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, 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 --
-- 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?
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.
How and what happens in the event they are unable to repay the RDA?
Well, it's -- the mechanism that's proposed is that it would be cash flow from 132 11/14/00 - WHOLE - BILL 000609, 610 the project or profit from the project. If there's no profit, the developer doesn't have profit; if there is profit, the developer shares the profit.
Under the TIF Act, what is the maximum allowed duration of a TIF project?
The TIF Act permits a 20-year term, unless an amendment is approved, going through the exact same process as originally approving the TIF. We've originally approved Jump Street by the bill I mentioned earlier for twenty years. Now, under the Act, we could go back through the same process, which we are doing, to amend the TIF Act to increase the term.
These proposed amendments will extend the TIF period by six years. I believe we will now include the BFT tax as TIF revenues, which will increase the value of the TIF note or loan from $16 million to $23 million; is that correct?
Will the developer be increasing their private equity 133 11/14/00 - WHOLE - BILL 000609, 610 and/or debt from the previously approved amount?
Those amounts are not increasing at this point. The risk, however, is on the developers to cover any cost overruns, or they're going to assume at this point the obligation to repay the TIF note if tax revenue is not available.
Do you have a breakdown of the $18.3 million in fees and expenses category?
I could forward it to you, I'm sorry. I will forward it to you.
Okay. Would you please walk us through the project financing gap analysis for the Jump Street project?
Yes, I will. 134 11/14/00 - WHOLE - BILL 000609, 610 Basically, what the Jump Street financing gap analysis indicates is that the total project costs for all elements of the project is $62.3 million, that the cash flow, based upon the proforma that PIDC and others have reviewed, indicates that the revenues would be $5.2 million, the expenses would be $1.7 million for the net operating income again, the NOI, is $3.5 million. We believe that this amount would support debt of approximately $27.9 million. That is done by assuming a debt service coverage ratio of 1.25, which results in a payment from that net operating income of $3.8 million over years at 9 percent, 15 which is probably conservative and it may even be 16 a higher interest rate, which would then reduce 17 the debt that the developer could borrow and, 18 therefore, increase its obligation to find other 19 funds, particularly the equity. 20 Now, the estimate of supportable equity 21 would result from the remainder after the debt 22 service is paid of $568,000. Based on an equity 23 cap of 15 percent, that means that that amount 24 could support $3.8 million of equity. The result 25 then from the equity and the debt is that there's 135 11/14/00 - WHOLE - BILL 000609, 610 -- there's a gap of $30.7 million. We believe the TIF, at its maximum level, could support $23 million resulting in a $7.5 million gap beyond the TIF that I mentioned earlier that is being funded by the Redevelopment Authority through the acquisition.
Mr. Fina, if additional public funding were required, would you be required to come back to City Council for another amendment?
Okay. The Chair at this time recognizes Councilman Goode.
Thank you, Madam President. Mr. Fina, we can save some time. Can you tell me if you're classifying HUD 108 as private or public money.
Within these documents here, you're classifying HUD 108 as private or public money?
You're talking about the 136 11/14/00 - WHOLE - BILL 000609, 610 project plan?
No, I think we refer to a category of private and public funds, and we've put that in there, we add the two.
On Page 7A of the amended project plan, it says private financing $39,350,000, tax increment financing million. 11
But you don't really 14 have 39,350,000 of private money in this deal, do 15 you? 16
Well, there's no money 17 committed to the deal, but that's what's expected. 18 We will not be using HUD 108 financing for this 19 project. The amount here does include the 20 7.5 million of the RDA funds, which should be 21 broken out of that 39. 22 So you're correct from that standpoint, 23 Councilman.
Yeah. That sounded very interesting that you're willing to admit that 137 11/14/00 - WHOLE - BILL 000609, 610 there is no private money actually committed to this project yet, but let me run through a few other questions. How did this project originate?
I believe that staff of the City had read and visited the proposed Harlem USA a number of years ago. They invited the developer to come to Philadelphia and meet with at that time the then- President of City Council, the Then-mayor, and the -- and then other people, including PIDC, to talk about trying to replicate that Harlem USA in Philadelphia at this location, as well as looked at -- as well as reviewing other locations. The developer was encouraged to do that and it was interested in doing that, and that's how the project basically originated. And then we put together, with the developer, a review of his financial analysis and program and to come up with what we think were the needs of the project that would not be met by 138 11/14/00 - WHOLE - BILL 000609, 610 private investment and debt.
Let's speak about how the developer was encouraged. You actually offered to buy the land for the developer; is that correct?
The City actually offered to buy the land for the developer; is that correct?
Okay. And how much was spent in economic stimulus dollars?
Seven and a half million to buy the land. And then you entered into an exclusive agreement with that developer?
And this was all based upon replicating a project that was done in New York?
Well, prior to that, Councilman, there was a number of discussions with other movie companies to create other -- 139 11/14/00 - WHOLE - BILL 000609, 610
But I'm asking, did you pay $7.5 million in economic stimulus funds that I'm assuming came from tax lien sale to lure this developer here to replicate this project based on a project that was done in New York?
Well, there were a number of incentives that were provided. The TIF --
You gave this developer an exclusive agreement and you bought the land with $7.5 million of taxpayer money.
Based on the fact that you were replicating a project in New York.
Can you tell me a little about the financing of that project in New York?
I don't have that information, but I can get it to you, Councilman.
Actually, I do have that information. The project is a very comparable project, it's about 280,000 square feet, it's about $65 million, but the project in New York -- and I'm reading from a Chase Manhattan 140 11/14/00 - WHOLE - BILL 000609, 610 Bank publication out of winter '98 -- done by the community develop says that Chase provided a $407.7 million construction loan while an additional $11.2 million loan was from the Upper Manhattan Empowerment Zone Development Corporation. Shortly after the closing of the construction loan, Chase sold participations to Fleet Bank, City Bank, Diamond Savings Bank in New York, and Caldwell Federal Savings Bank. In other words, it was 70 percent of this money that came from Chase and then their interest was sold to other banks; is that correct?
And you were involved in luring the developer here. 141 11/14/00 - WHOLE - BILL 000609, 610
No. We looked at this particular project. That was what interest --
This project is a complete replica of the project in New York. The project here has a square footage of 280,000, the project in New York is 270,000 square feet. The project here is $62.35 million, the project in New York was $65 million. Why is the financing different? Why is their $47.7 million coming from initially one bank and then a series of banks, another $11.2 million coming from the Empowerment Zone. Yet in this project, we have no commitments for private financing, and the private financing numbers here are actually cooked. In essence, you have $23 million in tax increment financing, but in terms of private financing, when we go to the sources and uses statements in this document, when we get down to the sources, it's very shaky, it's not listed as absolute amounts. I mean, in fact, what it says 142 11/14/00 - WHOLE - BILL 000609, 610 is that in terms of HUD 108, which you say you will not include HUD 108 financing in this project, but it says here within this document you gave to us, PIDC may provide a HUD 108 loan of up to $20 million. And it says clearly within this document that $39.4 million in private debt equity includes that HUD 108 money. Now, which is it? Where's the private money coming from? And if you have private money in this project, in terms of documentation you've given to us, it amounts to $39,350,000, tell me what that is this terms of sources of private financing.
Chase has provided me with a letter of interest, but not with a commitment letter as such, and that probably won't happen for months yet on this process. The HUD 108 will not be utilized in this project, Councilman. That was what we had originally proposed; it should have been deleted from this amended project plan. We are not considering using HUD 108 --
But you don't have a private financial commitment, yet you're absolutely coming to this Council for an increase 143 11/14/00 - WHOLE - BILL 000609, 610 in public dollars after $7.5 million was spent to buy the land. Actually, let's talk about some other sources. Are there any neighborhood development fund dollars in this?
Okay, thank you. That concludes my questioning. I'll just say for the record, I don't see how we can provide an additional amount of public money before there's a private financial commitment. That's completely ridiculous to me.
Councilman, we're not providing; we're getting authorization provided should the other dollars materialize. None of the funds -- of the TIF funds are provided until the project closes with all of its funding.
Thank you. The Chair recognizes Councilman Ortiz.
Just one question, 144 11/14/00 - WHOLE - BILL 000609, 610 Madam Chair. I wasn't here yesterday, but we did have a discussion, my staff kept me informed about a bill about the children's fund. And I just want to know how we can configure that 1 percent, or if we finally enact legislation that is now in the books, whether this -- all of the TIFs that we are talking about will be exempted from that 1 percent or not.
Councilman, if it's legislated by you, then we are obligated and the developer would be obligated to --
I'm talking about this TIF and the other TIFs that we're discussing today.
If they want to voluntarily, there's no legal obligation or ability for the prior TIFs to come back and legally obligate them to pay something.
And I imagine that you have looked at the legislation about the 145 11/14/00 - WHOLE - BILL 000609, 610 1 percent of the children's fund. And what, if any, negative effect will it have on the actual development of any projects if the 1 percent is actually legislated?
No, no, today, he was here today and he provided a response to that very same question concerning the 1 percent, and he thought that it was inappropriate to put that obligation on businesses that are seeking public financial assistance to do the project as it is.
Why is it inappropriate? They are getting something from the taxpayers, we are taking money from the school system. Why is it inappropriate for them to contribute a very insignificant sum to a children's fund?
Yet, it would be appropriate for them to take away -- it would be inappropriate for to us pass legislation that 146 11/14/00 - WHOLE - BILL 000609, 610 takes money away from the school tax base. How would it be inappropriate? I -- I -- that's a curious choosing of words.
I think how it would be inappropriate, sir, is that we're reducing taxes right now that go to the School District because there's a gap; otherwise, without that gap being funded, the project can't proceed. The only thing we could actually do is take even more tax revenue to cover that because the economics of this project do not warrant the project proceeding without public assistance. So you're adding another economic burden on the project. And I am for -- as Mr. Cuorato said, I am supportive of a children's fund and children, but if you add that burden, it would only be asked -- the developer would only ask the public to assist even further.
You know, Councilman Goode just finished detailing a project that is a total identical, and they have -- they don't have the same sort of financial contributions that are expected from the City. And I just don't see why it would be 147 11/14/00 - WHOLE - BILL 000609, 610 inappropriate. Again, I don't see where it makes it uneconomical, unprofitable. I think every project we have legislated and have given a TIF to almost here in the last two years in Center City could have been done without -- would have been successful, would have been profitable. And I think I think we keep fooling ourselves. We -- this is an entitlement that people now believe they have, and we keep on giving it. We're now asking the necessary and requisite questions about the impact that it has on our tax base. I think several questions have been asked here that really go to the point. One, does it hurt us in reducing the wage tax in the long run? Also, it hurts us in terms of the school funding as it goes. It seems like the return that the people are getting is really minuscule in return for the benefit that the individuals are receiving -- the developers are receiving. And I question the issue about the construction jobs because I don't think most of the construction jobs are going to Philadelphians. And I question where, you know, where it is that 148 11/14/00 - WHOLE - BILL 000609, 610 the citizens of Philadelphia benefit in the long run overall by these largesse that we keep giving with the taxpayers' money. I just question that. I still have not received in the last two hearings a very clear answer because I see nothing in front of me in terms of economic analysis, just rhetoric that is presented to us at every hearing, but nothing, nothing that gives us what has been done before, what has been the benefit, and what it is it's going to be, nothing. Thank you, Madam Chair.
You're welcome. Councilman Cohen has a question. He's out of the room at the moment. Are there any other members who would like to ask a question? (No response.)
Would you check if Councilman Cohen is on his way back? 'Cause we're waiting.
I know I went out 149 11/14/00 - WHOLE - BILL 000609, 610 of the room on a couple of occasions. Were the -- have the representatives of the Kimmel Center or the Regional Performing Arts Center -- did I miss them, were they up at the table?
No. Do we have anyone else to testify on either of the bills, Bill 609 or Bill No. 610? Please approach the witness table. (Witnesses come forward.)
Kindly identify yourself for the record and proceed with your testimony.
Good morning, City Council President and City Council members.
My name is Ellen Solms. I am Executive Director of Avenue of the Arts, Inc., the private nonprofit agency whose sole mission is to coordinate and support development on the Avenue of the Arts, both north and south. I am here to express Avenue of the Arts Inc.'s support for the legislation now before this committee to create a tax increment financing district at 15th and Spruce Streets and to amend 150 11/14/00 - WHOLE - BILL 000609, 610 the existing Jump Street TIF District at Broad and Cecil B. Moore Avenue. Avenue of the Arts Inc. believes both initiatives will be key factors in the ongoing success of the entire Avenue of the Arts, solidifying and extending the Avenue's role as an economic engine for the City. On South Broad, an independent study has clearly shown that the 660-car garage proposed at 15th and Spruce Streets is essential to the successful operation of the spectacular new Kimmel Center. The endorsement of this project by the Center City Residents Association is an indication of how important this garage is to the entire district and to its successful integration with the adjoining neighbor on North Broad. On North Broad, the development of the now-vacant and largely underutilized site by Grid Properties into exciting an retail and entertainment center will be a terrific boon to the local community, providing services and jobs to neighborhood residents. Its completion in between the Liacouras Center and Freedom Theater will truly create an entertainment center on North Broad, with the power and diversity to attract 151 11/14/00 - WHOLE - BILL 000609, 610 cultural consumers and their dollars to the Avenue of the Arts on North Broad Street. Thank you.
Thank you. Good afternoon. So nice seeing you again.
Fine, thank you. Mr. Alston, please kindly identify yourself for the record.
Good afternoon my testimony will be brief and succinct. Here are copies. Council President Verna and members of City Council, good morning. I am Floyd W. Alston, President and CEO of Beech Interplex, Inc., a member of the Board of Directors of the Avenue of the Arts, and Co-Chair of the North Broad Street Planning Force for the Avenue of the Arts. I am here to express my support of Bill No. 000609 and Bill No. 000610 to amend the Jump Street TIF and to create the Avenue of the Arts Garage TIF. It has been my privilege to be directly involved with PIDC in a number of positive 152 11/14/00 - WHOLE - BILL 000609, 610 economic development projects in North Central Philadelphia adjacent to or on the North Broad Street -- on North Broad Street. Most recently, we are on the verge of the successful restoration of the internationally known Blue Horizon, located on North Broad Street. In addition, as a part of the work of the Avenue of the Arts Board and the North Broad Street Planning Task Force, you will see mid-2001 the construction of an exciting streetscape from City Hall up to North Broad Street Station. This will mark the beginning of an aggressive new renewal effort for North Broad Street and the continued refinement of the now-exciting South Broad Street. I thank you all for your support as we pursue our efforts to make the Broad Street corridor and its adjacent neighborhoods convenient, safe, accessible, entertaining, and economically viable. Thank you.
Thank you very much. Good afternoon, sir. Please identify yourself for the record. 153 11/14/00 - WHOLE - BILL 000609, 610
Good afternoon, President Verna and members of City Council. ). I'm the Project Manager for the Regional Performing Arts Center. Thank you for giving me the opportunity to appear before you to speak in favor of granting the tax increment financing sought for a proposed 660-car pack parking garage to be constructed by Parkway Corporation on the corner of 15th and Spruce Streets. I have some brief remarks in which I hope to make clear the critical importance of this garage for the success of the Avenue of the Arts in general and the Regional Performing Arts Center in particular, and then I will be pleased to try to answer any questions you may have. Over the past years, I've been 19 involved in the designing and construction of many 20 important civic projects, such as the Gallery at 21 Market East, the Center City Commuter Rail 22 Connection, the reconstruction of the Schuylkill 23 Expressway, and the Pennsylvania Convention 24 Center. Almost 13 years ago, I got involved in 25 another uniquely challenging project: building a 154 11/14/00 - WHOLE - BILL 000609, 610 home for the performing arts especially for our city's great cultural treasure, the Philadelphia Orchestra. Today, I serve as RPAC's construction project for the Kimmel Center for the Performing Arts. And just when I thought I had seen and heard it all, I learned about the demands of constructing a 2500-seat symphony hall, a 650-seat recital theater with a resolving stage, restaurants, box office, education center, entertainment and gathering places, and a huge glass dome. I learned about noise and reverberation protection, acoustical demands, audience and performer flexibility and comfort, and access within and to the building. It is this latter issue that brings me before you today. I don't think there's any real doubt about the benefit RPAC will bring to the City and region, even besides the obvious ones, a much needed new home for the Orchestra and an opportunity to bring back long missing performers and groups in dance, classical, pop, and world music. The non-cultural -- the nonprofit 155 11/14/00 - WHOLE - BILL 000609, 610 cultural business is big business, bigger on a national basis than all major sports combined. Studies show that Philadelphia, which is already a $300 million-per-year cultural market, will, with RPAC, become a $564 million yearly market. RPAC alone is expected to generate jobs, nearly 4800 just from construction and another 3,000 in Art PAC-related economic activity. Tax revenues: About $10 million every year in City and State and income, sales and wage taxes, more than half of it in the City of Philadelphia. Economic development: The Pennsylvania Economy League says that the dollars and jobs created and sustained by RPAC, quote, will circulate well beyond the arts and hospitality sector, end quote, and that RPAC will play a vital role in attracting today's kinds of businesses and employees to our city at a time when the City's quality-of-life assets are as important as its tax and infrastructure. Education: RPAC will provide capability for expanded programs for all of our resident companies and linkages with the schools 156 11/14/00 - WHOLE - BILL 000609, 610 throughout the region, as well as increase diversity in audience and programming. In RPAC's first year of operation, we project 100,000 seats will be occupied by school-aged children attending a full slate of youth education programs and performances. Why am I tell telling you all of this instead of talking about parking. Because one is the prerequisite of the other, because none of this will happen unless people feel comfortable about coming to RPAC. How to get there, how to get in and out of a building in the City. Is it safe, is it convenient? In short, where to park? Virtually every person and group I speak to about RPAC asks the same question: Where can I park? Any concern or hesitation about RPAC is not about paying for it.
About 94 percent of the construction costs has already been raised. Not, will it be beautiful? Raphael Vignioli's design has been acclaimed all over the world. And not, will be playing great music and dance? The list of performers, starting with the Orchestra and the other resident companies, 157 11/14/00 - WHOLE - BILL 000609, 610 Philadanco, the Opera Company of Philadelphia, the Chamber Music Society, the Pennsylvania Ballet, the American Music Theater Arts for Youth, the Concerto Soloists assures its artistic greatness. The question is always: Where to park? This is not really surprising. RPAC will attract many area residents who do not regularly come to Center City. It will attract overnight guests from the surrounding region, from across the country, and from around the world. Where will they stay, where will they eat, where will they park? The first two questions are answered. Hotels and restaurants are everywhere and are enjoying Philadelphia's great new civic renaissance, but the parking questions have not yet been answered. Everything is in place, Philadelphia is a great city again, and people are coming from everywhere to be part of it. But without this last piece, where to work? we put it all at risk. This Council stood four square behind the City's remarkable rebirth. Your vision, foresight and courage have made it possible, but 158 11/14/00 - WHOLE - BILL 000609, 610 there is one more vital piece, and it may sound small compared to some of the things you have done, but it's not. The success of all of the rest of it depends on your answer to one more question, where to park? For RPAC and others at the heart of Avenue of the Arts, parking at 15th and Spruce is critical. It's close, it's familiar, it's safe, it makes the whole thing easy. This Council has made its mark on history with its support of the revitalization of Philadelphia. There are a few more steps to be taken to ensure the lasting success of that legacy. This seemingly small step, approval of a TIF for a 660-car garage at 15th and Spruce must be taken before the journey can be completed. We are 56 weeks and 3 days from opening. I urge you to take this last step and assure that safe and reliable parking is in place by their opening night. Thank you.
Good afternoon. 159 11/14/00 - WHOLE - BILL 000609, 610
Council President and members of the Council, I am Marilyn Rivers. I am the Executive Director of Women's Christian Alliance, an agency serving North Philadelphia for 50 years or more. We are located on the 1600 block of North Broad Street where the Jump Street is now proposed to be, and I just want to say a few words on behalf of the Jump Street project because I am involved with families in the community and I know that they take a great deal of pride in their community, and I see this project as adding to their lives, enriching the job opportunities, and enriching the environment by providing a front that they can be proud of.
Are there any questions from members of the committee for any one of the witnesses at the table? The Chair recognizes Councilman Nutter.
Thank you, Madam Chair. Good afternoon. 160 11/14/00 - WHOLE - BILL 000609, 610 My questions have to do with the Avenue of the Arts Garage. I think many of the representatives for the Regional Performing Arts Center or the Kimmel Center were in the audience earlier today when I asked about the garage and the proposed construction of the center. And I just wanted to get a better understanding of what the thinking was at the time with regard to parking provisions versus just the construction of the center.
I'm George Schaeffer, from the Regional Performing Arts Center.
When the Kimmel Center for the Performing Arts opens, there will be 8,000 seats in a one-block area: The Academy of Music, the Meriam Theater, the Wilma Theater, the 2500-seat symphony hall, and the 650-seat recital theater. I would guess that 70 to 75 percent of the people attending those performances will 161 11/14/00 - WHOLE - BILL 000609, 610 drive. So 5500 people will arrive by car in any one given evening. And, therefore, you have a need for about 2500 parking spaces. We did not feel that we intended to build a 2500-car parking garage in addition to our $250 million project. We were able to provide within the design of the Kimmel Center 135 spaces, and we are hoping that the private community and/or the Parking Authority fills that much-needed gap.
There was no 13 discussion, though, back at the time that -- I mean, I guess, beyond a hope that somebody somewhere might possibly think about, contemplate, and maybe just do something? I mean, within the confines of We're going to build a facility that has 3300 seats and we know that there are other venues around us -- I mean, most of the time when people build large projects like this, they try to look out for the patrons who are going to come to the facility and they're going to try to accommodate some significant number. Now, I mean, obviously, you've tried to do what you could. I'm assuming your 128 spaces 162 11/14/00 - WHOLE - BILL 000609, 610 are on the site. I mean, I know that you must have known that 128 spaces were not going to take care of 3300 people. So, I mean, how do you go forward on -- what's the project, $240 million?
A $250 million project, for which, I believe, the State is in for some amount and I believe the City.
All right. I mean, how do you go forward with a project like that not knowing, with any apparent level of certainty, from 1996, how you were going to accommodate 3300 patrons at the facility? I mean, how do you know that?
You hit some very interesting and important points. It's an issue that Avenue of the Arts, Inc. Has been dealing with for a number of years, and a couple of -- approximately 18 months ago, we did commission a study called "Getting to the Show on Time" that analyzed what the parking demand would be once the Kimmel Center is open. 163 11/14/00 - WHOLE - BILL 000609, 610
Well, did you have parking concerns before the Kimmel Center?
Yes, we've had concerns, not just about parking, but about accessibility and traffic within the area, and that's what I wanted to address. It's not just a question of parking. Parking is absolutely essential, and the study did show that once the Kimmel Center opened, there would be an immediate need for about 700 additional spaces, if you counted up all of the spaces that are available on the Avenue. And it also made about 14 recommendations in addition to parking that affect 15 how traffic should move on the street, traffic 16 regulations, recommendations that have to do with 17 public transit. And all of these we are exploring 18 and moving on very aggressively with RPAC, with 19 representatives of the other venues, and with many 20 of the restaurateurs, for example, and the other 21 private parking operators in the district. 22 So it's an area that I think we're all concerned about, and we're trying to deal with it on many different levels.
Was there a 164 11/14/00 - WHOLE - BILL 000609, 610 feasibility study done prior to moving forward, going into the creation of the Kimmel Center?
On parking specifically? I mean, there were many, many feasibility studies --
Parking and how we're going to do it, how we're going to raise money, all of those kinds of issues.
I would say yes, there were studies on all of those areas.
And in any one of those studies, was it ever indicated that not only was there a need for parking because of the Center and all of the other venues around it, but any recommendation as to how you should help ensure that people who specifically want to come to the Kimmel Center, or at that time, it would have just been the RPAC, where are they going to go, and what was the recommendation?
The Parking Authority convened a study, I believe, in '97 and indicated, as Ellen testified, a shortage of about 700 to 1200 spaces, depending on how many things come on line and when and whether more parking facilities 165 11/14/00 - WHOLE - BILL 000609, 610 come on line. So there are 3900 existing parking spaces within 3 blocks of the new Kimmel Center. But with all of the things that are going on in the Avenue and all of the things that we're projecting to occur in the future, there's a shortage of about 1,000 spaces. So you look at all of the real estate in town and say, How can you provide -- how can you fill that gap?
And there's a lot on the corner of 15th and Spruce, with a parking garage developer, with a desire to build a parking garage. There is some discussion going on that perhaps two additional levels of parking will be created on the Double Tree Hotel. The Union League has purchased the Eggland (ph.) managed facility next to the Prince Theater and, I gather, is renovating that, and that would provide 300 more parking spaces. A new underground parking structure has just come on line in the old Meridian site, with about 300 spaces. We are working with PIDC to see whether on a short term basis, before major development occurs south of the Performing Arts Center, where we can create an 166 11/14/00 - WHOLE - BILL 000609, 610 additional surface parking lot in case this garage doesn't happen. (Unintelligible, parties talking over each other.)
Right. It's obvious that you're working to try to solve the problem. Again, my whole purpose in wanting to hear from you was primarily in the realm of I didn't really understand how someone goes forward and do serious fund-raising activity from private individuals, governments and anyone -- foundations and anybody else, not knowing how your own parking concerns were going to be addressed and now find yourself in a situation where -- I mean, what, the building is probably half-built?
Right. And we're now just kind of coming to grips with something that everyone knew was a need back then, and it's probably increased. It's just, I could say, intriguing, fascinating, you know kind of going up 167 11/14/00 - WHOLE - BILL 000609, 610 to the line of a little strange that you would go through all of this and not have secured for yourself -- I don't know anyone that builds a building of this magnitude or an office building or anything where you're going to have large numbers of people and they don't take into consideration how they solve their own parking problem as opposed to hoping that, you know, maybe the wind blows right one day or somebody somewhere's going to come save you.
There's a delicate balance. Certainly, none of us wants to see huge massive parking structures all along the Avenue of the Arts to accommodate patrons, so we've been working carefully to find adequate parking for those who do drive and an alternative means for people to get there so that we don't destroy the pedestrian quality of the district and the neighborhood.
Okay. I appreciate your explanation and your responses. They've certainly been very helpful. Thank you.
Thank you. Do you have any -- do you have reservations, any doubt at all that this project would go forward without this TIF?
Does anyone at the table believe this project is dead without the TIF? (No response.)
Again, I want to ask the question of everyone at the table. Do you have any doubts that this project would move forward without this TIF?
Yes, I have grave doubts that this project could move forward without a TIF. That's the analysis we did, that the parking garage will not be built without the tax increment financing.
So the developer said basically the deal's off if there's no TIF? 169 11/14/00 - WHOLE - BILL 000609, 610
The developer asked for much more and we negotiated with them for a substantial amount of time (inaudible) proposed the claw-back. The developer said if we could not meet minimally this amount, they would not do the project. They presently operate a surface parking lot there that's profitable but which doesn't provide additional parking spaces that everyone at this table believes is actually necessary for the Kimmel Center to be successful. So, yes, Councilman, your question's appropriate. Without the TIF, this project will not proceed not a parking garage.
I guess I'll ask this of the folks from the Regional Perform Arts Center. When the building was designed, did any of the architectural plans include parking on the site? And could you tell me how many VIP or employees' or management parking spaces are incorporated into the design? And could it have been built with parking garage associated with it? The facility at Temple University, I believe the arena there has a garage associated with the facility. 170 11/14/00 - WHOLE - BILL 000609, 610 Was there any consideration of having your own parking as a source of revenue?
Councilman, part of the design includes a second-level parking structure with about 135 parking spaces within the project that we're building. To go any deeper than that, it would have been extraordinary expensive construction. We barely are above ground water right now, so to go any lower than that would have made it a very uneconomical parking garage.
I guess that's all the questions I have. Thank you, Madam Chair.
Thank you, Madam President. The concept of that $7.5 million gap -- I think this question's addressed to Mr. Fina -- made up by the purchase of land and the community organization involvement, somehow that gap is being made up by the City's purchasing land and involving a community organization. And I don't know, that's new concept, like the children's fund 171 11/14/00 - WHOLE - BILL 000609, 610 that was discussed yesterday is a new concept, and it has a certain attraction. Could we hear more about that? What is the community organization? Because I know in neighborhoods throughout the City, community organizations feel like they're left out and the idea of getting a headquarters or whatever sounds great and the idea of helping meet the objectives we all have for children is great and it seems like redevelopment might be an answer. I'd just like to know first what it is in the Jump Street project.
First the financial part of it. I don't clearly frankly understand the $78.5 million gap.
Well, there's basically dollar figures. One is that we're increasing the TIF from 16 to million. 21
I understand that. 22 But there's still the $7.5 million after you 23 increase it.
And that money is provided by the City to the Redevelopment Authority to 172 11/14/00 - WHOLE - BILL 000609, 610 acquire the land and the buildings that exist by the parcel today.
Because the project does not work without that public financing.
When we raised the issue of children's money there isn't any money, and suddenly here, this -- I've never -- I've never been aware of the City's munificence before.
This additional money comes from the City, it's economic stimulus funds that have been appropriated by City Council for economic development purposes, that those funds are going into this project. They're not coming from the developer back to the City, providing for the project because even with a TIF, the economics still doesn't work.
You mean the City thinks that the economic health is more strengthened by buying this land than it would be if they gave that 7.5 million to various projects that will help the children in this City? I'm trying to figure out what this means. We've been 173 11/14/00 - WHOLE - BILL 000609, 610 told that we needed a strong school system for a lot of purposes but one very important purpose is to see that there are skilled people in the City, and I'm just troubled by these kinds of concepts coming in and suddenly disappearing in other areas like in the children's fund and here in economic development we're told this is a very important development.
It's a fund appropriated by City Council for economic development.
I assume you could appropriate funds for the children's fund. You can do that, you have that authority to do so.
We can't interpret the education of children as part of the economic development strategy of the City?
I think you certainly can. It's certainly very important, and no one that's testified before you today has indicated anything but that being very important.
Let me ask you, in this particular TIF, is the School District a part 174 11/14/00 - WHOLE - BILL 000609, 610 of the TIF or is it separate?
They've reviewed that and in-house voted to participate in the TIF, as I presented to you.
I'm sorry, we're having difficulty hearing you. There are so many different conversations going on in the room. Anybody having conversations, please do so in the corridor. Please proceed, Mr. Fina.
Mr. Fina, everybody knows that having a term of office means the School Board always reflects the Mayor's wishes. Councilman Nutter here, I've asked him to confirm that under the amendment that City Council adopted apparently means the Mayor favors --
I said we have these (inaudible) on the TIF changing nuances that seem to appear when we talk about children as opposed to what about the community organization. Who is it? What are they going to do and why? 175 11/14/00 - WHOLE - BILL 000609, 610
The District Councilperson is basically very much in the negotiations with the developer and with what that entity will be in the community. Also some of the dollars come back to the public for economic development participation.
What is the outside line that you understand now with the arrangement that the community organization get the free rent or free service?
The community will basically be the owner in part of the project. They will most likely own the land or be a partner in owning the land and they will return percent of the 16 net cash flow after a preferred return of 17 approximately -- I think it's 10 percent to the 18 developer in its initial equity. Then after 19 that's completed, 25 percent of the net cash flow 20 would go to the community organizations. 21
To support economic 23 development activities in the area. And this 24 could include educational activity. 25