing gap analysis" to each member of Council. There are outlines, our conclusions basically of how there is a gap that exists. Even with the revenue that's generated from the proposed garage that we project to be generated, there's a gap that exceeds the TIF, actually. The gap is about 7.84 million, the TIF is 6.2 million because the gap -- So the developer, even after equity's 47 11/14/00 - WHOLE - BILL 000609, 610 provided to a project in the form of the land, has to provide additional cash to this development as well as borrow $15.6 million. The risk is on the develop to get a return for its equity and to repay that debt. So we attempt to maximize that -- the private investment. We look at the TIF more or less as a shallow subsidy program, one that attempts to encourage capital investment, not replacing it. We always look to the developer in the business to provide debt and equity first and then determine if there's a gap in how we would fund that gap. And even then with our analysis and from discussions of me coming before City Council, we brought something -- a new concept that we started several months ago in continuing in our TIFs in our negotiation with the developer, something we call a "claw-back," where if the developer makes a certain return on its equity, a certain profit, we then share above that the return to pay off the TIF note early. So if I'm wrong in my calculations, if I've made mistakes and overestimated the difficulty of a developer to earn a profit, we 48 11/14/00 - WHOLE - BILL 000609, 610 have a mechanism that we're creating that we document that the developer must share its profit with us until the TIF is paid off.

Okay. My next question is, the efforts by PIDC and the Commerce Department to be supportive of the projects and come up with creative ways to help them, is it possible to get that same creative support for the children's fund in terms of me trying to try in -- generating some dollars from these developments for a children's fund, but we don't get the same enthusiasm to invest in children that we get to invest in businesses. What commitment can you make at this point to help us figure out how we can get this children's fund going? I want to see the same enthusiasm and support for helping us develop this fund, and I need some commitment from you.

Councilwoman, I -- I fully support the idea of a children's fund. However, I -- I cannot support the idea that it be -- it be funded from our business assistance programs. And I -- I say that with all due respect. I understand the intent, and I think 49 11/14/00 - WHOLE - BILL 000609, 610 it's most noteworthy. I would just ask that you consider the fact that we are at a disadvantage in attracting business and development, and I am doing everything that I can to overturn this perception that Philadelphia is not a business-friendly environment, to overturn this perception that our tax structure is onerous and burdensome and what I -- what I'm trying to do is -- is do things that will make the situation more positive. I just don't think funding the children's fund from the basic programs that we use to help businesses is going to -- is going to further my goals to increase business. I am not saying that the children's fund is not important. What I guess I'm saying is that if -- if there are other ways that that can be funded, including direct appropriations, those are the ways that I think it should be done.

I --

I don't want to see us put at a further disadvantage, and my fear that is in the business assistance programs that we provide, if we're taking money out of that, it's 50 11/14/00 - WHOLE - BILL 000609, 610 going to further the disadvantage that we're working under.

Well, I don't agree that we're disadvantaged. I have some land up on Cheltenham Avenue that I got developers standing in line to develop. They want to develop it. I mean, they got -- there's land over there on the Boulevard and Logan, 34 acres. Developers are standing in line to develop it. They don't seem to say that they don't want to invest. And that's in the community, it's not downtown. So I don't agree with that argument. I think it's a safe argument to use to grant support for businesses, and they really do have to do that. But I think we ought to stop using the negative that Philadelphia's such a bad place and folks don't want to come in and develop. I think they will develop. If the folks who developed around PNC Bank developed, they didn't ask for a TIF, but they came in and developed. So we do have to present City in a positive light, that we do have something to offer. If we don't have an adequate workforce and we continue to have an increase in crime, they're 51 11/14/00 - WHOLE - BILL 000609, 610 not going to want to come. So we ought to see the benefit inn the development of these projects to support the children so that we can grow children to be responsible citizens as a benefit as a result of the investment. So I -- I think that -- and then I just read in the paper this morning that we got a developer buying up everything in the City. Evidently, he wants to develop. He bought the Acme market, he's buying up everything. Nobody's giving him any TIFs yet, but he's got all this land and we can't seem to take it for ourselves. Did he get a TIF on the Acme market? I mean, you know, we get this argument all the time. We got to do it because the people are not coming to Philadelphia. I do not agree that, you know -- and, you know, I think that we're going to have to work on finding a way to fund these children, and it can't continue to come out of the general fund, and we ought to tie it to economic development, and people will pay because the folks who want to come and do business in Philadelphia want a crime-free City, they want a workforce that's skilled and capable, and if we 52 11/14/00 - WHOLE - BILL 000609, 610 tie the two and make it a positive argument, then it's better for everybody. It's better for Philadelphia and it's not the Oh-woe-is-me- Philadelphia argument that we continue to get over and over again. And I just don't buy into it. So I'm going to call you because I want you to tell me how we can do it. I don't want to hear nobody telling me anymore that we can't do it. We're going to figure out how we do it. And that's all I got to say. Thank you.

Thank you. The Chair recognizes Councilwoman Brown.

Thank you, Madam Chair. I continue to be softly persuaded to support TIFs because of one compelling factor, and that is the ultimate benefit to the Philadelphia School District. And I -- Councilman Ortiz continues to raise it, an important question for me regarding the School District and when the benefit happens. On of your testimony, first 53 11/14/00 - WHOLE - BILL 000609, 610 paragraph, the quote is, project benefits include 230 construction jobs, 57 permanent jobs, and new annual average tax revenues of $275,000 to the School District. Explain to me when that happens. It does say "new" but "new" is relative. So could explain to me when that happens, one. And, two, what happens at the end of the years, when, 10 according to information, the loan dies? 11

Councilwoman, you're quoting 12 my testimony, which I have not given yet. 13 Mr. Cuorato had given his and he was going to try 14 to go to another commitment. 15

That's fair, 16 that's fair. 17

I'd be happy to answer that 18 question maybe after I give the testimony. 19

Sure. Why don't we allow Council colleagues to continue to talk with the Commerce Director, and then you can answer the question after his departure.

Thank you.

Councilman Nutter. 54 11/14/00 - WHOLE - BILL 000609, 610

Thank you, Madam Chair. Mr. Fina or Mr. Cuorato, if -- if you responded to this earlier, I apologize, either because I was delayed in getting here or I missed it. But one of the things I wanted to try to understand about this project was --

I can't hear you.

Some people look forward to the opportunity not to hear me, so I appreciate my colleagues actually asking me to speak up. One of the things that I've been intrigued about this particular project related to the larger project, which is, obviously, the Regional Performing Arts Center, now, I think, more officially, the Kimmel Center. Was a parking garage or a significant increase in parking spaces a part of the original project? I mean, when people conceived that center, what was their -- what was the idea relative to parking? What's the seating capacity at the facility? Was this gone through earlier?

No, sir. 55 11/14/00 - WHOLE - BILL 000609, 610

Okay, all right, thank you.

Councilman, the seating capacity is 2700 in the concert hall and 600 in the recital hall.

All right. So 3300 new seats in a brand-new facility that takes up -- the footprint of this building is what, from Spruce to Pine, Broad to 15th?

Spruce to Delancey, Broad to 15th.

Okay, Delancey's the small street between Spruce and Pine, right? So when the concept was put together, when this was envisioned, which -- I mean, I think the RPAC, Kimmel Center is a great project. What did people say about where folks were going to park? I mean, what was the idea?

Councilman, I believe there will be representative from RPAC that would like to speak and could probably address that question better than I. It was considered -- earlier, maybe before you came in, we talked about why would not 56 11/14/00 - WHOLE - BILL 000609, 610 the Parking Authority do this rather than using the TIF to support this project and -- and our succinct answer was that the Parking Authority would take too long, there would have to be bonds guaranteed through City Council, guaranteed by the City, and we thought this was a better mechanism, particularly in the fact that there will be taxes generated from this project that if the Parking Authority created a parking garage, there would be less taxes generated; even with the TIF, there would be more taxes. And the fact, also, that we are basically putting a risk on the developer to do the garage as assume having the public risk the garage. So there's a number of answers, but if I can -- if you would be so kind to ask that question again of the RPAC representative when they give their testimony, I think that would only enhance my answer to you now.

Well, I understand that but, I mean, I'm assuming that you would have asked that question yourself, right? I mean, if someone -- whenever somebody came to you with this proposal, didn't the thought occur to you that -- 57 11/14/00 - WHOLE - BILL 000609, 610 I mean, why is this almost being looked upon as an add-on? I mean, 3300 seats, big new facility, where are people going to park, I mean, seems to be kind of the next natural question. I mean RPAC wasn't the secret.

That's correct, Councilman, we did consider that -- always parking was thought about in the project. We -- the initial thinking that I'm aware of dealt with the Parking Authority providing parking in the structure, that they would acquire land probably through the condemnation process and build a garage.

When was that?

When was that? That went on for the last two years that I'm aware of, those discussions with the Parking Authority.

You've had discussions for the last two years with the Parking Authority about this?

About parking, yes.

And all during that time you couldn't figure something out?

No, we could. We thought this was a better approach, Councilman, and that's 58 11/14/00 - WHOLE - BILL 000609, 610 why here today, to present that, and I will present that in my testimony. In answer to your question, we think this is a better approach for this particular site than going through that process of condemnation, than the Parking Authority exercise its ability to finance a garage through City-guaranteed bonds.

Okay, I understand that. I mean, I'm just -- you know, I'm not an RPAC expert, it wasn't, you know, a project that I really had to do very much with. In the last few years, as it -- I mean, you've mentioned the Parking Authority on a few occasions. Has the Parking Authority done any projects in the past two years in the City?

Well, I think it was indicated earlier by one of your colleagues that there are proposals by the Parking Authority to do a number of projects, including the 18th and Rittenhouse Square area, but do I not believe the Parking Authority's commenced any parking garage since, except the Airport.

And what they've brought in, I guess, under distress, for Eighth 59 11/14/00 - WHOLE - BILL 000609, 610 and Market some time ago -- I mean, that was kind of a last-minute thing. And, I mean, they seemingly got themselves together to figure out how to -- I mean, obviously, the rest of the project failed, but I think they're going to go forward with that, right? I mean, they responded in a crisis to -- I mean, I'm not -- this developer, the Parking Authority, I mean, I'm just trying to sort all through the stuff. I mean, I haven't articulated a particular view yet; I'm just trying to understand the background and the details.

Yes, Councilman Kenney had actually asked --

There's a point of order?

The Chair recognizes Councilman Clarke.

Thank you. Thank you, Madam Chair. Councilman Nutter, I just wanted to respond to one question with respects to the Parking Authority's involvement. There was one issue at the time. If you recall, there was a 60 11/14/00 - WHOLE - BILL 000609, 610 bill that was requested from the last administration that would increase the cap on the number of spaces for the garage. And at that time, I believe the Parking Authority was considering going out and getting a bond for four -- three or four garages, but all of those garages would be more than the 500 parking space cap. And at that time, members of Council, particularly members who represented parts of Center City, did not feel comfortable with taking, which is currently a zoning issue, out of the hands of the community. So we did not pass that bill, remember that? And that's one of the reasons why they felt uncomfortable with proceeding with that without having sense of being able to do a larger garage.

Councilman, is that the matter of the last administration? I think there was some attempt to exempt the Parking Authority from certain zoning regulations. Was that --

Exactly, yeah. And right now, in retrospect -- well, I don't want to 61 11/14/00 - WHOLE - BILL 000609, 610 -- currently, we're in a discussion about a garage at 19th and Walnut, and it is being litigated, so I think that that decision might have been prudent on that particular case.

I understand.

Thank you.

Okay. So, these discussions started a couple years ago, and the conclusion two years later, through this whole process, was to go this particular route. Now, when did RPAC become a viable proposal?

1996.

1996?

(Nods.)

Okay. Why don't I save those issues for RPAC. The project plan that we received back in September indicated that this is a $31.3 million project, and it has in the project plan acquisition costs of $7.9 million. Now, I was under the impression that this ground is already owned by the developer who wishes to develop; is that correct? 62 11/14/00 - WHOLE - BILL 000609, 610

Yes.

So what are the acquisition costs?

It's maybe a misnomer by calling it "acquisition." It's the market value of the land in the existing parking lot today that the developer's contributing, as well as cash to the total development of the project.

I'm sorry, you lost me with that answer. I have no idea what you just said.

The -- we've calculated the value of the land as it exists today --

Right.

-- to be $7.9 million.

Right.

And when you do an analysis of a project, you look at what the developer's contributing. The developer is providing the land as part of the total development costs. In other words, if the Parking Authority had to buy the land, they would pay $7.9 million, we anticipate, for this land.

But they're not in 63 11/14/00 - WHOLE - BILL 000609, 610 this, right?

That's correct, Councilman.

I mean, we have done a few of these, so I don't mean to seem difficult or even particularly dense. I mean, I didn't have my yogurt this morning but -- I mean, this is listed as costs. It says acquisition, 7.9; construction, 15.9; fees and expenses, 7.5; total project cost, 31.3. And that's matched up against financing, private debt and equity, 25.1; the TIF, 6.2. Excuse me. I guess what I'm not completely understanding is, how does the developer, putting forward what's now estimated to be the value of the land in the project ends up either as a cost or -- I mean, doesn't the developer, I guess, have a particular incident to put up the land in order to make the project happen?

The --

I mean, I just -- maybe it's a terminology issue or --

Well, the use of the word "acquisition" is not entirely accurate since the 64 11/14/00 - WHOLE - BILL 000609, 610 public is not acquiring this site. If you look at the sources and uses of funds --

I mean, I'm not unreasonable in having received this, and the word is written there. I mean, I didn't make it up. And in the context that we normally use the language, acquisition under costs means you have to pay for something in order to get that piece of property. Isn't that what that normally means? I mean, this is not an unreasonable reading of this, is it?

Absolutely not.

Okay.

But I guess the concept is that for a project to be developed, the land, you need to have the land as a part of the project. The land is assigned a value. The developer in this case is putting the land into the project and is given credit for that on the sources side as part of his equity investment.

But he's developing his own land. I mean --

But he's putting the -- he's putting the land into the project. I mean, 65 11/14/00 - WHOLE - BILL 000609, 610 we're listing sources and uses of funds here in trying to come up with all of the sources and all of the uses or the cost factors. The land is necessary in order to develop the project. The developer is putting the land into the project.

Okay. I mean, you know, I hear what you're saying. I guess when you think about you've got a project and you have construction activity, I mean, your hard costs are bricks, people, all of the appurtenances that go with it, I mean, the physical things that make this what you want it to be. I mean, I guess it's kind of naturally assumed that if you own it, you want it to happen on your property, as opposed to going and buying other land to make it happen. I understand if you have to go acquire property. That is a cost.

Councilman --

There is no cost.

Well, it --

I mean, isn't this really a --

Councilman, if the developer that owns it now, if the business that owns it now 66 11/14/00 - WHOLE - BILL 000609, 610 sells it to another business, that would be the acquisition. Even though both are corporations, one corporation sold it to the other. The ownership of that corporation could be the same people, but it would be one corporation to the other. That's why we did it this way. This developer may very well sell the land to another limited liability corporation. That's what happens in these transactions. So you attribute -- and we do this always, you attribute a market value to the land. That's -- that's what -- we call it "an acquisition" because that's what the computer spits out in all of our other TIFs when we set this page up, but it should be market value. And if this is sold by the existing corporation that owns it and the affiliate Parkway to another corporation, which is an affiliate of Parkway, it wouldn't be two separate corporations. There would be an acquisition and all of the associated taxes with that transfer would occur.

What does it actually cost to construct this garage?

We calculate it at 67 11/14/00 - WHOLE - BILL 000609, 610 $15,940,000.

And then you have the fees and expenses.

That's correct.

To build the garage, it's really $23.4 or so million; isn't that correct?

That's correct.

And the sheet seems to indicate that as a part of this transaction, there is private debt and equity in the amount of $25 million; is that correct?

That is correct.

And so, you know, as they say, give or take a million or so, I mean the difference here is in the valuation of the existing land; is that correct?

I'm sorry, Councilman. The difference is approximately the TIF, except that there's almost 2 million or a million 7 that the developer has to also provide to this development that the TIF has not. We're also providing the fact that the risk is on the developer, that if the project does not generate the revenue, that we 68 11/14/00 - WHOLE - BILL 000609, 610 are not obligated to pay the TIF note, except from the extent that the taxes are there.

Well, do you have any doubts about the viability of a multistory garage that is diagonally across from the Kimmel Center? Isn't there a parking shortage in Center City.

My knowledge is not that of an expert on parking, but I'm aware that there's not a parking garage that has been built in Center City that has not received some form of subsidy, of late. I can't go back twenty years, but of late.

I understand that. I didn't ask you that question. I asked you about the viability of a garage at 15th and Spruce that's diagonally across from -- what was the total cost of the Kimmel Center? 230, 250, 280?

$245 million.

$245 million? What's the most expensive hotel that's been built in the City in the last two or three years?

That would probably be the Loews PSFS, at 135 million. 69 11/14/00 - WHOLE - BILL 000609, 610

So this is somewhere between the most expensive hotel in the City and probably the Convention Center in terms of construction costs, size-wise?

Yes.

Do you know how the new garage at 15th and South Penn Square, the new underground garage, do you know how that was financed?

No, I do not.

Did you have any involvement in that?

I'm sorry, Councilman, what was the question?

Did you have any involvement in or do you know how the new garage at 15th and South Penn Square, under the former Meridian Building, the 305-parking-space garage, do you know who how that was financed? Did the City have any involvement in that?

We did not.

That recently opened, right?

Yes. 70 11/14/00 - WHOLE - BILL 000609, 610

All right. I think the rest of my questions are probably for Regional Performing Arts Center.

Councilman Kenney?

Thank you very much. Just one other comment or question regarding Councilman Nutter's line. I think Councilman Nutter was alluding to the fact that the underground garage was built without City subsidy. Was there another garage that's either being constructed -- I think it was very controversial. I think a guy by the name of Wayne Spiloff (ph.) was knocking down -- wanted to knock down historic buildings to build some retail and garage. Was there any subsidy on that one that the City was -- I mean, any TIF?

That was the one on Sansom Street.

Oh, Sansom Street, I'm sorry, yes, Sansom Street.

No public subsidy, to my knowledge, Councilman.

Okay. I just want 71 11/14/00 - WHOLE - BILL 000609, 610 to go back to a minute to -- is there something to add?

Other than the standard tax abatement.

Okay, but no TIF?

Right.

Okay. And the tax abatement would be obtainable by anybody who develops any new commercial property anywhere in the City, correct?

Yes.

You talked earlier about a process that either you're employing now or that has been in place for this administration and the last administration, the process wherein the developer comes in and presents their ideas, their desires and needs and asks for a TIF, and it's either decided whether or not it's given or it's not given. Who exactly sits on that process? Who are the people involved and what agencies are involved in the process of that analysis?

Well, I can't speak for the prior administration. 72 11/14/00 - WHOLE - BILL 000609, 610

Well, you were there -- were you there during the past administration?

I was, in 1992-1993. I don't think we were -- we had not been doing --

But Bob --

Bob was there; Bob could speak to the prior administration. For this administration, development proposals come directly to me, or oftentimes people will go to PIDC. The request gets generated. PIDC -- if the requests go to PIDC, they will bring them to me. If they bring them to me, I will talk to PIDC about it. The ultimate decision as to whether or not we're going to support it would be a recommendation from myself to the Mayor. But that would be based on information that PIDC generates and --

But are there any other agencies involved in consulting you -- the Redevelopment Authority or the Parking Authority -- when it comes to projects for parking or anything like that? And does anyone from the 73 11/14/00 - WHOLE - BILL 000609, 610 Mayor's Office participate in this process or --

I'm sorry, Councilman --

Does anyone from the Mayor's Office or from any other City agency participate in this process of determining whether or not a TIF is going to be recommended?

The City Planning Commission is involved, although not in the economic analysis portion of the process. The Finance Department is certainly involved as far as the revenue ramifications, but the primary decision rests with the Department of Commerce.

Does the Mayor's Office participate?

To the -- well, I am really the liaison with the Mayor's Office.

I mean, you're not on the second floor. Does the second floor or second-floor personnel participate in any way in this process?

I -- I would, just as a normal matter of course, keep the Chief of Staff informed if we're in discussions or if we have proposals. That's the normal course of process. 74 11/14/00 - WHOLE - BILL 000609, 610

In your experience to date and in perhaps Bob's experience in this administration and the last, has anything come the other way? Has anything come from the second floor to your process? Or does all of what you decide come from your process to the second floor with either a signoff or knowledge? Does anything come the other way? That you're aware of.

Councilman, I've only been on the job for a little over three months. In that three months, I cannot recall -- I cannot recall a specific request where anyone from the Mayor's Office called me and said there's a developer who's looking at a project that needs a TIF. It's really been -- it's generated more through PIDC and Commerce.

Okay. What's your experience?

Councilman, there have been any number of times over the years where the Mayor's Office has referred a proposal that they received to PIDC. That doesn't mean that ever gets funded or particularly what program it gets funded from. 75 11/14/00 - WHOLE - BILL 000609, 610 We'll accept a proposal from any legitimate source or from any meaningful source that says there's an economic development proposal that creates jobs, taxes, and improves the City. We're not going to say that if doesn't come through PIDC, we're not going to consider it. We're open to anything. We've had referrals from Councilpeople at times on a particular project. We've also -- as far as other people reviewing the TIF project, as early as we can, we do present the analysis to the technical staff of City Council for their input into it and review and discussion and sometimes negotiation.

Are there circumstances that you've been aware of personally that the process results in a decision not to do a TIF and that that has been urged to be reversed? Or urged to be relooked at?

No we've -- we've made decisions not to do TIFs based on requests that we've gotten. And even in the several months that I've been director, we've gotten requests to fund TIFs for projects that that we did not think warranted a formal TIF proposal. And I certainly 76 11/14/00 - WHOLE - BILL 000609, 610 am not aware of any situation in which a TIF was proposed or to be turned down where we got advice otherwise.

And I'm taking you at your word 'cause I've known you for a long time, and I understand that the process that you're employing and trying to employ as we go forward. My concern is that, and my question is, what role do political considerations play, or can they play, in the decision whether or not to do a TIF or not to do a TIF? And I know -- I mean, not just this administration, but the last administration, what kind of role do political decisions make? None, some, a large part, if in any way, as it results in your decision or in having in Council present it with legislation for a decision to do a TIF, which I don't think I've voted against any of them, in all fairness. What role that process plays or doesn't play?

Councilman, I don't know that it -- I guess that I would characterize it as a political consideration. I think to the extent that the Administration wants to support a project 77 11/14/00 - WHOLE - BILL 000609, 610 for a certain area, that that expression of support would be forthcoming. But the fact of the matter is, a project, I think, still has to stand -- a project for which we are considering a TIF still has to stand on its own economic merits. And I'll use just one example because I'm familiar with it from my prior position at Penn's Landing, and I know you are as well with the Penn's Landing Corporation. The Family Entertainment Center was a project that I think certainly the Administration was strongly advocating as the key to our waterfront development. We -- we entertained a proposal from the developer. I think we were all convinced that there was a gap. So to the extent that the -- it was a project that the Administration was supporting, there was certainly a will to get it done, provided the other factors, the economic factors, were in place.

I think the general concern on my part is that when you come to a project like the Family Entertainment Center, certainly a unique major need for a waterfront attraction and development of that scale and size 78 11/14/00 - WHOLE - BILL 000609, 610 with a national developer that can could anywhere in the world, let alone anywhere in the country, so I think in that particular perspective, I agree with you that it should be not only an Administration push but kind of an overall community push to get that kind of high-profile job-creation project done. I guess on the other hand, when it comes to projects as mundane as a parking garage, which don't have the sex appeal or the panache that the FEC has, is there a political role or a consideration in the recommendation to do this kind of financing?

I would say no. 16

Okay.

I would reiterate Mr. Cuorato's position that there is no political consideration.

Okay, thank you.

Councilman Cohen?

Thank you. What makes the decision to use a private developer rather than the Parking Authority? For example, when Disney World used 79 11/14/00 - WHOLE - BILL 000609, 610 Parking Authority, we had lots of concerns about it. I don't know why the Parking Authority should have been there. In that case, it seemed to me it cried out for the use of a private developer, especially when the Parking Authority's role became two-thirds of the developing interest, the entire interest. Here, if it's serving a public interest, I have such difficulty in seeing the future of Philadelphia if in this area surrounded by all of these wonderful things that we've spent hundreds of millions of dollars on to advance South Broad Street, it's necessary for us to feel we've got to induce some kind of -- with TIF money or abatement money to induce a developer to become involved. It would seem to me that any developer ought to be shouting with joy for the opportunity to participate in the development here, particularly developers that have had past experience with the City and who, despite the City's other problems, have prospered, in part because they've done good work, in part because of assistance from the City, in part because of the general upward spring of the City. 80 11/14/00 - WHOLE - BILL 000609, 610 I'm just troubled. If a TIF is needed here, tell me where it's not ever going to be needed. And that's a real problem I have with this issue. So that's a question addressed to you, Mr. Cuorato. I sensed a negative feeling that you have, that we've got to erase this terrible image of the City being a place that overtaxes everybody, and apparently, maybe in that same image, gives nothing in return. I think we give so much in return and that we're an expanding, healthy community, and I don't think we have to go on our knees and crawl and beg for things and, you know, and just give away all kinds of tax funds. It may be that the project is a good project if it meets a need, but -- but I can't understand why a private enterprise can't deal with this situation entirely. Isn't -- I mean, have we changed our views? Does private enterprise now get redefined as being private investment, plus public guarantee? That nobody will lose any money if they invest their money, they can only have an increase? I mean, is that the direction that 81 11/14/00 - WHOLE - BILL 000609, 610 private enterprise is moving now? They want to be totally guaranteed that they're going to have profit and there is no risk? 'Cause that's not what my understanding of the reason why a percent 7 return is indicated here on one of the forms as 8 being currently the rate of return, and I don't 9 know how they get 15 percent. It seems to me it's 10 a much higher figure. But assuming it's only 15 11 percent, are they guaranteed a 15 percent income 12 on this other thing? 13 I see somewhere, there's a figure of 14 9 percent, and then there are these magical 15 alphabetical words that make us feel we're incompetent. When we look at the papers, there's an NOI appearing, you know, and nobody asks what does NOI mean because we're afraid we might be the only Councilmember that doesn't know what an NOI means. And then you must have a reason for not wanting to tell us what NOI mean. And then you use other initials, DSCR, which you then put a dollar mark, and I haven't the faintest notion, despite serving so many years in City Council, I haven't the faintest of either 82 11/14/00 - WHOLE - BILL 000609, 610 what NOI is or DSCR, but I don't want to say so because people will say, What you been doing your last 33 years? You don't even know what these initials mean. Is it to intimidate us that you put them in instead of describing what they are so that we'll know and don't have to ask you what they mean?

Certainly not.

Well, you know, it carries the look that you're defining for us what you want us to know about and you're hiding other things when you don't want us to know and you want to tend to discourage us from asking about it. What does NOI mean?

Net operating income.

Net --

-- operating income.

Operating income. And what does DSCR mean?

Debt service coverage ratio.

There must have been some letters missing on that. Debt service 83 11/14/00 - WHOLE - BILL 000609, 610 coverage ratio, what does that mean?

The income that is generated from a project is matched up against the debt service, and what lenders look at is whether or not you're generating enough income to cover your debt service, and that's called the "coverage ratio." It's the ratio of income available to pay debt service to the debt service expense.

And when you list $1 here, what does that mean?

1.00, meaning it's the most conservative ratio that you can have, which is to say that the available income to pay debt service is just covering the actual debt service. Councilman, I also just want to correct one another notion that you just said. I think you said that you -- you said that I said that I had a terrible image of the City, and I absolutely do not have a terrible image of the City.

Well, because you're always complaining about the tax. You know, they should have -- (Unintelligible, parties talking over each other.) 84 11/14/00 - WHOLE - BILL 000609, 610

Well, I just want to correct that because I do not have a terrible image of the City. I have lived in Philadelphia my entire life and I love the City and I have a very good image of the City; I'm working to make it better. What I said was that we are not perceived as a business-friendly city because -- primarily because of the current tax structure, and I believe that we should try to do something about that, and I want to try to do something about that because we are not competitive. I fight these battles every day with businesses who are either here and are looking to move or they're outside the City and they want to come in and they say, I'd like to do it, you know, we love this area of the City, we like the workforce, but when we look at our bottom line, when we look at our proforma, it just doesn't match up. That's what I'm trying to overcome. But that is not in any way disparaging to the image of the City; I'm just trying to make us more competitive from a business standpoint.

Well, you know 85 11/14/00 - WHOLE - BILL 000609, 610 you'll never succeed because it never makes any difference. It is part of the rationale in getting more money from government for private groups, whether they're nonprofit or business groups, to point out their needs of money. Everybody always can develop a rationale for why they ought to participate, you know, in revenue-sharing with the taxing authority. Workman's Compensation rates will always be too high, even if they're almost 0. Every business tax will be burdensome, if no other there reason, if there isn't a complaint about the amount of dollars, then it's a complaint about the forms that have to be filled out. But that's in the nature people who want to get things done more easily, so you're never going to get business people to stop complaining any more than you'll get labor to stop complaining or any more than you'll get folks in the neighborhood to stop complaining. Everybody needs certain improvements. But I don't think that's a justification for distributing large sums of tax money. And I think that if there is a need for 86 11/14/00 - WHOLE - BILL 000609, 610 additional parking spaces there, that a system ought to be worked out that -- how about the patrons? I just don't understand that -- you mean, on ordinary business principles, a building garage cannot be successful? There are building garages around there, there's one at 15th and Sansom. Didn't we just approve certain garages that are going to be built? I don't understand why it can't be made to pay for itself. Certainly the rates are not low. Has there been any study made as to how a private enterprise could operate there on the building? What other methods are there of getting the necessary parking spaces?

We've done an analysis that determines that we think there needs to be this public support for the project. But as I mentioned earlier, Councilman, even if we're wrong, we've developed a claw-back mechanism. I know it's another phrase that maybe has not been used as often here at City Council. What that means simply is that after a return on the developer's profit at a tern interest rate, we then share in the profit to pay off the TIF note 87 11/14/00 - WHOLE - BILL 000609, 610 early, therefore reducing the taxes that would go to pay the TIF note in return into the City and the School District. We've heard your position that you think that maybe these TIFs aren't necessary, that even if we prepare the numbers with certain assumptions, that maybe we could be wrong. For any number of reasons we could be wrong, so we've started to develop a mechanism where, if we are wrong for any reason, we then reduce the TIF by paying it off early out of profits that the developer would take and put in his pocket.

Well, I tell you, that sounds awfully good in theory, but I believe in practice, nobody will ever pay the slightest bit of attention. You will accept from whatever developer you deal with his statement or her statement of what the situation is. And just like the City paid -- or was it at the ARA Building where we paid $1 million a year, year after year, or I believe we're still paying to the Wyndham Franklin Plaza, when we pay them about $1 million a year, because their statements always show that they don't quite reach the level at which there 88 11/14/00 - WHOLE - BILL 000609, 610 has been an agreement with the City whereby they will pay the full tax schedules.

Councilman, I am very pleased you brought up the Wyndham Plaza Hotel. There was a City guarantee on that that the City actually did pay on; however, the owners of that hotel two years ago came back to PIDC and said, We want to refinance the hotel. We said, Be our guest, you have to do two things: One, you have to repay the money that the City paid on the debt service that when you failed, we had that repaid; and, two, the City will be removed as a guarantor for your debt in -- going into the future. They agreed, we had those funds repaid, and there is no 16 longer any obligation. So, sir, we do not continually pay year to year for the Wyndham property.

Well, I'm delighted by that news, but I'd like to have a letter from you outlining what was paid by the City, what's been repaid, because I think that's a great achievement, if you've done that, and then I would like to ask you about the ARA Building at 11th and Market, to see if we can achieve the same results, 89 11/14/00 - WHOLE - BILL 000609, 610 assuming if these results are as good as they sound. Excuse my skepticism. We often find in the small print that what appears in the large print doesn't convey all of the facts, but I hope you're right, 'cause that would be a great achievement if it's. . .

Thank you, Councilman.

All right, thank you.

You're welcome. The Chair recognizes Councilman Rizzo.

Thank you, Madam Chair.

Madam President, one more last question. What steps are you taking where you enter into this agreement that if the returns show that they're more than anticipated, and, therefore, the TIF, even by your standards, was either not needed at all or at least not as much? How is the City going to check on that? What apparatus are you creating to make sure that if that agreement is to mean anything, it's 90 11/14/00 - WHOLE - BILL 000609, 610 carried out?

We will require that an independent CPA review the financial statements from the project annually and that they will certify the amount of profits that are generated from this particular project.

Couldn't you have the City Controller do that instead of the -- an independent? 'Cause an independent CPA could be hired by the company. And the word "independent," you know, can mean many different things. I'm not trying to criticize the integrity of the CPA, but I'd feel more confident if the City Controller was the auditing authority.

Certainly the Controller could take a look at the audit when it's completed, but I think standard practice of businesses across this country you do hire independent auditors to review and complete your financial statements on an annual basis. Then a controlling authority, like the controller, would then review that audit to see that it was performed properly and that the findings -- that they would agree with those findings. 91 11/14/00 - WHOLE - BILL 000609, 610

Well, could you give the Council President a letter to the effect as to what the procedure was going to be on that regard? 'Cause I think only if you get some objective system in place will it be meaningful at all.

Councilman, will you yield?

Yes, I'll yield to Councilman Goode.

Councilman, I just want to make sure I get the Councilman's request down and I'm -- just bear with me just one moment, please. Thank you. Thank you.

Can you tell me, just as a matter, we've been discussing audits and whether your clients are audited properly or not. What's the current status of the -- or what's PIDC's most current audit?

Well, currently, the audits are underway. I don't recall the year, Councilman. I'll get that to you of our last completed audit. 92 11/14/00 - WHOLE - BILL 000609, 610

Is it possible that PIDC does not itself have a current audit?

I mean, it's possible. I'm not in the audit end or the accounting end of PIDC. I'll give you the information. I assume it's been in the last -- we have audits done --

Is it possible that PIDC's most recent audit is 1998?

It's possible, sir.

Okay, thank you.

Thank you. Councilman Rizzo, do you have a questions of Mr. Cuorato or for Mr. Fina?

One short question, Madam President.

And does anybody else have questions for Mr. Cuorato? Because he certainly has another commitment, which he told us about earlier. The Chair recognizes Councilman Rizzo.

Thank you, Madam Chair. I received a letter from the developer, and it points out some -- it makes some points 93 11/14/00 - WHOLE - BILL 000609, 610 that I'd like to talk about the process in reference to the Regional Performing Arts Center. It points out here, reduce attendance without the garage, at-risk dollars, jobs and taxes without this garage. When we plan a project and we know we are 700 spaces short, at least that's the projection that the developer has, to support needs of the Regional Performing Arts Center, if you were in the development process, did anyone realize that we were 700 spots short at the Regional Performing Arts Center? It amazes me that we build this big building and nowhere in the calculation -- and it was discussed earlier -- that we weren't concerned about the 700-space shortfall. Could someone explain how we move forward in a project like this? Did we know that the developer was planning to develop this parcel? And it's starting to get to the point like anytime you do a project, you just -- part of the process is they ask for a TIF. If you get it, it's fine and it's great if you get it; and if you don't, you don't. 94 11/14/00 - WHOLE - BILL 000609, 610 But could someone explain to me how we could go forward with a project of this magnitude and not knowing -- and not dealing with the parking problem?

Councilman, it -- the -- there was an awareness that parking was going to be required. I think that the people from Avenue of the Arts Incorporated and the Kimmel Center can give you a more detailed answer on the planning that took place. My understanding is that there have been discussions over the past couple of years about this need to fill the parking need and that what we are bringing you today here with this project is the way to solve it. But the people from Avenue of the Arts and the Kimmel Center can tell you more about those specific discussions that took place over the last couple of years. My point is, the awareness was there, and it wasn't as though we built this project -- it's two-thirds of the way completed -- and all of a sudden, there was a realization that we need parking.

The point that I'd 95 11/14/00 - WHOLE - BILL 000609, 610 like to make is that most projects, I assume, for permits and for final approvals, Licenses and Inspection, Planning Commission, isn't there a scenario of parking? Isn't that a part of getting the permit to start putting the foundation in? Doesn't that issue have to be addressed by government to deal with what impact this project's going to have if there's not enough parking available? Can you manual the gridlock, and can you imagine the confusion that would be caused by people parking illegally without having the parking issue addressed before there's even permits issued to begin construction?

The zoning code does require parking for certain uses, but I don't believe that was applicable in this case.

So you build an auditorium with -- I forget the exact number -- 600 for the concert -- 3,000, let's say, for the sake of speaking, 3,000 potential vehicles coming to that facility -- I mean, that's not a realistic number when we say a thousand and not -- and that's not a part of the zoning code?

Not from a zoning 96 11/14/00 - WHOLE - BILL 000609, 610 standpoint, no. The people planning the project were aware that parking had to be addressed, and it is being addressed.

Did they know of this developer's proposal before the project began? Did they know that there was going to be the potential for a -- a project of this magnitude to support their need? And did they know that there was going to be a TIF requested?

I don't think that they knew that there was going to be a TIF requested. There were discussions with the Parking Authority about providing the parking. The ultimate decision was that this was a more prudent way to go, to have a privately developed garage, and they have made what we believe is a very compelling argument for a TIF.

Again, I don't want to go back over territory that was already covered but, again, having a facility like this to accommodate 700, whatever the number of vehicles, at this location, I've heard of riskier businesses. This is -- but I was more concerned about the process and the fact that this, like the 97 11/14/00 - WHOLE - BILL 000609, 610 light bulb, went off in the eleventh hour, and I hope that's not the case.

I believe it's not the case, and the people from the Kimmel Center and the Avenue of the Arts can describe that process for you in more detail.

Great. Thank you, sir. Thank you, Madam.

Councilman Goode.

Thank you. I'll be very brief, Mr. Cuorato, I know you have to go. Following to what Councilman Cohen was saying about how financial information is presented to Council, as I think we had some discussions about before. On TIF projects in the past, a few that I have had the pleasure of voting against, we received only a one-page summary. While this is much more substantial information it, is sort of strange the way it is presented. It does not have a simple sources and uses statement; instead, we have deals with the sources in the project in a very non-traditional way. It says sources, when it talks about HUD 108 money, 98 11/14/00 - WHOLE - BILL 000609, 610 it will say: The Philadelphia Industrial Development may provide a HUD 108 loan of up to million, of up to 20 million. When it speaks 5 about TIFs, it says that the developer is expected 6 to obtain money for a TIF up to 23 million. Then 7 it says it is expected the developer will obtain 8 39.4 million in debt and equity financing. 9 It seems that the private debt and 10 equity here is a fixed number; the rest of the 11 money is not fixed. I know why that is and I will 12 question Mr. Fina about that extensively, but 13 don't you think that this information could be 14 presented not only a little bit more simpler in 15 terms of sources and uses, but a lot more direct 16 and, I will say, a lot more honest in terms of 17 what it essentially means? I mean, does that 18 actually mean to the extent that we can use HUD 19 108, the developer's not going to have to seek 20 private financing?

We will work with you, Councilman Goode, and any other members of Council and technical staff to come up with a format that you think is more informative and works better for you. If you think it needs to be clear and more 99 11/14/00 - WHOLE - BILL 000609, 610 direct, we'll work to do that.

Thank you. A second question is, very briefly, you are a board member of PIDC?

I beg your pardon?

Are you a board member of PIDC?

Yes, I am.

Are you aware of what its most recent audit is?

No, I'm not. I've only been a board member of PIDC for three months.

Could you forward to the Chair that information?

When the last --

-- audit was done.

Of PIDC? Sure.

The most current completed audited.

Sure.

Thank you.

Mr. Chair?

Councilman Kenney?

Thank you. 100 11/14/00 - WHOLE - BILL 000609, 610 Just one general, kind of philosophical question maybe, and it's a hypothesis. If we are getting to -- and I sense in this body, we're getting to the point where we may be kind of TIFed out. Again, I didn't vote -- I haven't voted against any of these TIFs; I do recognize the value of them and -- but I do sense that there's a general feeling in Council that we may be at the end of our TIF road in many ways. Theoretically, if we were to eliminate or put a moratorium on TIFs from Spring Garden to South, river to river, which is generally considered our Center City area, what potentially would that dynamic do to Girard Avenue, to all of the areas on the fringe of Center City? Would that create a dynamic that would push developers to those areas that are maybe underdeveloped now, close to Center City, and create perhaps a movement north and west, southwest and south? I mean, Center City is an economic engine and hub in the City that we need to maintain and make sure it is very vibrant and productive, but if we started, after all these years of TIFing predominantly Center City 101 11/14/00 - WHOLE - BILL 000609, 610 projects, with the exception of others we've done in other neighborhoods, and concentrated our TIF efforts on the fringe of Center City and then in neighborhood areas, would that, in fact, change the dynamic of perhaps revitalizing our neighborhoods to a larger degree than we're doing now?

I don't have a problem supporting TIFs outside the Center City area.

That's not my question. My question is, if we, for a period of two years, three years, said, We're TIFed out in Center City, we will do TIFs, but we will only do TIFs in areas outside this generally regarded area as Center City, what would that do to Northern Old City and the Girard area? What would that do to parts of West Philadelphia outside of the Center City area? What would that do to North Philadelphia? Would it create zones that would allow the Center City positive to expand into other areas that it maybe isn't expanding as quickly as it is now?

Councilman, my personal opinion, I don't think it would necessarily have 102 11/14/00 - WHOLE - BILL 000609, 610 that effect. The presumption, I guess, would be that we're only going to do a limited number of TIFs; and, therefore, they're only going to be done outside the Center City area. I would not want to put a moratorium on Center City TIFs because I think there may be projects that come along that we really want to support. I don't think it necessarily would have that effect. I am certainly open to encouraging development in those areas outside Center City and encouraging the use of TIF, if it will make a project happen, but I don't think we need to say that we will do it at the expense of Center City.

I think, though, that some of the consideration Councilmembers have -- or some of the concern they have is that Center City seems to be the major focus, and we all agree it is, and that everybody seems to want a TIF. And regardless of how well Center City's done in the past ten years, shouldn't that progress be spurring on development on its own without the TIF? And I guess that's the question we need to ask and answer at some point in time. And will that slowing up of the Center 103 11/14/00 - WHOLE - BILL 000609, 610 City area create some opportunities in fringe areas of Center City and in other neighborhoods throughout the City to expand the progress and benefits that an improved Center City has brought on for the City as a whole? And I think that's worth looking at.

Okay.

Thank you.

Councilman Nutter?

Thank you. One question with regard to the construction activity. What is the role of PIDC with regard -- or the Commerce Department with regard to monitoring who actually works on these projects and the composition of workforce, where people are from, and those kinds of issues? What's your role in that as it relates to a TIF project?

Councilman, I think at your committee meeting of the Economic Development and Commerce subcommittee of City Council, you asked a very similar question, and it had to deal with the reporting requirements of certain pieces of legislation that were passed concerning monitoring 104 11/14/00 - WHOLE - BILL 000609, 610 job creation and TIF projects. And I believe my response was that we were remiss in getting that information; we expect to have it by year's end. We are gathering that data now for all of the TIFs, and we have asked. But to answer it more specifically -- you did phrase it somewhat differently -- we've requested three different entities in the City to basically divide the TIF projects among them and do the job monitoring: There are OHCD for projects of which OHCD funding, CDBG funding is also involved; the Redevelopment Authority on projects in which the Redevelopment Authority has some type of participation or had participation in land assemblage; and, finally, if neither of those have jurisdiction, we've asked MBAT (ph.) to do the monitoring on those projects.

Now, there's a garage, I guess it's going up at 12th and Filbert. Were you involved in that project?

There is -- City Council approved a TIF District for that project.

Okay. And -- I mean, would it surprise you that based on reports 105 11/14/00 - WHOLE - BILL 000609, 610 we've received recently that 80 percent of the people who worked on that project live outside of Philadelphia?

I think that would be disappointing to me, but I know there is a lot of construction going in the general region, that there's -- demand for labor is significant, particularly in areas that are considered union towns, such as Philadelphia, so the labor force is being basically gleaned from other parts of country at times, not only outside of the City of Philadelphia, to meet the demands.

Are there not employment demands in the City? I mean, is unemployment down to zero in Philadelphia recently?

Councilman, I believe there is legislation that's been introduced by a number of Councilpeople who addressed this very issue of trying to encourage more employment in construction by Philadelphians in any project that's publicly assisted.

Well, I mean, again, under the circumstances, whether it's the 106 11/14/00 - WHOLE - BILL 000609, 610 project in front of us or a past project, I mean, I appreciate your sense of personal disappointment, although I don't necessarily charge you with being personally responsible, but, I mean, it is a little astounding that we go through all we go through, these are City dollars that are going to fund this particular project or assist in the funding; yet, you have 80 percent of the people working on it that are non-Philadelphians. I mean, isn't there -- there must be a better answer than personal disappointment. I mean, what -- what is the solution to this particular problem? Or do you -- is that a problem? Does anyone think that that's a problem, or is that just fine?

I think it's a problem.

Okay, and do we have a game plan as to what we're going to do about it?

Councilman, I agree with you that it's an issue. I'd like to ask if I could just look at this issue a little more closely and see if we can get back to you with 107 11/14/00 - WHOLE - BILL 000609, 610 some proposed solutions.

Well, I mean, do we have any idea what might possibly happen with regard to the project that's in front of us? I mean, what will the numbers look like on that? Or what's been discussed, or what's been negotiated, or what do we know? Or, I mean, when we get the reports, is it going to be the same?

Councilman, what this Council requires --

How would anyone here explain that at next week's neighborhood meeting that you're walking down the street, you're going to the terminal, and 80 percent of the people working on the job at 12th and Filbert are not from here? And there are -- I mean, again, unless you're prepared to tell me that there was a recent announcement this morning by the Bureau of Labor Statistics that we have eliminated unemployment or people are not unemployed -- underemployed by skills set in Philadelphia, that this project and a whole bunch of others that are in the 60, 70, 80 percent range, and we have people who don't have jobs, 108 11/14/00 - WHOLE - BILL 000609, 610 don't have health care, have no ability to legitimately take care of themselves or their families.

Well, Councilman, I think the bill that you introduced several weeks ago, whereby for any TIF proposals, we will be working with the developer to provide more opportunities for Philadelphians, is a good start. And I don't know if that bill's -- I believe it's up for final passage, but with some minor modifications, we did support that bill, and we will work with the developers towards those goals.

Well, I appreciate that and, yes, that bill is coming up and we did make some changes in committee. There are some other bills floating around having to do with City projects and other opportunities. I mean, I just -- I guess at the moment, I don't -- and maybe the Commerce Director hasn't been here that long, although Mr. Fina is a -- I don't want to call him an institution, 'cause he's a nice guy, but, I mean, he's been around for a while. I mean, I guess I just wonder from time to time if there are any signs of 109 11/14/00 - WHOLE - BILL 000609, 610 distress amongst the people who engage in this on a regular basis to try to figure out some legitimate answers to these problems. I mean, it is -- it would be virtually impossible for me to explain this legitimately to anybody who really care about it when we get calls and letters from people on a fairly regular basis, trying to figure out how to improve their lives. And you tell me that there is an explosion of activity around the City, which forces then the importing of people not only from our nearby suburbs from but other states to do work in our jurisdiction, for which we are helping to pay; and yet, they get to go somewhere else at the end of the night and send their kids to other school systems and a whole host of very positive factors, while the people here are still paying the tab.

Councilman, you pose a very important issue with these questions, and there isn't an easy response to any of these; these are very complex issues. I'm not dismissing it; I'm saying we are focussed on it. You raise that issue time and again and more forcibly recently, and we want to address them. 110 11/14/00 - WHOLE - BILL 000609, 610 What we have addressed is the fact that every TIF we've created results in jobs, every TIF you've approved results in jobs. The vast majority of those permanent jobs are held by Philadelphians. We are focused on that issue primarily, we have been. It doesn't mean we don't -- should not now and even before focus on the issue of the construction jobs that you're alluding to, and we will.

I appreciate that every TIF has generated jobs. Have you done a comparison by jobs between the construction activity and the value of those jobs versus the permanent jobs and what they've resulted in? Most of TIFs have been either hotels or retail; is that correct?

That's correct. With the exception of PNC, which --

The PNC Center, which I would still hold out as the best TIF ever did.

And, of course, the Philadelphia Naval Business Center of Kvaerner. So I would say the two biggest job-producing TIFs 111 11/14/00 - WHOLE - BILL 000609, 610 that are actually underway right now are the Kvaerner project at the Philadelphia Naval Business Center and the PNC Bank Operation Center.

I'm glad you mentioned Kvaerner, 'cause that's been on my mind recently, but I've been a little distracted. What is the analysis of the Kvaerner project some -- what is it, two years -- some two years later? There was supposed to be a thousand new jobs down there?

I believe jobs are being created there and they probably are somewhat behind schedule but not drastically behind schedule.

I'm sorry?

They're not drastically behind schedule, and I'll get that information to you.

How many jobs?

I don't have -- I don't know off the top of my head, sir.

Okay. If you would forward to the Chair the number of jobs, an analysis of the jobs, and if you could give us 112 11/14/00 - WHOLE - BILL 000609, 610 some demographic information about the jobholders, gender, race, and jurisdiction, I would be very interested to see what the analysis of that in reality is compared to what the original proposal was. So let's go back to the more recent discussion. Do I have any reason to believe that some answers to these very complex questions will be forthcoming shortly to try to address what I look at when I read these reports that I get from OHCD as they monitor these activities? You know, 80 percent outside Philly, 62 percent, 71 percent, 53 percent. Are we going to deal with this particular issue?

We are.

In a relatively timely fashion?

We will do our best, yes.

That's a little better. Thank you very much.

Councilman Cohen.

I'm lost in one of the questions, I think, raised by Councilman 113 11/14/00 - WHOLE - BILL 000609, 610 Nutter directly or indirectly, and it's plagued me. And that's, why do you include the number of construction jobs that would be created by any project when the evidence is very clear that those jobs are not going to Philadelphians, when we get reports that are different from in the past, when we were told that Philadelphia was the preferred place for construction workers to work, when we raise questions sometimes, why is it that minority workers seem to get assigned out of the City and are overwhelming denied the right to work in Philadelphia? We were told year after year after year that Philadelphia was the preferred place to work, and now the very same people who told us that are saying that many of the skilled workers don't want to work in Philadelphia because of the wage taxes. Since they don't live in Philadelphia to begin with, they're not subject to the wage tax, 'cause if they lived in Philadelphia, they'd have to pay it wherever they worked. So we have to assume that skilled workers who are concerned about a wage tax problem are people from outside of Philadelphia and that skilled workers don't 114 11/14/00 - WHOLE - BILL 000609, 610 want to work in Philadelphia. Why is it significant to Philadelphia that there are construction jobs being developed? We're told there are shortages of construction worker all over and that that's one of the major reasons why so many workers apparently have license plates from other states, let alone those from Pennsylvania that, you know, may live outside of the Philadelphia County, but, you know, actually from out of the State. I get very, very confused by all of these mixed signals. Like if this is a project that we're pushing hard and we want to make sure the construction unions are going to be for it then, then we use this line of arguments. If it's something else, we use another line of arguments that may be separate. Well, why is construction jobs now a relevant figure if there are not going to be any Philadelphians working on the stadiums, or any in any significant numbers. Then the question of job creation in Philadelphia doesn't mean much when you're talking about stadiums or anything else. So I'm very confused on this whole issue of 115 11/14/00 - WHOLE - BILL 000609, 610 construction workers. And then we're still told there are vast numbers of unemployed in the minority communities in Philadelphia and that's where the unemployment rate is highest at a time when construction jobs are difficult to fill because the scarcity would seem to be the ideal opportunity to develop all kinds of approaches to developing a skilled group of workers in the minority communities. Why doesn't that happen? And what is your role in the Redevelopment Authority and in PIDC and the Department of Commerce generally? You're the agencies that are most involved in the construction and the promotion of new projects. Why -- why don't you really make this a major issue so that ten years from now -- and I'll probably still be here. I will it to leave it to the lord and to the voters, but within those limits, I don't want to hear these same kinds of question from Councilman Nutter or any other Councilmember. We ought to have resolved this problem. What is your comment on that? 116 11/14/00 - WHOLE - BILL 000609, 610

Well, we agreed that it was a major issue. We think that Councilman Nutter's bill will help. We're certainly willing to work with the developers to encourage the use of Philadelphians on these projects. There are certain things that we can control and there are certain things we can't.

What can't you control?

We can advocate more training for Philadelphians, but we can't force the unions to automatically hire Philadelphians. We can encourage it, we can encourage their training, we can be advocates for that. And we can, at the other end, we can work with the developers to utilize as many Philadelphians as possible on these development projects. And that's what we've said we will do. It's a matter of working with the unions to see if we can increase their Philadelphia membership, and we've said we will do that.

Well, Councilman Clarke introduced a bill, which has been passed now and it was amended with an amendment that he 117 11/14/00 - WHOLE - BILL 000609, 610 introduced, with that goal in mind, to increase the opportunity for minority workers to get these jobs, then to get into the apprenticeship programs and then to get into the unions and then to have fair assignments by the unions. Well, why can't we have an aggressive program to support that activity rather than to just kind of when you come to Council hearings say, Well, we support that program, we'll urge that. Don't we have weapons in the City's arsenal? One, we propose increases several times and extended the width of prevailing wages. Why can't we really come to grips -- And you know what's needed are the folks that you work with all the time: We need help from the business community. There ought to be voices not just from those of us that are identified with working folk and the labor unions, but we need voices from the business community saying, This would be good for Philadelphia, it would really increase the skilled workforces in Philadelphia and make it attractive for other companies to come and join us. Why can't not we have a real effective 118 11/14/00 - WHOLE - BILL 000609, 610 program run by Redevelopment Authority, PIDC, and the Commerce Department that's really aimed at doing this? Is there any -- you know and you would learn as you tried to work out in what ways you had to improve the program. I think all we're getting from you gentlemen -- you know, I don't mean any of this personally, but I think we just get lip service from you. When somebody raises a question you say, yes, oh, they're fine, laudable objectives, oh, yes we would like to kind of help on that thing. And nothing ever happens. I see Councilman Clarke has entered the room and he might want to -- I'm talking about your amendments to the prevailing wage bill and the efforts to increase the skill of folks in the minority community and their eligibility for getting into the various apprenticeship classes and then getting into the union and becoming full-fledged skilled workers that help the City, not only help them in their lives, but also help the City with attracting a real skilled work base.

The Chair recognizes Councilman Clarke. 119 11/14/00 - WHOLE - BILL 000609, 610

Thank you, Councilman Cohen. I was actually going to speak of that. Councilman Cohen and Councilman Ortiz and myself had actually been talking about that particular prevailing wage amendment. This is a city that, frankly speaking, will always be a union town. I mean, there's no getting around that. And we legislatively require that most of the developments that take place, now we have entered into housing, will be required to pay prevailing wage and prevailing wage is essentially a code word for "union job." One of the things that I'd like to speak and ask you to commit as a part of being the Commerce Director because a good job is in fact commerce-related, and, Mr. Fina, in your capacity as vice president of the PIDC, we have consistently gotten from union members that if they have qualified individuals, they would be willing to take them into the trades. Unfortunately, there's currently no mechanism in place, with the exception of a couple of entities, that can adequately train and prepare people for 120 11/14/00 - WHOLE - BILL 000609, 610 the appropriate apprenticeships. We will be hearing a bill later on today to increase the level of hires on various developments that are OHCD- and CDBG-related, but the reality is, if we don't have the workforce to go into those particular trades, it doesn't really matter. You know, they're going to be required to be union. I need somebody in the City of Philadelphia, you know, with all of these -- these creative-type mindsets, as Councilwoman Tasco spoke of earlier, to create a mechanism that we can get people in these communities trained to participate in the trades across the board and not continue to load them up in the 332 Labor Union to make your quota numbers, you know. And I've said that, the membership of the various trades have said that, that we can adequately train people, and they would be willing to do that. Now, we don't know if that's factual, but at this point, we can't call them to the task because we don't have the people to funnel into those types of trades. So I'm asking you to come up with a strategy, create a mechanism, be it a 121 11/14/00 - WHOLE - BILL 000609, 610 school, be it in conjunction with the School District of Philadelphia, be it in conjunction with the building and trades union, so we can have some type of opportunity to have people go and get trained, and then we can require that these developers take these people into these various projects. And I'm asking you all to do that for me, 'cause this is very important to me. I mean, this has been a pain in my -- oops, sorry, a pain the in my backside. (Laughter.)

A pain in my backside for quite some time. And I'm telling you, as Councilman Nutter said earlier, I mean, the unemployment rate is not zero. I mean, in some parts of my district, it was 40 percent, you know, and people say they want to work, so I need to give them an opportunity to go to work. So I'm going to ask you guys to please work with us on this, okay? Thank you. Thank you, Madam Chair.

Okay, the 122 11/14/00 - WHOLE - BILL 000609, 610 Chair recognizes Councilman Goode.

I'll be brief. Just following up on Councilman Cohen and Councilman Clarke's comments. You've talked about instituting new procedures such as the claw-back if there is additional profit or revenue gained in the project that was unanticipated. Would you foresee, looking at it and responding to concerns raised here, a claw-back related to public benefit or a claw-back related to minority participation? Setting goals in projects, and if those goals are not reached, changing interest rates, calling loans, some punitive measures because a lack participation is not reached?

What were the two areas that you mentioned, Councilman, the minority participation and --

Just the claw-back in general in terms of public benefit, whether it be job creation or whether it be minority participation regarding contracting or jobs, whatever the public benefit beyond even -- I mean, this is not just for me and I think several of the members of Council a matter of whether there is a 123 11/14/00 - WHOLE - BILL 000609, 610 gap in terms of access to capital or a gap in terms of appropriate capital in terms of whether this deal works at certain levels, but if we're going to invest public dollars, there should be some public benefits to it, and perhaps there should be a claw-back related to whether we reach those goals as well.

I think we can look at punitive measures. Some of these you get into areas where the commitment is best faith or good-faith development, so it requires some sort of a subjective judgment as to whether or not that's actually been the case, but in cases where it hasn't, I think we can look at punitive measures.

Thank you.

The Chair recognizes Councilwoman Brown.

Thank you, Madam Chair. I simply I want to be put on record as underscoring and echoing the issues that my colleagues have raised. And good faith is important and it counts, but when we can still 124 11/14/00 - WHOLE - BILL 000609, 610 look at existing projects here in the City that have been financially supported by the City and not see local persons employed, it continues to beg the question. So there is a chorus now singing the same song, and a year from now, as we continue to look at TIFs, we're going to continue to ask the same question and we'll move persons who softly support TIFs to an individual who strongly opposes TIFs because the chorus that we're singing is not being heard.

Are there any other questions regarding this bill? (No further questions.)

Seeing none, Mr. Fina, you now have an opportunity to give us your testimony on Bill No. 609.

My testimony will be for Bill No. 609 and 610 together, if I may --

Okay.

-- provide it that way. And I may say many of the issues that I'll present in my testimony have already been discussed through the questions raised by this Council. 125 11/14/00 - WHOLE - BILL 000609, 610 Bill No. 610 will create the Avenue of the Arts Garage TIF to assist in financing the development of approximately a 660-car parking garage, with approximately 15,000 square feet of retail at the street level, at the northwest corner of 15th and Spruce Streets to accommodate the parking needs of the Avenue of the Arts, as well as the Kimmel Center for the Performing Arts. The City and the School District are being requested to approve a $6,250,000 TIF note for the $35 million project. The TIF note would be repaid from new real estate, City sales, business privilege taxes, and half of the use and occupancy taxes generated from this project. The developer, Parkway Corporation, or its affiliate, will be requested to make certain prepayments of the TIF note if the revenues exceed 17 percent of its investment, which will be calculated on an annual base. 1 million to the City. Another benefit would be the 126 11/14/00 - WHOLE - BILL 000609, 610 satisfaction of the parking needs of the currently under-construction Kimmel Center. Without such parking, the Performing Arts Center would border on disaster. With my testimony, a copy of PIDC's project financing gap analysis was circulated to Councilmembers. I have additional copies with me should anyone require such. The analysis indicates a gap exceeding the TIF note that would be funded by the developer. However, should the analysis be incorrect for any reason, and the project would do better than anticipated, PIDC has proposed the previously-mentioned claw-back to reduce the public TIF funding. Representatives of the developer and the Kimmel Center for the Performing Arts are here to answer any questions you may have. Further, I believe representatives from the Kimmel Center and the Avenue of the Arts, Inc. Have prepared testimony to provide information on the need for parking. On Bill No. 609, this particular ordinance amends the Jump Street TIF District, which was previously created by Council under Bill 127 11/14/00 - WHOLE - BILL 000609, 610 No. 980705. It extends the term of the TIF District from years to years, it revises the 4 project plan to include the business privilege 5 taxes in the TIF revenue, and it increases the TIF 6 note from $16 million to $23 million. 7 The Jump Street USA will be on a 8 five-acre parcel located on the west side of North 9 Broad Street between Cecil B. Moore Avenue and 10 Oxford Streets on the Avenue of the Arts North. 11 This site is also within the North Central 12 Empowerment Zone. , or its affiliate. 16 Grid Properties has successfully 17 developed Harlem USA in New York City. Grid, or 18 its affiliate, proposes to develop a three-story 19 289,000 square foot retail and entertainment 20 center, including a movie theater complex and 21 approximately a 200-plus-car parking facility or 22 more. Construction of the parking facility may be 23 funded from other public or private sources and is 24 not included in the project. The project would 25 include national tenants offering goods and 128 11/14/00 - WHOLE - BILL 000609, 610 services presently not available to residents in North Philadelphia, such as Magic Johnson Theaters. The City and the School District are being requested to approve the $23 million TIF note, an increase of $7 million from the $16 million TIF previously approved. The TIF revenue will include new real estate taxes, City sales, business privilege, use and occupancy taxes over a 26-year term. The total project cost is approximately $62 million. The project benefits include 520 construction jobs, 560 permanent jobs, new annual average tax revenue of $382,000 to the School District, and $1 million to the City. With my testimony, a copy of PIDC's project financing analysis was circulated to Councilmembers.

Again, I have additional copies if anyone requires such. 5 million. The City has provided such funding for the gap through the acquisition of the property. To assure the public is fairly compensated for the acquisition, the developer will be required to include in the 129 11/14/00 - WHOLE - BILL 000609, 610 ownership of the project a community organization that will also receive a participation in the net cash flow from the project. Representatives from the developer and the community organization are here to answer any questions. I also believe Mr. Alston from the Beech Corporation would like to provide formal testimony. The two TIF projects designs have not been finalized, and the figures presented here are based on estimates. The total amount of the line items may vary as the project design for each TIF project is redefined and are not intended to be limitations. The initial project costs and/or size of the project are also not intended to be limitations. The initial project costs and size of the project, excluding the additional structured parking for Jump Street, if any, may change up to 15 percent prior to settlement on the financing, without amendment to the project plan. Additional increases shall not be funded from any public financing source. Structured parking, again, may be added to the Jump Street project, without amendment to the project plan. After 130 11/14/00 - WHOLE - BILL 000609, 610 settlement on the financing, no further amendment shall be required. The language, as presented, was agreed to by the District Councilman, the technical staff of City Council, PIDC, the developers, and their legal counsel. The School District of Philadelphia has agreed by resolution to participate in both TIF projects, as presented to you and delineated in the project plans. The project plans are on file with the Clerk of City Council for review by the public. In closing, I would like to remind members of City Council that today's hearing is required by the Pennsylvania Tax Increment Financing Act, and the Act requires Council to wait at least three weeks from this hearing date for final consideration, which would imply action at Council's meeting of December 7th but, in any event, no later than December 14th. I respectfully request favorable consideration of Bill No. 000609 and Bill No. 23 O00610 by City Council acting as the Committee of the Whole for the recommendation for approval to City Council in accordance with the aforementioned 131 11/14/00 - WHOLE - BILL 000609, 610 time frames. I'll be happy to answer any questions.

Mr. Fina, what was the funding source that the RDA used to acquire the Jump Street site?

They were economic stimulus funds from prior years.

So will the RDA be reimbursed for their acquisition costs?

Well, what's proposed, since it came from the City, is that some mechanism with the community organization would be set up for ownership, and those funds would be shared between the community organization and the public, meaning the City, or its designee. It could be the Redevelopment Authority.

You're saying yes? Are you saying yes?