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?
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 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, 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.
We calculate it at 67 11/14/00 - WHOLE - BILL 000609, 610 $15,940,000.
To build the garage, it's really $23.4 or so million; isn't that 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?
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? 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?
Do you know how the new garage at 15th and South Penn Square, the new underground garage, do you know how that was financed?
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?
All right. I think the rest of my questions are probably for Regional Performing Arts Center.
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?
Okay. I just want 71 11/14/00 - WHOLE - BILL 000609, 610 to go back to a minute to -- is there something to add?
Okay. And the tax abatement would be obtainable by anybody who develops any new commercial property anywhere in the City, correct?
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 --
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 --
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.
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.
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 reiterate Mr. Cuorato's position that there is no political consideration.
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?
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?
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.
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. . .
You're welcome. The Chair recognizes Councilman Rizzo.
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, 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 --
Thank you. Councilman Rizzo, do you have a questions of Mr. Cuorato or for Mr. Fina?
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.
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?
No, I'm not. I've only been a board member of PIDC for three months.
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.
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?
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?
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?
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.
They're not drastically behind schedule, and I'll get that information to you.
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?
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.
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.