COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE THE COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, May 17, 2000 10:55 a.m. - - - TIF Bills: 000212 - West Chestnut Retail TIF 000221 - Networks TIF (Continued) 000222 - Schmidts Plaza TIF 000223 - South Ninth Retail TIF PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILWOMAN JANNIE BLACKWELL, Vice Chair COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK J. DICICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILMAN THACHER LONGSTRETH COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN BRIAN J. O'NEILL COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 5/17/00 - COMMITTEE OF THE WHOLE I N D E X William Hankowsky, President . . . . . . . . . Philadelphia Industrial Development Corporation Shelly Yanoff, Executive Director. . . . . . . 84 Philadelphia Citizens for Children and Youth 3 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 P R O C E E D I N G S
Good morning, everyone. This is the public hearing of the Committee of the Whole. I would ask Mr. McPherson to please read the title of Bill No. 212.
Bill No. 212, an ordinance creating the West Chester Retail Tax Increment Financing District and approving the project plan of the Philadelphia Authority for Industrial Development for the redevelopment of the West Chester Retail Tax Increment Financing District. Bill No. 2221, creating the Networks Tax Increment Financing District and approving the project plan of the Philadelphia Authority for Industrial Development for the redevelopment of the Networks Tax Increment Financing District. Bill No. 222, creating the Schmidts Plaza Tax Increment Financing District and approving the project plan of the Philadelphia Authority for Industrial Development for the redevelopment of the Schmidts Plaza Tax Increment Financing District. And Bill No. 223, creating the South 4 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 Ninth Retail Tax Increment Financing District and approving the project plan of the Philadelphia Authority for Industrial Development for the redevelopment of the South Ninth Retail Tax Increment Financing District.
Good morning. Kindly identify yourself for the record and proceed with your testimony.
Good morning, Council President Verna. I am Bill Hankowsky, and I'm President of the Philadelphia Industrial Development Corporation, and I want to thank you the members of Council for your time this morning, I am here to testify in support of Bills No. 212, 221, 222, and 223, for the four TIF Districts that Mr. McPherson just read into the record. Since introduction of these bills, PIDC has met with City Council, Council staff, representatives of the School District to review these project plans. On Monday, May 8, 2000, the School District agreed by resolution to participate in the districts before you today should they be approved by Council. Collectively, the creation of these 5 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 four TIF Districts represent a $130 million investment in vacant or abandoned land and buildings, which the City currently values at a value of $13 million. 9 million for the City. Over the term of the districts, new revenues will total 28 million for the School District and 54 million for the City. I would like to briefly describe each district and some changes that have made in the project plan since they were circulated to City Councilmembers on April 13th. The creation of the West Chestnut Retail TIF will enable the developer, Chesmark LLC, to construct a 50,000 square foot supermarket with surface parking on vacant land at 56th and Chestnut Streets, thereby providing needed goods and services to the immediate community. 4 million project. The TIF would be repaid from new real estate, sales, business privilege, and 50 percent of the use and occupancy taxes. 6 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 Projected public benefits include 60 construction jobs, 125 permanent jobs, and annual tax revenues of $46,000 to the District and 138,000 to the City. Since introduction, the West Chestnut plan has been amended to correct certain tax calculations. 1 to the TIF Fund. This amended 14 project has been filed with the City Clerk for 15 review by the public. 16 The creation of the Networks TIF will 17 enable the developer, Amerimar Enterprises of 18 Philadelphia and Angelo Gordon of New York, to 19 renovate the over one million square foot vacant 20 SmithKline Beecham Building at 15th and Spring 21 Garden Streets into a state-of-the-art 22 telecommunications and e-commerce office complex. 23 The TIF will be structured to attract e-commerce 24 companies which are currently unwilling to locate 25 in the City. 8 million project. The TIF would be repaid from real estate, City sales, and business privilege taxes. No use and occupancy taxes would be dedicated to the TIF Fund. 1 million to the City. Since introduction, this plan has been amended to clarify certain issues: First, the name of the developer has been changed from 1500 Spring Garden Associates, LP to 1500 Network Associates, LP, but that reflects no change in the controlling affiliates; Second, the developer anticipates that they may sell or lease portions of the 700,000 square foot telecommunications center as condominiums or some other forms of ownership, and the e-commerce center would be leased and not sold as condominiums or other forms of ownership; Third, although projection of the BPT illustrated the gross revenue portion of the BPT, 8 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 project plan authorizes application of all new BPTs to the TIF Fund; And, finally, the calculation of the reduction of tax increments was clarified to indicate that the 5 percent growth rate may be compounded annually. This project plan was also amended and restated and filed with the City Clerk I would like to parenthetically point out one point that's not in my testimony with this particular TIF. In this project plan, we are doing something we have not done before, which is, basically, we are saying that we accept the developer's representation that there is a gap based on the proforma that's been provided to us.
However, should they be able to get rents higher than they anticipate, that they would then use a portion of that increased value to pay down the TIF early. " So the idea is that should the project work better than they anticipate, our participation would decrease more rapidly over time. The creation of the Schmidts Plaza TIF will enable that developer, an affiliate of Tower 9 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 Investments, to demolish the abandoned Schmidts Brewery at Second and Girard and construct a 240,000 square foot retail complex in two phases -- again, providing needed goods and services to that community. The City and School District are being asked to approve up to $8 million in TIF loans in the two phases for this $34 million total project cost. The TIF would be repaid from real estate, City sales, and business privilege taxes; again, no use and occupancy taxes are being used in the TIF Fund. The projected public benefits include 250 construction jobs, 600 permanent jobs, and annual tax revenues of 351,000 to the District and 580,000 to the City. Again, since introduction this plan has been amended to correct certain technical items. 8 million to the Fund. 3 million to the Fund. And the initial project plan had also mislabeled the southern boundary as 10 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 Laurel Street, and the correct street is actually Pollard Street. Again, the project plan and bill have been amended and restated to reflect these changes and are on file with the City Clerk. Again, I should just note for Council's information parenthetically that there will be companion legislation which you would see over the course of the next several months dealing with street closings and the Redevelopment Authority providing condemnation assistance for this project, so there will be additional Council actions necessary. The creation of the South Ninth TIF will enable the developer, Carmel Realty Associates, to renovate a 13,000 square foot vacant building on Ninth Street just below Washington Avenue and to a discount store and restaurant, again providing services to the immediate community and anchoring and revitalizing this block. 5 million project. The TIF would be repaid 11 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 from real estate, City sales, business privilege, and 50 percent of the use and occupancy taxes. The projected public benefits include 5 construction jobs, 35 permanent jobs, and annual 6 revenues of $10,000 to the District and 40,000 to 7 the City. No changes have been made in this 8 project plan. 9 Before I close, we have also provided 10 to Council one amendment to the Schmidts ordinance, which is consistent with the correction of the boundary. So it simply changes the legal description of the district, and I believe that amendment has been provided to you and has been circulated. So that would be an amendment to Bill 16 No. 222, and it changes the legal description. There's also been a proposed change in the project plan language as it relates to what can be done or changes that can be made to these plans after approval by Council. " For the West Chestnut Retail TIF and the South Ninth Retail TIF, the last sentence would be amended to, "After settlement of the financing, no further amendment shall be required," with the remaining words stricken. In closing, I'd like to remind members of Council that today's hearing is required under the state statute, the Pennsylvania Increment Financing Act to create a TIF District, and that the Act requires Council to wait three weeks for final consideration, which would allow Council's first action, should it deem it appropriate, for a meeting on June 8th. We would ask for your approval of Bills 212, 221, 222, and 223. And I would be prepared to answer any questions Council may have. I may have -- excuse me one second. (Mr. ) 13 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
I think, as the President understands, there's been some further discussion on a potential amendment to the Networks TIF that's still being discussed, and perhaps I would ask that you consider that once it's resolved in the next few minutes. Thank you.
Mr. Hankowsky, have all Members received a copy of the amendment to Bill No. 222? Do all Councilmembers have a copy of the amendment?
Do you have enough copies of the amendment so that every Councilmember will a copy of it?
And the Chief Clerk's office should also be given copies. 14 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
Mr. Hankowsky, what are your assumptions with regard to the number of jobs that will be created as a result of the project regarding Bill 222? And what assurances do we have that these jobs will be in fact created?
Oh, Network, I'm sorry. Well, the Network project is really a. . . the SmithKline Building is a 1,037,000 square feet, I think. The developer has acquired the property and is really doing two things with that building. Taking approximately 700,000 square feet of it and converting it into what is generally called a telecommunications center, a telecommunications hotel. These are facilities that our new economy requires be instructed for the various servers and equipment that support the 15 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 Internet and the telecommunications industry have a plastic to be housed. They need to be near a significant source of power, they need to be near where fiber optic is, and they are actually a critical piece of the infrastructure necessary for the rest of the City to be able to plug into the new world of e-commerce. In addition, the developer is proposing to take approximately 265,000 square feet of the building, which is the tower, and convert that into office space, because we will have a situation, then, where all of this infrastructure, all of the fiber and connections to the Internet, will be immediately at hand, and the companies will be able to locate there and, again, sort of plug right in. The anticipated jobs that I've reflected in my testimony assume that that space gets leased out on a normal basis of about, you know, how many people would occupy how many square feet of office space. And we contemplate, therefore, that it would create up to these 1500 jobs. This will happen over time as the space is leased, and we don't have a guarantee in the sense 16 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 of they haven't signs leases for all that space at this point. They are currently in discussion with a number of potential tenants and are obviously looking to know that they have the capacity to execute the project, which would include the TIF component in order to finalize those leases.
Okay. On the same bill, in Part 4, Section A of the project plan, you indicate that the developer may obtain a portion of its funds from public non-City programs that assist infrastructure development by environmental remediation or creation of opportunities for high-technology business. Would you please explain what you mean by that.
Yes. The -- there are programs that are available. For example, Commonwealth of Pennsylvania has certain programs that are available to abate environmental problems. There are also -- the State has certain programs that are available for high-tech businesses. The developer is not saying that they will, but they would like to seek the opportunity to source those funds in order to augment the 17 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 financing for the project. And, therefore, we have provided that that could occur in Section 4 4-A. They would not be looking for any additional assistance from the City of Philadelphia, and we would not provide any additional assistance other than TIF that's before you today.
Thank you. A number of Councilpeople have questions. At this time, I recognize Councilman Nutter.
Thank you, Madam Chair. Mr. Hankowsky, you -- first let me commend you for your creativity with regard to the claw-back provision. I wanted to ask one question about that. I thought I heard you say that the way this will work is if the rents are higher than projected, then the amount of the TIF will go down.
Let me -- let me be more specific, Councilman, and I know we've talked 18 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 about all of these things many times, so this is another one that's a little more complicated than I said it, but I was trying to briefly at least get the concept across. The way it would work is, annually, we would take a look at the average rent that the developers are receiving from that space.
And we are looking specifically at the office space rents, the 265,000 roughly square feet. And we would take a look annually at the average rental that they're receiving. And in the Year 1, sort of the break number is $15 a square foot. If they go out and rent this space for an average cost of $11, nothing happens. If they're able to rent this space for greater than $15, then 50 percent of that additional income that they would be receiving would be applied to retire the TIF note early. So let's say it 19 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 created $100,000; it applied the $100,000 so that the next year the TIF note wouldn't be paid on principal, we would be making it go away.
Take me back to the $15 a square foot. Let's say that they're able to rent at 20.
Right, and $5 of value per square foot is calculated: 50 percent of it, the developer gets to keep, 'cause we want to incentivize if we're going to do this; 50 percent gets applied to the TIF note. So if the TIF notes had an annual debt service of 500,000, now they have to apply the extra money, and they would apply 600,000 to it, whatever the amount came out to be.
Councilman Nutter, excuse me. I believe Councilman Rizzo has to leave, and he wants to be recognized if you don't mind.
Could I just make one 20 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 comment for the record, Councilman Rizzo, just -- I need to further explain what I said 'cause I don't want to be --
I unfortunately have to leave. A good friend, (unintelligible) Stein, as many of us know, died, and today is his service. So I'm going to leave my votes voting aye on all of these TIFs and amendments.
Thank you. Mr. Hankowsky, please proceed, I'm sorry for interrupting you.
Yes. Councilman Nutter, again, because I never want to get caught not fully being on the record.
So the $15 is a starting point. We've also provided that that $15 will move up for -- at a compounded rate of 5 percent a year.
You're saying 15? 21 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
The $15. In other words, to reflect the fact that, okay, that should grow over time.
So it goes up by 5 percent plus CPI. There's also a provision that should the developer do (unintelligible), in effect, they could earn credits and sort of pay themselves back to the degree that they're way under. If they they've given us money, if they've gone over and there's a year they've paid out, we never pay them back. So even if they have a bad year after that, they don't have a look back.
Yeah, right. We never do more than what's called for in the plan.
I understand. What, I guess, in your calculations -- and, again, I appreciate you taking a look at it from that particular perspective. I'm assuming that there must be a point at which there is some level of 22 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 incentive for the developer to try to get a higher rent, and there must be a point at which there's additional incentive to try to get the higher rent based on the additional payback. Or is there all upside and no downside for all parties on this?
No. I think that because we're sharing the upside, the developer in every instance would be -- would be better off taking the higher rent, even if he applies 50 percent of it to lower our benefit to him.
You'd always on a net cash basis be better off to do that than to somehow always keep it at, like, 14.95.
It's different, by the way, than some other Old City deals where we weren't as astute about that, where we've actually incentivized people to just stay under.
We're trying not to do that now. 23 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
Right. You know, I just want to make the record clear about what we're doing and not doing. Now, did I also understand you to say, I think in this same project, that there was either the possibility or the option or it was undetermined about potential condominium development in this same building?
Yeah. The best way to think about this building, I think, Councilman, and I don't know if you physically have a essence of it but --
This is the SmithKline Building 15th and Spring Garden?
Yeah. So there's a large, low building and then there's a tower. The low building, which has big floor plates and was actually used by SmithKline at one point as pharmaceutical production operation, they actually manufactured their --
Right, I've actually seen things made in there in a previous life.
Right. And it can take 24 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 very heavy floor loads, has high bays. That's where the switching equipment in this infrastructure for the e-commerce world happens. The developer would have a right under this proposal to condominimize (sic) that portion of the building. So if Nextel (ph.) comes along and says, Yeah, I want to be in that building but I want to own my floor where I'm going to put my servers, etc., for whatever business reason, the developer would be allowed to do that.
The tower, which is where this office calculation happens, that is not provided for. They would -- that would continue to be rented.
All right. So when you use the term "condominium," you are not using it in a housing context.
You are using it as a space ownership context. 25 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
Now, just by way of kind of keeping track of some of the bouncing balls around here, we did a TIF for the new SmithKline Building; is that correct?
A vacant piece of ground. We TIFed that had. Then SmithKline sold this building, which is an existing building --
-- to the present people who are the developers in front of us; is that correct?
That is accurate. 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
I think it's -- I think it's in the project plan. My recollection is, it's 14.8 million.
So SmithKline sells that building to the present owners.
And our role here today is, we're looking at a TIF for that building for its development.
And reuse. Do you have any sense of what the plan was for the building before they had come to, I guess, you guys? Or was that coincidental to the sale and the purchase or -- I mean, did they 27 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 anticipate getting a TIF as a part of the potential purchase of this building?
When you say "they," are you meaning the developer or SmithKline? Just so I'm responsive.
The developer. The developer in this instance has actually done -- I'm going to use this phrase, and I hope it -- these "telecommunications hotel buildings" in other cities. This happens to be a -- sort of a current fad in real estate. Because of the e-commerce economy, people are -- there's a very urgent need to find big buildings in urban areas as close as you can to the fiber and the power to service the Internet.
This developer was interested in seeing whether that could be done in Philadelphia and I think has identified that there's, in fact, a market to do that. And, fundamentally, the low portion of the building, roughly 700,000 square feet, the old manufacturing, which is dedicated to that, is what 28 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 the developer, I think, was most intrigued by this building about.
And, basically, the developer probably could proceed with that project without us, in an economic sense.
What the developer then saw was 265,000 square feet of office space and said, I think I can do something with that also, but I'm not sure that that economics can work, given what I have to spend to fit that out and given what these kind of companies pay in rent, but given that they would be literally abutting juxtaposed against this infrastructure, at least I've got a sales basis upon which they would come here. And if you, the public, would be prepared to work with us in assisting us in getting that done, we'll go off and create that space and we'll go market that space and bring those companies to Philadelphia.
And that basically 29 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 drove the TIF component, that portion of the project.
I mean, the reason I ask the question -- I mean, you know, I want to see these companies come, but I'm just trying to better understand the chain of events of what people do and how they do it in these transactions. You decide to buy a building from someone, you have some ideas about what you want to do with it. And do you coincidental to that begin making approaches to the government or an economic development agency about possible assistance, or do you just go and buy it, kind of complete your deal, and then say, Well, let me go scout around and see if I can get some help with this.
I mean, it's 14.5 million. I mean, that's like a lot of money. 30 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
So it seems to me that you kind of know what you're going to do and how you're going to do it before you put your cash down or letter of creditor credit card or however you pay for these kind of transactions.
Right. I think in this instance, this developer had this building under agreement of sale but had not acquired it, came to the public and said, I have this under agreement and here's what I think I can do. I'm very confident that I can do this telecommunications hotel piece, I think I can do this e-commerce office piece. I don't think that piece may not pencil out; would you be willing to consider assisting us on that piece? And that piece, by the way, would be the piece that have the significant job creation. The telecommunications hotel piece does not create very many jobs. There are some people there to, you know, make sure the servers don't break and, I guess, worry about Love Bug viruses, or whatever they do. But the significant employment impact is in the tower, one. 31 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
Two is -- and I think -- in fact, I think Councilman Clarke at some point had hearings about the e-commerce business issues for the City generally and the need for to us position ourselves as a city to, to be candid, I think, to make the statement that yeah, we want those kind of businesses also and.
And we think that this project is very consistent with that. It is, to some extent, a statement.
I think it's consistent with what we're seeing out in West Philadelphia at the Port of Technology Building, which quite candidly, would not work were it not in the Keystone Opportunity Zone.
So there are different -- different incentives are kind of happening here.
So they came to us and 32 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 said, Would you be willing to help us think about that? and we said yes. And as we explored it more, we said, Yeah, but suppose things happen really well?
And people will pay better rent, we shouldn't have to do this so let's do that.
But I think this -- and then the developer, understanding that we were willing to ask this Council for consideration and the School District, proceeded to buy the building, which they have now done, I think, maybe two weeks or three weeks ago, roughly.
All right. Well, let me just finally say on that that I think the opportunity to have a lot of these companies here is good for the City. I just wanted to understand the chain of events and how you do that. Madam Chair, if I could ask two last 33 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 questions. These are not project-specific; these are information requests. Mr. Hankowsky, we're up to completed 5 TIFs, 4 in front of us today, and 1 still to come; 6 is that correct? 7
We are -- yes. This 8 Council has approved 19. I just want to -- 19 are 9 completed in the sense they're not all built. 10
There are four before 16 you today, and that is correct, there is one other 17 pending two weeks hence. 18
On the 19 that are 19 approved, if you could provide to the Chair for distribution to us a specific report giving some base detail information on all of the TIF projects approved to date, that would be: the date of implementation, construction start date, construction end date -- at least for those that are completed, and any information you have about 34 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 those that are approved but have not stated; the number of employees that are presently working at the completed TIFs; and any new numbers you have on proposed TIFs, or the numbers that you expect for those TIFs once they get up and running. All right?
Councilman, if I could, just informationally today, which I could tell you, I think five have closed -- eight have -- when I say "closed," in other words, the -- we've actually closed the TIF note and the financing.
So eight are either complete or under construction, and we will provide that data.
For the remaining eleven, they are still somewhere in the pipeline of trying to get put together, and so we would be providing our anticipation of what will occur.
Sure. And for 35 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 those eleven, if you could give a brief blurb as to where they are or where you think they are in the pipeline and how soon you expect the start-up.
Right. I think we're all aware that there's at least one that may not happen.
But today is such a happy day; we don't want to talk about that, right?
So we will give you our best sense of where they might be, right.
You can just put a mouse with a circle and an X through it.
With regard to the Kvaerner project, you remember Kvaerner.
Could you provide us with a detailed report of how many people are working at Kvaerner today, a breakout by race and gender, and within those categories, as well a 36 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 breakout of the Philadelphia residents and non-Philadelphia residents by zip code.
Okay. Could I just -- so I'm responsive, you're looking for permanent employees there versus the remaining construction workers that are there?
I'm primarily interested in the permanent employees, yes, people who actually work at the site and are doing something with a ship, some steel, or something like that, okay?
And, lastly, there are a number of reporting requirements that have been added to the Philadelphia Code over the past couple of years by a number of different ordinances. And as a part of your other TIF report, if you could let me know where you are in the process of making those various reports that are due to the Council. Most of them are usually due by the end of the year. That was Ordinance 23 No. 980799-A, although you won't have much to report on that because I think that deal is not complete. It's probably in your eleven, it's the 37 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 West Philadelphia Retail.
Bill 980845, Bill 5 990181, and 990326. Actually, forget about the last one, that's not yours. But the middle too, if you could let us know on a separate report where you are in the reporting process, I would greatly appreciate it.
Thank you. The Chair recognizes Councilwoman Brown.
Thank you, Madam Chair. I would like to ask that in preparation of the report to the Chair that Councilman Nutter has requested, that you add on to that a couple of 38 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 things. One is the answer to the question, the number of years. I see here it's after years, 4 benefits kick in, so I want to know if that's 5 consistent across the board. I'm looking to see 6 if there's some kind of formula or standard that's 7 applied, or is it on a case-by-case basis; and if 8 it is, why? 9 And I also notice that there's no 10 consistency in the percentage of taxes. For 11 example, in the four TIFs that are presented here 12 today, there's 50 percent U and O in two cases and 13 no percent U and O in other cases, and I'd like to 14 see what that is too across the board with the 19 15 TIFs. 16
Is there a formula 19 applied, is there a standard? Who makes the 20 decision and based on what do you make the decision when it comes to the application of taxes? Please.
Yeah. In terms of the application of taxes, let me also talk a little bit about the term question. 39 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
About the term, length. There is a State statute that authorizes the creation of Tax Increment Financing Districts. That statute says that the District cannot be longer than years, so you'll never see them 8 longer than 20; that's by statute. 9 Generally, what people are looking at 10 is in the way we've structured TIFs in 11 Philadelphia generally is where we're saying to 12 the developers, You go find the money, somebody to 13 lend you the money, and we use the taxes to pay it 14 off. So it's a loan, or what's often referred to 15 as the "TIF note." 16 And people clearly are interested in -- 17 I mean, it's fairly obvious, I guess, that if you 18 can have a debt for a longer term, that cost per 19 year is lower, you know, the debit service is 20 lower. So people are generally looking for 20-year TIFs. And I think all but one, if I recall, went for the 20-year term. The one project that we had at a shorter term was, in fact, a policy issue, which was a particular project that has not happened at 40 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 this point, but it was for new construction residential. And we were concerned about creating an unfair precedent. Councilman DiCicco had introduced a bill a couple years back that provided a 10-year abatement if you rehabbed an old building. So here we have -- this Council and we had all made a decision of years on abatement 10 if you're rehabbing, so we said, well, it would be unfair now for new construction to give somebody 20. So we said in that project, we will make you even, par. So that one TIF is 1 10-year TIF.
In terms of the taxes and how we look at those, basically the party, the developer is coming to us and saying, We see a gap in our project that we think a TIF could help fill. And we do calculations about what will the project throw off in various kinds of taxes -- real estate, sale, business, use and occupancy, and others, wage but. Those four are available to use to fund a TIF.
We basically do them 41 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 based almost in the order I gave them out in terms of saying, Well, if we can satisfy the need to fund that gap with real estate, we would stop at real estate. If we thought you needed some more tax revenue, we'd look to go to sales and then we'd look to go to the BPT, and we always look to use and occupancy last. So what you'll see on use and occupancy -- and you'll actually see if I put the TIFs in chronological other. And there has been some fair amount of dialogue in these chambers about this over the course of approval of the prior TIFs 14 with regard to trying to minimize the impact of 15 those future prospective revenues on the School 16 District. And since 100 percent of the use and 17 occupancy goes to the District, it's the last tax 18 we look at. 19
And if we can say no, we want to say no. And you'll see sometimes we'll say, Well, okay, we need some of it, and we'll do 50 percent. And there's been other percentages of it, but it's the only one we've done on kind of a percent basis. 42 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
So one of my follow-up questions was also -- I was hard-pressed to understand why the School District would buy into a proposition, period, would buy into this proposition. And you've partly answered that, and part of the answer is -- please repeat it so that I know I understand it.
Yeah, well, I think the District buys in for two reasons, and I obviously can't speak for the School District in total but at least I'll tell you what I think -- why I think they're doing it. There is a fundamental presumption here and, you know, it's a judgment, so people can agree or not agree, that these projects are worthwhile projects to undertake from a general economic benefit sense. They -- you know, they bring employment to the City, and some of the ones before you today goods and services to neighborhoods, take blighted or undeveloped land and get it fixed, etc., and that these projects would not occur, that the math would not work unless we provided some level in assistance, which is often called the "but for" argument. But for 43 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 us helping, it will not happen.
Therefore, the District is really looking at an either/or scenario. Either we say, no, we're not willing to participate and we're not going to use the TIF mechanism, and therefore, they would look at -- take a simple one, the 56th Street supermarket, that piece of ground will lay fallow. And we do a calculation and say what you'd get on those real estate taxes to the School District are X, you know, $30,000 or something, not a lot. If this proceeds, we think you can get X plus Y, more money than you get today.
Less than you would get if we didn't TIF it 'cause you'd get other taxes that we are using in the project, but more than you'd get today. And if the judgment is that we're better off allowing the project to proceed and getting more taxes than we get today and getting part of the pie than not having any pie to deal with at all.
So you'll get a 44 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 part of it during the term, and then they get the balance of that benefit at the end of years? 4
Yeah. At the end of 20 5 years, the world looks the way it would look if we 6 had never touched it. 7
So full taxes are paid 9 and they go to all the appropriate bodies that 10 receive those taxes. The School District gets its 11 55 percent in real estate, they get all the U and 12 O, etc., whatever -- you know, and some of these 13 -- and by the way, Councilwoman, different 14 projects will have different impacts. So as an 15 example, a hotel where people, you know, tend to 16 enjoy themselves so they might drink some, the 17 District will get liquor-by-the-drink tax that 18 they wouldn't get otherwise. 19
So you'll see -- sometimes when you look at these, you might say, Well, it looks like in this project, the School District gets a lot more that it does in this project. It generally is driven by what's happening in that project. 45 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
Okay. Let me go on the record of saying that I am hard-pressed to support economic development initiatives that do not reflect what the City has already done successfully -- namely the 1 percent for art. The business community and the community that cares about children and youth in this city found a middle ground and both won -- children and youth won and the business community won. So currently as TIFs -- well, I can only go based on the four that I've seen. None of them reflects some consideration for that policy that's already in place. And we know it's possible because other cities are doing it. So I put that on the record because that's always going to be a consideration of mine. And as we look forward, I am going to look to see to what extent, if any, is given to the business team thinking and considering how young people in this city can benefit from these major economic development initiatives. I'm putting that on the record now, and I will use that as a barometer as we move forward.
Understood. 46 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
Thank you. The Chair recognizes Councilman Goode.
Thank you, Madam Chair. Mr. Hankowsky, without a State statute, it is actually illegal to have different tax structures for businesses, is it not?
Without a State statute? Well, without a State statute, the City can't do anything with taxes. You know, all of our powers with regard to taxes -- (Not completely intelligible; parties talking over each other.)
So it fundamentally is illegal to have different tax structures for businesses.
No, let me be fully responsive if I could, if you don't mind. Without a State statute, we can't do anything with taxes.
The State can make a 47 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 determination that there are various classes of taxpayers. So the State, for example, does differentially treat how we can apply abatements, so it kind of authorizes us to do commercial and residential years, and it can decide we can do 7 residential 20 years. And the State, for example, 8 under the business privilege tax, we treat 9 different businesses differently. So there's a 10 manufacturer's exemption, there is a Securities and Exchange exemption. So there are instances where, as a matter of tax policy, even with the -- and you're correct, there's that overarching thing called the "uniformity clause" in the Constitution. But even with that in place, the legislature has determined, and then this Council has enacted, differential treatment by it, but it has to be done by a class of taxpayer. What is different with TIFs is it's transactionally, one at a time. So it's not done by a class. And in that sense, it's different.
Okay. And that really leads to my question. Of course, that was a setup question. 48 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
The real question is, included in your documentation supporting these bills, I saw no analysis of financial need for any of these projects. Could you submit to Council any documentation reflecting financial need for any of these projects.
You mean that there's a gap? That, in fact, the projects need the TIFs?
That there's a gap and that there is no available capital market other than through public or quasi-public means.
Right, yeah. Well, what we submit to Council -- and, again, I'm not -- we're not trying to not be responsive. If anything, at least I try to be responsive. The project plans are actually -- the content of them is actually prescribed by the statute; there are things you're supposed to put in them in order to meet the statute requirement, and that's what the project plans do.
Okay, so you'd be happy to -- 49 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
Yeah. I'd be happy to sit down with you or your staff or however you think it would be appropriate and walk you through -- I mean we do do a -- we do look at a proforma, which is, I think, responsive to what you're asking about, to see, Well, do you really need to do this? I mean, can't this project pay for itself, so to speak? And can't the marketplace, therefore, provide you the capital?
But you did not consider submitting any documentation relating to financial need on these projects?
We haven't been asked to, and we haven't for the previously. But we 16 do do an analysis; that's all I'm saying, we do do 17 an analysis. 18
But why would you 19 not present that analysis to City Council?
But I'm assuming that we only do TIFs because of financial need.
So why would you not 50 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 demonstrate that financial need and present the reason for asking for TIFs?
Well, again, we haven't been asked to previously. We come to Council, we represent that we've made that analysis, and --
In other words, we're supposed to take your word for it, that there's a financial need on the project.
Well, usually we've -- many of these project, you know, have a District Council perspective, and often we sit in a much more intense way with the appropriate District Councilperson because we always look there first to say, you know, here's our analysis, do we collectively think that this project should proceed to come before all of you? And we do do that on a one-on-one basis with the appropriate District Councilperson.
So that is a TIF program policy? That is, you deal with the District Councilperson related to whether there needs to be a TIF or not?
I think that is not only our policy; I think that is this Council's 51 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 policy since you will not introduce a bill unless the District Councilperson agrees to it.
That's not my question; my question is, in determining whether there is financial need, is that a discussion that needs to take place with the Committee of the Whole or the whole Council, does it need to be a demonstration of needs that these taxes are being taken away from the entire City and the School District?
I really apologize. I'm not sure what the question is. Are you asking me, do I think it should happen here or --
The question is, what it was before is, why have you not submitted any documentation that need? Your response to that was that you had a discussion with the District Councilperson.
Right. We also meet with Council staff people before we bring these forward, so we meet with Council technical staff.
But there was no 24 need to demonstrate the financial need to the whole Council? 52 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
There hasn't been previously, no. We meet with the technical staff, we meet with the District Councilpeople, then with some understanding, and we proceed from there.
Which raises another question in terms of equitable access to the program. Is there any geographic boundaries to this program in terms of where the taxes are being forgiven? Are we doing TIFs all over the City?
I can't answer that off the top of my head, but I think probably pretty close.
I don't know off the top of my head. I'd have to look, but it's pretty close.
You don't know off the top of your head at all, you couldn't take a guess? 53 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
No. I don't want to get caught taking a guess. I'll be happy to take a look at it and get you a response today.
Okay. Is there an actual program designed for the application for TIFs?
Okay. Last is just a general economic development question related to TIFs. Is it in your estimation that the City is 54 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 in a position of strength economically to continue to do TIFs? Has there been any long-term policy established that shows at what point we are, quote/unquote, TIFed out, or are we ever TIFed out?
That's obviously a very broad question, and let me make a couple of responses. One, there is a statutory limit on how much of your total assessed valuation I think can be TIFed, and I think it's 10 percent of your total assessed valuation, which clearly is a very big number for the City of Philadelphia, so we're nowhere close to that number, but at least there is a statute limitation. The issue of sort of being TIFed out implies that we have these dollars that we're handing over, and I think back to my answer to Councilwoman Reynolds, that the notion -- the concept here is that on a transactional basis, we look to see whether a project, in fact, has a gap and whether it's appropriate to use this technique to solve that gap, and we are always -- if you believe in the assumption that these can't happen 55 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 unless we help solve the gap, we are always, in a tax perspective, better off with the transaction than without it. The most fundamental issue that your question sort of implies, which I am a very strong believer in, is that there needs to be a continual recognition -- and I know this Council has had various deliberations on this more general topic -- of the issue of our competitive position, the cost of doing business here versus somewhere else and the need to address that. So if, for example -- and I'm being -- as Councilman Nutter said, it's a nice day, we should reflect it. You know, if you could eliminate the wage tax, you know, or something dramatic and level the playing field, I might have a very different response as to whether you need these techniques on a transactional basis, if you were to change the economic, you know, dynamic of the situation. So for example, we would, you know -- and I think Keystone Opportunity Zones -- I mean, there's all these other techniques out there.
Mr. Hankowsky, I 56 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 understand your position that we have a bad tax structure, we're not competitive. But in the context of having a shrinking tax base, do you really believe that using TIFs over the long haul is actually increasing that tax base?
Because I believe that without doing them, these projects will not occur, and your base will, in fact, not be added to.
Well, we'll take your word for that since we don't have any demonstration of financial need. Since you don't know when projects are being done, we don't know what the market is like in those areas because you don't where these projects are being done. Thank you very much.
One second. 57 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
Madam Chair, if I may, I have to be out of the chamber, and in case I'm not back before the hearing is over, I'd like to leave my vote as aye on all of the bills and any amendments.
You're welcome. Following on Councilman Goode's question, have we ever had a request for a TIF and it was denied or it wasn't followed through on, and the project proceeded, to your knowledge?
That's a good question. I know there are TIFs that we have said no to. I mean, there are people we say no we're not doing that. I can't think of one. I'd like the liberty of thinking about it longer, but I can't think of one where we said no and then it did proceed anyway.
Councilwoman, 58 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 could I follow up on that?
(Not completely audible, off-mike.) . . . but really actually adjusted the TIF on the developers on the 15- and 20-year TIF for the luxury high-rise apartment at Eighth and Walnut. And because of some of the things that Bill already described, they said no, it's either take ten years or we're not going to do the TIF.
I mean that's as close that I know of that something has not yet happened, but there has been --
To see the request and compare that to the projects to see of they proceeded?
That would give us some idea of whether or not -- you know, whether the request will just go away because they don't get the TIF. It seems to me that some of these projects --
Well, could I just make one comment on that, Councilwoman?
Just to be very clear, sometimes we say no because we believe that there really isn't a but-for gap. In other words, we look and it and we say no, no, no, you should be able to borrow the money privately, you don't need us to do this. And sometimes we're right, so I think there may be situations where we have said that and they have proceeded.
This project at 1500 Spring Garden being developed by the developer who has a track record in the City of developing properties, why would they have a 60 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 problem getting the money from the bank with a long track record? Why would they need a TIF?
I want to be very clear. Well, let me start with the fundamentals. Can this developer go a the bank and borrow money? Absolutely. And, in fact, will do that for the majority of the cost of the project. What this developer is, We could do that, we'll fit out the 700,000 square feet of a telecommunications hotel, but we can't borrow the money for the e-commerce piece. The math doesn't work, and banks look at that math, and the bank is going to say, Is there enough rent out of that to pay for the cost you're spending to fix the space to justify us lending you the money? And our believe is that there is, in fact, a gap, that a bank would only go so far and not provide all the money necessary and that what we're doing is we're closing the gap.
Okay. So now are you saying that this project at 1500 Spring Garden is a hotel in addition to the e-commerce --
No, and I apologize for the use of the word -- 61 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
We should come up with another phrase. No, it's not a hotel, it nothing to do with residential, it's not a hotel. It is a telecommunications center.
Right, I understand that, that's fine. You keep saying "hotel."
Yeah. The jargon in the industry is "telecommunications hotel," but forget -- I'll stop using the word the place.
It's a where the residents of the hotel are equipment -- servers, generators that service the industry.
Councilman Nutter may have asked this question, but have those tenants been identified in terms of who will --
The developer is working with various potential tenants now for that, yes.
Let me ask you 62 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 another question. As Councilman Brown said, and we are also interested in this, the Code requires that on new construction, a percentage of the work requires -- of art work -- a percentage of the cost has to go to art work, it has to provide 5 percent, I think, for art work in front of the project.
No. I think -- I'm not -- I'm not an expert on the percent for the art program.
Well, (unintelligible) has art work, most buildings have art work as part of their --
There's two different programs, just to be very -- and I don't mean to -- but we also get stuck on all these details. There is a City requirement where we 63 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 spend generally our capital dollars when we build a police building or rehab the municipal services building or something like. And there's a requirement that where we spend our dollars -- I may be off, I think it's a percent, 1 percent for art. There is a separate program administered by the Redevelopment Authority where the Redevelopment Authority says, Where you come in and use Redevelopment Authority property or condemnation that will acquire property, that they have a separate requirement for percent for art. So you'll see -- I think there's no better example than right across the street here at Centre Square with the close pin -- you know, we talk about meeting at the close pin.
That was a Redevelopment Authority acquisition of that parcel, and that public art was a requirement of the Redevelopment Authority. We do not have a general percent for art requirement if it's -- if it doesn't fall into one of those two categories. 64 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
Mm-hmm, okay. So our interest is to look at a percent of the TIF money, the public money, being utilized for youth development. How many Tax Increment Financing Districts have we created? And if you don't know this right off the top of your head --
We have created 19, and you have 4 before you today, so that would take you to 23, if Council is so disposed, and we have one other before you whose hearing is in two weeks.
And we have some that you've granted where the project hasn't proceeded? Have most of the projects have proceeded, are they in construction?
Eight have proceeded either through construction or to completion, and the remainder have not yet started construction. That's right.
Well, that has 65 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 started.
Well, I guess, what is the longest standing project, whether it started or not?
Okay, the first TIF, which is the answer to that, the very first TIF was in Council President Verna's district. It was the PNC Operation Center in Eastwick.
It both -- it is completed, Phase I was completed. And just a month ago, we dedicated Phase II. So it now is up to 1500 jobs and about 350,000 square feet of building, and you see when you take the ramp going to the airport, it's that building. That was our first one.
Well, have we begun to realize any revenue from that yet?
Oh, yes, absolutely. Clearly we reaping -- the City of Philadelphia is realizing a significant increase in wage tax because I think -- and I may be slightly wrong -- 66 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 there are 800 new jobs there that were not in the City of Philadelphia before we did that.
Mm-hmm. That is the City, not Tinicum Township, right?
I'm sorry? Yeah, that project's in the City. It's a couple hundred yards from the edge, but it's in the City. No, we're not giving the taxes to Tinicum Township.
Okay. Have we realized the goals that we anticipated for general employment and construction jobs? Or have they been greater or fewer than projected on these various TIFs?
Again, doing this off the top of my head, and I think Councilman Nutter sort of asked this in the sense of, could we give a report on the ones that are done.
But my general sense is that, yes, for the TIFs that are completed, we are clearly within the rough range of the jobs we anticipated would be created. The PNC one we're over because we had Phase I when we were before 67 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 you, and that's already open, Phase II. The Loews Hotel, I think we had -- you know, that's open with 500 jobs. So I think, you know, in almost all those instances, we're pretty much on the mark.
Now, if we commit a TIF to a project and the project doesn't proceed, does that tie us up in terms of the amount of TIFs we could give here?
No. It's not the same way that like the HUD 108s or something where we committed dollars and they're sort of tied up until, you know, we let the project go. It doesn't prevent us from proceeding to look at other TIFs, it does not -- unless we ever got to this 10 percent max, which --
Okay, thank you very much. 68 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
Thank you. The Chair recognizes Councilman Nutter.
Thank you, Madam Chair. Just a quick question, Mr. Hankowsky. In the -- and I know we've done a few of these, but there's so much time in between that we just end up going over some similar territory. Where is the component in the project plan with regard to either neighborhood employment or minority, female business opportunities or just kind of jobs in general? My recollection from the past is, that is in response to, I think the question from Councilman Goode, often the District Councilperson works with you or the developer on those kinds of issues, but I thought also in the past, that issue was usually raised, or there was some document or kind of an economic opportunity plan that is often discussed, but --
But where is that in this whole -- what is that and how does that relate to the project plan? 69 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
Yeah. We advise developers, and I'm dealing with TIFs today, so I'll talk about in each TIF transaction, that there must be an economic opportunity plan as part of the overall transaction. It is not required by the State statute to be in, quote/unquote, that project plan.
I was going to ask you that. What's the basis of your telling the developers that?
And I think it's clearly a reflection of the sentiment of this body at a minimum.
And historically, we also advise the developer that they need to work 70 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 with Council staff to have those reviewed, and we look for Council technical staff to advise us that they are comfortable with that. That is, in fact, happening on all four of these at this time, and we will not close the TIF note until that has been signed off on.
Now, what actually ever happens to those -- this is the economic opportunities plan?
Do they ever come back here? I mean, do we ever actually see --
They do come back, they are provided to Council's technical staff. I can't honestly answer on how they're then subsequently circulated. Generally, you are also right, Councilman, that to the degree the Councilperson tends to be more directly involved in the transaction than the district, generally that office also would, you know, have it.
Right. For the TIFs that are completed, as you mentioned earlier, the eight, are there economic opportunity plans 71 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 available for those? And since they are complete, you'd be able to match up or compare what was put together at the time of the TIF or shortly thereafter versus the reality of the project that's now up and running and people are doing whatever?
I think we can probably do that. My only caveat there may be one or two -- to be quite candid, I just want to be, again, candid, if nothing else. One of the very earliest TIFs may not have happened, the first one or two. They just may not have existed.
I think we've -- but for those that have, I think we could add to your information request or a report on that also.
Sure. And do they eventually become a part of the documentation that goes with the TIF that ends up in the Chief Clerk's Office?
No, they don't end up -- no, in a pure mechanical sense. They don't end up in the Chief Clerk's Office because they're not a part of that -- I'm going to use my term for 72 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 the moment -- the required legislative package, which is the ordinance and the TIF plan. They are part of the document --
So the State statute says you have to have a project plan and then a --
Right. And then there's a requirement that there be a resolution, so we end up with these sort of tiers of documents that are simply the prescribed documents that the, quite candidly, lawyer for the developers and the 73 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 lenders, you know, want to see all of that there so that they can (unintelligible) TIFs there perfectly in place.
The opportunity plan does become an attachment to the loan documents. So it's in the -- if you went to the lawyer that did the closing binder, you'd find it in that.
All right. So you need a project plan and you need an ordinance. Your policy is, you have to have an economic opportunity plan. You attach that to the loan documents, although you could make that a part of the project plan, I guess, if you wanted by policy, even though at the time of the project plan, the economic opportunity plan is probably not completed because that usually ends up being a part of the longer-term negotiations subsequent to passage of the bill and the project plan.
Yeah, and sometimes it happens in the period -- you know, I think we're all aware of this, sometimes it's happening in the period like from the hearing to the final 74 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 passage.
My only -- and I'm not a lawyer and plan claim to be, but my only caveat is that we -- that I think everybody wants to keep -- just so they can write that legal opinion and say, yeah, there's all that stuff that's required by the statute and that that's sort of -- I don't want to, you know -- very straight forward and understandable. And to the degree we -- and I'm not, you know, I'm making no posture as to whether we should have them attached or filed with the Clerk -- if we filed them with the Clerk, it would be easy, if that's the request. But just that we don't (unintelligible) to the documentation that somehow in a legal sense becomes, you know, does a TIF note unwind or, you know, does the lender not have a mortgage, or, you know, those kind of very basic questions that people legally are going want to know. I mean, we don't file the TIF does either, you know, the legal -- the actual loan documents. 75 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
With the Clerk. I mean, there are documents that happen subsequent to this action.
Yeah, I don't think so. You know, they are probably recorded down in Records 'cause it's a mortgage, you know.
But there's nothing to stop you from adding it to the --
Right, I understand. Now, lastly, what are those standards with regard to those economic opportunity plans? I mean, is it project by project, or is there a base standard of either how many jobs, how many people, numbers of minority/female/disabled businesses? I mean, how do you determine what the elements or the components of the economic opportunity plan are?
Again, I don't want to 76 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 -- I don't want to be a lawyer again, but I think -- I think we're all aware that there's a whole series of cases out there about what you can require people to do versus what they should voluntarily agree to do. So that -- so that the plans aren't susceptible to a legal challenge.
We basically advise the clients of what the City would generally be looking for if it were executing the project.
And say that that seems to be a pretty good place to start thinking about this.
And then -- you're right, it may vary with projects, by idiosyncracies of, you know, how many is construction, and there may be something peculiar in a project or whatever.
I mean, the projects in front of us today, I mean, are -- at least one of them is very different than the others. I mean, the Networks project -- I mean, 77 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 not to highlight it or pick on it but, I mean, that's a very different project than a commercial project --
-- where you have, you know, basically one-story buildings, a whole lot of stores, and kind of people running around, as opposed to a high-rise.
And you have distinctions between -- you know, I think Networks is an example where there's developer asking for our assistance, the -- there are things that are clearly under the developer's control, you know, how they construct the project, the staff that's going to maintain the building.
It's another thing to talk about creating requirements on the e-commerce companies that are tenants that sort of at the moment have nothing to do with the project.
Right. 78 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
So, you know, but with that, we then put the developer in contact with Council staff so that they become directly involved in looking at the proposals that the developers are putting forward and what is deemed appropriate.
One last quick question. With regard to the economic opportunity plans, and I know most of the focus will always be on either the contracting of the job opportunities, obviously, with adults. Has there ever been -- for more of the commercial retail projects, has there ever been discussion about youth employment?
Does anybody ever talk about them in the context of, are there job opportunities for young people after school, weekends, summer, with some of these entities that would have the youth employment? 79 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
I -- I -- I don't believe there has been, historically, no. 4
Thank you very much. The Chair recognizes Councilman Clarke.
I had to check my watch. Mr. Hankowsky, I'd like to ask you a question about the process in determining whether or not you actually sit down and develop a TIF ordinance and then send it to us. And I guess I want to ask a question more specifically about the type of job creation these TIFs have created across the board, the types of job -- retail, hotel, hospitality-related and in some instances, I think some other types of industry. And I wanted to find out, do you take into account the 80 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 types of jobs that are involved in the growth industry versus the types of jobs that potentially may not be around in a few years? And I ask that question because particularly about the hotels, there's this real concern right now that in the event that there's a downturn in the economy or something else may happen as it relates to our ability to continue to attract tourists, that somewhere down the line a lot of these jobs that may be created as a result of TIFs are no longer available versus -- and I guess I can highlight the Networks and my discussions what is pretty much viewed across the board as being the growth industry. Do you take that into account when you make your decisions? And also, not only the amount of jobs, but the salaries associated with those jobs. Is that a part of your analysis?
Again, I think it's partially to follow up sort of on the discussion with Councilman Nutter. These projects are various different kinds. So you have situations where the party -- I'll take one, Loews. They're the developer but they're also going to run the 81 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 hotel and they're actually hiring the people, so they're very much involved in sort of every aspect of that transaction. The hotels that we have done, and I think we've done three hotel TIFs. The three that are done are situations where the -- you know, Loews owns that hotel, Marriott owns City Hall Annex, Marriott owns the headhouse. So when you think about a downturn in the hotel industry, it's one thing for, oh, Double Tree on South Broad, who don't own that building to say, Geez, we're going to cut back. It's another thing for somebody who's invested their money, so they're going to be more aggressive about putting people in that hotel and keeping that hotel operating. They have real exposure. So we are concerned about the investment -- I don't mean that in a financial sense but in kind of a commitment sense, the investment of the parties to be committed to get the transaction done.
No, I'm talking about 82 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 it just in an evaluation sense. The kind of jobs -- and we have office jobs, you know, we have manufacturing jobs, you've got retail jobs, we've got hotel jobs, we have all kinds of jobs in these. And we are looking at that from the standpoint of the benefit that it brings to us, but we are not trying to -- you know, if hotel wages are at a certain level and manufacturing wages are somewhere else, I mean, it kind of is what it is by the nature of the businesses that are involved in the TIFs. We are not making a critique of it.
Well, we look at the wages 'cause we calculate the wage taxes.
You don't really get into whether or not this is a growth industry versus --
Oh, I'm sorry. Well, from the standpoint of -- we want to invest in 83 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 projects that we believe are projects that have long sound, long-term prospects.
And I think every one that we have done is a sound, long-term prospect. I mean, there could be a downturn in the economy that affects any industry or any segment of this. But I think everyone -- you know, it hasn't happened, but we've approved one manufacturing TIF, but it's a company that's grown from 700 jobs in the'70s to over 3,000 jobs today. So even though it's called "manufacturing," it's an industry in Philadelphia that's growing in that industry, and I surely wouldn't want to tell them that because they're a manufacturer, we shouldn't consider them.
All right. I ask that question because I saw a document three or four months ago and it was an analysis on the level of City investment in the hospitality industry, and had we done that for the creation of office jobs, what we would have gotten out of that, and it was much higher-paying jobs. I think maybe it was a 15, $20,000 difference in salaries 84 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 associated per job created, and that's why I want to get a sense of if we're looking at that --
-- specifically as it relates to our decision on funding the TIFs.
Thank you. Are there any other questions from members of the committee? (No further questions.)
Do we have anyone else to testify? (Shelly Yanoff raises hand.)
Please approach the witness table. (Witness comes forward.)
Good morning. Kindly identify yourself for the record.
Good morning, Council 85 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 President Verna and Councilwoman Blackwell and all the other Councilpeople. I'm Shelly Yanoff, and I'm the Executive Director of Philadelphia Citizens for Children and Youth. Thank you for the opportunity to testify today. Before I start, I'd like to share three anecdotes, if I could, that happened yesterday. First was, the Greater Philadelphia Association of Realtors passed a resolution urging more investment in public schools and schools generally, because it's critical to their ability to sell houses in Philadelphia. And I mention that because when I walked in today, I was asked, What are you doing here today? this is about business. As if business and children and families are separate. And if we don't make economic development and children and youth development come together, we're destined to not have a viable city. The third thing was that I went to a briefing on the situation with the School District. It's hard to believe that the School District is willingly saying, Let's lend $12 million at a point today when they're also 86 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 announcing that they may be close to bankruptcy. So this is not about the School District, but it is about bridging the chasm that exists between our thinking about economic development and kids' development. For more than years, as you know, 8 we've been urging at PCCY that the City and State 9 governments do more for the future by doing more 10 for children. Through much of that time, the City 11 grew poorer and, children, the nation's poorest 12 population, grew poorer still. 13 Although we don't have the exact data 14 because the census is now being conducted, we do 15 know many things. About 80 percent of the 212,000 16 public school children are sufficiently and 17 qualify for free or reduced lunch. And we do know 18 that our youngest children, those who have not 19 started school yet, are our poorest. We do know 20 that even the difficulties of application and confusion about the rules, more than 212,000 Philadelphia children today are enrolled in publicly funded health insurance programs. And we know that poverty shapes the lives of too many families. We know that about 87 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 100,000 children are on welfare today and that about 60,000 children life in families that have left welfare for work in the last several years. In Philadelphia and nationally, we understand that many of the families that have left welfare have not left poverty; they simply don't receive cash assistance anymore. So many of Philadelphia's families rely on publicly supported programs to improve the quality of their lives. At the other end of the income scale, we know that Philadelphia has families who look for a good quality of life in their communities before deciding where to settle. These families choose to move in or out of neighborhoods based on the quality of schools, the quality of neighborhood life, the kind of programs that exist that strengthen their children and families. They look for after-school programs, for good child- care programs, for schools that not only have good academic programs that are good, with small class size and well-trained teachers, but also communities that have music and art and sports opportunities for their children. In short, these families look for programs in their communities 88 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 and schools that Philadelphia generally isn't able to provide. We know this from research, we know it from experience, we know it from the region's Realtors, and all of you know it as well. And we know that for both of these kinds of families and the many in between, good programs makes a different to them -- in the quality of life today and in the outcome of their kids' lives in the future.
But also know that the families who have choices are choosing not to stay here because we, unlike other cities, have not been able to invest in the kinds of programs that families and kids need. So how are we in Philadelphia to provide an environment that values, supports, and attracts families? We need to do this not just because it makes sense, but because our future is at stake. Other cities like New York and San Francisco and Portland and Seattle set aside a guaranteed increase every year in preventive programs for youth. Other states like Maine have in their TIFs legislation the opportunity to have child care built in as a project cost when new economic development comes to town. In New York, 89 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 before they begin before they began to provide pre-kindergarten for all 4-year-olds, they were already providing about $25 million in after- school and summer programs. In Philadelphia, we had the ideas but we lose out on the action because we can't seem to find the money. In fact, in too many instances, some of the packages that Philadelphia undertakes to attract economic development inadvertently end up discouraging the very family life that we know we need. Almost all of the TIFs passed thus far sacrificed future school taxes at least for 14 years as part of the package. This only 15 exacerbates the decrease in local funds 16 contribution to schools that we've seen in the 17 '90s, and does nothing to improve neighborhood 18 life for children and families. To begin to solve 19 of how to provide funds to do what we know and 20 research tells us would make a difference, we must look back and forward. We should look back to the art set- aside passed by Council in the '50s that required that when the City substantially assisted in securing the land for development, a small 90 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 percentage had to be provided for public art. As Councilwoman Tasco mentioned, that set-aside has made a major difference in the quality of life in Philadelphia, strengthens, the arts community, improved Philadelphia's appearance and habitability. Now we must look forward to adopting and broadening that concept to improve the lives of children and families, attracting new families, and strengthen those who've always lived here. Yesterday's concept needs to be adopted and broadened for today's needs. We urge that whenever Philadelphia incentivizes any investment through TIFs or through a bonding or through a special decrease in future taxes, a small percentage of the investment is set aside to make the City a better, stronger, more attractive place for families to raise children. It's relatively simple. City action for economic development must include a specific direct benefit for children and families. Thus, if percent has been set aside or were set aside from this TIF for children and families, hundreds and hundreds would directly benefit and so would 91 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 the City. Indeed, if 1 percent had been set aside for the Kvaerner settlement, if 1 percent had been set aside for Disney, for Penn's Landing, for other projects, the current and future state of our children and families would be much improved. The funding provided through these investments should be separate from the operating budgets of the City or the School District. In other cities, these funds often are administered by a board appointed by the mayor And Council, with standards for use that provide if the funds are used to supplement and not supplant the City's regular investment in programs that support children and families. Here, too, the precedent and the mechanism exist in the City; what we need is the will. In conclusion, we urge the Council to begin to bridge the artificial chasm between programs and projects that support economic development and programs and projects that support children and families.
We urge that any TIFs approved require a direct percent set aside for families and children. You are creating opportunity; here make sure that it will work for, 92 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 that it benefits, that it builds on all our future. If Philadelphia is to begin to improve its fiscal future, it must be creative enough and wise enough to improve the future for children and families, for they are the same. Thank you.
Thank you. The Chair recognizes Councilwoman Brown.
We know the success that Philadelphia has enjoyed with regards to the 1 percent art program. Can you elaborate, if you could, on the Maine initiative and how that community successfully showed their concern and sensitivity towards honoring wishes of the business community as well as the children and youth of that community?
Well, Maine has created in the state legislation an ability to include child- care projects as a project cost in their TIFs. And that if the municipality wants to do it, therefore, that is an automatic that goes in. 93 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 And I think Santa Cruz has required that any economic development include a loan program for child-care facilities so that there are projects and examples around the country where people are recognizing that we've got to come together on our economic and children and families development.
Now, is it your view that an opportunity might exist for Council to register its interest in that area? Or is that something that can only happen given a State statute?
I think obviously it needs to be worked through as a requirement, but since Council approves a negotiation between developers and government, then I would -- I believe the Council can suggest that this be a part of the negotiations.
Thank you. Thank you very much. Are there any other questions from 94 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 members of the committee? (No further questions.)
Have all members received copies of the amendments that look like this?
Mr. McPherson, have all Members received copies of the amendments?
I'm being told they have not. Councilman Nutter, do you wish to be recognized?
Just as we get to these amendments, Madam Chair, if there could be some explanation about them. They seem to materially change the normal operation of these TIFs and they also seem to provide a new or expanded, possibly decreased review of documents 95 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 or approvals. And I'd just like to understand what they're about and why.
Okay. Mr. Hankowsky, do you want to explain the amendments, please.
I'll try. Let me particular, Councilman Nutter, sort of -- if I could do this somewhat chronologically, 'cause it might be helpful. This section that you now are seeing amendments to, there has been a provision that has been in all prior TIFs. There was a -- there 14 was a request that that be changed to be -- I'm 15 going to talk sort of conceptually here -- to be 16 somewhat tighter. 17 So there was an amended or a revised 18 version that was in the project plans as 19 distributed to Council.
What page is that on? Or what section generally is that in? I mean, I have seen this language.
Eligible Project 96 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 Costs?
Initial project costs. So the statement is usually in Part 3, Project Costs?
Upon reflection of that language, which we were asked to include in these as submitted, there was a concern that it was not going to work in a practical sense in certain instances, and what you have been provided, I think, is probably fair to call "a middle ground." So it's trying to somewhat tighten it up and yet let it function correctly.
Well, why don't you tell us where we were, where it went, and how you got to where you are now.
Okay. Where it was -- there was a -- as I said, in the kind of previous TIFs, there had been language -- there was a concern that additional public money might come in a transaction, that additional public money might 97 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 come in a transaction. Particularly, there might be additional public assistance, City public assistance. And if there was additional City public assistance, this body should be a part of the deliberations to sign off on that. So what we've attempted to clarify is that the City's participation cannot be modified without coming back here; however, that there could be additional assistance from third-party public sources for certainly discrete elements of the transaction that the parties could pursue. And also, that after you settle the financing, you don't have to do further amendments. The simplest way to describe this is the cost overrun problem. A project starts and they start doing change orders, and can't be bringing every change order back. So the idea was that once the deal's settled -- "settlement" meaning that all the parties -- that the equity, the TIF has all settled, that then the project can proceed. But, basically, this is an attempt to address the fact that we don't want to be providing additional City public assistance 98 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 without consultation with this body. And that's what is being tightened up here.
Well, then that leaves me with the impression that that was allowed before?
I'm left with the impression that maybe you had a recent experience with this and you're now trying to recover from that experience?
It looks like now that it has a high probability that it will never occur.
If it had proceeded, we might -- I think it is probably clear that we would have been back here. Maybe because of this issue, maybe for other reasons.
We would have cleaned 99 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 it all up at the time anyhow.
But to make sure that that doesn't inadvertently happen again, we want to do these amendments.
So let's say in the -- I'm looking at the West Chestnut Retail. I'm assuming that the crossed-out version, which was the 5/17/00 is now no longer valid and we're going back to the initial version of 4/13/00?
Right. So tell me what happened before the change, tell me what happens after the change. Before the change, it says, "After settlement of the financing, no further amendments shall be allowed without City Council approval." So you're saying that with that language, if they wanted to make an amendment, are we talking about on the financing side, are we talking about the size of the project, are we talking about the debt equity issues -- or it's a three-story, no, now we want a 5-story building, it was a 7-story building, now want a 5-story building -- all of 100 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 those changes would have had to come back here under that language; is that correct?
No. There's always been -- 'cause you've delineated a series of different kinds of changes. There was always provision that certain changes could happen on cost, size, etc. Sometimes we've even got it as specific as number of hotel rooms that we would be required to bring back to you. But once it settle and now it's going to go to construction, so we now have settled and it's going to be a 500-room hotel that at least costs $100 million and our TIF note is $10 million, that to the degree something happens after that, they can proceed to do that, they know they have the right to do change orders and modify and get their project executed. The TIF note never changes 'cause we have no authorize to change it, 'cause we have no 21 authorization from you to change it. Prior to that -- and we've done a variety of things, Councilman. There have even been instances where we put caps on the number of hotel rooms. You know, like if you change the 101 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 number of rooms, we had to come back. So we've had different standards and different situations. But if those standards -- if we went through those ceilings or floors, we would come back here. So this change -- let's take West Chestnut -- is actually tighter than what you've had in the past. And that last sentence, we're amending it back to the way it had read in the past. In the past, it always read this way. So we're not doing something we didn't do historically.
Well, I mean, maybe I just don't have the right document. Are you saying it's going back to "no further amendments shall be allowed without City Council approval"?
No. What I'm saying is that in all the previous TIFs, it said that after settlement of the financing, no further amendment shall be required. We were asked in these project plans, the ones before you today, to insert different words; hence, the initial version. I think there has been -- obviously without Councilmember -- but an agreement among the staff that on that sentence, we should go back to the 102 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 way that it has happened originally.
After a settlement of the financing, no further amendment shall be required.
So what does that mean? You've lost me. "No further amendment shall be allowed without City Council approval" I read that you have a change, you have to bring it back. The language you're saying that you want to go either back to or forward to or whatever direction you're going, "no further amendment shall be required," I assume that means you can make changes and you don't have to come back.
After the project has settled, not before, not -- if they change their plan of financing, if they're going to change the project, before they can start, we would have to come back here. But once they've started it, once we've closed, then it's not required that every change come back here.
Councilman -- 103 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
And you're saying that that would hopefully prevent us from being in a situation that we saw not too long ago in a particular project that may not go anywhere?
No, that's -- that's -- that project is a different issue.
All we're asking, Councilman, to do today is amend the project plans. This will be consistent with what we've always done. When I say "settlement" for those of -- you know, that's the situation where the lender, the construction lender, the TIF note, all the money -- and generally it goes to -- it may go to a trustee who's handling the construction lending. Nobody will close a deal if they believe that, okay, now we start and we start digging the site and we find a boulder, and we've got to spend money to do that and it's going to change the math of the deal, and that somehow they have to stop and wait to come back here, they're not going to do that.
Okay. 104 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
So it's a practical correction to back what we used to do.
Suppose the boulder situation happens and they decide they need to change ratio on U and O or the real estate tax or something like that.
The TIF note has settled and we can only settle it pursuant to this project plan and what we agreed to.
If they wanted 75 percent of the U and O and we were at 50, we can't touch any of that stuff. We can't change the ordinance or the project plan. For that, we would have to come back here. 105 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
All this deals with is, did we change the construction costs, or they show more equity or --
All right. So the three-page document that we have, which apparently is now going back to the initial version of 4/13/00 but striking the "allowed without City Council approval" and substituting the word "required" in that particular one, that's what you want for that one?
Okay. And then you've got a whole different thing going on with the Schmidts Plaza, and the Ninth Street seems to be the same as the --
All right. And for this one, you have double-underlined language, 106 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 which is always a flag that there's something special going on here.
On Schmidts, the developer is pursuing at least two sources in addition to the TIF. In one instance, there are environmental issues with this property -- I'm not sure I would call it a brownfield site, but it's pretty close -- and are interested in pursuing the possibility of accessing -- the State has programs that address that, and using that to deal with the costs related to that. In addition, they have a dialogue underway with the Empowerment Zone Lending Institution about the possibilities of them being a lender in the transaction. This would permit those to happen should the developer be able to make them happen. If they don't happen and he can't proceed with the project, obviously we don't proceed either.
I thought I was done. 107 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
The last sentence I said is, if the developer is unable to access these sources and does not fund them with his own private money --
Access these sources, meaning government sources but outside of us?
Then he has two options: he can either figure a way to fund that private capital -- you know, his, or borrowing; or not proceed. But we would not fill that gap either with TIF proceeds or City dollars.
He's looking at potentially the Commonwealth of Pennsylvania, the 108 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 Empowerment Zone Lending Institution, which is, in this case, would be the American street Financial Institution.
How much money are we talking about? (Mr. Hankowsky confers off record with colleagues.)
I think it might be on the order of the magnitude of $5 million.
All right. Now, the one thing that did pop out at me on these TIFs, and we've had discussion before and the opinion is all over the place about the priority of this, but it's a fact of life, unlike a number of other TIFs, these don't seem to have any HUD 108 loan component to them.
And I know in the preliminary CDBG plan for the Year 26, it appears that PIDC is not accessing any of the remaining $10.5 million in HUD 108 loans because it's all 109 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 going into housing, from which there will never be any payback, but that's an argument for the housing people. Why don't you access the HUD 108 loan money for this?
Was that a potential funding source for this remediation issue?
I think you sort of -- one is, you're right, there is still some available 108 capacity on the economic development side of the ledger. You're correct, though, that the uncommitted, or unapplied for, dollars in the Year 26?
Basically in part -- and, again, we think that us providing the TIF assistance is the level of support that the City 110 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 of Philadelphia should provide and they should tine other ways to solve this problem and not use those dollars, and we could use those dollars in other places.
Okay, all right. So play this out for me again. They have to go find other governmental sources, but not the City of Philadelphia, to try to deal with the environmental remediation issues. It's the Commonwealth of Pennsylvania and who else?
The Commonwealth of Pennsylvania is a possibility. They've been also speaking to the American Street Empowerment Zone Financial Institution.
And there may be other -- I mean, maybe there's an EPA environmental program or something like that.
Right. The Commonwealth, I'm assuming, is like the brownfields people. 111 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
Okay. So if in the unfortunate circumstance, that don't work out, then they --
They don't proceed. We make some judgment that we should 108 or something and we come back here. We'd have to come back here if we were ever going to contemplate additional City dollars.
Well, what does that do to the timetable of the project as we try to figure out what American Street FSI is doing or the Commonwealth with regard to proceeding on this project?
Well, I think this project in particular is a -- I will use the term -- "a tough project." So what the developer is trying to do here is, he's bought this property at 112 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 sheriff's sale, we all know that, and to some extent has dived off diving board and doesn't know if there's water in the pool. But did that.
So we give him credit for that. And he's looking to understand whether --
Well, I didn't get the impression that a whole lot of other people were trying to dive in this pool.
I didn't get the impression that a whole lot of other people were trying to dive in this pool.
So it would have just sat around as a part of a larger inventory of properties.
So -- and the developer is looking -- to be candid, I think -- as to 113 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 whether we as a governmental body, you know, collectively, the City and the School District, are prepared to provide a level of assistance through the TIF mechanism. And with that, he at least knows he's got that. He also has a sense of what we can borrow privately. He has ideas about how to fill the remaining financial needs. As I mentioned in my testimony at the very beginning of this morning, there will be a need for this body to deliberate on a condemnation by the Redevelopment Authority street closings. So this does sort of massively impact the scheduling 'cause you're going to have to act on a few other issues too on this project, but it does enable the developer to begin to put some of pieces together to get this finalized such that they really could start construction, because it's the fall by the time all the pieces come together, is my best recollection of the schedule.
Well, I mean, I don't know. I mean, I just kind of get the impression that we're leaving potentially a major component of this thing somewhat unresolved. And I mean, I assume we want this to happen, right? 114 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
Do any of the other projects have pieces that are missing or we're saying, Go out into the hinterlands and find some money from somebody else and come back to us when you have the red slippers? I mean, what are we -- why are we doing this?
I think this one is sort of different. It's got -- it's a complicated project, this one. You know, it's blighted and --
Every project that comes in here is complicated. So what?
Yeah, that's true. But you need to basically assemble this site because there's some missing teeth, pieces that weren't a part of the original Schmidts sheriff's sale piece. Strike streets, address certain utility relocation issues that result from those streets. I think everyone really does believe this a good project from the perspective of, this it a piece of blight on this neighborhood for sure. Getting it out of there would be an asset.
Right. 115 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223
It would even be a further asset if we could get it out of there and put active reuse on the property. We want to try to help get that going. There's a lot of pieces have to come together, but I don't think we're, quote/unquote holding it up in any way. I mean, I think we're actually --
Well, I don't think I made the accusation that we're holding up, but I'll just conclude with, I guess I have a slight discomfort level knowing that there is a piece that still needs to get done. It appears for the moment that we're just kind of leaving it hanging when we know that there might be potential sources even here.
If there's a philosophy about how to deal with these kinds of things and who should deal with them and whose money and all of that, you know, maybe it's valid, maybe it's not. But there just doesn't seem to be any dispute that we want to support the project, we've already got an $8 million TIF note here potentially and in Phase II/Phase II. We want the 116 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 project to happen, we'd like it to happen as soon as possible. There's no doubt about the current condition of the place. It's not like folks are jumping through hoops to try to get this thing in the first place. And I guess I just don't necessarily want to leave here with the impression that it's, you know, kind of being given significant encouragement but has a missing piece, and we'll just kind of wait and see what happens. You get back to us and let us know what happened on your exploration out there.
As opposed to just, Here's the project, here are the costs, we worked it all out, we identified the funding sources, go build something. And, you know, we'll see you at either ground-breaking or ribbon-cutting time and just basically like get it over.
Well, let me comment in two ways. One is -- and perhaps I just have -- the City is not sort of saying to the development, Okay, good luck. We're not doing that. The Commerce Department has been helping explore the 117 05/17/00 - WHOLE - BILLS 000212, 221, 222, 223 possibilities of the State environmental money being available, the staff of the Empowerment Zone has been working with this developer to look at the potential of using Empowerment Zone -- so there's been a multi-agency effort to try to figure out how to make this happen. As you know, the TIF process has this peculiar timing envelope, so I think we all have made a judgment that it would be helpful to have this in place because let's just say at the time of your first reading of this bill, three weeks hence, the Empowerment Zone says, Yeah, let's go. If we had to start the process then of the TIF process, you know, we'd be eight weeks out, and given Council's summer recess, we would really be waiting for the fall. This allows this project to happen and be at the ground-breaking stage --
Well, at the risk of insulting any of my friends, you know, there might only be one quasi-governmental entity that moves any slower than us, and it's probably the folks over at the Empowerment Zone. So I mean, I'm just concerned. I mean, 118 5/17/00 - WHOLE COMMITTEE - PUBLIC MEETING we can end. You know what my concern is.
I'd like to see things, you know, kind of wrapped up, put a bow around it.
Are there any other questions from members of the committee? (No further questions.)
Hearing none, we will conclude the public hearing of the Committee of the Whole and we will now go into our public meeting. - - -
We are now in our public meeting, and the Chair recognizes Councilwoman Blackwell regarding Bill No. 212.
Thank you, Madam President. I move that Bill No. 212 be -- I move the adoption of the amendments. (Duly seconded.) 119 5/17/00 - WHOLE COMMITTEE - PUBLIC MEETING
It has been moved and properly seconded that the amendment be adopted on Bill No. 000212, as read by Mr. Hankowsky. All in favor will signify by saying aye. Those opposed? The ayes have it and the amendment has been adopted. The Chair recognizes Councilwoman Blackwell.
Thank you, Madam President. I move that Bill 212, as amended, be reported out with a favorable recommendation. (Duly seconded.)
It has been moved and properly seconded that Bill No. 000212 be reported out of committee with a favorable recommendation, as amended. All those in favor will signify by saying aye. Those opposed? The ayes have it and the motion has. 120 5/17/00 - WHOLE COMMITTEE - PUBLIC MEETING
The Chair recognizes Councilman DiCicco regarding Bill No. 4 222.
Thank you, Madam Chair. I move for the adoption of Bill No. 222.
I'm sorry. I move for the adoption of the amendment to Bill 222, as -- there are two amendments, right? I move for both at the same time.
I move for the two amendments to Bill No. 222. (Duly seconded.)
It has been moved and second that the amendments to Bill 222, as read earlier, be approved. All those in favor will signify by saying aye. Those opposed? The ayes have it and the motion is carried. And the Chair recognizes Councilman 121 5/17/00 - WHOLE COMMITTEE - PUBLIC MEETING DiCicco.
Thank you, Madam Chair. I move for the adoption of Bill No. 222, as amended. (Duly seconded.)
It has been moved second that Bill No. 000222 be reported out of committee with a favorable recommendation, as amended. All those in favor will signify by saying aye. Those opposed?
No? The record will reflect that Councilman Goode is voting no. I think the record should also reflect that on all of the bills and amendments, both Councilman Longstreth and Rizzo are voting in the affirmative.
I'm sorry, I'm sorry. It was Rizzo an O'Neill. They voted 122 5/17/00 - WHOLE COMMITTEE - PUBLIC MEETING in the affirmative for the adoption of the amendments and the reporting out of the bills with a favorable recommendation. The Chair now recognizes Councilman DiCicco concerning Bill 223.
Thank you, Madam President. I move the adoption of the amendment to Bill No. 223. (Duly seconded.)
It has been moved and seconded that the amendment to Bill No. 13 223 be adopted. All those in favor will signify by saying aye. Those opposed? The ayes have it and the motion is carried. The Chair recognizes Councilman DiCicco.
Thank you, Madam President. I move for the adoption of Bill No. 23 223, as amended. (Duly seconded.)
It has been 123 5/17/00 - WHOLE COMMITTEE - PUBLIC MEETING moved and seconded that Bill No. 000223 be reported out of committee with a favorable recommendation, as amended. All those in favor will signify by saying aye. Those opposed??
The record will reflect that Councilman Goode is voting nay.
Thank you. I just want to be recorded as voting aye on the amendments and the bills. I was away from my desk.
The record will so reflect. I'm sorry Bill No. 000221 will be continued until Monday, May 22, at 10 a.m. Thank you all very much. This concludes our public hearing and our public 124 5/17/00 - WHOLE COMMITTEE - PUBLIC MEETING meeting. (Adjourned at 1:05 p.m.) - - - 125 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Wednesday], May 17, 2000, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE OF THE WHOLE BILL NO.'S 000212, 000221, 000222, 000223 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter