COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE THE COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Weds., 3/1/00, 9:35 a.m. - - - BILL 79 - Authorizing Mayor to enter amendments to lease agreement with Eagles and Phillies. . . Bill 80 - Authorizing Mayor to enter into agree- ments with PAID for lease of football practice facility at Broad and Pattison Avenue. . . Bill 82 - Authorizing Mayor to enter into amendments to lease with Eagles and Phillies. . . Bill 83 - Adding new chapter to Philadelphia Code imposing a tax on rental vehicles. . . Bill 84 - Authorizing Mayor to enter into agreements with PAID for lease of football practice facility and for leaseback. . . Bill 85 - Amending Phila. Code on "Contracts and Procurement" by providing City Council approval for contract for construction, acquisition, lease, operation of building or structure. . . PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILWOMAN JANNIE L. BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK J. DICICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN W. THACHER LONGSTRETH COUNCILMAN RICHARD T. MARIANO 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 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 I N D E X Stephanie Franklin-Suber. . . . . . . . . . . Mayor's Chief of Staff 5 William Hankowsky, President, PIDC. . . . . . 15 6 William Martin, Corporate Chair . . . . . . . 26 Philadelphia Law Department James Roundtree, Director, MBE/WBE Council. . 34 Charles Newman, Director. . . . . . . . . . . 137 Capital Program Office Greg Grillone, Director, Veterans Stadium . . 145 Paul McCarthy, Deputy City Solicitor. . . . . 173 Jonathon Saidel, City Controller. . . . . . . 195 (Written testimony attached.) Joe Banner, Chief Operating Officer . . . . . 230 Philadelphia Eagles David Montgomery, President . . . . . . . . . 241 Philadelphia Phillies David L. Cohen, Counsel to the Phillies . . . 299 Charles Pizzi, President. . . . . . . . . . . 346 Greater Philadelphia Chamber of Commerce Dan Whelan, Vice Chairman . . . . . . . . . . 349 Greater Philadelphia First John Morley, Private Citizen. . . . . . . . . 362 3 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 P R O C E E D I N G S
Good morning, everyone, and welcome. We are here today to hear testimony on Bill No.'s 79, 80, 82, 83, 84, and 85. For those of you who will be offering testimony with respect to any bill relating to financing, development, and leasing of a new practice facility for the Philadelphia Eagles for the making of certain capital repairs, restorations, and replacements to be made to the Veterans Stadium and for the imposition of a motor vehicle rental tax, I want to make it very clear from the outset that your testimony will be limited to those issues. This hearing is not to become a stage for postulating on the desirability of construction of new sports stadiums within the City of Philadelphia. That topic will be heard if and when bills are introduced on that issue, not today. To my fellow Councilmembers I cordially request that when questioning witnesses or making statements from the floor, you too should abide by these guidelines. I thank you very much. 4 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 At this point in time, I would ask Mr. McPherson to read tiles of the bills.
Bill No. 79, an ordinance authorizing the Mayor, on behalf of the City of Philadelphia, to enter amendments to the City's lease agreement with The Philadelphia Eagles Limited Partnership, a Delaware limited partnership, and with The Phillies. Bill No. 80, an ordinance authorizing the Mayor, on behalf of the City of Philadelphia, to enter into agreements with the Philadelphia Authority for Industrial Development ("PAID") providing for lease from PAID to the City of a football practice facility to be developed at Broad Street and Pattison Avenue, and for leaseback of the said practice facility from the City to PAID. Bill No. 82, authorizing the Mayor, on behalf of the City of Philadelphia, to enter into amendments to the City's lease agreement with the Philadelphia Eagles Limited Partnership, a Delaware limited partnership, and with the Phillies, a Pennsylvania limited partnership. Bill No. 83, an ordinance amending 5 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Title 19 of the Philadelphia Code, entitled "Finances Taxes and Collections," by adding a new chapter imposing a tax on rental vehicles, all under certain terms and conditions. Bill No. 84, an ordinance authorizing the Mayor, on behalf of the City of Philadelphia, to enter agreements with the Philadelphia Authority for Industrial Development ("PAID") providing for lease from PAID to the City of a football practice facility to be developed at Broad Street and Pattison Avenue and for a leaseback of the said practice facility. Bill No. 85, an ordinance amending Title of the Philadelphia Code, entitled 16 "Contracts and Procurement," by providing that a 17 City Council approval is required for contract for the construction, acquisition, lease, or operation of a building or structure owned or leased by the City, or the construction, acquisition, lease, or operation of which is financed in whole or in any part by the City, then any consideration that is paid for the naming, designating or titling of such building or structure must be paid to the City, under certain terms and conditions. 6 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Thank you. Our first witnesses will be from the Administration: Stephanie Franklin-Suber, William Hankowsky, and Mr. Dubow. (Witnesses come forward.) (Applause.)
Miss Suber, do you have any extra copies of your testimony with you? I believe that all of the Members of Council have received a copy? Do you have them with you?
All right. We're having copies made. Does anybody need a copy?
Please proceed, Miss Suber. Identify yourself for the record and proceed with your testimony.
Madam President 7 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Verna, Members of City Council, for the record, my name is Stephanie L. Franklin-Suber, and I have the honor of serving as Chief of Staff to the Honorable John F. Street, Mayor of the City of Philadelphia. I appreciate this opportunity to appear before this committee on behalf of Mayor Street. Joining me at the witness table are: Bill 10 Hankowsky, President of the Philadelphia Industrial Development Corporation; our Budget Director, Rob Dubow; and our Director of Capital Programs Charlie Newman. We are here to testify in support of the Administration's bills, numbers 80, 82, and 83. (Applause.)
It's my newfound celebrity. Collectively, these bills implement a proposed agreement by and between the Philadelphia Industrial Development Corporation Industrial Development (PIDC), the City of Philadelphia, the Philadelphia Eagles, and the Philadelphia Phillies to: first, purchase a practice facility for the 8 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Philadelphia Eagles; and second, to invest up of $80 million in capital renovations to Veterans Stadium. It's important to emphasize that this agreement is a contingency plan. It is a contingency plan. It will only be implemented in the event that we do not proceed with new stadiums by November 3rd of the year 2000. The Street Administration seeks City Council approval of this legislative package for several reasons. First, both the Eagles and the Phillies, who are represented here today, are keenly interested in the earliest possible development of new stadium facilities because they believe that new stadiums are a necessary step towards the financial and competitive success of each team. Despite exhaustive efforts by the Rendell Administration and the teams in 1999, City Council, the City, and in particular, those neighborhoods most directly impacted by new stadiums, did not have an opportunity to fully and fairly analyze new-stadium development. This proposed agreement allows the teams to come back 9 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 to the negotiating table with the assurance that there is a timetable within which the City will make a final determination on new-stadium development. The November 3, 2000 deadline is tied to the construction schedule necessary to construct the new stadiums in time for the 2003 season. If the City decides not to proceed with new stadiums -- again, if the City decides not to proceed with new stadiums -- the teams will continue to play at Veterans Stadium until 2011 under our existing leases. If either or both of the teams play at Veterans Stadium until 2011, the proposed investment of up to $80 million in capital renovations to Vets Stadium will improve the condition of the stadium and enhance the financial and competitive success of the teams. The proposed categories of repairs to Veterans Stadium would extend its useful life for another ten years. Second, the Eagles are eagerly interested in the earliest possible development of a new practice facility. They believe that a new practice facility is an important component of the 10 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Eagles' continuing effort to attract and retain the highest-quality coaches and players. This proposed agreement allows the Eagles to continue development of their practice facility. In addition to new practice fields, the Eagles will maintain their corporate headquarters in the City. This agreement also allows the City to retain the wage, business, and other tax benefits generated by the practice facility and corporate headquarters. If the Eagles' corporate headquarters is outside of City limits and if the Eagles players practice outside of City limits, the City stands to lose significant wage-tax revenues, and this revenue stream also supports the economic rationale for a new football stadium in the City of Philadelphia. You will hear testimony today in support of the teams' position on the proposed agreement from Joe Banner, the Eagles Chief Operating Officer, and from Dave Montgomery, the Phillies' President. To put this proposed agreement into some context, and by way of background, the 11 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Rendell Administration, in cooperation with PIDC, engaged in extensive negotiations with both the Eagles and the Phillies regarding the development of new football and baseball facilities in 1999. Additionally, the Eagles were prepared to begin development of the team's new practice facility at a location immediately across from Veterans Stadium.
Unfortunately, given the time constraints, no decisions on the development of new football and baseball facilities could be reached during 1999. In December of 1999, in the absence of a commitment by the City to develop a new football stadium, the Eagles decided to explore alternative practice facility locations outside of City limits. As a result, all construction on the practice facility was ceased. In December of 1999, when it became apparent that no deal was going to be struck between the teams and the City, Mayor-elect Street met with representatives of both teams, PIDC, and assessed the situation. As he has stated publicly, Mayor Street believes that world-class cities like Philadelphia deserve world-class 12 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 baseball and football facilities. )
The Mayor has also stated publicly that new-stadium development should only occur on terms and conditions that are fair to the taxpayers, fair to the teams, and fair to the residents of this city most directly impacted by new stadiums in their communities. While the Mayor believes that all these competing interests can be effectively balanced to generate significant economic and other benefits for the City, it requires a public process for debate that cannot, and should not, occur in two, four, or even eight weeks. The proposed agreement provides assurances to the Eagles and the Phillies of the City's good-faith commitment to full and fair consideration of new-stadium development within a timetable to enable the construction of new facilities by the 2003 season. If new stadiums are built for both teams, the City believes that only a minimal capital investment is required for Veterans Stadium, and the Phillies and Eagles will only occupy the Vet for an additional three or 13 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 four years. However, if the City does not proceed with new stadiums, and either or both of the teams continue to play at Vets Stadium to the expiration of the current lease or beyond, a significant capital investment in Veterans Stadium is more than justified. The City and the teams have different assessments of the current state of Vets Stadium and the scope of the improvements that need to be made. The proposed agreement reflects a good-faith compromise on the part of the City and on the part of the teams. If the City does not proceed with new stadiums by November 3rd of 2000, then the City agrees to invest up to $80 million in improvements to Vets Stadium over two fiscal years. The Street Administration believes that these contingent capital expenditures are reasonable and appropriate if Veterans Stadium is to be used for football and baseball for the next eleven years and beyond. But, importantly, the proposed agreement also provides an incentive to the Eagles to build and keep their practice facility and 14 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 corporate headquarters in the City of Philadelphia. A new football stadium would generate revenues to pay the cost of construction and operation of the new practice facility. The proposed agreement allows the Eagles to recover their construction costs if there is no new football stadium to support the practice facility. The City and the teams have agreed to negotiate rent, taxes, naming rights, concession arrangements, and other issues in connection with Vets Stadium and the practice facility in the event and at the time the City does not proceed with new stadiums. The proposed agreement simply sets the stage for full and fair debate of new-stadium development in the public arena. It gives us a business and a legal framework for vigorous good-faith negotiations with the Eagles and the Phillies during the upcoming months, with regular and substantive consultation with Members of City Council and the impacted neighborhoods. The Street Administration believes that the proposed agreement has structured a fair approach that effectively protects the interests of the City. 15 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Thank you for allowing me to give you the background and -- (Applause.) (Standing ovation.)
All right, Mr. Hankowsky, please proceed with your testimony.
Yes. If you need additional copies, I have them available.
Does anyone need a copy of Mr. Hankowsky's testimony?
Good morning, Council President Verna and Members of City Council.
My name is William Hankowsky, I'm the President of the Philadelphia Industrial Development Corporation, and I'm here today to testify in favor of Bills No. 80, 82, and 38. I would briefly like to describe these bills and the overall transaction that they authorize. Bill No. 83 is the most straightforward. It authorizes the collection by the City of the 2 percent vehicle rental tax, which was authorized by the State legislature in June of 1999. This tax would become effective on 16 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 July 1, 2000. 65 percent. Later in my testimony, I'll explain how this revenue will be utilized in conjunction with the proposed transaction. The remaining two bills authorize two actions that would occur only in the instance of the City of Philadelphia, the Philadelphia Phillies and the Philadelphia Eagles have not agreed on the development of two new stadiums by November 3, 2000. As so well explained by Stephanie Franklin-Suber. Step one is authorized by Bill No. 82. It provides for amendments to the current lease between the City and the Phillies and a similar amendment to the lease between the City and the Eagles. These amendments provide for an aggregate amount of up to $80 million for capital repairs, restorations, and replacements of the two fiscal years of 2001 and 2002 for Veterans Stadium. The particular repairs and the timing for their execution will be based on a mutual agreement of 17 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 the City and the two teams. The logic behind this action is fairly simple. If we do not construct new stadiums, then we need to invest in Veterans Stadium to extend its useful life until the end of the current leases, which is the 2010 season. This action is consistent with the terms of the current leases, particularly Sections 901 and 905, which provide that it is the City's obligation to provide for the capital repair of the Vet. The parties have agreed that up to this amount is the City's obligation over the next two fiscal years and have done so on the premise that they would be playing here through the remainder of their lease terms. The City will undertake these lease repairs as we have done in the past, utilizing the City's procurement procedure and issuing bonds to pay for their expense. These bonds would be paid off by a combination of the vehicle rental-car tax revenues and the City's standard General Fund debt service appropriation. Fundamentally, the City is repairing Vets Stadium as we have done in the past, with one exception. That is that we are agreeing now with 18 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 our two tenants, the teams, on the maximum amount we will spend on such repairs in the next two fiscal years. In other words, establishing a count. Step two of the proposed transaction deals with the Eagles practice facility. The Eagles are constructing on a 22-acre site at the former Philadelphia Navy Hospital a new $30 million practice facility that includes their corporate offices, team training facilities, and a NovaCare sports medicine operation. The practice facility was planned for in 1999, was the subject of meetings with the affected community and appropriate rezoning of the site by City Council in June of 1999, and their entering into two agreements between the Eagles and the Philadelphia Authority for Industrial Development ("PAID") and PIDC. These two agreements were an interim lease based on a lease that PAID has entered into with the United States Navy and a $7 million economic stimulus grant agreement. The Eagles had a right to cease construction if a package were not authorized for 19 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 a new stadium in 1999, and they did so. Mayor Street then began the discussion with the Eagles to allow for the resumption of construction. Bill No. 80 is the result of those discussions. It authorizes the City to lease the practice facility from PAID and, in turn, lease it back to PAID.
This mechanism is established to allow PAID to buy the practice from the Eagles for an amount not to exceed $23 million should a new-stadium package not be in place by November 3, 2000. 5 million annually. The City would use a portion of the annual revenues from the vehicle rental car tax to make this annual rental payment to PAID. Once PAID acquires this facility and leases it to the City and leases it back, then PAID and the Eagles would enter into a new lease dealing with the Eagles' continued occupancy of the facility. The terms of this new lease have not 20 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 been negotiated. They will only need to be negotiated should the contingency occur. The result of these actions would be to place the parties in roughly the same position they are today. That is to say that the Eagles would be relieved of their bank loan, which they are using to construct the practice facility, and the City, via PAID, would be in a position to provide the Eagles with practice facilities. As we do today at Veterans Stadium. Again, the one distinction is that the City and the Eagles would need to negotiate the terms by which the Eagles would occupy and use these practice facilities. This testimony provides an overview of the legislation before City Council. We've also provided briefing material earlier, which supplements this testimony. The Eagles and the Phillies will also be testifying. As always, I'd be pleased to answer any questions that Council may have with regard to these bills. Let me close by reiterating again one point. This entire package is only relevant if we do not proceed with new stadiums this year. They represent an agreed-to contingency. The intent of 21 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 all the parties is to be back before this body with an acceptable stadium proposal. And let me close by thanking City Council, as always, for your consideration of this package.
Ms. Suber or Mr. Hankowsky, the bills before us require the approval of new-stadium legislation by November 3, 2000. The penalty if such legislation is not approved by that date is that the City, through PAID, will purchase a practice facility for a cost not to exceed $23 million and commence up to $80 million of repairs to the Veterans Stadium. Is that correct?
Not entirely correct, Council President Verna. In two respects, it is not. We do not consider this to be a penalty. We consider this to be an incentive for the Eagles, as a matter of fairness, to construct their practice facility now, without any assurance that there would be revenues generated 22 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 by a new football stadium to support the costs of constructing that facility. The Street Administration believes that, as a matter of fairness, the Eagles should be able to recover the cost of construction in the event there is no 7 football stadium. If there is no new baseball stadium, but there is a new football stadium, we have no 10 obligation to purchase the Eagles' practice facility because they won't have the revenue stream to support the cost of construction and operation of the practice facility.
Ms. Suber, if the City, in fact, buys back the practice facility, are the Eagles required to practice there for the balance of their lease at the Veterans Stadium, which is 2010?
The agreement that we have reached with the Eagles, and the Phillies for that matter, in terms of practice facility, lease terms and conditions and Veterans Stadium lease terms and conditions in the event there are 23 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 no new stadiums, these are also issues which would be negotiated at that point in time. So we have imposed no requirements and the teams have imposed no requirements on the City.
If the Eagles exercise their right to leave the practice facility and move to a site outside of the City, can you tell us what the economic impact would be to the City? I would like that to be placed on the record, please.
Council President Verna, let me respond to that. We've taken a look at the differential between having the Eagles practice in the City and not practice in the City, and the differential between their management and coaches working with their corporate offices here and not working with their corporate offices here, from the standpoint of the wage tax difference if the practice facility were outside versus inside. We currently estimate that in the Year 2001, the difference between the in or out scenario is approximately 2.7 million. We've escalated that in two ways, one based on what we 24 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 understand will happen to the NFL salary cap in the next two years, and then we escalate it from there on based on the Five-Year Plan assumption, which is a 2.65 percent inflation rate, which is very conservative. Historically, the salary cap has grown in a kind of percent per annum, but 8 we don't assume that that's going to happen in the 9 future. 10 And it's also conservative because in addition to these loss of wage taxes, you would also lose use and occupancy tax, certain business taxes, because now the corporate offices wouldn't be here, and so the amount would be somewhat greater than that. But just to be conservative, it starts at 2.7 million and grows.
Thank you. Regarding the cost of repairs to Veterans Stadium if we do not reach an agreement with the Eagles and the Phillies on new stadiums, why is the Administration proposing the use of capital budget and not an authority to fund these repairs? And can you tell us what impact would the use of City capital funds for this project 25 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 have on future capital budgets?
Council President Verna, I will answer your question in a way I believe is consistent with the testimony I presented to City Council on the capital budget. The Administration, again, has proposed a contingency plan. We would expect, if City Council approves this agreement, that we will have new stadiums. If that is not the case, looking at worst-case scenario, and by that, I mean no other alternative sources of funding either the buy-back of the practice facility or improvements to Vets Stadium, we are providing for authorization in the Capital Budget over two fiscal years, recognizing the debt ceiling capacity problems that we are currently facing. We have said before, and I will say again today, that if there are alternative ways of financing the practice facility buy-back and improvements to Veterans Stadium, then we will certainly consider and use all alternative sources of fundings, or some combination of a variety of different methods. We are receptive to that and would make every effort to minimize the amount of 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 capital dollars that we would spend under these circumstances. So it may very well be that we will find a way, using an authority such as PAID or PMA, to finance some or all of the buy-back of the practice facility or the improvements to Veterans Stadium. Certainly, one of the reasons we have introduced legislation relating to the vehicle rental tax is to provide a new stream of revenue that we can use in connection with these proposed obligations.
What is the outstanding issue of the situs of the car rental tax, and why do you believe the City should enact the tax?
One moment, please. Joining us at the witness table is Corporate Chair Bill Martin from the Law Department.
Good morning. Please identify yourself for the record.
My name is William Martin. I'm Corporate Chair of the City of 27 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Philadelphia Law Department. Madam Council President, I'm willing to address and perhaps the Chief of Staff will address the question of why the Administration believes this should be enacted. But in terms of the situs, the State legislation provides that the tax will apply upon the rental of a vehicle, that it applies when the place where the renter takes position of the vehicle is within the City of Philadelphia.
And that would become effective July 1, if my memory serves me?
Do we have any indication as to how much revenue that would generate?
Yes. Again, we've, in consultation with the City Finance Department, have looked at the historic activity of rental cars in the City of Philadelphia, and we currently 28 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 estimate that in Fiscal Year 2001 that this tax would yield approximately $4.5 million and again escalate that on the Five-Year Plan basis of 2.65 percent, which again we believe to be actually conservative. Recent experience has shown that that -- that the amount of rental car activity in the City has grown at greater than that rate over the last several years. But, again, to be conservative, we went with the Five-Year Plan basis, and this is based on reporting that rental car companies have done with the City in prior users.
At this time, the Chair recognizes Councilman Goode.
Thank you, Madam Chair. Good morning, Mrs. Franklin-Suber.
Thank you for testimony. Let me first commend the Administration for its Town Meeting process over the last several 29 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 weeks. I had the opportunity to attend Monday night's meeting in the Majority Leader's district, which actually lasted until Tuesday morning. But my question is, Mrs. Franklin- Suber, how often is a sport facility issue raised at these meetings?
It is my recollection, and I've been to most if not all of the Town Meetings -- it is -- it is not raised frequently.
The major concerns relate to quality-of-life issues -- abandoned vehicles, blight removal. I'm trying to recall if there's even been a single question.
Okay. Have PIDC representatives attended these meetings to explain the agreement with the Eagles and Phillies?
Why not? It's an opportunity to go around the City to explain to 30 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 the citizens of Philadelphia the agreement between the City and the Phillies and Eagles.
We have had -- in terms of -- in terms of this -- the practice facility issues, we are presenting the Administration's position in this public hearing. This is -- this is not the discussion, as Council President Verna indicated earlier, of new-stadium development. The Administration plans on having a public process and discussing new stadiums again.
I was talking about the question of sports facilities, period -- be it practice facilities or new stadiums. Was there a conscious decision to do that in a public hearing here today rather than to do it at Town Meetings?
No. And I do recall that there may have been a couple of instances where the Mayor touched on the issue himself.
But it has not been an issue that has been raised extensively, and given the length and the number of the Town Meetings that we have had, I think that we have 31 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 covered the gamut of issues of concern to the communities.
In the overall scheme of things, this issue has not been raised very frequently.
Okay, thank you. At Monday's meeting, I gave you a copy of a public benefit resolution that would be co-introduced by at least ten Members of Council tomorrow. Have you reviewed it?
Okay, I will only ask you some questions regarding that agreement, or the resolution. You are involved, or have been involved, in sports facility agreement negotiations?
No. And I have not reviewed the resolution. If you are talking about the negotiations that took place in 1999, I was not directly involved.
You were involved in negotiations regarding the practice facility? 32 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
And in those negotiations, what public benefit criteria have you employed? A, have you guaranteed a percentage of jobs for Philadelphia residents?
Councilman, we -- the answer is, we have not. There is not a provision in the agreements, as drafted between the City and PAID and the Eagles, that deals with City residents in terms of employment.
The -- and if I could make a distinction between the construction aspect and the operating aspect, if I could. So we have discussed on the operating aspect side -- excuse me on the construction side, I apologize. We've talked on the construction side about MBE/WBE participation and the use of minority workers and female workers in the workforce for that project. On the operation side, fundamentally, the people, quote/unquote, moving into the facility are the current employees of the Phillies and, obviously, their players coaches, and there's minimal new employment. 33 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 There's some jobs that NovaCare creates, but there was minimal new employment, so it wasn't a particularly significant issue, and these were not, quote/unquote, all new jobs. So it's basically a retention issue, as has been indicated.
So because there are no new jobs, I can assume that you have not ensured any welfare-to-work opportunities.
That's right. It does not have any provisions with regard to welfare-to-work.
Yes. The Eagles are currently proceeding with this project on the basis of an MBE/WBE plan.
Is that affirmative action consistent with the City's affirmative action policies?
The Executive Director of the Minority Business Enterprise Council, Jim Roundtree, is present. He has been involved directly in the discussion with the 34 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Eagles, and he can respond to this question. (Jim Roundtree comes forward.)
My name is James Roundtree, and I am the Director of the Minority Business Enterprise Council. And I have met with the Eagles and their team in developing the practice facility beginning in September, and we believe that they have a minority and women and business participation plan that is acceptable to the City thus far.
Is it consistent with the aggressiveness of the executive order?
We believe so. We have identified participation in all three levels of activity -- in the design, in the construction, 35 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 and in the operations. We've also asked them to present to us a plan to utilize minority and women craft workers as well. The plan will also call for a participation level for disabled businesses along with that.
Since we have you here, how did that process begin? The Eagles and the Phillies are not required to abide by the City's affirmative action policies, are they?
Okay, we have not met the with Phillies; we've only met with the Eagles as it relates to the construction of the practice facility. And the process began with the meeting of the developer, the Eagles team, and the construction managers identifying areas where we believe that minority and women and disabled businesses could participate, as well as some levels of employment for minority and women craft workers.
I guess my more specific question is, who engaged in the process? Did MBEC ask the Eagles to provide certain opportunities to minorities and women? Did PIDC require an affirmative action plan? Did the 36 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Eagles offer an affirmative action plan? Who actually engaged in this process?
We basically indicated during our discussions with the Eagles that a plan would be necessary, and we agreed that probably the most expert people to have the discussion with about that would be the Minority Business Enterprise Council. And so then, as Mr. Roundtree indicated, they began the dialogue with them to actually put a plan in place.
Thank you, Councilman. The Chair now recognizes Councilman Nutter.
Thank you, Madam Chair. Good morning, Mrs. Franklin-Suber.
I wasn't at the event the other week. But, Mr. Banner, you might 37 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 want to talk to Mr. Roundtree about the upcoming season. I think he's still in good shape. (Laughter.)
And he might not even ask for 30 million. I'd like to go back to a question that the Chair asked, and I didn't understand the response. I thought I heard you say something about if there were a baseball stadium but no 11 football stadium deal, and then I didn't catch the rest of what you said or what it meant. Do you recall that?
I believe I recall it, yes. The point I was trying to make, and I apologize it was not clear. If there is a new football stadium, all right?
If there's a new football stadium, the Eagles will have the revenue to offset the construction and operating costs of the practice facility.
So if there's a new football stadium by November 3rd of 2000, then 38 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 we have no obligation to buy back the practice facility. However, if there's no baseball stadium, and the Phillies will be playing at Veterans Stadium, we will have an obligation to renovate Veterans Stadium because the Phillies will still be playing there.
So under the circumstance where either or both teams will be playing at Veterans Stadium until 2011, we would invest in the capital improvements to Vets Stadium. We would have that obligation.
-- possibly paying -- okay, all right, I understand. The other question had to do with the alternative sources for the capital dollars. I thought your testimony was something like, Yes, we could possibly find some other places. But I got the impression that that was a reluctant response to go down that particular path.
It's not a 39 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 reluctant response. It's simply that we don't know what the alternative sources of funding may be. We will explore, whether or not we will need to access our capital dollars, in the event that we have two implement this contingency plan. We hope that all of our energy and efforts will be fruitful and we will actually have new-stadium development so that this will not be an issue, but if it does become an issue, we have available to us the revenue stream from the rental car tax. Our projections are reasonably conservative. We expect that revenue stream to cover the obligation to purchase the practice facility. We would explore whether or not there are other sources of funds, whether it's PICA funds or using -- relying on other authorities like PAID or PMA. As you know, there are all kinds of creative financing structures that can be devised. But if we cannot come up with something, then we would have the ability, because we have provided for the authorization in the capital budget to use capital dollars. And Vets Stadium is a City facility, so that's appropriate. 40 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Well, I appreciate the response. And I guess, again, Miss Franklin-Suber, I know that when your heart and soul and mind, in conjunction with Mr. Hankowsky, you guys can be as creative as anybody in the universe. And I believe in a previous hearing --
You're welcome. I believe in a previous hearing, possibly at the Capital Budget, it was made pretty crystal clear -- I believe by Mr. Hankowsky -- that not only in fact is it possible, I think he said that there was no reason why we couldn't explore, if not craft, a deal that allowed for capital expenses to Veterans Stadium should we find ourselves in that unfortunate position because -- I don't think we should end up in that position either, I think we should have new stadiums and we'd like to see a deal as soon as possible. But I thought the testimony was clear that whether it's PAID, PMA or someone else, that there were clear alternatives to the City's Capital Budget in terms of funding possible 41 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 renovations to Veterans Stadium.
Well, I don't think my response is inconsistent with what Mr. Hankowsky said, and let me explain to you why I believe that. Anything is possible, and it is possible, I believe to structure a financing scheme that would allow us to at least finance some portion of these expenditures. And we approach it from that standpoint.
Now, whether or not we have actually gotten to the details of what that financing structure would look like -- and it may be acceptable to Mr. Hankowsky but it may not be acceptable to the City, and we have not had that discussion. So there's a difference between saying that we will consider and look at the possibility of using a financing conduit, as compared to saying that we have found a financing structure that we will use. But we certainly are committed to exploring other possibilities so that we wouldn't necessarily have to use capital dollars. 42 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Okay. Well, lastly in this area, if for some reason the source of funding from the Capital Budget was no longer available, you would not be left in a complete -- left at a complete loss for other places to get funds to make potentially needed capital repairs at the Vet; is that right?
Well, Miss Franklin-Suber, I've never heard you not be able to answer a question.
Now, I think you may not want to answer, but I think you have an answer to that question. You would not be left without options if the capital financing was not made available; is that correct?
I believe that there may be options; I don't know what those opposites are.
Okay. 43 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
And if you don't know what those options are, then, you know, I find it difficult to answer your question. I'm sorry.
If we knew what those options are, then I don't think we would be taking the approach that we are taking now.
Okay. In -- I think Bill -- I guess it's quad 082 in the other bill, there is the much-discussed date of November 3rd, 2000 which serves as a trigger date for a variety of things to happen, and that is primarily a requirement that a deal be enacted and approved by Council by that particular date, lest we end up buying back the practice facility and putting up the $80 million in Veterans Stadium. Do the bills provide any date by which a stadium deal must come to City Council?
And by the Charter requirements of advertising and the like, is it possible that a deal could come as late as October 19th, 2000 and still be eligible for review and 44 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 approval by this Council in a potentially desperate effort to have the November 3rd deadline met?
Without actually looking at the calendar or checking with the Law Department, I'm going to rely on my knowledge as former City Solicitor. I would believe that that is technically possible, but you should be assured that that is not the Administration's intent to wait until the last minute. And there will be ongoing -- if I didn't make it clear in my testimony, this agreement sets the stage for discussion of new-stadium development, and we would expect to have that discussion publicly, working with members of City Council and the public. I mean -- so we're going to go through this process.
With disclosure of information, and it is our intent not to wait until the last minute. Mayor Street, of all people, 45 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 understands the difficult position that that puts City Council in when you have a significant piece of legislation that is very important and requires thoughtful, full public debate.
Sure. But I'm sure that, at the same time, you could understand and appreciate that last year, it may or may not have been the intent -- I never had a discussion of it with the former mayor, but the expressed intention was to get documents and information to us about a stadium deal. We weren't in a practice facility discussion too much last year, in '99. Sometime before the end of our legislative session, before the summer recess, we were told that it was coming to us on September 16th, '99, then it was coming to us on September 30th, then it was coming to us sometime in October, then it was coming to us sometime in November, and then it was possibly coming to us as late as December 2nd in an effort to get it passed by December 16th. So given that history you can understand and appreciate the concern that if we have a particular date by which we may be required 46 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 to take a particular action, is it not, in the interest of fairness and good faith, is it not appropriate to have some particular date and a reasonable amount of time for not only for the Mayor to negotiate a deal, with input and involvement by City Council, and then also have Council in a position with a decent and respectful amount of time to review that particular deal and also go through the public process that you're talking about. That's not harmful in this discussion either for today's activity or for the potential stadium deals to have some requirement that a completed deal come to us in a reasonable period of time. Would you agree with that?
Well, I actually think in light of the -- in light of the, I guess, historical background that you outlined in terms of what occurred in 1999 and the fact that Council did not receive information, that is not the process that we are going to engage in here. And so, City Council is going to be involved and is going to be kept informed and is going to probably even represented on the negotiating team. We -- 47 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 this is not a process where there will not be an opportunity for information flow. And so that is -- I mean, that's exactly why we have set it up this way, so that not only will City Council be consistently involved in the process every step of the way. Irrespective of whether you get, you know, final documents, by the time you would get final documents, we would have gone through extensive discussions. You will not be blindsided, and the same goes true for the public.
I understand, but is that the process that has been followed up to this point? Was City Council involved in the negotiation or the much-discussed conceptual agreement for the $23 buy-back and the $80 million in Veterans Stadium?
City Council- members stood with the Mayor when he made the announcement of the conceptual agreement. 48 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
I understand, but that was after the agreement was made; is that correct?
As soon as there was a conceptual understanding, the Mayor started briefing members of City Council.
I understand that, but you understand the distinction that I'm making based on your earlier statement. City Council was not involved in the development of the conceptual agreement. Your testimony is that City Council was informed of the conceptual agreement. And I know you understand the difference and the distinction between those; is that correct?
So let me go back. If there is a date certain by which some action must taken by City Council, can you in fact object to some reasonable date or trigger point or timeframe during which from the time a deal comes over from that date in time, there is another period of time for proper review of that deal by City Council in an effort to collectively meet 49 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 and, quite honestly, avoid the trigger date of 11/3/00?
Councilman Nutter, I understand your concern, but I can't -- I can't make that kind of commitment. I understand your concern. It is not our intent to submit stadium development legislation to City Council at the last possible minute.
I could not make that commitment because I don't know what you mean by "a reasonable date." I would not make that commitment unilaterally without talking with all of the other parties that are involved here, so I can't make a commitment. I understand your concern and I think that the process that we envision will have enough information flow that we would not have to agree to a date by which we'd have to submit legislation to Council, but I don't know the feasibility without even knowing what you're talking about. 50 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
You understand the concern. And I guess -- I mean, I at least need you to put on the record that the concept of Council having a date certain by which it must take an action, it is then not unreasonable that there be some date, which is a reasonable date by which a deal would have to come to Council in order for it to adequately and appropriately do the due diligence of our responsibility in evaluating that deal. And in conjunction with that, if there is such a date by which a deal must be negotiated, isn't that in the best interests of the teams and all of the interested parties in having a new stadium built -- stadiums built and constructed, because it puts some time parameters around the process?
That was a multilayered question/comment. Let me just say that what I am prepared 51 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 to put on the record is what I have stated previously. And that is, the sole purpose of this agreement, the fundamental purpose of this agreement is to bring all of the parties back to the table so that there is a full and fair opportunity for public debate of new-stadium development. And we expect to have City Council directly involved in that process.
But you want us to agree to do something by a certain date and you don't want to be held to a date. I mean, that's what comes out of the testimony for the moment. You want us to take action by a certain date, but you don't want to be held to any particular date or timeframe in order to adequately allow us to do our job.
That's not true, 52 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Councilman Nutter. We are here today and we have a specified date.
And we're prepared to explain to you how we arrived at that date.
You are asking me to make a commitment hypothetically conceptually without a date having been identified and without my even having any ability to speak to anyone else. And I'm not prepared to do that.
Well, I understand that. One of the bills actually has a date; the date is July 1st. That date is four months from now, it allows you to negotiate deal in four months, and it allows City Council to evaluate that deal in four months.
I'm here to testify in support of the Administration's bills, which do not have a date.
I understand that, but all six bills are in front of us. I asked you a question about -- you said that you didn't have a date. I gave you a date. 53 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 I'd like your evaluation conceptually of that. You asked me a question and I gave you an answer.
At this time, I'm not prepared to commit to that date.
Yes. Councilman, there are a number of other Councilmembers that would like to be recognized.
I think we're going to do something just a little unusual today. We'll give in the first go-around each Councilmember ten minutes. So at this point in time, the Chair recognizes Councilman Mariano.
Madam President, I can understand this clapping for her, but don't clap for me. You guys embarrass me, all right? This is to Mr. Hankowsky or to 54 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Miss Suber. The NFL salary cap, right now it's $50 million; is that correct?
I believe -- I believe -- I can actually answer this one. I believe in the current fiscal year, it's 62.7.
62.7? When does it become a hundred million, within the next year or the year after?
Actually, probably Mr. Banner, on behalf of the Eagles, can give you a better explanation but, I can give you a quick one.
If that's okay. It is established basically roughly in February of each year because what they basically do is look at the revenues that have been collected. And most of us are sensitive to the TV contract, but it includes, you know, hats and everything else that are revenues to the league. And they do the calculation, okay, how much is there and then divide it by the number of teams and the 60 percent that go to the players and create that cap. 55 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 There is an anticipation, based on the current TV contract and the value of that contract, which was -- I'll use the term backloaded, i.e., that the TVs would pay more money to the league than at the front, that the cap will grow. And it is an estimate because you won't -- it's not like they actually tell you what the cap is the number of years out. We projected in our analysis that it might be 80 next year and about 100 in the -- actually, let me rephrase that, because sometimes even I myself get confused with calendar years and fiscal years. It's -- we're actually projecting 80 years out -- 80 a fiscal year out and 100 a fiscal year out. That's roughly two and a half years out.
So if everything goes right, as planned by the Administration, and the practice facility goes along and we construct two new stadiums and the Miami Dolphins are here practicing three days a week -- I guess that's what they'll practice if they play here, and their salary cap's a $100 million, how much revenue would that cause for the first year that we 56 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 wouldn't get if we don't build these new stadiums?
I can't explicitly answer that exactly the way you've asked it, but I think it's actually answered in our analysis.
But it's pretty much more double than we've had over the last ten years?
I think the answer is not exactly, just to be careful. For every time that a visiting team is here and we're taxing them because they're here, perhaps playing the -- you know --
We tax Dan Marino, for instance, at that lower rate if he plays here on Sunday, he practices two, three days.
Well, what I was about to say is, yeah, to the degree the visiting team comes and does, you know, a walk-through day and a, you know, a (unintelligible) day and then play, they -- 57 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
He's not practicing in Delaware County, he's practicing in the City of Philadelphia.
But I want to be careful here. The converse of that is when the Eagles are playing at Miami, they won't be here when they're practicing.
So basically the simplest way to do the calculation is just take and assume the Eagles are here the whole time, and it washes out because part of the money we won't get when they're away, and we'll get twice the money when two teams are here. So the numbers are actually about the same.
An Eagle player that plays for the Philadelphia Eagles, when he plays in Miami, he still has to pay City wage taxes to the City of Philadelphia. 'Cause if a plumber works outside the 58 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 City of Philadelphia, then he --
Yeah, if he lives here, he -- (Unintelligible, parties talking over each other.)
-- Lives in the City, he pays more money than if he lives outside the City. When he's not in the City, he doesn't play.
All right. But we're still talking about a great windfall of further revenue with the salary cap, correct?
Yeah, the project -- and we, as I indicated in my testimony, we ran our projections after kind of the end of the current TV contract at the Five-Year Plan inflation rate of 2.65. If you look at some of the more recent TV contracts, the NCAA final four, which was 59 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 recently signed -- and I have two other examples -- the numbers that those contracts are jumping are dramatic. So I think it's reasonable to assume that the number will be greater than 2.65 but --
Okay. Councilman Nutter touched on this a little bit and it was about the financing for the repairs of Veterans Stadium, if it ever comes to be, which I hope it never comes to be, 'cause we'll build new stadiums and on time like we wall want to, but if that does happen, you didn't say you were overtly opposed to using some alternate financing, did you, Miss Suber?
I mean, everything's on the table. We can look at that.
So there's no 22 reason for anybody to get upset and concerned that the big Chief of Staff isn't doing anything we might ask her to do.
That's correct. 60 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Thank you. Third question. And this is more to the sponsors of the Bill 0079, 0084, and 0085. At this time, I would ask the prime sponsors of them bills to withdraw them as considering there's probably some other amendments coming that we've been working on that may work this out.
0079, 0084, and 0085. I would ask the sponsors to withdraw them bills at this time. 'Cause I think it's confusing to everybody. I mean, we're going to stay here all day and ask questions for the Administration's bills, then we're going to have bills, and then I think we're going to have other bills or amendments?
Councilman, I believe all bills are being considered at this moment.
I understand that, Council President. But I'm asking the sponsors of those three bills that I mentioned to withdraw them now, if they would consider that? That would 61 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 be -- 79 would be Councilman Kenney and Nutter's, 84 would be Nutter and Kenney, and 85 would be Ortiz and Nutter. If these guys would consider withdrawing them bills?
All right, thank you, Madam President. That's all my questions.
Okay, thank you. The Chair recognizes Councilman Cohen.
Thank you, Madam President. You know, a few years ago, the City was thought to be in a lot of financial difficulties, even though it had never gone bankrupt, had never missed on any significant payment, and people used 62 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 to say that the City ought to do more to help itself. So the City Council worked together with the then-mayors and we developed streams of revenue based on taxes, and we thought we were showing how hard Philadelphia was working and willing to sacrifice. You know, and when we asked for more State help, we said, Look what we're doing ourselves, you always said we should do more. And so in the process, we passed 12 taxes. Philadelphians were willing to subject 13 themselves to that concern. And then suddenly, we 14 found, instead of being financially responsible 15 people, we got known as terrible taxers, and we 16 were attacked from all sides for adding taxes. 17 And then there developed this 18 psychology, There ought not to be any taxes. And 19 Philadelphia has the reputation throughout the country as being the most heavily taxed city in the country, maybe in the world. And we're told by you, Mr. Hankowsky, at various times over the years, that we've got to overcome this difficulty, that's why we have to give such great contributions, tax abatements, 63 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 that sort of thing, to businesses to bring them into the City to overcome the tax problem. Yet here, we're proposing another new tax. And I don't quite understand that philosophy. Why is that a part of the package? Are we going to go further in developing a reputation as a tax-crazy city?
Excuse me, before you answer. Councilman DiCicco, do you mind helping Councilman Cohen with his microphone, please.
This is held together by a rubber band. It's a temporary fix.
Okay. Mr. Hankowsky, please respond to the Councilman's question.
Yeah. Councilman, I think you very accurately sort of talked about our fiscal history. And this City Council has, over the last number of years, in fact, very consciously adopted budgets and taxing plans that were decreasing our wage taxes and other taxes.
So I think we've 64 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 clearly indicated a trend. So I think it's a very appropriate question to ask, Why would we add a tax in the transaction? I think it's important to understand the context of the vehicle rental tax. The last calendar year, when we looked at the question of, were there any potential revenue sources that we might be able to tap to assist in the financing in that timeframe, in the context of new stadiums and new practice facility, and we did look at various taxes that we have. For example, we have a hotel tax but we've raised that to pay for the Convention Center. We looked at, you know, liquor tax, but we raised that to assist the School District. So we felt that none of those taxes -- because, I think, very consistent with your question, that raising any of those would be perceived as going too far in those tax areas. One place where it looked like we were not taxing at the highest level in the country was the vehicle rental car taxes. By the addition of the 2 percent -- it would obviously go higher -- but it was not inconsistent with what some other 65 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 cities have done in terms of using that as a vehicle for a new revenue source. And that it is not totally -- and I appreciate that, but to a significant extent, levied on, to be blunt, out-of-towners who utilize those vehicles in their business or luxury visitations to our city, and was a way to get a revenue stream with -- with -- I'm not going to say no impact, but trying to minimize the impact on our residents and our businesses.
You know, I used to try to defend each separate tax that we levied, you know, along the lines that you're talking. This tax didn't apply to a certain percentage of our citizens in Philadelphia but it hit outsiders, but it never flew. What flew was that we were raising taxes and that Philadelphia become the heaviest taxing city, the city that it was most expensive for anybody to do business in. And I'm just urging that maybe we ought to give some more thought. This is the kind of question I would have raised had Council had any opportunity to be involved in developing this so-called conceptual 66 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 agreement. I would have thought it was very important to stay away from any new taxes. Now, with respect to that car rental tax, with respect to the car rental tax, has there been any study as to how many Philadelphians it would affect as against outsiders? (Mr. Hankowsky confers off the record with Ms. Franklin-Suber.)
Councilman, I want to answer that question but if I could make one other point.
Which is, I also just do want to indicate that obviously the authorization, as indicated in my testimony for this tax, was provided by the legislature in June of last year and actually culminated in perhaps six to seven months of discussion in Harrisburg about this. So there was a -- you know, as I said, it was done in the context and it's been 67 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 there and we've had the capacity to enact it since that time. To your question about Philadelphians versus non-Philadelphians, it's a little difficult to precisely know that. But if you look at the revenues of the rental car companies, and I believe -- and if I were given a moment, I'd probably pull out the right file, so I'll take the liberty of saying "approximately," and I could confirm it in a minute. But, I think, somewhere in the neighborhoods of 75 to 85 percent of those revenues are obtained by the rental car companies at the Airport. In other words, where people are coming, you know, via plane, arriving, and now need a vehicle to move around in doing their visitation. There's additional obviously because we know there are rental car places in Center City and there are some even in -- throughout our neighborhoods, you know, where you can rent an Enterprise car or something like that. But just looking at that information and talking with the companies, we think that it's probably in that neighbor, that 75 to 85 percent 68 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 of this is non-City resident activity.
I know I've had a substantial number of calls from constituents who say that they don't rent constantly, residents of Philadelphia. They don't rent cars constantly, but because parking rates and garage rates are so expensive, they don't own cars, but that three or four or five times during year, they may rent a car for a week or two. And they were raising the question of why ought they be paying for the facilities, either the sports stadium or the practice facility? I think it's -- I think it would be awfully good if you could find a way to substitute something else for the tax because those State legislators who enacted this legislation authorizing us to levy the tax, many of them were the loudest complainers about Philadelphians having raised all of the taxes during the years, and I'm sure they're going to forget that they passed the legislation, but they will be blaming us a year or two down the road. So I would like to suggest that there be additional thought on that aspect. 69 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Now, I'm also told, and I'd like to --
Gentlemen, we are not going to tolerate this, please. (Some audience members continue to boo.)
If we behave in this matter, we will recess and clear the chamber. Please have respect so that we can respect you. Thank you. Councilman Ortiz?
Thank you, Madam 70 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Chair. Miss Suber, I was interested in your answers to Councilman Goode about this issue never being brought up in any of the Town Meetings. And -- because I've never had any phone calls into the office as to people asking for building of a practice facility. But I'm interested in the fact that you stated in the answers to your question that we would be -- we would have to buy back the facility if we do not meet a certain date to approve the package for the building of the stadiums. However, the Eagles have no -- they have no 15 responsibility and they have -- they don't have any liability at all whatsoever in terms of staying in the practice field to practice. They don't have to practice in the practice facility in the practice facility that we have built for them and we bought back. They could move to Chester or Delaware County. Is that true? In your legislation, there's no 23 requirement that if you don't meet the November 3rd date, that the practice facility that we have to buy back, that the Phillies stay and practice 71 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 in that practice facility.
There is no 4 obligation on the part of the Eagles to practice in that practice facility.
So we could find ourselves buying back a practice facility that the Eagles, for reasons of their own, go and practice somewhere else, because they have no obligation and we don't force them to do that.
That's right. And they have that right to do that now under the existing Vets Stadium lease. We have an obligation under the existing Vets Stadium lease to provide a practice facility. They are not required to play in the practice facility.
We are -- we have right now, under the current lease, to do what?
So we have met our obligation. 72 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
That's correct. And they have no obligation to practice in it.
But we have met our obligation to provide them right now, currently, with a practice, and that has been done?
And they want the City to run risk if we don't meet a certain date -- and not the City but the taxpayer, that we would have to buy back that practice facility if we don't meet that November 3rd date. Is that another penalty? I think the Council President said that's a penalty. Why should the City be penalized for not meeting a date that's arbitrary in the first place?
But not meeting a 73 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 date because we may not have the information to meet that date.
Councilman Ortiz, let me try to answer the different parts of your statement. It is not a penalty. I mean, the beauty of an agreement is that you have different sides that come together and they work out something that is to the mutual benefit of both sides, and that process involves give-and-take. We have asked the Eagles to take the risk that there is no new football stadium, proceed with construction of their practice facility in the City of Philadelphia so that we can ultimately benefit with increased tax revenue.
I mean, so there is risk on both sides here, and we felt that if there is no new football stadium, which is going -- the revenue stream is going to support the construction and operation cost of the practice facility. If there's no new football stadium, they would have taken the risk, constructed the 74 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 practice facility. We would have paid them the construction costs. We're not paying all of the costs that they're going to incur. And actually, it might be better to have the Eagles' representatives explain their perspective on this issue. From their perspective, all of the risk certainly is not on the City of Philadelphia. We felt that in the context of the agreement, what the City would stand to benefit by way of jobs in the practice facility, whether it's construction jobs, permanent jobs, if we buy back that facility, we would then at that time negotiate with the Eagles what the terms and conditions of any lease arrangement would be. So we -- both parties, both parties share the risk at that point that we're not going to reach agreement, and that the Eagles may move outside of the City.
And we will deal with that circumstance at that point in time. That is -- that is not unreasonable under all of these circumstance. 75 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Our goal and objective, as I've stated previously, is to set the stage for discussion and debate of new-stadium development. And if we put our time and energy into that, we expect to be successful and we won't have to implement this contingency plan.
But the issue is that we are willing to risk taxpayers' monies, and that's what we're talking about here. The risk that the Eagles take is really very minimal.
In terms of the practice facility, the practice facility would be purchased using the revenue stream from the rental car tax. And, as Mr. Hankowsky said, this is a new revenue stream, and the impact of that --
It is absolutely taxpayers' money, but we also gain in terms of the wage and other business taxes that the City will recover from having the Eagles practice facility, corporate headquarters, and the NovaCare sports medicine facility right here in Philadelphia. And that facility will be open to the public. 76 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 (Applause.)
But nothing in the bill that is presently before us obligates -- (Shouting by some audience members.)
Gentlemen, please, let's have respect for each other. Thank you.
Nothing in the bill, nothing in the bill obligates them to practice in the practice facility that we have purchased.
That is correct, and it's consistent with the agreement we have with them now. And it doesn't mean that in the event there are no new stadiums and we go to the table to negotiate the terms and conditions of the leases that we don't discuss that issue at that point.
Thank you. The Chair recognizes Councilman Rizzo.
Thank you, Madam President. I think this whole issue would be a lot 77 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 easier to resolve -- can you hear me okay? -- if we had a feel that we were going to get to new stadiums, and I'd like to get back to the point, the scenario where, if there's a new Eagles -- a new stadium for the Eagles to play and there's no 7 stadium for the Phillies, based on that statement, it appears that you have a plan that will accommodate a new football stadium at the existing South Philadelphia site and allow Veterans Stadium to remain for the Phillies to play baseball in. Based on that statement, how come we're not a little further along on the citing of a football stadium and a new baseball stadium? And, again, I don't think we'd be having this conversation if there was a little more action in that area.
Councilman Rizzo, I disagree with your characterization of my statement. What I simply pointed out was that the difference between whether or not by November 3rd we have reached agreement on a new football stadium as compared to a new baseball stadium, the Phillies have no interest in the Eagles practice facility. 78 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 So in terms of our obligations, I simply pointed out to you what the possibilities may be. I made no statement or assumptions with regard to, you know, situs of football or baseball stadiums. That's not what this proposed agreement is about. It's simply to set the stage to have those discussions and to make sure that before any site is selected, the public has an opportunity to be heard. We're not there yet. We're just trying to get past the practice facility issue and to have in place a contingency plan if we do not reach closure on new-stadium development.
If we don't have -- if we have a stadium site selected for football, and in the scenario that you describe, we do not have is a stadium location for baseball --
The Street Administration has not selected a site for either new stadium.
I think the Councilman has said they have. Repeat your question, Councilman, please. 79 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
How could you -- the statement that I think I heard you make was that there would be the potential -- there is the potential of having a football site picked out and a stadium erected for the Eagles without a location for the Phillies. I think I heard you say that the Phillies could be playing in Veterans Stadium. That tells me that there's a possibility of building a new football stadium in South Philadelphia and keeping the Vet where it is.
In terms of the contingency plan, it deals with every possibility, that's correct. So it is possible -- it is possible -- it is possible that we may reach closure on a new football stadium and we may not on a new baseball stadium, and it is possible that we reach closure on a new baseball stadium and not a new football stadium, and it's possible that we do both, and it's possible we don't do either.
Based on -- based on no baseball stadium in South Philadelphia, and I guess I'll ask this question of Mr. Hankowsky, 80 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 could we based on what information we have in place today, could we construct a facility in the South Philadelphia complex for football and allow Veterans Stadium to remain and play baseball in?
I think, Councilman, candidly, it's impossible to answer that question. As Miss Franklin-Suber indicated, the Street Administration has not made any decisions vis-a-vis siting. I mean, the answer to your question, candidly, is that it's possible to put stadiums anywhere. I mean, if you want to condemn and buy property, you can do anything anywhere.
But there's no 17 transaction on the table. We don't know anything about -- we're not negotiating any of the economics.
Mr. Hankowsky, I think that Miss Suber indicated that that scenario could happen. I think the Councilman is asking for some clarity on that. And I would just like to interject, if that be so, what suddenly happened to the parity 81 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 clause? I mean, last year, when we were supposedly going to be addressing new stadiums, we were told that one could not be built without the other because of the parity clause in the lease.
I wasn't here for that discussion, Council President, but I did --
Well, we were, and that's what we were told. But can you just refer again to question that Councilman Rizzo was asking.
Well, let me respond to your statement first, because there is no obligation on the part of the City, under the parity clause, to build two new stadiums for both teams. If we are simply in a contingency plan, making sure that if there is a new stadium for one of the teams, the other team is not adversely affected by having to play at Vets Stadium without also taking into account the condition of the stadium. And so our position would be, if there's a new stadium for one team, and one team we have not reached closure on a new stadium, we're going to make renovations to Vets Stadium. 82 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 We don't believe that that raises any parity issue. In response to Councilman Rizzo's question, simply by saying that we have provided a contingency plan which recognizes that there are four possibilities does not then translate into the fact that, you know, can you -- can you build a practice facility in some other location. Well, again, anything is possible, and the contingency plan deals only with contingencies. It's not dealing with the site location of new stadiums, and it's talking specifically about this site for the practice facility.
I'm again going to ask Bill Hankowsky. Based on the information that's available, the available land to build a new football stadium, could you build, based on, again, the comment that a scenario could develop that the money would have to be spent on renovations to the Vet for the Phillies to play baseball, could you build a football stadium based on the available acreage that you know that not many people particularly know what's available and what's not available, could you build a new 83 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 football stadium and leave the Vet for the Phillies to play in? Yes or no. 4 Based on what you have, not the unknown, based on the information that you have.
I appreciate your attempt to give you a yes or a no, and if I could, I would, but it doesn't yield itself to a yes or no, with due apologies, Councilman. The only land the City of Philadelphia owns is the parking lot around the Vet. That's what we own today. And putting a football stadium there and leaving the Phillies in the Vet makes no 14 sense because then you have no place to park anybody. So any other contingency, any other scenario would require acquiring additional property from somebody, which hasn't been done. So there is no in-place scenario. There are lots of theoretical scenarios, but there's no in-place scenario that would allow for it without making a siting decision and taking a series of further actions. That would clearly have to come to this body.
Well, then, from what I understood, the scenario that I understood 84 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 was that if you built two new stadiums in South Philadelphia, that the Vet would definitely have to be razed to make that happen. You could not continue -- you couldn't build a new football stadium, let the Vet stay for an extended period of time, and build a new -- and keep the Vet -- keep the Vet operational at the same time at that site on Pattison Avenue.
You cannot do that. Is the -- the answer is, you can't do it without -- and keep the Vet there, right? Yes, no?
Again, I really appreciate -- I would love to do yes, no's. But all I'm saying is that you need to consider new real estate. To build a new football stadium, you need to consider new real estate, and that means you have to make a new site decision. That's all I'm saying.
Okay, that's fine. But, again, just to go back to what the Chief of Staff said, it just -- it didn't add up to me and it still doesn't. 85 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Thank you, Madam Chair.
You're welcome. The Chair recognizes Councilwoman Blackwell.
Thank you, Madam President. Is it true that the real cost, Mrs. Suber, to buy the Eagles practice facility would exceed $23 million under the proposed deal since the City's liability would include not only payment of the interest on bonds on the financed million -- 15
Councilwoman, 19 we're having difficulty hearing you, please. 20
You can't hear 21 me? Did you hear the beginning of my question? 22 But also the cost of issuance and other reasonable 23 fees and expenses? If so, why is the City liable to pay the issuers' fee in connection with the issuance 86 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 and maintenance of a letter of credit, and how much might this be?
Councilwoman, you are correct. In other words, the cap of up to $23 million is a cap based on how much money we would provide to the Eagles or reimburse the Eagles based on their actual cost to build the facility. Because the City would then and PAID, based on the agreements that are before City Council, would enter into a financing agreement of whatever it would cost us to put that financing agreement in place -- a letter of credit or bonds -- we would pay, as we would pay in any City financing, we pay those expenses. If we are able to, we would keep those at a minimum, and that's part of actually why this structure is set up the way it is. By using the City's credit through the lease-back, hopefully you don't have to have a debt-service reserve and the following. The specifics of that will have to be finalized should we get to the point where we actually have to issue these bonds.
So we don't have an estimate of what those fees could be at 87 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 this point?
I don't have it off the top of my head. I have people here who might be able to give us an estimate, if you want me to come back to that in a couple minutes?
Certainly. One other issue. One of the questions and issues that Council has had has been -- and Councilman Nutter referred to that earlier -- the lack of information that we had, and that's what held it up in December. Let me ask you a question. Is the proposal submitted to Council really complete or incomplete because it didn't include the practice facility lease? In other words, I understand that if Section 2.5 of the proposed prime lease, to approve the Eagles' lease, there has to be a document, that Council has not seen this lease agreement.
You're absolutely right, Councilwoman. There would be the lease between PAID and the Eagles, and that's the lease that, in the earlier questions, we've indicated, is the lease that will have to be fully 88 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 negotiated, if in fact we buy it back. We've prepared a draft, but it has -- to be quite candid, it has a number of blanks in it, term, rent --
But isn't that what you're asking us, Bill, to introduce today, something that we haven't seen, by passing this in the prime lease?
Well, it author -- the lease leaseback authorizes, obviously, the City to lease it, lease it back to PAID, and authorizes PAID to lease it to the Eagles. That last leg of the transaction, the lease between PAID and the Eagles, is subject to the subsequent negotiation that would have to occur if we bought it, rent it, and whatever, and would require the consent of the City.
I -- I -- I don't want to misspeak, but I believe the legislation before you doesn't require that it comes back. PAID is required to get the City's consent to enter into it. We can't enter into it without the City's 89 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 consent.
That's part of the question, that we don't have a document to evaluate.
I think -- I think that -- I'm sorry. I think that our attorneys disagree with your response. (Stanley Shapiro comes forward.)
Mr. Shapiro, please identify yourself for the record.
Yeah, I'm Stanley Shapiro, one of the staff attorneys with Council. I mean, that's true, but when you say "City," you mean the executive branch. You mean the --
Yeah, I apologize. I didn't mean to misinform. Yeah, that's what I meant.
I -- that's -- that's 90 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 right.
The current documents before you don't include a provision that requires it to come here, that's right. I apologize if I didn't say that, but that's what I meant to say, right.
And included in that lease, they have all of the terms, and they would be the rent the Eagles will pay, the naming rights. Who is responsible for the operating and maintenance costs for the practice facility? Who's going to be responsible for the capital repairs? And wouldn't that all be a part of the lease and we have absolutely no knowledge as to what those terms and conditions would be, nor any say?
Council President Verna, we have stated previously that all of the terms and conditions of the practice facility 91 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 lease would be negotiated in the event that the contingency plan is implemented. The same would be true in terms of whether or not we want to revisit any of the Vets Stadium lease provisions. We -- we -- you know, again, this is a very simple proposed agreement. It does two things, and its purpose is simply to provide assurances to our teams to create construction and permanent jobs by proceeding with the practice facility and allowing everyone to go back to the full debate in the public arena of new-stadium development.
I'm sorry, Councilwoman. I didn't mean to interrupt you. Please continue with your line of questioning.
No, that is -- no, thank you very much. That was a great help to explain our questions, because I believe that everybody in this Council is for stadiums; I don't think that's ever been the question. The question is only information that we needed in order to be responsible to do our jobs.
And we all want the practice facility, but it's how we get 92 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 there.
Thank you, Madam Chair. Before I ask my questions, is Mr. Roundtree here?
Is Mr. Roundtree in the audience? (Jim Roundtree returns to the witness table.)
I'd like to say, Councilman Nutter and Mr. Roundtree, I had the pleasure of playing football with Mr. Roundtree when we were young. And he would at least be a third-round draft pick, if he was in shape. (Laughter.)
Yeah. Miss Franklin-Suber, I had a question. I know this is -- the Chair said she didn't really want to deal with peripheral issues, but this is somewhat related as it relates to the site selection. Councilman Nutter had earlier talked 93 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 about a timeline associated with the information flow toward Council, and I would just ask, could you -- when you ask that question of the participants of the decision-making process as it relates to the deal, could you also ask if it would be appropriate to have a timeline on the site selection? I was not privy or did not have an opportunity to meet with the Transition Committee, and I understand that there were discussions with a number of individuals, and I wasn't a participant in it and I kind of feel somewhat at a loss as it relates to that process. So can you please ask if we can set a time specific on that issue?
Once the Mayor receives a report from the transition team regarding recommendations on -- on possible sites, I think the timetable would flow from -- you know, it would be related to the number of sites under consideration, and then it would be structured in a way that we could make sure that we get legislation introduced into City Council in an expeditious process. 94 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 I think everyone is anxious to simply start the process, and that's why this is an important first step. You know, we need everyone to come back to the table. I think everyone is energetic and enthused. We're prepared to go forward with vigorous negotiations. You know, the practice facility is important to us, our teams are important to us. The Transition Team, we are expecting their report, we have not seen it, and we will move full-steam ahead. And we would expect to inform Council of our timetable. If that's responsive to your table.
Yes, because we will -- I am certain that once the possible sites are identified, and again, the Mayor has not yet received a report, he has not had an opportunity to get any briefing or have any discussion with 95 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 the members of that transition team to understand their recommendations, their analysis. Once -- once the universe of possible sites becomes clear, then the process, the public process for dealing with the communities and understanding their issues and concerns about particular sites falls into place, and we will set up an aggressive agenda, and he will meet with all of the affected communities in the possible site locations. And Members of City Council will be involved in that process.
Okay. I was just asking if you could ask that question about a timeline on that.
Okay. Mr. Roundtree, remember those good old days? Mr. Roundtree, I wanted to ask you question with respect to some legislation that this Council passed last year on the prevailing wage bill. And at that particular time, it centered more around affordable housing activity. Do you recall that bill?
Yes, I do, Councilman. 96 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
And do you recall the amendment associated with that bill that talked about training programs of various kinds related to the individuals in a certain median income in the affected census tracts?
All right. My question is, does that prevailing wage bill in any way, shape, or form, is that a part of the Vets Stadium upgrades, any participating labor unions? Or is that just for those particular affordable housing initiatives?
It is -- it is currently not a part of that activity. It was only for the housing activity, that I'm aware of.
So the affected trades on the Vets Stadium upgrade or potential new construction on the stadiums would not fall under the purview of that?
Okay. Okay, all right, I'll come back to that later on. All right thank you. Thank you, Madam Chair, I'm fine. 97 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Thank you, Councilman. The Chair recognizes -- I think Councilman O'Neill stepped out of the room. Is this a follow-up, Councilwoman Tasco? All right, the Chair recognizes Councilwoman Tasco for a follow-up question.
What provisions are provided in the lease for -- I think it was answered earlier.
Councilwoman, would you pull your mike up a little higher. We can't hear you.
For minority participation on the construction of the practice facility.
There is an amendment to the lease. There's going to be language that really addresses the economic development aspect of the Eagles participation for minority women and disabled businesses in the design, construction, and operation of the facility as well as a provision for minority and female craft workers in each trade as it relates to the construction of 98 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 the activity.
As it -- now, presently, the Eagles are constructing the practice facility, so it is considered a private venture and it does not -- the process does not go through the City Procurement Department.
But they have agreed to submit a, for a lack of better term, a minority and women's business plan that will become a part of the lease agreement.
Okay. On the possible repairs, if we get to that on the Vets Stadium, that process would flow through the Procurement Department?
Oh, I had another question. I can't think, I'm losing my train of thought. I'll have to come back because I forgot 99 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 my question.
Thank you, Councilwoman. The Chair recognizes Councilwoman Miller.
Good morning. Mr. Roundtree, I have a follow-up question. I'm not quite sure what Councilwoman Tasco asked, but my question is also around minority participation. Since I've been here, each time we come before Council and present a large project, we've always talked about the Mayor's executive order as it relates to good-faith effort. I still don't really know what good-faith effort is in terms of a overall percentage of the goal or personal of the project. And can you explain in a little bit more detail about the good-faith effort. This is certainly a project that would lend the support for -- and we want to make sure and I know that you care about making sure that MBEs, WBEs etc. are included in contracts and in 100 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 employment opportunities, but I don't want to put myself in the position that I was in before when we discussed and approved the Kvaerner plan, and they be each time we come back with another hearing, we still don't get real clear answers on how the public did, in fact, benefit from that project and other projects. So I would think that maybe even the term "good-faith" needs to be changed or more clearly defined, because then who monitors it? And maybe the monitoring can be better this time, I don't know.
Currently, Councilwoman, we have agreed that the construction managers as well as the Eagles will present to the City their level of participation in two methods. The first is their overall commitment that will be attached to their lease. That is really in the form of an economic development plan, or more specifically, a plan to utilize minority women and disabled businesses in all their aspects. The other area is, as the construction is in process, we plan to meet with the Eagles and their general contractor and go through the levels 101 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 of participation in all those areas. We're working out the details now as to whether or not we can request a certified payroll so we can review it from their standpoint. But there is a mechanism that we can put in place to monitor that activity, and we will be involved in that.
Okay. And you're saying you're working on a plan with the Eagles?
The implementation of it. As far as philosophically, they have agreed on the level of participation, which, I'm sure, they'll be glad to reiterate when they come up to testify.
But one of the things that we didn't have in there is the details that you now see. So what I will say to them is their ability to provide that answer for you.
And also the Phillies. I know this is separate from the practice facility, but to me, it all goes together.
Okay. We have not met with the Phillies yet. 102 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Thank you. We'll have a follow-up question from Councilwoman Tasco. And then, Councilman O'Neill, we will be up to you. Councilwoman Tasco?
Article 19 of the prime lease, Affirmative Action and covenants Against Discrimination. Are you amending that section to include the goals?
I'm told that, yes, that's the area that will be added to.
Because it does refer to the Commission on Human Relations. And what role does the Commission on Human Relations play?
On of the 103 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 prime agreement, it refers to the Commission on Human Relations. Will we see the amendments --
Okay, will we see the amendments relative to affirmative action sometime today?
This is Jim Roundtree. I was informed that it was already drafted and included in your package. So that's what I'm here to testify on behalf of.
The question for those who didn't hear so well because it's a bit hard to hear is whether or not the affirmative action language is in the agreement and where that is. And I believe that is what Mr. Hankowsky is 104 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 about to testify to? Mr. Roundtree said he believed his understanding was that it was included. Now we're waiting for clarification on that point. Just so that everybody understands where we are. Mr. Hankowsky?
Yes, the language vis-a-vis the Eagles' responsibility to have an MBE/WBE plan or an equal employment plan is in the lease between the Eagles and PAID.
Which will -- which is in draft because we haven't negotiated all the terms, but they are -- they are -- they are proceeding on the basis that that is in effect. In other words, they -- "they" being the Eagles and their contractors -- are executing the plan as if it's a legal obligation.
Does Mr. Roundtree have a role in developing that plan?
Okay. Again, in 105 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 the Article 19, it refers to 19.2 organization membership. It says, "The Authority further agrees to cooperate with the Commission on Human Relations of the City in any manner that the Commission deems reasonable and necessary for the Commission to carry out its responsibilities under Chapter" blah-blah-blah. And. . . is that standard language?
Yes, that is standard City language that the City has in their contracts and that we pass down to people that enter into the contracts via us.
And will we have a nondiscrimination plan to accompany all of the agreements?
Will there be a nondiscrimination plan that will go out with all solicitations --
Thank you. 106 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 And we would note for those that are in attendance that all these questions are asked about affirmative action because it has been generally established that Council won't see the agreement. Since we won't see it, we have now way of knowing of what's in it without asking these specific questions. The Chair recognizes Councilman O'Neill.
Thank you, Madam Chair. I guess directed to Miss Franklin-Suber first, and we can move the answers around if they're required. I think what we've seen since this issue came up over a month ago, there's been a lot of second-guessing. The Mayor is the negotiator for the City in this matter and he presented a negotiation that he had accomplished with the teams to us in early January and said, This is the best I can do. I thought as hard as I could, I held the line here and there. He explained why and said, This is the most I can get at this time. He gave us a history of the last year as he had learned what was going on between 107 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 the teams and the Administration and the Council and explained that in light of all of that, he wanted to get everything back on track, have some good faith, and get to stadiums by the end of the year. I trust Mayor Street. I trust him when he told us that he giving us a full, not a half a picture, not nine-tenths of a picture, that this was the best he could do. And we sit here as Councilmembers, and I think we're second-guessers. I mean, this is what we do for a living. "Monday morning quarterbacking" might be another way of putting it. And we probably -- most of us belong to "Second-Guessers Anonymous," and we flunked the 12-step plan, the whole thing. And we like to find ways to improve situations, whether it be legislative or otherwise. But when there's a negotiation, it gets a little different. It's one thing if you all missed a minority requirement that should be in the deal, and I think they're valid. And there's also, I think validity, to if you haven't done this, for instance, any one of the things that the Daily News, the Controller, several Councilmembers 108 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 have enumerated that they find wrong with the deal, we should vote against it. What I have inferred from what the Mayor has told us is that if we don't accept this deal, approve this deal in its fullest part -- I'm not saying that there are things that we can't negotiate -- for instance, a reasonable date for us to get the -- "we" meaning Council and the Mayor -- a reasonable date to get the legislation. I mean, it's one thing for us to agree to a date like November 3rd, it's another thing for you to give it to us on November 1st, and we all know that that might need some work, but that's not between the Eagles and the Mayor and then us trying to become a part of the negotiation. That's more Council-Mayor. If this is the best deal -- I just want you to put it on the record, because it's my understanding that, you know, I could find all kinds of reasons both to attack this and to defend it. There's all kinds of good reasons to defend it. We're heard the attacks, and you just pick up the Controller's testimony, the Daily News today, the other bills, and you talk about -- which talk 109 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 about committing the Eagles to being there. Well, I can say that the Eagles aren't going anywhere else. I'm not going to build you a house, tell you you can possibly live in it for free, which is the bottom of where the negotiations would be, which is what the Mayor explained is what the teams wanted up front, and you're going to say, No, I'm going to move somewhere else and build my own just to spite you. Business people don't do that, especially when we would be in the position that they would be leaving in 2011 at the latest. They're not going to go finance $30 million or so of new construction somewhere else to spite us, and some bank's going to lend it to them for five years. It's just not going to happen in the real world. But even if it did, even if it did, we would still have them at the Vet till 2011, and then we have these costs that have been deferred that we are hoping and still hoping we don't have to spend.
If nothing else, we get four to six million, depending on whose figures you listen to, in skybox revenues for the next then years. It doesn't look to me that the Mayor 110 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 did such a bad job of negotiating. )
You know, there's two sides to negotiation. We've hear the results coming from our negotiator. You can undo any negotiation, redo it, if it's susceptible to that. I'm under the understanding that this isn't, that essentially, this agreement is one that we approve and keep and moving with the teams, or we disapprove it. It's not, we go back and renegotiate this part or that part, 'cause the Mayor has already taken those things into consideration. He knows that the teams wanted a dollar a year, they'll stay in the facility that they didn't have to pay to build at that point. He'd like to be able to work in the naming rights, work that into a bigger deal or have the chance to get more than the teams are willing to pay right now. I think that's what I've heard. Could you elaborate on that, because I love second-guessing, but I don't like killing 111 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 deals that I and, I think, a lot of other people are in favor of.
Councilman O'Neill, I think you summarized it perfectly. This is where we are. The Mayor has met extensively with representatives of the Eagles. And as he shared with Members of Council in the several briefings, a number of issues, a multitude of issues were raised, which is why I go back to the statement I made before. There is a fundamental purpose for this agreement, and it is simply a first step in setting the stage to discussing new-stadium development. It is not the discussion of new-stadium development, it is not the negotiation of the practice facility lease terms. In the event that the City buys the practice facility and we own it, we are not going to give up naming rights revenue; that doesn't seem to make sense at this point. We have said we are not going to agree at this point in time to any particular tax breaks. We are not going to agree at this point in time to nominal or no rent on the part of 112 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Eagles. The Mayor's thinking is very simple, and I think it's prudent and appropriate. You look at the circumstances that exist at that point in time because our perspective is going to be different. It's different if you are looking at Vets Stadium. There is no new-stadium development, and you are looking at extending the useful life of Vets Stadium until 2011 with teams playing there, you look at the economics at that point, and then you sit down with the teams and you look at and you negotiate a mutually acceptable agreement, taking into account the issues of their financial competitiveness, but also the impact and cost to the taxpayers. We are not in a position to make those judgments at this point in time.
We were told that this was the only practice facility -- it would be the only practice facility in the National Football League that was actually in the city where the team plays. I assume that that's still true a week later from when we heard it. But we have enormous tax implications 113 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 there. Could you just explain them? In some cities, it's just to be in the suburbs because somebody gave 'em land. Sometimes they don't play in the city they call themselves anyway. I mean, that often happens. So it's not that big a deal where the practice facility is 'cause the team isn't in Dallas, for instance. So where the practice facility is isn't important to Dallas, they don't even have the team. But in many of those cases, even if they were in the city, there aren't wage taxes. Most of this country does not wage tax. It is not a big issue. Could you explain the implications just from a wage tax standpoint on the facility, the practice facility being in the City.
Councilman, to amplify my response from a little bit earlier, the change is fairly dramatic. You go from a situation today. We use the term when we tax people that move around of "duty days," how often they're here versus somewhere else. Where today we look at taxing the players -- and we all know that is a very big wage tax generator -- on the basis of 125 duty days. That would drop to 10, the days of the 114 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 games at Veterans Stadium. And the consequence of that reduction is, for the players and also then management -- the coaches and everyone spending all of their time watching films somewhere else, not in Philadelphia -- is on wage tax alone, we project in 2001, is a $2.7 million loss to us. That grows as the salaries particularly of the players grow dramatically with the salary cap. And it does not include certain business taxes and use-and-occupancy and other kinds of taxes that we would get with the facility here that we won't get if the facility is not here.
One of my colleagues mentioned, and I've heard it myself separately in one of the meetings had on this issue, that the State -- there's been some discussion in Harrisburg about the car tax, that we wouldn't just get the car tax if we didn't use it for a stadium-related purpose, somebody would pull it back. And that's, I think, at least in the realm of reason that if we're not doing stadiums, we're not doing practice facilities, that we got the authorization for the car rental tax because it was all a part of a stadium 115 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 package. I can tell you also I have heard our discussions when people here in Harrisburg, how unreasonable many people think November 3rd is, or doing this by the end of the year or not doing it, that they have a certain pot of money on the table that they put up for us and for Pittsburgh, and they are at -- least some talk, just as with the car rental tax discussion, about them putting a deadline on us. They're not going to put money out there and just let it hang for years, whether we want it or not. So you may want to mention it to the Mayor, that it's not only, I think, a good idea for us to get this thing over with or not do it, one way or the other, but tat the people who are authorizing what hopefully would be the bulk of the public funding of this are thinking the same thing, that this wasn't something that was going to go on forever. They thought the thing was going to be done last year, and that he was in a hurry, the Mayor up there rushing to get this done, along with Pittsburgh. Pittsburgh apparently was in a lot more of a hurry than 116 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Philadelphia indicated it was.
You're welcome. The Chair recognizes Councilman Cohen. Oh, I'm sorry, Councilman Nutter?
A point of order and information, Madam Chair. I was listening to the comments with regard to what had been negotiated, at least what's in front of us, and I am reminded that from time to time, other projects come to the Council and they go through the same public-hearing process. And my recollection is on a different project but of considerable size. On the Convention Center project, which I believe was about $500 million, there had been some discussion 117 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 about the speed by which that project had come to Council and had been passed. And in the realm of the best negotiated deal, I have to assume -- I wasn't a member of Council at the time -- that Mayor Goode sent over, in his opinion, the best possible deal he thought he could get. But there is information that seems to indicate that the deal came over to Council sometime in 1988 and was essentially negotiated for some period of time, and a new bill that did receive all of the support apparently of City Council was subsequently passed, but it had significant involvement of Council. I believe at the time, the lead negotiators for that were Councilman Blackwell and at the time Councilman Street -- now obviously the Mayor. I think many members of City Council who voted for that subsequent bill may agree that what came out of that process was certainly somewhat different, if not better, than what had originally been set up by the Administration. So I want to raise that as an issue that, yes, we all want to see this go forward and see it happen, but I think a part of the 118 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 discussion is around, how do we make sure we get the best possible deal that we can? And it's not to question someone else's negotiating skills or judgment or anything else. I would have to assume that then-Councilman Street thought it appropriate for City Council to be involved in that discussion and negotiation, and I think he would probably be the first to say that the City, and certainly on behalf of City Council, got a much better deal than was possibly set up initially by then-Mayor Goode. So you where here at the time, I was not but that is at least factually what the history is, as I understand it.
Councilman Cohen, I was going to call on you next. However, I notice that there are a couple other Councilmembers who did not have a chance at the first go-around. So at this time, I would recognize Councilman DiCicco. 119 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Thank you, Madam Chair. It is a truly historical day in Philadelphia when my colleague Councilman Cohen is concerned about the excess tax we're imposing on the business community. You are to my right. Again, thank you. We are switching here. (Laughter.)
Councilmember O'Neill spoke to a few of the issues that I was going to address, and I concur basically with everything that he has spoken to. As someone who represents a district that has probably seen the most, if not the majority, of economic development in the last three years in the City of Philadelphia, I'd like to -- I look at these packages, these bills that we have today in front of us as similar to some of the things that we've done in attracting new businesses to the City of Philadelphia. We spoke -- a few of the Councilmembers spoke to the issues about the taxpayers' investment. And from time to time, this Council, in the four years that I've been a member of this 120 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Council, had to deal with a number of issues as it relates to development, some very significant development -- the Penn's Landing project, the Entertainment Center, as example -- where then-Mayor Rendell selected a developer to develop that site. And there were negotiations that were going on and I was not even made aware of some of the things that were being spoken to at the time regarding the negotiations. Those matters were handled by the Administration and PIDC. And at some point in time, the package comes over to City Council where we have to look at supporting or not supporting a TIF. There are all kinds of incentives that developers have the ability to look to use in the City of Philadelphia today. Some are in the form of TIFs, some are in the form of tax abatements, some are in the form of tax exemptions. But no matter how you look at it, in one shape or another, those kinds of incentives do affect the taxpayers. I mean, the TIF is, we delay the collection of taxes, we put the collection of taxes off for a certain period of time. But in effect, someone could argue that the 121 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 taxpayers are funding that project -- even though I don't see it that way generally, but that's a way you could look at it. So I like to look at the issue practice facility and the stadium issues as economic development for the City of Philadelphia. And I agree with Councilman O'Neill. Never in my wildest dreams did I suspect that the Eagles were really going to let us build this practice facility and then somehow decide to leave the City to go to Delaware, which I keep hearing, Delaware, which has no wage taxes, and I'm wondering what the benefit is to them. " It just doesn't make sense, and I don't think that that's what their intentions are. I think that the way this may have been presented initially, it does make many of us a little bit uncomfortable that we may have more or less have been in a position where it looked to us as though we had no other choice but to take the deal the way it is. And I think over the last two 122 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 weeks, with the leadership of the Council President and in talking to some of our colleagues, I think we're all going to be able to work this thing out. And I think that going forward -- and let me just stop here for a second. I'm going to go back to a couple of the comments during the previous administration, and with all due respect, to then-Mayor Ed Rendell about some of the dates that we were always looking to do some stadium deal by, and they came and went and they came and went. This is a lot different. We have something, we have something in writing. We have something that we can look at now and see and feel and touch. So I think we're way, way far down the road, further down the road today than we were during the last administration, because we wouldn't be having this discussion today had we not been a part of the process. And that's really what's important to me, is to continue to make sure that we're a part of the process. So I think that that process has been put in motion by way of the bills that the Mayor 123 3/1/00 WHOLE COMM.
- BILLS 79, 80, 82, 83, 84, 85 sent up a couple weeks ago. I think it was February 10th or whatever the date was, or the 17th. So I'm optimistic about this. I think we're going to be able to get the deal done. I have not heard any person in this room today or during the last few weeks suggest that they were not in favor of stadiums. We do have a lot of issues to deal with yet -- the funding of those stadiums, the sites of those stadiums. But I think that process is in motion and I'm very optimistic. It's not really a question; it's more a statement on my part. The only question I have is for you, Mr. Hankowsky. At the present Naval Hospital site, aside from the area, the acres or so that 17 are being developed for the practice facility, 18 when we look at other developments we've done in 19 Center City, when we talked about building hotel 20 because of the construction that it will jobs 21 create and the permanent jobs that it will create, 22 and the fact that we need them to continue to 23 increase our hospitality and tourism industry, and we've talked about the economic benefits to that, there's a certain synergy that we look to when we 124 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 build hotels or we build entertainment venues that we hope that other things will follow. Do you not feel that this may be a situation at the practice facility site that we can look to further development of the remaining -- remaining -- Naval Hospital site? Does this help us in that regard?
Councilman, I think it does. You're correct that the entire Navy Hospital site is a 44-acre site, and the portion going to the Eagles practice facility is approximately acres. So we have about another, 14 you know, 25, 26 acres available there. 15 And as you know, that community, that 16 immediate community, has, to be quite candid, sort 17 of suffered with the fact that the United States 18 government began the closure progress in that 19 facility in 1988 and has lived with -- I mean, 20 this is sort of ironic, I think -- abandoned 21 federal property in a way that we often struggle 22 in our neighborhoods with just abandoned property. And that one of the their number-one priorities is simply eliminating that blight, which has occurred already on the practice site. 125 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 The demolition is nearly complete. And putting a high-quality facility on the site sets the tone about what can happen with the rest of the site. We've been working closely with the Council President's office on that property across from that, the Capehart (ph.) property. And hopefully, we'll -- you know, we'll make progress on that this year so that we can begin to really speak to a lot of uncertain real estate in South Philadelphia, that its uncertainty, I believe, actually to some extent, created a chilling effect on development. When you don't know what's going to happen, you're a little more hesitant to proceed with your own plans. There is now the beginning of outlines of certainty there.
Basically approve of the site, and this just starts a whole series of events of things that could occur. 126 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
You're welcome. The Chair recognizes Councilwoman Tasco.
Thank you very much. I'd just like to go back a little bit to the minority participation and your report that that will be negotiated, Mr. Hankowsky, between the lease, the PAID, and the Eagles. Harking back to our favorite subject -- Kvaerner -- when that deal came to us, we were told that there would basically minority participation, and then, of course, we found out there wasn't.
So my question to you is, if you negotiate this in the lease with the Eagles, who will monitor the program? Do you have the ability to do that? Would you contract that out to someone? And where does the public go if they find that your plan is not being 127 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 implemented?
I think those are good questions, Councilwoman. I just want to be clear for the record that the place where this document will sit contractually -- and you're correct -- is the lease between PAID and the Eagles. But the -- excuse me, but that the Eagles, on the basis of our understanding, are proceeding to implement this plan, as they are proceeding with the construction. And I think they can speak to that themselves when they appear before you later during the course of the day. But my understanding, and I believe about 35 percent roughly of the awarded contracts have been MBE/WBE firms, so that they are doing it so that we don't -- one of the problems that we had with Kvaerner was the catchup problem, which, you'll recall, we sort of got to it and they had already started. So one thing I hope is that I can occasionally learn a lesson so that we wouldn't have a catchup problem here. Right now -- and I believe Mr. Roundtree can talk about the fact that they 128 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 will be reporting back to us. We would want to work with MBEC on this because this is a part of a bigger picture, you know, in terms of whether we would do the Vet and other things. And they should either contact us or MBEC -- the public question, your last question.
Is that it? Thank you. The Chair recognizes Councilwoman Brown.
It does need to be fully restated and echoed and underscored and put 129 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 in capital letters that there are several Members of Council that fully support the building of the practice facility and ultimately the stadiums. The challenge is coming up with a good and fair deal at the end. So with that, I have a follow-up. I need to bring closure on a question and answer that was provided by Mr. Roundtree. You indicated that you had been in discussions with the building trades and that they have agreed to submit a plan, correct?
No, I said that we had been in discussion with the Eagles and their construction managers, and the Eagles have agreed to submit a minority and women business plan.
With that and given the scale of this project, was there any drop-dead deadline on when you would receive the plan?
When the -- 130 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
When the construction was supposed to start, but the two dates that we had had slipped, so we're in the process of re-energizing those conversations.
Secondly, given the scale of the project, again, what are the total number of jobs that are going to be created with the building of the practice facility, for the record?
Yes. We estimate, Councilwoman, understanding that based on the construction costs that there be somewhere around 73 direct jobs on the site. These are -- we do these in person-years of sort of employment.
I'm sorry. Person- years of employment. So at some points, there may be more people than that but, you know, you need electricians for two weeks and then they leave, or 131 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 whatever the light trades are.
And approximately 52 related to the materials that are going to be involved here.
Well, those -- obviously in the construction industry, I mean, obviously, in a sense, every project's new jobs because when there's not construction, these people don't work. So these are new construction jobs for the project. We think the wage taxes from that activity is about $210,000 during this construction -- the period of construction for the facility. And then there's a few jobs new to the facility, driven mostly by the NovaCare facility, which we don't have today, which is estimated at 10 to 20 positions in that space. And then the Eagles project that they would probably increase their staff somewhere around to 30 positions 24 over time in their new offices. 25
Thank you. 132 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 And then, finally, the City is committing 30 million, million already on the 4 books. Who would handle the cost overruns, for 5 the record? 6
Our commitment to the 7 Eagles is capped so that it's -- it's their responsibility.
You're welcome. The Chair recognizes Councilwoman Krajewski.
Thank you. Mr. Hankowsky, with the $80 million cap in expenditures to the stadium.
Would that also be in addition to the 8 to 10 million that we've already spent on the stadium?
The maintenance, the 8 10 that we spend on -- 133 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Yes, it would be in addition to that, but it wouldn't -- 'cause we spend whatever we spend for the utility bills and the --
Right. I mean, there's an operating budget, I guess, in the Recreation Department for Vets Stadium, and there's a staff we have there and they, you know, clean the facility after an event or whatever those functions are.
In that vein, Mr. Hankowsky, how would we ever spend $80 million over two years or three years to improve the Vets 134 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Stadium? We would have to put out RFPs, and you know the time that that takes. How would we do that?
I think, actually, the representatives from the Capital Budget Office are here and I think have thought about that question, if that's all right with the Council President.
I'm sorry, Councilwoman, were you still in questioning?
Isn't that these figure higher now? Wouldn't that increase if we go on --
I seem to have a problem. My question is, would the $80 million capital expenditure be in addition to the 8 to 10 135 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 million the City spends each year for routine maintenance? Now, wouldn't this put the dollar figure -- run it up for keeping the Vet operational for the next years to like -- 6 anywhere to $160 million? It seems high. 7
Rob Dubow. 8 I think, if I understand what you're 9 talking about, there are two issues. One's the 10 operating expenditures for each year.
Those costs would not be affected by these 80 million, these are separate expenditures. These aren't capital items as opposed to operating items. So this would be like replacing seating as opposed to cleaning up after a game.
So the City still would be given them anywhere between 8 and 10 million.
We don't give it to them; we actually -- we own the stadiums so we do that 136 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 maintenance.
That's right. But I mean -- yes. Although we're obligated to do these capital repairs, so it's not like a new type of expense.
You're welcome. Mr. Hankowsky, I don't know you answered my question.
What is the likelihood that we could ever spend $40 million in renovations of the Vets Stadium in one year?
Right. I asked if the Council President wouldn't mind, the Capital Program Office has actually been looking at that question, and I think perhaps might be able to give you a more fuller response, if that's all 137 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 right.
Council President, my name is Charles Newman, Director of the Capital Program Office. As Mr. Hankowsky said, we have put together a preliminary plan that will enable us to complete design of the facility in the fall -- of the capital repairs to the facility in the fall and enable the construction documents to be bid so that we could begin construction on January 1st of 2001. The -- it is a challenging task to complete this work within the timeframe that --
I'm sorry, I don't want to be rude or interrupt you. We were given a laundry list of all of the repairs and categories that would take place. I don't know what list you're referring to at this moment because it has not been shared with us.
I am referring to Schedule A of the proposed lease amendment, which has a list of --
Do we have a 138 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Schedule A? Please proceed. Please proceed.
Oh. Which contains a, as you mentioned, a series of categories of work. It is not a detailed description of the scope of work. That would -- the first thing that needs to be done is to begin work with the teams' architectural engineers to flesh out the precise scope of work for the project in each of those categories.
We have the categories, but how do you do the bid work without knowing the amount of money that you're. . .
Okay, let me just take a step back and walk you through the process. I just alluded to the first step, which is the architects and engineers and the City working with the teams to develop a program for the work. That's the first step, and we expect that in order to expedite this project, that that will have to start during the month of March. We would then complete that by the end of May or into June, and the architects would commence the design process. Now, this introduces the concept of 139 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 fast-tracking, where you're doing multiple tasks at one time. But we're anticipating the completion of design in October of 2000, followed immediately with the bidding of the work and the awarding of contracts in December.
Council President Verna, we actually have a proposed construction timeline which might make Council's review and understanding of the description we've just put on the record a little easier. It is a timeline that is based on what is actually in the proposed lease amendments. That's the third amendment to the Eagles lease and the sixth amendment to the Phillies lese.
Since all of this is going to be done prior to the trigger date, is that what I understand being said?
Yes. And the lease amendments also provide for the possibility of extending the timetable.
I'm sorry. I was distracted, I didn't hear your response.
What we've distributed is a proposed construction timeline. 140 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 It is a challenge, it is going to be a tight timeline, but what it provides is for -- we think it provides for us an opportunity to meet the deadline, but the documents that we've negotiated also provide for the parties to reach the mutual future agreement that we would extend the deadline if it becomes necessary because part of the process requires extensive coordination between the City and the teams in terms of design, in terms of the plans, in terms of the scheduling, and phasing in of the work. So what we have submitted in Schedule A are the categories of capital repairs, restorations, replacements to Vets Stadium that we have agreed to. What we would expect to do then, after that, is to have Ewing Cole,, for example, develop a more detailed scope of work based on those categories after doing the building assessment, and that is reflected in the construction timeline that you see.
Councilwoman Krajewski, are you finished with your questioning?
Yes. Thank 141 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 you.
You're welcome. The Chair recognizes -- oh, I'm sorry. Councilman Nutter?
I was hearing -- I was in a conversation, but I was hearing in the other ear about a construction schedule that --
I believe copies are being made. We did not see it but we should be receiving them momentarily.
Is it a part of the big book that we got two weeks ago?
This construction schedule, was it a part of the big book document that we got a couple weeks ago?
No. This is a document that was prepared to help us explain and walk you through the schedule. Really, what it 142 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 is, this is what we contemplate in the third amendment to the Eagles lease and the sixth amendment to the Phillies lease. And the only thing it does is outline the steps that we would envision taking in this process. And I am sharing it with Members of Council so that they can follow more clearly the proposed timetable for completing the work by the deadline.
I understand it's being copied, and I'll look at it when I get it, but did I also hear you talk about starting this in March?
Are there authorized funds for this? 143 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
If we begin in March, what we'll have to do is use money that's in Veterans Stadium projects. We have funding in existing projects that we would use for this.
But that funding was allocated for specific projects at Vets Stadium, wasn't it?
Isn't that a little bit of robbing Peter to pay Paul for something else, that we don't want to do anyway? I mean, doesn't this give further rise to the complaint that we've been hearing that either agreed-upon deferrals were made over the past few years because people were starting to turn their attention towards stadiums, and the complaints by at least one of the teams, rather vociferously, about the condition of the Vet? And now we're going to take more money away from Veterans Stadium that's been allocated for various repairs that I'm sure are needed? I mean, we all, I think, generally agree that Vets Stadium needs some infusion of 144 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 capital right now. I mean, it's not like we're going to have new stadiums next week. But I mean, this $40 million sitting in the '01 Capital Budget, which has not been authorized, nor have the voters approved, so I don't understand how we're going to start design work on a project that we actually apparently hope never really happens, with no authorization.
While they're deliberating their response, let me take one moment to introduce guests here today. Some Members of Council went to court when Judge Smith argued a case initiated by the State Human Relations Commission on educational plans and ways to remedy racial disparities in school. As you know, the court ultimately said that certain things had to be done. With us visiting today are two monitors who are visiting people and schools and dealing with the whole issue of the monitoring of that 145 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 court order. And they are Dr. Frank (unintelligible), President of Urban Superintendents Association of America, and Dr. James P. Dixon, Court Master. Would you please stand and be welcomed. (Applause.) (Greg Grillone comes forward.)
Greg Grillone, Director for Veterans Stadium. In response to this question about the money being available to start the assessment of this review in our present capital budget appropriation, we do have some monies in there that were set aside for costs for A and E costs.
For A and E costs, architectural and engineering costs, in theory.
We had general categories, one of which was structural, which, in 146 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 fact, in concept would overlap some of the categories that are listed in Schedule A. So we could we -- do have some money to begin this process.
I mean, I probably -- technically, you have money going back to FY '94. As laid out in the capital budget, you have unspent dollars for Veterans Stadium for FY '94, FY '95, FY '96, FY '97, FY '98 and FY '99. It's in this current year's capital budget.
I believe that's true, but specifically addressing your question about how we begin a process, we look at and formulate plans and do we have authorization, or do we have money to do that. I do believe in the current capital budget appropriation, there is a portion of that money that was initially designated for architectural and engineering costs, so therefore, we could start the project with that money.
You could spend architectural and engineering dollars previously allocated for a different project for projects for which you don't have funding authorization for? I would love to talk to the Recreation Department 147 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 about that because they always tell me that I can't get a rec center done until money is appropriated.
A significant portion of that money was set aside for structural -- in the structural category in terms of the actual construction.
Is that the same structural that's work now in Schedule A?
Some of it may be. I think said earlier that there may be some overlap.
Well, yeah. I mean, until the details are formulated, I think in general, it's fair to say that there's probably some overlap. But obviously, the level at which we're talking about in Schedule A of $80 million is certainly a lot more than was initially contemplated.
The architectural and engineering work that you proposed, is that for the full 80 million and for the 10-month period referenced in the document?
No. That A and E money 148 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 was in the FY --
No, that wasn't my question. The work that you do in architect and design work, is that for projects to be carried out with the full $80 million over the 10-month period of time, I believe, from November of 2000 to August of 2012? Is that what your design is for, $80 million for ten months of projects?
The money you plan to spend for architectural and design work to deal with the list that is being copied somewhere, is that for work to be carried out for the ten-month period of time, as referenced in the documents to spend $80 million?
The '01 budget only has $40 million and you still have to come back in two budgets, the 02 budget, to get the other 40 149 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 million, which is fairly far away, not through the '01 budget. The voters haven't approved -- they certainly have not approved the '02 and the voters are nowhere near dealing with the two other authorizations. So I'm trying to understand how you do this.
In order to proceed from where we are, which is Schedule A, which is a set of fairly generalized needs that the stadium would have to extend its useful life --
-- a couple things have to happen. One is to take that to further detail, and I'm going to use examples, not real examples, but examples to illustrate. So if we're looking at, say, the question of where the waterproofing is necessary because you see cracking and separation of cement, that's clearly a category of stadium renovation. You know, where you go out and say, Let's identify exactly where all this is 150 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 and create a working document of about what we have to get done in conjunction with that development and how you do it. So that, for example, areas where waterproofing might be done that are -- that the public doesn't utilize, what one might call "the back of the house," you could do those during baseball season next year. Whereas, if you're going to waterproof the stands, you want to be doing that when people aren't in them, when you don't have to rope them off. So what's also being looked at is using the program document and working with the teams to develop a schedule. The schedule may have instances where you might say to a contractor, We're going to have to stage waterproofing. We just can't you give you six months to do it, we can give three months, and you have to use two-week periods.
And we would have to do some of that thinking, whether we were repairing the Vet in the next three to five year or whether we were spending 80. 151 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 And it's very much a jigsaw of the schedule, and with the type of activity that you want to execute, you don't want to go back to the same place twice, so that, for example, when you're waterproofing, you could fix electrical and do the same "back-of-the-house" work that you schedule out and say, Here's the first 40. So maybe you're not doing all of the waterproof work, then you do the next part with the next money. You find some logical way to execute the project through with the teams, with the stadium management as to what's the most efficient and cost-effective way to do it. And for that exercise, you would work to fund it from the revenues that Mr. Grillone indicated in this period of time before November 3rd so you know what's the plan of tack for November 3rd. And obviously, all of this deals with, you know, up to 80 million, making sure we have an understanding of what's involved and price it in more detail.
Again, so that you understand, I am not disputing that there are work needs at Veterans Stadium. I was just somewhat 152 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 surprised at the ability, I guess, to do architectural and design work on a project for which the actual costs have not yet been identified, for which you have no authorization. And if Mr. Grillone is going to redirect funds that were previously allocated to other projects at Veterans Stadium, I guess that that should be clear, but I never -- have we done this before?
I apologize if I wasn't clear. All I was trying to address is your question about how we could begin this, for lack of better word, "engineering assessment" to begin to formulate how we would spend the $40 million. All I merely was trying to say is that in our current provision, there is a portion of funds set aside in the general category of A and E.
What do you think the costs of A and E are on a 40 to $80 million project?
We have done a really preliminary estimate of what we think the fees would be. And in terms of actual expenditures 153 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 before the November the 3rd date, we are looking at somewhere in the neighborhood of actual expenditures of 2 million, maybe a little less, in order to move the project forward between March and November.
If you do that and we subsequently end up with stadium deals by November 3rd, is that essentially $2 million that have gone to waste?
No. The teams have agreed that that would count towards any public contribution that we may make to new-stadium development.
This is -- but that is pertinent to the stadium deals, for which we have none; is that correct?
And that comes out of, apparently, stadium negotiations, which we are, by your earlier testimony, we are intimately going to be involved with. 154 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
And were we involved in that particular discussion or meeting or decision?
No. But we thought it was important to make sure that if the contingency plan was not implemented and we had expended taxpayer dollars, that we had a mechanism to recover those dollars, so we thought that that action was in the interest of the taxpayers and that you wouldn't have any objection to that.
Okay. Well, I appreciate the answer, but in the spirit of good will and full involvement and cooperation, I mean, that only leads you to wonder if there will be other meetings and discussions and issues that the Administration might think are good things and brilliant ideas, but just choose not to involve City Council in that particular discussion. I mean, you can understand my concern based on the discussion we've just had about that, right?
Actually, I don't, Councilman Nutter, because I think that in looking 155 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 at this, again, the idea here is that we are putting in place a contingency plan.
And so in order to meet the timetable, we've looked at it a couple different ways. And as I said before, this is the proposed construction timetable at this point.
I'm glad the teams have agreed to pick up the $2 million in costs if we don't end up having to do --
Because we've come up with a stadium deal. That's not the issue.
Correct. And in 156 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 terms of the other contingency, if we don't do other stadiums --
-- then we believe it is appropriate for us to proceed with the design. And in the event that -- as you can see from the timetable, it's going to be a process. There's going to be a preliminary construction schedule, and it may very well be that there's some slippage in terms of the timetable.
So I don't understand your concern. I don't think you can reasonably infer from the fact that we've tried to cover a contingency and protect the interests of the taxpayers to the benefit of the City that somehow we're going to be involved in secret deals and negotiations.
Well, I didn't use any of those terms to describe anything. All I said was that you had a good idea, it's good that the teams have agreed to it. Your earlier statement was that Council will be intimately involved in all discussions, all activities, all 157 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 meetings around the stadium issues. All I'm pointing out is, you came up with a good idea, you thought it was in the taxpayers' interest, I applaud you for it. All I asked was, were we involved in it? You answered no. We can move on. You used the term "slippage" in response to an earlier question. On of the -- I think for the Eagles, is this the third amendment? The third amendment to Agreement of Lease, on , in number 3 e., down at the bottom, you mention that there is the potential for slippage, as there always is, in these construction type schedules. There's a phrase at the end of that paragraph that says: "Except in the case of landlord's willful disregard of the requirements of the final construction schedule or other pertinent provisions of this amendment. . . " Does "slippage" qualify as either willful disregard of the requirement of the requirements of the final construction schedule or other pertinent provisions of this amendment?
Councilman, Bill Martin, 158 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 from the Law Department. No, it would not. The intent of that provision was to address concerns raised by the teams, that they -- they have protection against a circumstance we could not anticipate, which would be the City entering into these contracts and then intentionally disregarding in all respects the commitment that have been made here. And that was the implications of that particular provision. It's not intended to address the circumstance where after research by the City in cooperation with the franchises, it's concluded that it's not practicable to have the anticipated scope of work done by the August 2001 date.
Okay. We can come back. I'm actually on a pretty long yield or point of order, but I appreciate your response. Thank you.
Thank you. The Chair recognizes Councilman Cohen.
There -- there -- in the normal course of dealing with any problem, there are all sorts of questions that come up. 159 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 It's kind of unfortunate that they're coming up at this kind of a hearing because, you know, many people say there are two things that it's terrible to watch happen. One is the making of sausages, and the other is the making of legislation. And this is the making of legislation, and there are lots of details. For example, despite my appearance of great youth, I've been a lawyer for more than 60 years and have been in City Council, except for the years when Mayor Rizzo, the father of Councilman Rizzo, was mayor, since 1968. And never in my history have I ever confronted a piece of legislation which everybody says we hope is never going to be used. Usually if there's a problem, you don't start -- and I never have, and I'm kind of kind of lost here, because what we're dealing with today is, what if we don't succeed in getting what everybody seems to want? So instead of spending our energy in trying to resolve the questions -- for example, I have many questions about financing and many questions about it being a world-class city. I think to be a world class city you have 160 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 to have world-class stadiums, you have to have world-class schools. (Applause.)
You have to have all kinds of -- you've got to have world-class health centers. You ought to have kids -- every kid in Philadelphia certainly ought to be able to go to school and not have to stay away 'cause he can't afford a token. (Applause.)
So there are a lot of concerns as to what public money ought to be used for, and we will have a debate on it. But nobody opposes the concept of new stadiums. My thought offhand in general would be, the Eagles have a right to build the most luxurious stadium they want anywhere, as long as they can afford it and as long as the neighbors don't oppose it, you know, wherever it is. (Applause.)
But they're all going to be worked out later, and our energies ought to going into how do we resolve all of these questions, but this piece of legislation doesn't 161 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 move the stadium issue at all. What it does is to provide for a series of contingencies if the City doesn't go along with the stadium. Now, actually it doesn't even do what I said, and that's what we're all saying it's going to deal with -- what if we don't build stadiums. This is, what if we don't build a stadium with a contract executed by November 3rd of this year? Because are we to believe that if we don't agree by November 3rd and this $80 million contingency is thrown in that the Eagles and the Phillies are going to say forget the new stadium? You know, as I do, just like we didn't get the stadium in 1999, they're back wanting it, for a good reason, in the year 2000. If it doesn't happen in the year 2000, they're going to be back wanting it in 2001. They're going to constantly want it because it's an idea that has merit, it's useful, and they're going to ask for it. What I think Councilman Krajewski -- at least what got from her question was, she wanted to know, if we put the 80 million in, does that end our obligation with respect to stadium funds? 162 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Your statement makes it appear so. And I would like to add one other question. If this did not happen in this year, say if we could not get agreement 'cause we're spending all of our time preparing for if we don't agree, so we're not going to have any time left to ever deal with the issue of a stadium 'cause we're going to spend all of our time preparing for what if we don't agree. Now, does that mean that if we don't agree this year, the two teams are withdrawing their proposal for a new stadium in Philadelphia? I'd like a fresh answer to that. I don't see an answer anywhere. We're told the trigger date is by November 3rd, we shoot $80 million into some kind of repairs, undefined yet, though you have this schedule by November 3rd. Does that mean that's the end of new stadiums? Chief of Staff?
Councilman Cohen, I actually think, with the indulgence of the Council President and Members of Council, you've touched on a variety of different issues in your -- in your question. 163 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
I think I have explained the Administration's position and philosophy in terms of this proposed agreement, but it might be most helpful to you to hear from the teams' perspective what the impact would be on the teams in the event that we do not have new stadium legislation approved by November 3rd and get a sense of whether or not, in response to your question, they have an unlimited amount of time in which to do new-stadium development. That is certainly not the sense that we got from them in our discussion of agreement, which is why we felt it was important to agree to a timetable, but I do think it is important for you in your deliberations and in the interest of a full public record to hear from them what the impact would be in the event that we did not proceed with this particular timetable.
No, no, that's not my question. They may have a chance to answer that later. My question is, if we do not come to an agreement on the stadium, that is, deal with the 164 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 bill that none of us have seen, it has not yet been introduced, we don't have even information about it, but if we don't agree somewhere down the line by November 3rd of this year, does that mean that the teams are not going to be requesting again a new stadium after we've put in the $80 million?
Our view -- our view -- our position is that if we do not do new stadiums by November 3rd, then either or both of the teams are going to be playing at the Vet, and we're going to invest the money and we're going to extend the useful life of Vets Stadium for 11-plus years.
And we would expect that they would play at Vets Stadium.
And is it your position that the Mayor, for whom you're speaking, will take the position that that's the end of the 165 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 new-stadium issue?
What I've just said, Councilman Cohen, is what the Mayor has said numerous occasions, including in briefings with City Council. If we get to November 3rd and there are no new stadiums and we invest up to $80 million in renovations to Vets Stadium, the teams have an obligation to play at Vets Stadium until 2011.
If we rehabbed Vets Stadium and both teams are playing there, they're playing there until 2011.
Well, it may be that we decide we do new stadiums after 2011. I can't answer -- I am telling you what we have said, Councilman Cohen. 166 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
You're stating that this has been said by Mayor Rendell and the previous administration, that we have a contract -- a lease agreement with the Phillies that's really unbreakable right now and that they're supposed to be there until 2011. And I think the question that the Councilman is going forward and your answer. Could you explain to us, because part of this legislation and part of what we're doing is really changing the lease agreement that we have with the Phillies and changing certain clauses within the lease agreement that will permit the Phillies or the Eagles -- and I would believe the Eagles or the teams -- the Eagles at this point, because of the practice facility, the Eagles. To really break the lease, there is an 167 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 escape clause and an amendment to the lease, and I -- that -- and there's language that is not currently there in the present lease. And I just want to know, following Councilman Cohen, why is there a clause in the proposed Eagles lease amendment letting them escape from their obligations to play at the Vet if the construction scheduled for Vet repairs, which goes back to November the 3rd and all of those days that we're putting forward, other pertinent provisions of the amendments are willfully disregarded. What do these words mean and what does "pertinent provisions of this amendment" mean? And why are we adding these clauses to this lease agreement where there is no need for this at the current time?
Councilman, when we were negotiating this provision, we were quite concerned and focused upon the fact that we did not want to negotiate an amendment that would 168 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 provide the Eagles with any incremental opportunities to get out of the Vet lease as a result of the obligations that were being entered into by the City here and as a result of any possibility that the City, when acting in good faith, couldn't meet a deadline. And we went to great pains in negotiating the document to provide that the deadline of August 3 is not a hard and fast deadline. Rather, it's a deadline that suggests a date where such subsequent date as it is reasonably practicable that the work can be done. In addition, we focused upon the fact that there are other things that perhaps we cannot anticipate that might result in the completion of these improvements being delayed, such as (unintelligible), such as tenant delays, which are defined in detail in the lease, such as the lack of availability of the $40 million because of a determination by this body in the capital process next year. We are very every aware of the fact that we don't, in entering into this lease, we do not want to open up any unanticipated escape 169 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 opportunity for the Eagles from the Vet lease.
Well, I mean, to the extent, Councilman, the City would breach its obligations under the existing Vet lease, I'm sure the Eagles' attorneys would take positions in court regarding the implications to their --
But if we breach the contract, obviously, the Eagles or the Phillies, but there is no clause right now in there. We are not going to breach the contract. We are going to maintain, and we have maintained, the Eagles and Vets Stadium facility in playable conditions. And we do not -- there is no intention, and I don't believe this administration or this Council is going to purposefully do anything that will breach that contract. We will maintain that stadium. And why add and bring in new phrases and clauses that are vague, that may give rise to any sort of litigation down the pike? Why not leave it the way it is. We're talking about putting forward some remedies and some construction to remedy the situation that Vets 170 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Stadium may have, but we have to do that anyway. Why change the lease, why put in some phrases that are vague in its intention and given to interpretation by any set of lawyers. I'm sure that Fox Rothschild or Ballard or any one of these big law firms can begin to look at it and subject ourselves and open ourselves for litigation later on.
Councilman, it was our determination that the language, as presented, is not vague. The phrase "willful disregard," I think, suggests a standard which is a standard that I am comfortable that this city will not breach, that this city will not breach. And in the absence of specifying as we had here --
"Other pertinent provisions," what does that mean, "other pertinent provisions"?
The phrase "willful disregard" applies not only to the construction schedule --
-- but to other pertinent 171 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 provisions of the lease. I presume that it's the City's intent not to willfully disregard its obligations either as they relate to the construction schedule --
But that hasn't ever been in question. I don't -- I don't believe that any administration has willfully disregarded any of the contractual obligations that we've had.
And I'm not suggesting that they have, Councilman, but I think in the absence of this language, we would leave open the possibility of a lower standard --
Why would we, under any circumstance, any circumstance, ever open up the basic lease to the possibility of a claim by one of the teams that they have a right to leave? Why is there a reference in this clause to the original lease? Maybe they would have rights with respect to something else, but why do we now open up that lease that goes to 2011, that compels them to stay in the stadium until that date?
This amendment, Councilman, is an amendment to that basic lease. So in entering into a sixth amendment, we are, in 172 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 any respect, amending the basic lease obligation. We wanted to make clear that in entering into this amendment and incurring these obligations on behalf of the City, that we avoided the possibility of any inadvertent problem with a schedule on these improvements being the basis for an argument by the franchises that there had been a breach of the lease, resulting in a potential remedy of termination.
Sir, you know, all of us have been -- those of us that are lawyers have been on all sides. All of us can be very creative. You're opening a door; you've got to find a way to close that door. Right now, the Eagles are obligated, and the Phillies too, I assume, they have the same date, I believe?
2011? They're both obligated to stay there. Why should we, under any circumstance, give them a potential right, a potential avenue that they do not have now? You've got to find a way to draft it in a way that doesn't open that door.
Councilman, I'd like to -- 173 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
I'd like to give an opportunity to another member of the Law Department, Paul McCarthy, to also address this line of questioning.
I mean, that was one of the things we couldn't understand as we went through. We thought we had an ironclad lease until 2011, and then suddenly you find an opening.
If I may. Again, my name is Paul McCarthy. I am a Deputy City Solicitor with the Law Department, and I assisted the Mayor's Office and Bill Martin in crafting this language. This was negotiated language with representatives of counsel for both of the teams. The fundamental factual situation that has to be confronted is that when we undertake, through the vehicle of the lease, to carry out the capital repairs and commit ours to a deadline for the completion of those repairs, we have to contemplate -- we've already set ourselves up to 174 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 deal with this issue, and we can't avoid dealing with it. If we don't -- if we put a completion date in the lease and we don't address the consequences of missing that date, willfully or otherwise, then we've set ourselves up for a situation where the landlord is not in compliance with one of its covenants under the lease. So that the language has been drafted is intended to reduce the range of rights that the teams have vis-a-vis the City in the event we willfully fail -- willfully being a high standard for the teams to make out in a court of law. If we willfully fail to make that date, then what we've done is -- I should phrase it better. If they cannot prove that we willfully failed to make the date, they've given away one of the remedies they would have at law or inequity, which would be an argument the default, the failure to make the date, gives rise to a right on their part to terminate. So the effort here is to close the door, that's absolutely right.
I -- I -- I just must say, I'm in absolute disagreement with 175 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 anything that weakens our claim that the Eagles --
Councilman, if it gives you further comfort, the other language in the lease does ratify and reaffirm all of the other terms of the lease. There is no alteration whatsoever to the Article 506 covenant in the Eagles lease. I believe the Phillies lease would have the same section site, which is their covenant, to play the home games in the stadium. That is not altered in any respect; in fact. The language of each lease amendment reaffirms that covenant.
Well, my position remains the same. You've opened the door, and that door ought not to be opened, under any circumstance. Another thing that bothers me about this whole -- what we're doing and what we're wasting time -- if I may just mention this and then I'll yield.
Please, you're not going to yield, your time will be up.
Okay, very good. I'll come back. Thank you, Madam Chair. 176 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
The Chair recognizes Councilman Goode. Oh, he's not here? Councilman O'Neill?
Yes, Madam Chair. There was reference made today by one of my colleagues about the difference in the negotiations in this present case before us, of the practice facility, and the Pennsylvania Convention Center Authority, the Convention Center, as we know it. And, apparently, there was some meetings amongst some Councilmembers yesterday, last night, I'm not sure, where this was discussed that -- I wasn't invited so I wasn't there but I understand --
-- from a reliable source that there was comparisons made to, Hey, you know, Street's out there negotiating this and, you know, when he was Council President -- or he wasn't even Council President, he was a Councilman in the Goode Administration, he and Lucien Blackwell and a couple staffers were negotiating the Convention Center Authority. Fortunately, Mr. 177 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Shapiro is still here and he gave us a wonderful memo today outlining the details of that, and I believe they're all true and accurate from my recollection. And I think that would be helpful if this had anything to do with the type of negotiations that were going on there between two public bodies, representatives of the Governor and the Commonwealth and representatives of the Mayor. Had Councilman Street asked two of us and two staff members to carry on at some point these negotiation, which, who knows, he may when we get to the stadiums. There may be some comparison, but I would hate the record to be confused 'cause I think it would be, that it's an all apples and apples. Talking about the Convention Center between the City and the State, well, we were getting hosed on that deal, no matter how well Blackwell, Street or anybody did, if you look back over the way that was done, what the State put in, what the State got out, what the City put in and what the City got out. But I at least appreciate it being 178 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 brought up because Councilmember Street, obviously, is a skilled negotiator. I think we give him credit on the Convention Center, and I think we have to give him credit, until proven otherwise, on this matter. We've spent the last at least half hour talking about something, again, where the Mayor told us almost on the first day of his administration that getting the Eagles and Phillies to agree to a sum certain and language would avoid litigation, would strengthen our lease position -- unless we think he's stupid all of a sudden and he doesn't understand what he's telling us, because he made it clear that the one area where we had exposure under our ironclad leases that we have today is the fact that we have not done the capital repairs in recent years because we anticipated new stadiums. Rather than give them the ability to go into court and have some third party tell us that they can leave town, we are having them, through a negotiation that the Mayor has done, lock themselves in to precluding that litigation. The only way we now could let them out if we approve 179 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 this is that we don't do the repairs that we agreed to, which everyone knows we'll do. We're not going to be in that position, if we can help it. But I would ask, if we're going to have a fair comparison at all, we talk about when we get to these stadiums, where there's private dollars involved -- many, many private dollars and some State dollars and hopefully not too many City dollars -- that we look at the Ed Snyder deal, which is now the First Union Center. I don't remember a whole lot of Council negotiation in that deal. I remember some parts of that deal that were pretty hard to swallow from a taxpayers' standpoint, but the end result was, we weren't going to have a First Union Center if we didn't accept and like turning over all of the parking revenues that we had and committing that if we built downtown, we turn over 4 million a year just in place of those, if we didn't have one of these stadiums down there. I don't remember us becoming negotiators in that, but at least there, we had a private individual, similar to the team 180 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 (unintelligible). 'cause that was the Flyers and all.
And hopefully, we'll get at least as much participation -- and I hope that, from my perspective, the Mayor and his Chief of Staff and whoever else was involved don't call me every time they have a proposal to go back and forth, but that they continue to brief us on the stadiums as we move along, and we continue to comment on it, and that we stay within some framework. But I do not see any comparison between the Convention Center Authority involvement of Councilmembers who were obviously there, with the Mayor's approval at some point, to continue working with Governor Casey's team and the legislature's team at the Convention Center. It was a purely public project. This is so far from being purely public project that comparison just is lost. And I'd hate to see Mayor Street hung out to dry 'cause he's not doing what we wanted to do when he was in Council when there's just no 23 comparison. I'd rather see Street's conduct compared in the -- in the -- what was called the -- what the original name of the -- I don't even 181 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 remember it, the CoreState Center, Spectrum II, or whatever it was called when we were discussing it, because I think that would be somewhat fairer, although it maybe still wouldn't be apples and apple, as a comparison. And I'd like the record to be clear on that. And we're going to hear some comparisons by the Controller about the Cincinnati stadium deal, which was a horrendous negotiation. And just what heard from the mayor who left office a few months ago, we couldn't ever be in the position Cincinnati's in. And that was just with the briefings Mayor Rendell gave us during the last year about the City's position on certain issues, that Cincinnati apparently missed the boat on completely. We're not even in that ballpark, and it just shows, you know, let's see how half-empty this half-full glass can look, as does comparisons to a purely public project. Thank you. )
Thank you. The Chair recognizes Councilman Kenney. 182 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Thank you, Madam President. (Some audience members continue to boo.)
The Chair recognizes Councilman Kenney. (Some audience members continue to boo.)
Thank you, Madam President. I don't have any questions regarding this particular issue of these six bills that are before us. I wanted to sit here today and listen to what people had to say, but I want the record reflect that I was involved as a staff person in the negotiations in the CoreStates Center, and we'd be willing, for the record, to state that if the teams are willing to accept the same amount of public dollars that were put into the construction of the CoreStates Center as would be put into the 183 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 construction of both a football and baseball facility, I would be willing to accept that deal today. The record should not be unclear that Mr. Snyder, for the most part, paid for that and built himself, with very little, very little public dollars. And all I just want to say is that in order to obfuscate, which I think is what my colleague is trying to do by making that comparison, he may not have been in the middle of those negotiations, but we were at that time, and I think that it should be made clear that I'd be willing to accept the same deal that the Snyders got as far as the Phillies and Eagles got. Thank you.
Madam Chair, I will not accuse anybody of this Council of trying to obfuscate a record without a dictionary in front of me. But what I would ask is that if somebody were a staff member, being a staff member sitting right here, who's obviously involved in these negotiates, it's always necessary to have staff involved. But I would also ask him if he's 184 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 aware that we had certain key issues in the Snyder deal that were non-negotiable. The negotiating team had taken it as far as they could, and it was really a vote on whether you wanted to approve the deal or not. Not that there weren't staff people involved but Councilmembers didn't willy-nilly get themselves involved in every aspect of the negotiation -- as a team, within the Council or individually. Somebody was working for a State Senator who was involved and had district issue as well as finance issues with PennDOT or whatever. That's totally different. That is obfuscation, if I'm pronouncing that word right. It's not a word I use every day. But it certainly] Doesn't match apples and apples. We were not involved as a legislative body in those, and when the bills came to us, there were certain key elements -- and I just mentioned the parking as one -- that it was an up or down. We could have thought it was the worst deal the City ever concocted, but it was either have Mr. Snyder's investment and us giving up certain things, or no deal. 185 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 And what the Mayor has presented to us -- whether we like how many staff have been involved or who the staff is along with the Mayor -- a deal that he says is the best he could negotiate. And that's exactly what we had in the end in the Snyder deal. And we didn't like up or down -- nobody wants up or down if they could help it, but it's oftentimes, that's where you are. And we are only talking about a minor little deal compared to the stadiums here that gets us to be able the talk about stadiums in a way that we could all hopefully get a resolution, and that's how the Mayor's presented it. So I don't know who wasn't listening to the Mayor 'cause I think we all were. He clarified the lease issue, he's explained how far he could go. He even explained that the teams wanted a dollar a year and -- and would stay in the stadium for a -- in the practice facility for a dollar a year, but he thought he could do better taking those things later into the stadium negotiations, along with the naming rights. And if we're going to sit and second- guess negotiations where somebody was sitting face 186 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 to face with the team owners, we might as well stop here rather than worry about a November 3rd deadline. Thank you.
The Chair recognizes Councilman Ortiz. (Some audience members boo.)
You have no 15 more questions? Is Councilman Goode in the -- is Councilman Goode here? (Councilman Goode not present at this time.)
Councilman Cohen? Oh, wait just a moment, please. 187 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Councilwoman Tasco?
I always take these hearings, no matter what the issue is, as a way of Council to establish a record on the issue that we are discussing and not as an attack on anyone but our right to discuss publicly the issues as presented to us. So that is what I take these hearings today, to be Council's right to not second-guess but to raise questions and establish a record, which we all can go back to and refer to at sometime in the future years. Mr. Hankowsky, on of the lease agreement with the Eagles, there is a Paragraph 3, which pretty much lays out what happens if we don't -- could you explain that paragraph relative to stadium capital repairs, of the Eagles agreement, where it states certain things happening if we do not, in a timely fashion, approve the repairs or do the repairs?
I'd be happy to, Councilwoman. Could you just help me. You're on of the amendment to the Vet lease for the Eagles?
It's the says 188 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 third amendment to Agreement of Lease.
This is the "whereas" piece. I've taken it all apart, so all I have here is the lease. Do you want to see it?
Is the amended lease between the City and the Eagles?
Right, right. Councilwoman, do you mind if Mr. Martin just comes over and looks at what section you're looking at so we could get ourselves in the right section. I have the section now. I apologize. Could you ask the question again.
Could you explain that paragraph to me in lay -- 189 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Councilwoman, the section 7 that you referred me to, Stadium Capital Repairs, the section begins on and continues for several pages.
Item 3. The portion 3, before you get to b., the first paragraph of Section 3, which is, I think, a quarter of a page. Stadium Repairs, , Item 3.
In essence, this is the provision which encapsulates the business understanding that if the ordinances are not approved, that the stadium capital repairs condition, the condition, as subsequently defined, is the failure to approve the ordinances for new stadiums by November 3. If that condition occurs, then it begins to set forth the obligations of the City to expend the $80 million, as we've described.
Okay. If you move 190 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 further down in the paragraph, it says: "As used herein, the term 'the required ordinances' shall mean all the ordinances which are necessary for the development, finance, and leasing: a. To tenant of a new football stadium, which are mutually acceptable to landlord and tenant, as evidenced by tenant's written approval thereof; and b. To co-tenant of a new baseball ballpark for a co-tenant, which are mutually acceptable to the landlord and co-tenant, as evidenced by co-tenant's written approval thereof." Explain that to me.
The point there is that the ordinances -- the ordinances which would be required to be passed, which would result in this $80 million obligation not resulting, are ordinances as so described, which are ordinances for football stadiums, which are mutually acceptable to the City and the Eagles and as to a baseball park, which are mutually acceptable to the City and Phillies. So if ordinances are passed by November 3 and then we don't need to spend the $80 million, 191 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 what kinds of ordinances this is describing.
So does that mean that if the City and the teams don't agree on the stadium --
If -- if -- yes, if the City and the teams do not agree on a mutually acceptable package relating to respective stadium, and if that package is not approved by this Council by November 3, then the obligations outlined in this amendment --
Okay. On the next page, let's see. . . Not the next page, but on of the lease, I noted that in the testimony provided by Mr. Banner, he notes that $80 million may not be enough, that there has been some expert opinion that it could be more than $100 million. What I'd like to know is, of the $80 million that we're dealing with, how much it would go to the expense of architects, as outlined in Paragraph D on , and how much would 192 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 actually go for construction? And can architects, consultants, contractors, and engineers be paid out of $80 million worth of capital money? And if not, who pays that.
The professional services -- the architects, the construction manager, whatever services we are going to need collectively to implement the capital are an eligible expense within the 80.
I think earlier the gentleman from Capital Budget Office has done some estimates of what that will be without having a full signed contract with a party which I believe he could respond to.
As Mr. Hankowsky mentioned, these are very preliminary, but we are looking at a construction cost net of fees of, say, $70 million. So that the fees, construction management fees, architectural fees would total about 10 million or so.
So that cuts down on the amount of money going for actual capital 193 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 improvement, and that would be even $30 million less than the 100 million that Mr. Banner suspects it might be.
Yeah. I -- to be candid, I -- one is, you should probably -- I mean, I can't speak for Mr. Banner's 100 --
But I can speak -- I mean, that number probably had architect fees in it also. I mean, it's a part of doing it, you have to pay the fees. And on a project like this, as we talked a little bit about earlier this morning, the mere physical coordination of getting this done is going to require a construction manager or kind of things that -- just to coordinate getting it implemented, the staff to do that.
If I can add one point in response to your question. It is clear in the agreement that the capital repair sum, which is the amount that the City would be required to 194 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 expend here, shall in no event -- and I'm quoting now -- shall, in no event or circumstance whatsoever exceed the sum of $80 million. So while I think Mr. Banner's testimony may relate to what their vision of the stadium is currently and concerns they have about it, the $80 million represents, in essence, a compromise number, and the agreement, as presented, does not allow for the City's obligation to exceed $80 million.
You're welcome. Madam President, I understand that Councilpersons Cohen and Nutter want to yield for the Controller.
It's my understanding that the Controller has another commitment, so I certainly have no objection to him going ahead and testifying now.
All right, inasmuch as I'm sure that all of you at the table would not like to take a break, we would like to 195 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 bring our controller on, Jonathon Saidel. And then afterwards, we'll welcome you back. (Some audience members boo.) (Jonathon Saidel comes forward.)
It's my pleasure, Councilwoman, and I appreciate the opportunity to be here. I gave out and distributed a statement earlier today and have been watching on television, as well as in the side of the chamber during these deliberations, so I'm not going to repeat my statement. The statement is for your edification anytime that you'd like, and if it can be written into the record by the court stenographer, I would appreciate it. I am -- I am very concerned about what I've been here seeing today. The process, I think, is the most important problem that we have. For a year and a half, I have attempted to get information, which, from the previous administration that met, as you know, behind closed doors, did not disseminate information to 196 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Members of Council and certainly didn't disseminate information to me as the fiscal watchdog of the City of Philadelphia. And I made perfectly clear a year and a half ago, as I do today, that I want stadiums in Philadelphia. The Phillies deserve a new ballpark, the Eagles deserve a new stadium. But how we move through that process and balancing between our responsibilities to the taxpayers of Philadelphia as well as to the economic enrichment of having these two professionals team within the confines of the County and City of Philadelphia is very important to me, as the Controller of Philadelphia. And I have some problems. We shouldn't be here. We have all the people that are necessary to begin negotiations that come to new stadiums. Rather than us spending valuable political, valuable time and energy going through the machinations of finding out now what is in a prescribed lease, which has not been available to any of us, we should be sitting in some room now 24 hours a day, 7 days a week, making sure that the Eagles will have their new stadium and their 197 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 practice facility, and that the Phillies should have their new stadium somewhere in the City of Philadelphia. And that it must be done by members of the building trades of the City of Philadelphia. Those are things that we have to be all about, and I think that we are wasting a tremendous amount of time. And there has been a tremendous give-and-take here today, and I'll probably end up echoing many of the things that Councilman Cohen said. I'm concerned that this process will end up negating any kind of stadium deal. And I am very concerned about the $80 million that has been placed in our Capital Budget upon which libraries and rec centers that are needed to be repaired have been pulled out. We in the City do not have a history of spending $80 million on anything for a 2-year period. And I believe Councilman Nutter asked a question about the reprogramming of the Capital Budget. It was my assumption, up until I heard this questioning, that above the initial money, which is sitting there for Veterans Stadium, that the $80 million was going to be over and above the 198 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 previous program money. So I'm at a loss of words on that. And for a number of weeks and a number of months, all of us have been asking, what is the breakdown of the $80 million in improvements that the Eagles and representatives of the Administration say that needs to be done within the two years? And I have never received a reply on that statement. So that we could see what is the timeline, what is the accurate timeline fixing things. There's always a different timeline on fixing things. And as everyone knows in this room 14 and in this building and in the City of Philadelphia, you have a design phase, and there's a variety of phases, and we in Philadelphia have had a history of not being able to spend money on large projects within a confined time. I think we should be meeting now. There are people here, and we should be moving forward on this project. Some of the other things.
In relation to the $22 million, we have already made an investment of $7 million into the $30 million project when it comes to the practice facility. 199 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 We have begun to show good faith. But I am concerned, and many people will tell you that the Eagles may not leave until the year 2011, but they have an opportunity to leave. And if they leave, we will have a practice facility that no one will be in because it's different than putting money into a building. That building can be leased to other professions within the City of Philadelphia. But if the Eagles do leave and get a better deal somewhere else, and that would be their right, we don't have a lease. Now that lease could be for $1 year, which won't affect their financial impact. But we ought to at least, at a minimum, make sure that if we build the practice facility and we pay for the practice facility, that they can stay until for the life expectancy of the lease on Veterans Stadium. But on the other hand, we are sitting here all day hoping to God that we never reach some magical arbitrary number in November, upon which we then will no longer have a stadium issue, but we will have a new practice facility and then have to spend the large amounts of money making sure that Veterans Stadium is 200 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 working properly. No one mentions the naming rights. There are a variety of ways that we could ask if we don't participate and get funds for those naming rights for the practice facility, that that money can be put back in operational expenses as well as capital expenses on an asset that we are paying for. And, yes, we do get 2 to $3 million a year on City wage tax. But does that mean that every business in Philadelphia will be able to come to us and say, We are going to leave and take our City wage tax away until you buy us a building? And there has to be a give-and-take and a balancing effect here as we move forward. And I have to commend you, Madam President, because you have been right in the forefront, trying to acquire information almost on a daily basis as a representative of not only Council, but myself as the Controller of Philadelphia. And slowly that process, I think, is beginning to move forward. If there was a negotiating team in place right now and they were meeting on a 201 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 consistent basis with the Phillies and with the Eagles in dual plateau, and that is that one looks at site selection while the other one sets up a foundation for a financing deal that we could then tinker with around the edges, depending upon that site foundation and move forward in a comprehensive way, I wouldn't be that concerned. Because you are being asked to pass legislation that in the end, no one hopes will ever come about, which is the first time in the history that I've been Controller that I'm testifying for or against a piece of legislation that people hope we'll never take advantage of or will be nonexistent by some particular date. I am concerned that with an arbitrary date in November, without the commitment to move every day and every night to completion of a financing deal, whatever that deal may be -- and I'm not here to discuss the nuances of a financing deal which is not in existence -- that we will end up paying for a practice facility, not having a leasing arrangement, being committed to spending $80 million in two years, upon which we never have spent $80 million in the past, and end up in 202 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 default of some agreement. Now, I am very happy to hear from the Administration that they're willing, that the teams are willing to extend the $80 million expenses -- whatever those expenses are, I do not know. But that should have been brought to our attention before today.
And the fact that there would be a set-off on the architectural, engineering, and design phase, if we come to a financing deal and a stadium deal, that that would be taken off the top, based upon what our contribution would be, which was brought up by Councilman Nutter's questioning, that should have been brought up to us before so that we didn't have to spend countless hours thinking about questions which have already been answered. Now, I believe that we have to move forward. Madam President, you as a representative of this Council, and certainly others who are concerned about the financing should be involved on an ongoing basis with the process of negotiating with the teams so you don't need to be briefed. You only need to be briefed when you're not involved in a process. 203 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 And certainly those Council people -- and we know what the sites are, we've been bantering about this for two years already. Where those sites are being looked at, those Councilpeople should be involved directly on a continuous basis, with a dissemination of information to the community organizations so that don't end up the same way we did with the former administration and the former mayor, who, I think, was a great mayor. But in this particular case, he tripped and fell. Because it wasn't till the Daily News came out that I even found out that they were considering the 15th and Spring Garden, and then everyone in the world found out about it. Well, you can't negotiate a deal that is going to be hundreds of millions of dollars and affect the future for another 30 years of the citizens of Philadelphia in this city without having a commitment to bring everyone into the process. Now, it's been brought up about the First Union Center and it's been brought up about the Convention Center. But the reality is that 204 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 today, we all have to be involved to give our best efforts, to make sure that this process continues. Cincinnati is an example where there was a deadline placed, there was a tremendous amount of cost overruns, and most cities that have NFL teams are not in the position we are. We are the only city and county, so when the Cincinnati Bengals negotiated, they were still in Fulton County, and the county people had an opportunity to participate in a funding way into that process. We have differences, we have to accept those differences, and I think we have to move in good faith. I know the Eagles are frustrated, I know that the Phillies are frustrated, and we are all frustrated. But we ought to set aside that frustration and just move forward in a comprehensive way. I think the arbitrary deadline in November is not appropriate. I think we ought to make sure that we make every best efforts to do this. And there should be a timeframe between when the final solution on the financing deal is put forward and when the final decision will be 205 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 made so that we don't continue a process where it takes years of people looking and nitpicking on a deal, which could end up being tens of hundreds of pages long. But we all have to be involved in the process. The questions that have been asked all morning here are questions that were answered. And if they were answered today, they could have been answered yesterday so we could all come together to have a meaningful dialogue and get things done. As far as the changes in the agreement, as to the leasing agreement, which was established by ordinance, the Phillies have been paying our capital improvements for years. And they deserve a round of applause, I tell them, as the Controller of Philadelphia, because in the early 1990s, as you remember, we didn't have money to fix libraries and rec centers. So we amended that lease to allow them offset what capital improvements they made on our behalf on an asset of ours to do a reduction of their rental payments.
So they have been making those (unintelligible), and that system has been 206 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 working. I don't see any reason to change that system in the foreseeable future. So let's move forward, get off the dime, do what we have to do. And that means that we cannot negotiate behind closed doors, that you have a responsibility, just as I do, to the people of Philadelphia. Individually, you represent ten different districts and a number of Council-at-large people. But collectively, we are all a part of the checks and balances to run this city efficiently. I have complete faith in Mayor Street. If I didn't, I wouldn't have campaigned for him 15 hours a day, 7 days a week to be elected mayor of 16 Philadelphia. But we live in a system of checks 17 and balances, which is what our democratic process 18 is. We don't live in kingdom. And I have faith 19 in him, but I also have faith in all of our 20 abilities to contribute to the process to making 21 the best deal possible. 22 So to sum up, I think that we have to 23 make sure that there's a leasing arrangement. We 24 should look into the pilot program, as far as 2 percent of the construction costs we place back 207 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 in operating and in capital. We ought to make sure that there is an agreement that, if God forbid, there is no municipal financing deal on stadium sites completed by if there is a deadline, that at least the Eagles sign a lease, even for a dollar a year, so that they stay till the year 2011 and they continue using their practice facility. Because if they leave their practice facility, we lose the wage tax, but we also have a big, open ground on Pattison Avenue that can't be used for anything else. And we have -- in the past administration, they have jump-started, they have thought that something was going to happen, and I'm still waiting for documentation on DisneyQuest, with that big hole in the ground. We don't need a bunch of holes in the ground in the City of Philadelphia. We can all move together and, I think, be proud of what we're going to do by the end of the day. And thank you for the time, and I appreciate the opportunity to speak off the cuff. Thank you.
Thank you. 208 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 (Applause.)
Thank you, Mr. Saidel. I really appreciate your coming in, and I do know that you had another commitment. I think that we're all in the same boat. We certainly want to see the practice facility go forward as we are embarking on the possibility of new stadiums. And I agree with you, we can't wait to talk about what we're going to do in November. I think we should all roll up our sleeves and get working on this as soon as possible. We heard some testimony today that we haven't heard before. I agree with you. I think we should be informed, we should be involved, and I know that you have been giving us information on a weekly basis, and I certainly know what your concerns are. And I feel very certain that you should be also fully informed and part of the negotiations.
Are there any questions or comments of Mr. Saidel? The Chair recognizes Councilman 209 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Mariano.
Thank you, Madam President. Mr. Controller, thank you for sharing our frustration on the legislative process in trying to get this thing through City Council and through the Administration. And we appreciate your watchdog status. You talked a little bit about the $80 million for the, you know, to Vets Stadium in case nobody does the repairs?
Well, the Ewing forecasts what the capital expenditures would be over a period of time, which, if I remember the numbers correctly and, you know, in my position --
The $22 million is 210 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 dramatically less than the original 40 million. And it also, Councilman, brings up the question that was answered before, about the reprogramming of money that has been sitting around for years in the Capital Budget.
So if you reprogram the money in the Capital Budget to fulfill that obligation of the Ewing study, that is far short of what I can only say is an arbitrary number at 80 million, because I haven't seen any documentation or an expense sheet, as you know, from being in the contracting business.
Thank you. And my concern, not having the background in law or economics that you do of being an accountant, this $80 million, to a lot of people, it's a lot of money. But in layman's terms, we never really get to that $80 million if we go along with this process that you've shared with the frustration with us a couple minutes ago, to get to this point where we get a schedule and we start building this thing. We're not going to spend $80 million if 211 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 we do this in a timely fashion, if we get to the point where the Eagles can be having a game in 2003, correct? We'll never get to the 80 million, because if the Eagles get a stadium and they have to knock down the Vet for the Phillies have a stadium, so we're not going to put repairs in a stadium. That's only if -- and correct me if I'm wrong -- if we don't build both stadiums.
If you pass the legislation as is and we move forward and negotiations aren't completed by this drop-dead date -- excuse my language, the exit date, then -- and if the negotiations fail, then we are committed. Now, it was mentioned here at the hearing on the testimony that the Eagles will grant us an extension. If that is so, then I don't see any reason why that shouldn't be placed in the bill, if it's something that both the Administration and the Eagles agree to, which is a revelation to me. I mean, I've been asking that question for a number of months.
Another question. 212 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Can you talk a little bit about a pilot program payment, which you said would be 2 percent cost of the construction?
If that's something that we could possibly work out in the realm of this legislative process that you talked about, explain to the laypeople like myself how that would work.
Well, the pilot programs are usually 2 percent of construction costs, which are passed by the Board of Revision of Taxes.
And that would be in the practice facility, I'm sorry.
And that's exactly right, it would be on the practice facility. It would be effectively in lieu of real-estate taxes.
And that money can either be put -- we can set up situations where that money is spent on a specific expense within the 213 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 practice facility, it could go into the General Fund, depending on how it's negotiated.
And you also -- a couple more questions. You talked about the Phillies doing capital improvements themselves. That was in lieu of payments or did they get reimbursed for that?
No. Actually what happened was you -- were lucky you weren't here then.
It was in the early 1990s when we were on the brink of financial collapse. And in order for us to live up to our responsibilities on the original lease agreement, we amended the lease agreement to allow the Phillies -- the Phillies did primarily did most of the work, and I commend them on it -- is to make capital improvements within Veterans Stadium on an ongoing basis, and whatever money that they did 214 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 spend, their rent would be reduced so that, effectively, they were prepaying their rent for fiscal period, and it be as if got the money and then put the money back in. So as they made improvements for us because we were cash-strapped, we reduced their rent for the fiscal period.
I don't want to make this a -- because it could be a bad comparison but it would be like when you had an apartment and the landlord wasn't doing the stuff around the apartment.
Well, they didn't -- yeah. And, in fact, we went one step further. We -- and usually with a personal lease, you place the money in escrow, and the landlord fixes it, and then you pay rent your rent once he's lived up to his obligation. With the Phillies, thank God, they made the improvements and the repairs that were 215 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 necessary, and we reduced their rent. So if they owed us million, they only paid us million, whatever the 2 million that was justified. 5
And this is my next-to-last question. The money that we talked about this morning coming directly out of the Capital Program, I think there's a consensus here in Council to take that money out of other things, like maybe PAID or out of PICA. Councilman Nutter, I think, has a plan for that. Do you see any problem, as the Controller, with us not going to the capital funds for that? Do you think that's --
Well, my problem with going to the capital account is that if we continue to move forward and don't make dramatic decreases in our debt obligations, we will reach the debt limit, which is an arbitrary limit, based upon the assessed value of the real estate of Philadelphia and County of Philadelphia, but it is a limit. So the closer that we get to that debt limit, the shakier we become on Wall Street.
And what is that debt limit? 216 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
I don't remember the -- about a billion and a half dollars of outstanding debt.
Well, if we continue this way, we'd probably reach it in a couple of years. So when you look at -- now, PAID, one of the reasons why we utilize PAID under certain circumstances is that we avoid the debt limit situation. But we also, with PAID, have less control over the nuances of the things that they do 'cause they don't come through me and they don't come through you.
Thank you. And, Madam President, out of that frustration that the Controller spoke about and the frustration of the whole legislative process, I would again ask the people that proposed 0079, which would be Councilman Nutter and Kenney, 0084, which would be Councilman Nutter and Kenney, and 0085, which would be Ortiz and Nutter, to withdraw them bills so that we can get along with this process and go with maybe some amendments that 217 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 might be here today, along the lines that the Controller is speaking.
Are you suggesting that they withdraw their bills and the amendments that you're proposing? Or are you proposing that they be the Administration's bill?
No. I would say that we leave the Administration's bill go as is and possibly amend them, with a consensus from Council, and we could withdraw their bills as --
-- because in the title, they have the November date.
What would be the 218 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 legislative process after the other Councilmen withdraw this bill to get into that bill?
Then the Mayor would have to send us up another bill or -- he would have to send up another bill because we couldn't amend his bill because of the title.
Okay. Well, I would still ask those Councilmen if, on the record, they would withdraw their bills. Councilmen?
Councilman Ortiz, I think a question is being asked of you. Will you withdraw your bill?
Councilman Nutter, the question is being asked, are you willing to withdraw your bills?
The point is, Councilman, that a Councilmember is asking if a member wants to withdraw the bills.
Point of 219 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 order.
The only thing he has to make, is he either withdraws or doesn't withdraw them Councilman Cohen. Thank you.
It seems to me the point of order is that the question is backward. The Council bills are amendments, in effect, to the basic bill. The question first is, will the Mayor withdraw those three bills?
When those three bills are withdrawn, the amendment bills are --
Councilman, I would think -- Councilman, a point of legislative order. (Unintelligible, parties talking over each other.)
The point of legislative order, Councilman, is that they're not amendments. I think they're bills in theirself. They were presented as bills, so they could withdraw them bills.
Yeah, but then it 220 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 leaves an impossible thing. The Mayor's bill asks us to approve and advance a lease agreement between PAID and the Eagles that we've never seen, that hasn't even been written. Are we going to abdicate all of our authorities, Councilmembers?
Councilman, we're not abdicating any authority. That's what this is whole process is about. (Unintelligible, parties talking over each other.)
There is not going to be discussion among Councilmembers and arguments between them. If you have a question, ask the Chair.
Council President, I asked my question for those members to answer me. It's either yes or no. There's no cross talk from Councilman Cohen. He --
Councilman Nutter, have you changed your mind? Are you 221 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 willing to withdraw your bill?
Yes, Madam President. I recognize you. Councilman Mariano is requesting that you withdraw your bill.
No, yours is 0084, but friends there answered for you.
Thank you, Councilman. 222 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Thank you for the information, Councilman Cohen. (Councilman Cohen responds off mike.)
No, because you always start something, so you're going to stay now and answer. Are there any other questions of the City Controller?
I first wanted to thank you not only for what has been the clearest statement I've heard all day long, but it's a clear voice that's been the only voice I've heard consistently over the last couple of months, giving some information about the stadium and asking that we act sensibly, in an open way. And I wanted to thank you for it.
Thank you, Councilman. 223 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Because your material was very helpful to those of us in Council in analyzing it. I have one further question. This raises so many questions. Now, you were not controller, were you, at the time of the last major lease amendments in 1985, when I think Councilman Goode's father was the mayor?
We were going through all kinds of problems, something like this. It was very difficult, there was a lot of controversy about it, a lot of unhappiness about it, but there was one great thing that Mayor Goode kept emphasizing, and we went with him in good faith and we went out on the streets and argued with our constituents. Mayor Goode said, Yes, it's tough, we're putting in a lot of money, City money, taxpayers' money. We wish we weren't, but the day will come when there will be a rainbow. You're going to have to wait for that day 'cause it won't take place until 2001.
That's right, the luxury box on the -- 224 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Right. The $6 million a year, he said, would come back to the City from these superboxes.
And we went out in good faith, out to the communities and told them that you've got to be patient. Some didn't want to be patient. We pleaded with them and we got general acceptance. And, you know, when we did that, do you know what many people told us? That day won't ever come. Before that day comes, there will be another agreement which will take care of that, which means that the teams won't have to pay a penny. And I have to tell you, that's a serious problem we're going to have out in the community, 'cause that was the rainbow day that $6 million coming to the City from the superboxes. But, you know, the community, not the politicians, the community was much smarter than all of us in elected office.
They knew that that 225 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 day would never come when we get that million. And that's where the bad faith is. The bad faith isn't from the City to the Phillies. You know, that's another thing I don't understand. We're told this bill is only to guarantee the City's good faith. I don't know why we have to guarantee good faith, I don't know of anything we've ever done in bad faith. And so I don't see any justification on that point for this bill. But that's -- the only reason is to prove our good faith.
So tell me, how are we ever going to deal with that 6 million that the people are going to tell us out in the community, We told you years ago that that money would never come.
Well, if, God forbid, there's no stadium financing and there's site specifications and that situation falls through, the Eagles and the Phillies are still required to hand over the luxury box income beginning in February of next year, which is not 6 million. It's between 4 and $5 million, I believe, on an 226 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 annual basis.
And I've always thought -- yeah, I've always thought that if we had to continue in Veterans Stadium, that that money would be used to pay down the debt for the capital expenditures that we did have.
And I don't want to comment on the preliminary negotiations that Mayor Rendell was involved in, but at that time, he was -- he had told me that he was going to do -- we were not going to receive that luxury-box income. And if you remember, one of my concerns was that we waited all these years and we're not being recompensed for allowing Tose, primarily, not to move to Phoenix but to stay in Philadelphia and to receive the luxury-box income as we made those capital improvements. But if we pay for the practice facility and there is no movement to some final solution for the municipal financing deal in site specifications, then we will be receiving that beginning in February of 2001, between 4 and 5 227 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 million in the luxury-box income.
Thank you. The Chair recognizes Councilwoman Krajewski.
Thank you, Madam Chair. Good afternoon, Mr. Saidel.
On your testimony, you state that the City stands to gain financially in the future under the terms of the current leases. Could you explain those gains.
Well, one of the major ways under the current leases is the luxury-box income, which is the --
Well, couldn't these things be incorporated into a new lease?
It could be. 228 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
In a new stadium, yes. I mean, I only know -- I only know third-hand from the negotiation that took place under the Rendell Administration, but it was my understanding that one of the things they were looking at was that when they built the new stadiums and had new luxury-box seating arrangements with both teams, that we would no longer continue to receive luxury-box income. And that was a concern to me because that --
Well, you know, anything -- I think anything could be incorporated in the give-and-take of people from both sides that are concerned and committed to making a deal that both is beneficial to the taxpayers of Philadelphia and the people they do so ably represent as well as to the teams, to keep them here and make them successful and be the championship teams that they so justly deserve. 229 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 So any of that can happen.
Thank you. Are there any other questions of the City Controller? (No further questions.)
At this time, Council will stand in recess until 2:30. (Council stands in recess.) - - - (Proceedings resume.)
Sorry to have kept all of you waiting. Our next witnesses -- I believe the Administration is finished with their testimony, and I don't believe any of the Councilmembers have any remaining questions. In view of that, I would ask Joe Banner 230 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 to come up to testify on behalf of the Eagles, and David Montgomery. (Witnesses come forward.) UNIDENTIFIED WITNESS: As you know, Mr. Banner was not feeling well, and we have just sent someone to bring him in.
Mr. Banner, I understand you're not feeling well and I'm awfully sorry for the delay but perhaps we could proceed now.
No problem. Thank you. I'm counting on that meaning that the questions won't aren't so tough since I'm feeling --
I said I'm counting on that meaning that the questions won't be so tough since I'm not feeling real well. (Laughter.)
Okay, but it's your throat that's bothering you, not the 231 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 line questioning.
Good morning, Council President Verna and Members of City Council. I'm Joe Banner, Chief Operating Officer of Philadelphia Eagles. Before I start, I just want to follow up the earlier player personnel recommendations that were made here. I don't know if Michael is in here right now, but since our biggest need is a speed wide receiver, I'm not sure that Jim Roundtree is the answer to that problem. Before I begin my testimony on legislation before you this morning, I want to thank you for the time you have already spent working with us on our NovaCare complex project and the support you have expressed for our goal to get new stadiums. I am here to urge your support for Bills 80, 82, and 83. My testimony has three parts. I have shortened the statement that you have received just a bit in light of the length of the day, but I'd like to quickly run you through what many of you have seen already with respect to what the practice facility project is. 232 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 So you see right there is the picture of the NovaCare complex from the backside, where the fields are located. This is just an overview of the site, you see the fields. 5 acres, that we're using for this site. It's a 108,000 square foot building. The team's day-to-day operations will be located here as well as the NovaCare Center for Rehabilitation, and that center, as you've heard will be open to the public. This is, just quickly, the features of the field and the NovaCare complex. And you'll see there the advantages to us mainly from a football perspective. You've heard the numbers thrown around and we wanted to provide you some specifics so that you understand where those numbers came from. And we are more than happy to provide the detailed backup if anybody's interested in it for any one of these line items, if that is something that would be of benefit to Council. You see that the project is expected to 233 3/1/00 WHOLE COMM. 3 million. As you heard earlier, the -- there is a cap on what the City's costs could be, so if we came in exactly on budget, there's about $360,000 that the team would be responsible for, kind of classified as an overrun. And you can see the items at the top half of that list have already been bid and, in most places, committed to. And some of the work, through the middle part of the program there, has actually already been completed. This is a chart to reflect -- you heard early testimony. We did the wage tax program here. There's only one assumption different here than what you heard from City Council, and I think you heard -- I'm sorry, from PIDC. I think you heard Bill Hankowsky indicate earlier how conservative the numbers were. million. million. And as he indicated, this does not include gross receipts tax, sales tax, use-and-occupancy taxes. You'll see in a second, I think, that the collective tax number is 234 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 significantly higher than what's been referenced. This is the -- as we see it, the benefits of the project. 3 million in tax revenues during construction, and the removal, which has already taken place, of the structures on the site that have been unappealing and undesirable to the community. I won't read through this whole list. Number 2 is the one that we think is most significant. 7 million in 2002 and grow in each subsequent year. That's taking the wage tax numbers and adding in the use-and-occupancy and other taxes that I referenced. Again, these are just the ongoing benefits we see that the project brings to the City. You heard it mentioned a couple of times and we just wanted to provide some substantiation that generally, these facilities have not been built within the City limits where the teams play and their facilities, as in their stadiums, exist. So specifically you'll see on 235 3/1/00 WHOLE COMM.
- BILLS 79, 80, 82, 83, 84, 85 these two charts that there are twenty teams in the NFL whose facilities and practices are outside of their stadium. Seventeen of those twenty are outside of the city that they're located in. The only three, St. Louis, Tampa Bay, and Tennessee, where they are located in the same city, are brand-new stadiums, where the public paid for the entire new stadium, and in some of those instances, even paid for some or all of the practice facility. Again, that's another view of the building there. I wanted to discuss briefly the capital repairs needed to make Veterans Stadium a safe and functional environment for NFL football and major-league baseball. These repairs should not be confused with capital improvements to enhance economic opportunities or to improve amenities. It should also be understood that the $80 million represents a rough estimate of the cost of this work, as was discussed earlier. In developing independent estimates on what would be needed to begin preparing the Vet for another decade, both PIDC and the Eagles relied on 236 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 nationally recognized firms with stadium expertise. Our experts put it at more than $100 million. The $80 million figure represents a compromise, and for reasons I will discuss later, one which the teams they believe they have given up more than the City. It should be noted that when Pittsburgh and Cincinnati analyzed the similar multipurpose stadiums built at about the same time as the Vet, the projected cost of repairs for each building exceeded $100 million. And the result of that was that they proceeded to put new-stadium deals together. I turn now to my last topic, which is why the legislation before you today is important the to Eagles. The Eagles face three major challenges in our efforts to succeed in the National Football League. First, we need a grass field football stadium that will help us recruit better players and that will provide our fans with the kind of facility that most of our competitors already have. Second, we also need a better practice 237 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 facility to attract and keep better players. And, finally, we need the additional revenues if we are to offer athletes competitive salaries. And we believe these challenges are inextricably linked. A new stadium will generate new revenues, it will help us finance both the stadium itself and the practice facility, and it will also allow us to pay the athletes, who, in turn, will pay the wage tax. From the Eagles' perspective, not having a new stadium jeopardizes our ability to support a practice facility in the City and still have some chance of recruiting better players. If we were to do what almost all other NFL teams have done and build the NovaCare complex outside the City, probably as part of a larger private development, we would have significantly lower construction and operating costs. We also would not have to overcome the competitive disadvantage presented by the City's tax structure. An unacceptable result for the Eagles would be to find ourselves after November with a higher cost of a practice facility located in the 238 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 City and no prospect of a new stadium to help pay for it, an aging facility with artificial turf that players do not regard positively, and it affects our ability to compete. Very simply, because they would lower the costs of staying in the City, the NovaCare complex buy-back provision reduces but does not eliminate -- and we think this is an important point -- but does not eliminate some of the risks that -- the terrible outcome that we mentioned earlier is possible and allow us to continue to build the practice facility in Philadelphia. The same is true for the capital repair provisions.
If we knew that new stadiums would be approved this fall and would open in three years, I'm sure the teams would strongly favor a modest repair program, but if do not have new stadiums, in fairness to the teams, our players and our fans, we need to begin preparing the Vet for another decade of use. And although it may not be possible to complete $80 million of repairs at the Vet by the fall of 2001, we believe every effort should be made to reach this goal. If it turns out that 239 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 less than $80 million is needed, then less than 80 million will be spent. If more than $80 million is needed, the teams have agreed to a cap. There are claims at that number for the next several years. I know that many of you -- perhaps all of you -- are concerned about the November trigger date for both the NovaCare complex buy-back and the capital repair ordinances. I can assure you that this date is not chosen arbitrarily from the team's perspective. It represents the latest date at which we can have a deal and reasonably expect to be able to open our new stadiums in time for the 2003 season. Given the size of these capital projects, each lost season will cost each team in the City tens of millions of dollars in a combination of higher borrowing and construction costs. We recognize that deciding to build a new stadium is an issue of enormous consequence in any city, in particular in a city like Philadelphia that faces other, and frankly more serious, problems and issues. For a private business of our size, stadiums are huge projects, 240 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 even larger than they are for the City in a relative sense, requiring enormous commitments of time and money. Last year, the Eagles spent almost $10 million planning a stadium project that we believe most elected in the City wanted us to complete. Despite good will all around, the project did not go forward, and a good bit of that money has been lost. If you have to have any hope of opening stadiums by 2003, both teams will have to put capital at risk almost immediately. We also recognize that your approval of these ordinances does not commit the City to approving stadium deals in the fall. In our view, the ordinances before you frame in a fair and responsible fashion the alternatives that the teams and the City face. Perhaps most important, the ordinances frame the alternatives in a way that provides incentives for each of us to get to the result that I believe we all want to achieve. On that basis, I respectfully ask for your support. Thank you.
Thank you, 241 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Mr. Banner. (Applause.)
Thank you very much, Council President, and good afternoon to Council President Verna and Members of Council. My name is David P. Montgomery. I'm the President of the Phillies, and I'm pleased to be here today to offer testimony in favor of Bills No. 80, 82, and 83. While, of course, we're not here today to discuss the details of a new baseball ballpark, nor a football stadium in Philadelphia, passage of these package of ordinances will set the stage, we believe, for a healthy dialogue about the need for new world-class stadia in Philadelphia for negotiations between the City, the Phillies, and the Eagles for such stadia, and we hope for the introduction and passage of an ordinance package that will allow both teams to proceed with new stadium construction later this year. At the outset, I want to thank all Members of Council for their consistent courtesy 242 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 and consideration to the Philadelphia Phillies. We appreciate the time you've spent talking to us throughout last year about the exciting possibilities of a new ballpark. When it was not possible to accomplish that goal, we certainly appreciated your letter confirming the commitment of Council President Verna and most of the Members of Council to prompt consideration of any legislation necessary to create new stadia in Philadelphia. We appreciate your willingness to listen to us over the past couple of weeks and at this time on the hearing on this package of legislation. We believe that the Phillies in this city have a very special relationship. When we open our season in April, it will be our 118th consecutive year that the name Philadelphia and Phillies have been tied all. We're proud of the fact that that's the longest streak in all of professional sports, and at this time, meaning one team name with -- a specific team name with a city, and surely, that's a streak that we intend to continue on into the future. As Council has acknowledged in the 243 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 resolution adopted unanimously in September of '99 and in Council's letter to the Eagles add Phillies this past November 16th, consideration of this legislation to allow for the development of new football stadium and a baseball ballpark are a top priority for the City government. You've heard from the Eagles' testimony that we believe it's necessary to address the issues that are subject to this package of ordinances that are before you in order to set the stage for a full stadium discussion. We believe that that discussion will take place over the next couple of months, and that discussion will include consideration of the issues previously identified by Council in both its resolution and its letter. Bill No. 82 is the ordinance package in front of Council, that ordinance which most directly affects the Phillies. That bill 20 authorizes the execution of amendments to the leases between the City, the Phillies, and the Eagles. The major substantive matter addressed in those amendments is that the City commits to making up to $80 million in capital repairs and in renovations to Veterans Stadium in Fiscal Years 244 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 '01 and '02 in the event the ordinance is forming the basis of the deals between the City and the team for a new baseball ballpark and a new football stadium are not approved by this Council on or before November 3, 2000. Everybody in this room, we believe, hopes that the contingency addressed in those lease amendments never comes to pass and that the City never has to put anywhere near $80 million into Veterans Stadium. We're all committed to working towards our shared goal of two new world-class stadia in Philadelphia. That would avoid the need to address the really serious repair and renovation needs that exist in Veterans Stadium, which, this year, will be 30 years old, and a multipurpose stadium that's definitely showing its age.
Given those serious repair and renovation needs, and given the willingness of the teams to cap at 80 million their existing contractual rights to immediate repairs and renovations to the stadium, and given the climate in which all parties are committed to a prompt and expeditious consideration of new ballpark 245 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 legislation, the Phillies believe that passage of the legislation now before this Council would represent a fair and appropriate expression of good faith by the City and both teams that will set the table for productive discussions on new ballpark legislation in the coming months. Thanks again for your consideration. I'm here to answer any questions that you may have and am joined by David L. Cohen, counsel to the Phillies. Thank you very much.
Are there any questions on behalf of any of the members of the committee? Councilman Cohen?
Thank you, Madam President. I'd asked the question of the City, and the Chief of Staff suggested I ask it of the teams. Let's assume this scenario for a moment, that November 3rd comes and we all weep together 246 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 and nothing has been worked out and we've adopted the bills that make November 3rd a trigger date for the $80 million. Am I right, that's the trigger date?
For putting 80 million? And let's suppose, despite miracles of miracles, somehow the City for the first time in the history of mankind learns how to spend $80 million in that short period of time and we surmount all obstacles. Does that mean that the question of new stadiums is dead, and the teams agree that they will not be asking for new stadiums until at least the end of their current lease, in the year 2011?
I'd be happy to go first, Councilman. The Phillies' position is very simple. We believe that we have to pursue vigorously and have continued -- actually, we've been pursuing for the better part of almost a decade now the opportunity for a new baseball ballpark. We believe it gives us the opportunity to give to our fans and to our franchise what's happening now, I 247 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 guess, since 1989, there have been new ballparks that will be constructed between 1989 and the year 2002, as far as baseball facilities are concerned. So we're anxious to continue to have that dialogue for quite some time. I will tell you, as far as the date is concerned, frankly, we've already -- when we had substantial discussions with the previous administration originally, we were talking about a potential opening in April of 2002. Some of the events that occurred during the last year, some of which was the process that the State frankly made that slide to the fact that we're currently pursuing an opening in April of 2003. In order to do that, frankly, November 3rd is a late date. We are currently now spending design dollars out of our pocket on the assumption, as I said earlier, based on the representation of you and many of the members Council, that new stadiums in Philadelphia are a priority. So we continue to do that, we continue to fervently hope that we can work things out by November 3. And if not, we will continue to 248 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 pursue new stadiums.
Thank you. My question's been answered. You will continue to pursue it until you get it. I think that's a worthy goal. We would like to do that. We would like to make it unnecessary to do that by clearing out the obstacles that these bills present to all of us, because we're wasting energy, we're spending all of this energy in providing if we fail, when we ought to be spending time trying to succeed.
The only thing I want to add about the turn of expenditure of time and energy is, I think we're at a crux of making a decision about Veterans Stadium, Councilman. We have been at this process for a while, and I think, as the Controller testified, the Phillies actually have been more active maybe even than our co-tenant, the Eagles, as far as capital repairs historically at Veterans Stadium. In the early '90s, we did step forward and were instrumental in doing some of the work at that time. We have recently take place the approach -- our franchise has, I don't want to 249 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 speak for the Eagles -- that it would be improper for the Phillies to be asking the City to do two things, which is to sink dollars into Veterans Stadium that we believe are necessary, and yet at the same time have us for the opportunity to be in a new stadium. We felt that way in 1997, which is basically when, if you will look back, Fiscal Year '97 is the last year that there were what I would call "substantial proactive repairs" to Veterans Stadium. So what we have done is, we've said, We're going to sit on the sidelines, to use a football term, and put our energy into pursuing a new stadium. Unfortunately, if we continue to allow Veterans Stadium to be our home -- originally, remember, we thought we were going to be in a new one in '02, so our last season, in essence, would be 2001. Now we know we're going to be in the Vet through '02. And forget November 3, but shortly, if another date slides by, that's going to be our home a year longer etc. And what you cannot do then is ignore the tough decision that the City has, frankly, of when to sink substantial dollars into the 250 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 facility.
Mr. Montgomery you're a businessman. Would you -- would you --
Yes, you are. Would you invest millions of dollars in something where you were told, "We're not telling you what the details are, trust me"?
Would you sign your name just, you know, on "I'm a nice, honest person." You know, sign your name in advance to agree to things that you know nothing about at the moment?
We'll let you know along the way, you know, what your obligations are. And then the person says, Suppose we would 251 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 like to change those obligations? Well, maybe we'll permit you to, but maybe we won't 'cause you've already signed off. You'd never put yourself in that position, would you?
Well, actually, ironically, Councilman, maybe we have, because I think our discussions about the types of repairs that would take place at Veterans Stadium if we couldn't come up with a new deal have not been firm enough on either side. In other words, we have come up with a number that we think covers those needs, but we haven't sat down and priced out individual aspects of that. And, frankly, that's a part of the discussion you had this morning with the Administration. And so we have gone with the Administration, trusted that their goal is to work with us to try to get the new stadiums. In the meantime, we've agreed on types of items that would be considered as far as renovations and repairs to Veterans Stadium, but we have not done that with any specificity.
But you have known 252 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 all the time that Council had to vote on a package, on something, before stadiums could come about, didn't you?
We certainly know that any lease amendment to the stadium has to come before City Council.
Any lease amendment -- my understanding is -- I'll look to my counsel, but my understanding is that any lease amendment would require Councilmatic approval.
Right, in any action toward the stadium or a practice field for the Eagles.
Okay. Well, I'll use Mr. Banner, if I may, as a witness on the practice field.
Yeah, but even -- and let me just amplify Dave's answer a little bit on your initial question. You know, would you sign such an agreement? 253 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 I just think it's important to remember that maybe I would, and that's, obviously a decision for you to make. But if you're asking us, maybe I would -- if I had an unlimited exposure and the result of signing it capped my exposure, and the deal was written in a manner that as things went along, the City retains the right to approve whether something qualifies as a capital repair, and if it turns out that less than the cap is required, I'm protected in that I don't have to spend up to the cap, so -- and I'm also getting this payment and this process spread out over a period of years. So I'm just suggesting if you're asking us, maybe I would if I got those series of things in return.
You know how it seems to me and, I think, to some of my colleagues, at least? The City Council -- you've spent a lot of time with the City Administration going over things. You come to us at a last time and we -- City Council has a history with both ball teams. I don't think we've ever said no, we've never reduced an appropriation for repairs 254 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 to Vets Stadium for whichever party was ready to invoke them. We've been cooperative, we've made -- many times we've said publicly that there's no 5 opposition in City Council to the concept of a stadium. Please tell us some facts so we could begin considering it. And month after month after month, nothing has come through. We still know no 10 details. Then you come with legislation, which includes a package, which says, Sign off in advance, approve the Eagles' paid lease, without knowing a thing about the lease. We understand -- I think maybe it hasn't even been negotiated yet. But if it exists, we know nothing about it or about its terms. How do we discharge our duties? We have a responsibility. We have been elected by the people of Philadelphia to do the duties of City Council. And David L. Cohen, when he was Chief of Staff, he would rip us limb from limb were he in our position of being asked to do something, which he knows we cannot do and still live up to our oath. We've been asking for the information in amendments that are presented here 255 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 today. We asked just for time to have enough time do our legislative duties properly. Yet, we're being treated as if you have to worry about our good faith. We think the Council has always dealt with the sports teams at a much higher level than just good faith, and we just don't understand why you put us and ask us to put ourselves in a totally impossible position legislatively. You ask us, in effect, to abdicate our responsibilities and to turn them over to somebody else. And, sir, I have to tell you, we cannot do it. And if we did it, I think we all ought to be thrown out of office. I don't know how anybody could make clear that you're dealing with people who want to achieve the same goals you want to achieve. And yet, you act towards us as if we don't want to do that, as if we're your worst opponents. And we don't think you ought to put us in that position. We think that this energy ought to go into pursuing the goal of achieving what you want -- the stadiums and the practice field, not to develop legislation just in case we failed. 256 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 You've been here during the day, you've heard everybody. And Jonathon Saidel, the Controller, said that in his whole legal history, he's never known of any kind of legislation like this. None of us have ever known it. All of this energy going into what happens if we fail, when we ought to be putting our energy into making it succeed. That's really not a question; it's a rhetorical statement. Frankly, I just don't understand why we're here in this posture today when we ought to be working on the deals necessary to produce what your main goal is and our main goal is. Thank you, Madam President. For now, I'll yield the floor to anyone who wants questions.
Thank you. The Chair recognizes Councilman Nutter.
Thank you, Madam Chair. Good afternoon. There was discussion earlier about the November 3, 2000 date and the passing of that date, and if Council has not taken action on stadium deals, we'd know parameters are 257 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 of what happens after that. You may recall that I had a discussion with the Mayor's Chief of Staff, Miss Franklin-Suber, about that deadline and the discussion about trying to get a deal to us by some particular date certain that is reasonable for the teams to have time to negotiate a deal and then reasonable for the Council to be able to review that deal and, quite honestly, avoid virtually everything that we're discussing here today. From your perspectives, as the team representatives and probably the people who will have to negotiate a deal, do you either find it unreasonable or objectionable that there should be some particular date within reason that a stadium deal should come to City Council?
You know, from the Eagles' perspective, I would want to not interject ourselves into an arrangement between the Mayor's Office and the City Council. But I will say this: I personally would handle the negotiation of the deal from the Eagles' perspective. I have nothing more important to do, and I am available anytime, and 258 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 as fast as anybody is ready, to get to work on that very process and complete it as quickly as it can possibly be completed.
Councilman, we too are anxious to move forward with such negotiations as soon as possible. But I also would agree with Joe in that the matter, I believe, that you were questioning the Administration on, which is the proper timeframe for Council and the Administration to have those deliberations, frankly, is really, in our minds, not our issue.
So if a date were established that was reasonable, I take from your responses that you would have no direct or personal objection to it.
From our perspective, we would want it to be realistic enough to achieve this November 3rd date and to keep the 2003 opening on track. And beyond that, we would be willing to put every effort into working and meeting any deadline that existed between us and the Mayor's Office and City Council or any other parameters that were collectively established. 259 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Now, I think the only thing that I would add is that having spent quite a bit of time on this, I urge us all not to underestimate the complexity of the subject.
Well, I understand that, but therein lies the reason for the question, because if it's complex for you in the negotiation, then the natural result is that it's also complex for us. And I think, again, as everyone tries to achieve the same goal, we want reason on all the sides -- a reasonable amount of time for you to negotiate, a reasonable amount of time for us to review. But I think your answers are: one, you don't necessarily want to be in the middle of that; but, two, if there was a reasonable amount of time, it doesn't do anything to your feelings about what it may be.
Thank you. An issue was raised earlier that -- this is a practice facility question with regard to our current lease obligations, the Eagles are obligated to play at Veterans Stadium until 2010 260 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 or maybe at the beginning of 2011. You are not obligated to practice at the current practice facility, which, I think, is two open fields and a bubble. We have a requirement, I believe, in our lease to provide you with practice facilities, you have no particular obligation to utilize them. Is that correct?
And, again, in the worst-case no one ever want to go near it but since we're here and trying to plan for contingencies, if there are no stadiums deals done November 3rd, which I would like to avoid, and the City obligates itself to buy the practice facility, the question has been raised, will the team utilize -- and not only utilize but commit to utilize -- a now brand-new facility at a total cost of $30 million, of which we will actually have paid everything?
I think that there's kind of two separate answers here, and I'll kind of give the one that sounds better first and then the tougher one second.
All right, I'll 261 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 take that.
I think practically, it's very hard to picture a scenario in which we build this facility, it's been bought back, have the opportunity to stay there, and we instead choose to build it again and relocate it. I think that's a very unlikely practical outcome. But it is one that we feel is crucial for us to maintain the option of having. And there are three basic reasons why we believe that, and they relate a little bit to my opening statement and how we see these things as interrelated and our goals and succeeding in our business. Number one, the ability of us to recruit free agents in a scenario in which we are, at that point, committed probably for ten more years to play in Veterans Stadium and located within the City and thus dealing with some challenges -- namely the tax structure and recruiting free agents or keeping them -- there's a scenario that would at best be challenging and one that we may or may not in that scenario feel is something that we could overcome and, therefore, one we think that we need to at least 262 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 keep our options open. Number two is, we will be in a very difficult financial situation if we are remaining at Veterans Stadium with our current lease and locating a practice facility within the City. Because even in the instance where the facility has been bought back, there's a significant difference in the cost for us going forward within the City as opposed to being outside the City. And our situation in that scenario would be difficult enough that we at least need to retain the right to evaluate those economics at that point as to whether or not we could afford to do that. Lastly, and this is partially what brought us to this point with the Administration, in an interest to keep this as simple as possible and not get into a long list of issues about which we probably would have a hard time agreeing at this time, since this is a scenario we hope never happens, as you saw in our opening presentation, we believe that in the first year alone, this throws out $4.7 million of tax revenues to the City. If we were to be in a scenario where we 263 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 were obligated to stay there and the buy-back, as Bill Hankowsky testified earlier, cost $1.9 million, and the City guaranteed that it was keeping $4.7 million in tax revenues, we will actually have created a very significant incentive for people to not do a stadium. It would be a huge mathematical advantage at that point to maintaining the training-facility tax revenues for 10 years and incurring the $1.9 million buy-back. And I don't think that that's a wise position for us to put ourselves in, and I think it would be an unfair situation to ask us to create for ourselves.
Let me ask you a couple questions on the three items. Number one, as I took it down, you talked about the need to recruit free agents and, I guess, attract other players who may not be free agents, I guess, right out of the draft. And then you also talked about the tax challenges here in Philadelphia. With regard to the recruitment, I guess now might be the moment to publicly, I guess, commend you on -- what is it, John Runyon (ph.)? 264 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
A very large person, human being. When you say "keep the option open," I mean, if you're still playing at the Vet, you keep your option open to not play at the practice facility, the NovaCare facility here in Philadelphia. What would you do and what does it really get you? I mean, you get to play in a new practice facility in another county but still play in the same old Veterans Stadium, with $80 million in repairs? I mean, how does that help you?
Well, right now, when we recruit a player or we try to retain a player, we basically have three challenges. And I'm not trying to be negative; I'm just dealing with the realities of the situation. One is the stadium we play in; two is where we practice; and three are the taxes. You mentioned John Runyon. We were bidding against Tennessee. In Tennessee, there is no City tax and there is no state income tax. So we started out by having to offer him 7 percent more than Tennessee just for it to be the same deal. 265 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 So our belief is that if we have a new stadium --
Yes. We he ended up having to offer him percent more -- 7 just to 7 be even and 10 percent to convince him he should 8 leave where he was. 9 But the point is, it's a challenge and, 10 in fact, it's expensive when you're at a 11 $30 million contract, as that was, and you have to 12 offer 7 percent more just to be tied. That's over 13 $2 million, just on that one player's contract. 14 So our view is that if we have a new 15 stadium and we have a practice facility in the 16 City and the only challenge then left to overcome 17 is tax situation, that we've got enough ammunition in reciting to overcome it. Our fear is -- and we haven't made a final decision. I'm telling you, I think the practical outcome is that it's very unlikely we do this twice, but our fear is that where we have both a stadium problem still and a tax problem, and we still have two of three challenges we have now, that it could be extremely difficult to 266 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 recruit or even retain our own players who will be becoming free agents. And at that point, in weighing all the pros and cons, it's unlikely, but not impossible, to say, Look, we're just not going to be able to keep our players or recruit players if we don't build this thing someplace else. And at that point, when we're facing that decision, I think we need a way kind of the ramifications of the three points that I've made and decide at that point what we should do.
Well, okay. But I mean, at that point, you've solved two of three issues. You're now completely out of the City, so they'd only pay wage tax for the games that are actually played at Vets Stadium, you rent a new facility in some other county, but you're still at Vets Stadium.
Right. And I think even in the scenario where this was never a problem and we passed a stadium deal last fall, and this is, obviously very subjective, but we felt like if we eliminated two of those three problems, we had enough ammunition to succeed. So if the two we 267 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 eliminated are the tax problem and the practice facility but not the stadium, it's not as good as three out of three, but we believe we can -- as long as we've knocked out two of those three. In scenario where there's no new stadium and we're absolutely required to keep the training facility in the City, we still have two of those three problems as opposed to eliminating two of those three problems. And that would be a concern.
All right. On number two, you talked about the cost of operations in the City. And, again, is that -- are you talking about the actual operating and maintenance costs of the facility in that there is a large difference between the operating and maintenance costs of the facility in Philadelphia versus in another county, or is it kind of a larger macro-issue of all of the other taxes issues of having your corporate office here in Philadelphia and what we charge basically -- or what you pay as a business person to do business here versus somewhere else? Is that the issue?
It's both. We think that 268 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 the operation and maintenance of the facility would be somewhat higher, and I guess it's an open issue. But if there was a real-estate tax, it would be a use-and-occupancy tax and, obviously, be business-related taxes. And we do believe that there would be at this point an unquantifiable difference in the operating and maintenance cost of the facility itself.
Do you have a sense today of what the operating and maintenance costs would be for the facility here in Philadelphia? I'm assuming you must. I mean, you're under construction.
You mean if we just went forward with the building here, what would the operating and maintenance be?
I mean, we've created an estimate just off what other teams in the league's O and M tend to be, and we've got a range, but I will tell you, our best guess is somewhere in the $400,000 range. I mean, I think when we get into the actual equipment we use and quality of HVAC and stuff, we'll have it better, but that's kind 269 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 of a rough number we're using at the moment. And that does not include capital repairs; that's just the O and M.
And are you anticipating, under any scenario, that you're going to take care of capital costs at this particular facility?
No. I think we view that in the package of so-called things to be negotiated, if in fact the buy-back took place -- and I don't think that we've -- we have some preferences and some ideas, but I don't think we've eliminated anything from being something that is on the table that, therefore, we could be obligated to pay for.
Okay. The last scenario, the kind of financial incentive scenario, I mean, I think if -- maybe you've heard it more times than you care to and, you know, the proof will be when we actually have public hearings on the actual stadium deals. I mean, I heard what you said about the $4.7 million in taxes and that it's only going to cost us 1.9 on the buy-back over 30 years. 270 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 I mean, one, it ends up for us actually being a $57 million facility, not a $23 million buy-back over that time -- $1.9 million times 30 years. Plus what you may have left out of that equation is that we have to pay debt service on the $80 million going into Vets Stadium. I'm not sure what that number is, off the top of my head, but maybe a good financial person up at the table might be able to tell us what the debt service is on the $80 million. I mean, it's not just the 1.9; it's also the debt on the 80, the total of which may actually be more than 4.7. I don't necessarily know that any of us would look at this as any particular financial incentive not to do stadiums. I mean, again, I think you've heard it from everyone that we definitely want to put something together. We'd just like to see a deal. The number now seems to be $5.8 million in debt service on the $80 million, that's actually a loser for us.
'Cause 5.8 and 1.9, I think that gets you up in the $7 million range 271 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 for which -- I mean, even the government is not so stupid that we negotiate deals that we do something that gets us $4 million but costs us $7 million. I mean, even we don't do stuff like that.
I mean, I think -- first of all, I think you can make the case of how you kind of disconnect the parts of the deal, but if you want to connect all the parts of the deal, then I think you have to put the car rental tax back into the equation. And I think you would, unfortunately, even though we disagree dramatically with the Controller's numbers, have to put back the suite flip. And I think when you're done with that, that $5.8 million to not do a stadium deal would be compared to probably 10 to $12 million. I mean 5.8 versus 10 or $12 million. So you have a cost of 5.8 or maybe 10 or $12 million in revenues to not do a stadium deal.
Well, based on that particular provision, I can say to you here publicly that I have no interest whatsoever in the financial incentive as it relates to those particular numbers to not do a stadium deal -- a 272 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 deal, obviously, we have not yet seen. I mean, one day, all of the components will come in and we may have differences of opinion about the various aspects of a deal that come to us. But on that particular -- on this point, number three, I would just have no interest in getting into that kind of a discussion. Let me also ask 'cause you said it kind of fast and some people may not have heard it and you might want to explain it. You talked about the suite flip, and I don't think that term or that phrase has necessarily been used today. Would you care to explain what that is.
Well, I think earlier it was referenced that after the 2000 season, so in 2001 is what we reference to a flip and who keeps or controls the revenues from the suites -- I speak just from the Eagles' perspective -- that we currently control. And currently, we receive and retain 100 percent of those revenues and have 100 percent of the obligations to the expenses and ticket purchase and so on and so forth. In 2001, the City receives a 70 percent of -- and I think the difference of opinion is, 273 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 what is it that they receive 70 percent of.
Well, what are the revenues that are generated by the sky boxes?
You know, I don't know that off the top of my head. I think the gross revenues . . . I could be wrong on this, okay? But I'm going to tell you that I think the gross revenues last year were in the $6 million range.
Right, okay. So from the time they were built until 2001, the lease is that you get 100 percent of that revenue, and then I believe it's February '01, there's a, as you said earlier, a flip, and a split in the percentage -- 70 percent to the City, 30 percent to the team.
And just so I don't leave anybody with a false impression, you know, we think there's clear established precedent as well as very clear language that that 70 percent is of 274 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 a net. And to be honest with you, we think that the suite flip is worth nothing to the City. I mean, we literally believe the answer to that is zero, and we believe that the most liberal interpretation is just a bit over $1 million.
Okay. There's been a lot of discussion -- I mean, part of what is obviously driving a great amount of today's discussion, the need to keep the Eagles practice facility and corporate offices in Philadelphia is -- the big issue has been the wage tax. There are other taxes, naturally, that the team pays -- that the organization pays. Now, what is the actual figure on the wage tax? We've -- we've -- the question has been asked on a couple of occasions, and we usually get a range, and we've never been able to get a clear answer as to whether or not those numbers are being given by our Revenue Department, who, I think, maybe can't give us an exact figure, or they're coming from the team, which, naturally, would know because you actually pay the tab.
You mean as in, what have we been paying? 275 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
I would not know that. I mean, I'll tell you what we -- how we calculated these numbers and if that gives you any comfort with the validity of them. Right now, we have an average of the number of duty days that the players are paying their City wage tax on. And, of course, we know what our payroll is -- not just of players, but of everybody. And we have used that number of duty days to calculate it. So I can't see why the numbers -- and I don't know if PIDC's numbers came from us or not, I don't think they did, but if they did, I can't see why there would be any variation from what the actual payments have been. I mean, the payroll -- the cap has been lower so it, especially in the last year, has increased quite a bit. But we've just taken the duty days that we're actually withholding from our players and projected that onto what we expect the salary cap and the rest of the organization's salary to be to calculate the City wage tax number.
Okay. How are the 276 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 players paid? Do they get a weekly check, every two week, a month, a quarter, half a year, a year?
Our players get paid -- during the season they get one-seventeenth of their salary each of the seventeen weeks. In addition to their salaries, they get paid small amounts of money for off-season workout programs while they're in town. But they would, between the beginning of September and early December, with weeks of season, each week they receive -- 13 I'm sorry, every other week, they get paid. And 14 it represents really two-seventeenths of their 15 earnings. 16 So if you've made -- I don't mean to 17 blow anybody away with these numbers, but if you made $1.7 million, you'd get a $200,000 check every two weeks during the season.
Mr. Banner, let me assure you that if I made $1.7 million, I would not be sitting here; I'd probably be sitting where you are sitting, and I can assure you that that's not the case.
Well, if you were sitting 277 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 here, I promise you that you wouldn't be making 1.7 either. (Laughter.)
All right, that's fair. All right, okay, that's fair. For the average person who kind of looks at all of this, on the day of the ground-breaking, and we talked about Mr. Runyon and don't mean to make any kind of public example of him, but it's the most recent example. On the same day of the ground-breaking, there was much discussion about the practice facility and moving forward and everybody went back to work, which I'm certainly please about, it was essentially the same day that this process was moving forward, and the team is essentially saying, If you don't do a stadium, we need you to buy our practice facility, and we cannot finance such an entity without the revenues that are generated by a new stadium. And on that same day, the player shows up, and I think everybody knows it's a $30-some million, a 6-year contract, and a $9.5 million signing bonus. And so for the average person, you look at that and -- I mean, 278 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 the numbers by themselves are astounding but -- I mean, they kind of match up in some way. It's million, 30 million, a $30 million facility, 5 30 million for a player. 6 How do you do that for the individual 7 but you can't finance a piece of real estate? 8
Well, we'll finance the 9 real estate, you just pay the player. 10
Well, no, maybe 11 I'll do his food bill or something. 12
The salary cap in the NFL 13 is a percentage of gross revenues, and it not only 14 has a maximum, it has a minimum. So we are 15 literally required to spend a certain amount of 16 money on players. And we just consider it a cost 17 of doing business. 18 It is in the context of what we need to 19 spend. And I'm not even dealing with to compete 20 for the moment, I'm just dealing with by league 21 rules what we need to spend on players, plus the 22 operation of our business, to be able to honestly 23 tell you in a scenario in which there is no new stadium and there's a practice facility, that, you know, we would be, to say the least, in tight 279 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 quarters to try to maintain our ability to do those kind of deals just to meet the minimum. And then, of course, our goal really is to not just be meeting the minimum but to be actually competing with the better teams in the league. But I fully appreciate your point and the perception that is created by that, and it was not planned to go that way.
I understand. But, I mean, what's the answer? Is it just a different source of funding?
And one can only go to one thing and can't go to something else?
Yeah, because of the reality that we have a minimum amount of dollars that we can spend on players, as ruled by our league, and a greater amount we need to compete but a minimum we have to spend, we can't very well take, you know, money out of that number and say, Well, we're going to use this for debt service instead and ask the League and the union or whoever to give us a waiver on the minimum requirements we have on players' salaries. 280 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 And the reality is, that minimum we would not be competitive in the League, and that would then have effects on all our other revenue streams.
Probably for the moment, one of the last questions. There was a hearing back in June of last year about the practice facility. It was a zoning bill that allowed all of this to go forward. And there were questions that were asked in that hearing, but then there was a briefing in the Mayor's Office not too long ago. And is Mr. Hankowsky still here?
Yes, he's right behind you. (Mr. Hankowsky returns to witness table.)
Councilman Nutter, once you've finished your question of Mr. Hankowsky, can we move on.
No question, yes. 281 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Thank you, thank you, Madam President.
You haven't asked a question yet. As I was coming over, I didn't --
No, I'm only kidding. (Councilman Rizzo addresses Councilman Nutter off mike.)
Yes, yes. Councilman Rizzo wants a yield on an earlier question.
Mr. Banner, before we move on to a different subject, I'd like to go back hopefully to this fine training facility. I'd like to know about the duty days. When do the players come back in the summer to begin what we call summer camp?
It varies, depending upon 282 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 the beginning of our season. It's usually at the very end of July, somewhere around the 25th of July is when they come to training camp.
Well, since you have this beautiful -- since you will have, hopefully, this beautiful new facility, isn't training camp normally outside of the City?
Lehigh University. Would you consider or could you tell us why, with this beautiful training facility, you'd want to go to Lehigh University to train?
Well, let me just give you two. From our perspective, there are certain needs. For example, we need living quarters and dormitory space immediately adjacent to it. But I should also make you aware that a fundamental part of the Packer Park Association deal that we made was to, in fact, promise that we would not have this training camp at this facility. It brings in a tremendous number of people and cars and congestion, and it was a request of the community group that we not put it there, and it was one 283 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 that we agreed to. We would have preferred to retain the option of doing that, not necessarily the obligation, but the option of doing that. But in light of the community's feelings, we felt it was a reasonable request that we agreed to not put it there.
So if it's something that if the community accepted training camp at that facility, it's something that you would do?
Well, as I said, there's still some other logistical problems. I mean, the players literally now stay in dormitories, which have meeting halls in them and are adjacent to the areas in which we practice and have meetings early in the morning, late at night, treatment centers, weight rooms, etc. So there would still be some logistical challenges from our perspective to be able to practice there.
You're not going to have weight rooms at the new training facility?
We would, but we do not have, for example, a dormitory that would be in proximity. 284 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Okay, that's fair enough. The community in that -- if that agreement was already made with the community, then that's appropriate. Thank you, Councilman Nutter.
Thank you. Mr. Hankowsky, a couple weeks ago, we were in the Mayor's office for one of a number of briefings, and I had asked you a question about the issue of property taxes related to the practice facility. My recollection was that you said because PAID will own the land or the area, that there was no payment of property taxes at this particular transaction. Do you remember that meeting or that discussion?
To be honest, I sort of vaguely do. 285 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Yeah, right. Is that -- do you want me to confirm that that's a right answer, or is there a follow-up question? I mean, is --
I just want to know, do you recall that you said that?
Well, the reason I'm saying that is, the answer to what happens on real-estate taxes is a function of which -- conceivably is a function of what scenario you're under. So today as, this facility is being constructed, as we speak, it is being constructed on federal property, pursuant to a lease from the Navy to PAID and PAID to the Eagles. I'm not aware, and I'm sure somebody from Law Department or Revenue will jump up here if I get this wrong, but I believe that the facts are that if you build something on federal property, the City can't tax it.
That's scenario one, 286 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 that's the scenario we're in today. Another scenario is, there's a practice facility, Eagles own it, we never buy it back, it's just sort of sitting there. In other words, PAID has ground-leased the piece of ground to a private party who constructs their own facility. I believe in that scenario, the facility is taxable. Scenario three is --
It's a scenario that's not in front of us, I just want to be clear.
It's not in front of us because either -- if I could do the other two, it might be helpful. The other two are, we build a new stadium, the practice facility becomes a part of that overall transaction, deals are paid for, and we haven't bought it back. And we could view that facility pursuant to the payment-in-lieu-of-tax statute that was passed by Harrisburg, and it could be eligible for a pilot, as an ancillary 287 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 facility to a sports and recreational facility, if I remember the verbiage in the statute. So it could be eligible for a pilot, that scenario.
The alternative scenario is the one that is a part of the subject of the legislation before us, which is a scenario whereby it would be leased to the City, leased back to PAID, PAID leases it to the Phillies -- excuse me, the Eagles. And in that scenario, I think it would -- and again, I'm not rendering a legal opinion, I'm talking about how I understand the business implications. It would be close to what we have today, which is that the City owns practice facilities -- the bubble and a couple of field -- that are provided to the team, we don't pay real-estate taxes on 'em. I don't know if there's something computed (unintelligible), so it's a part of the Vet lease. And conceivably, you could -- I'll use the terminology "negotiate," agree that there's a pilot for the team's occupancy of it, but I'm not sure it is liable for real-estate taxes, you know. 288 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
And I may not have amplified that answer in the briefing you're referencing.
That's okay. The reason I ask the question is because when I went back and took a look at the hearing from Wednesday, June 16, 1999, the zoning bill, the Council President was chairing the hearing at the time said this, and she was talking to another member. "Councilman, while we're talking about revenues, will we not also be generating revenues from this facility with property taxes?" Your response was at the time was: "Yes. This facility, because it will be used by a for-profit, it will be a ratable, which current practice facilities aren't because we, the City, have them inside the Vet, the locker room, and all of that. So there are some new revenue, plus keeping the current revenues that we will get from the practice activity in the City. That's accurate."
That's my -- I hope I'm 289 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 not being confusing, but that's the scenario where -- which was, in part -- again, if you think of June '99, the only thing on the table at the time was, they were going to build a practice facility. Somewhere out on the horizon was the contemplated discussion of stadiums. We didn't know where we would end with that. So if in the circumstance of that being a stand-alone transaction, with no other consideration, then it would be a ratable. Once you add the stadium and say, Okay, now let's look at this in the context of the 1989 statute, I think, which is the one that set up to pilot, it could be eligible under the pilot. And in the subsequent discussions, we were looking at a pilot what would echoed what would have been real-estate taxes.
Well, in looking at the statute, which I assume you're talking about Section 4706.1 and .2, there is no mention in the definition of a practice facility.
No, I think it talks generally about ancillary facilities, accessory uses. 290 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Including accessory uses incident thereto, which shall include, but not be limited to, dining, drinking, and parking facilities. So --
I'm just trying to understand how the practice facility fits in with that definition.
And I clearly don't understand how NovaCare would fit in the definition of that statute.
There might have to be an apportionment. I don't disagree on the NovaCare. Like we do -- I think we do an apportionment of the McDonald's in the first floor 291 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 of the Children's Hospital because we have a for-profit thing inside of a nonprofit. And we -- I think the BRT figures it out and says, Okay, there's about this much real-estate taxes because you have that facility.
But part of your testimony is, you believe that the practice facility clearly fits within the statute?
I believe it could fit in within the statute, as part of a overall stadium transaction.
I'm not rendering a legal opinion; I'm just talking about how you could look at it.
No, I understand. Now, the practice facility will not be open to the public, right?
Will not be open to the public. Nor is the one we have today that pays no 22 taxes, either.
You're 292 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 welcome. The Chair recognizes Councilman Clarke.
Thank you, Madam Chair. Good afternoon, gentlemen and lady. Mr. Montgomery, here we go again.
You had stated earlier in your testimony that you were currently in design for your stadium. I just want to get something on the record.
What we have done, Councilman, is do the part of the design. It's called "the programmatic phase," which is a situation where our individual disciplines -- say, the ticket office, baseball operations etc. -- meet with our architects to discuss what potentially a facility would look like in their area. We're limited as to how far we can go on that because it would vary, depending upon site.
Upon the site? In terms of your more recent 293 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 discussions, do you have a sense of where you probably will ultimately end up? Or are you not that far along?
We have really not had, with this administration, discussions on site.
Our preference, as was stated to then-Mayor-elect Street, and continues to be, would be to capitalize on what we think was some of the momentum created last fall in identifying an opportunity at the sports complex. The reasons for that are that the more we looked at our fans, their indication was that there's great equity built up in that site. In fact, I think, frankly, that we have four sports teams, professional sports teams all playing within, you know, a mile or so of each other or probably a half a mile, and clearly, the access associated with that site.
Have you had discussions with the Mayor's Transition Team?
I testified -- I guess 294 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 maybe "testified" is the wrong word. I appeared, along with Joe Banner, one morning, indicating -- sort of going back over the ground of our studies as far as sites were concerned, that's correct.
And at that time, did you express your preference at this time to the sports complex?
The same thing that I just stated, that's correct, Councilman.
Okay, all right, I just wanted to get that on the record. Thank you. Mr. Banner, earlier, in Miss Franklin-Suber's testimony with respect to the Vets Stadium upgrades, there was a statement made that proposed the categories of repairs to Vets Stadium would extend its useful life to another 10 years, and that was referencing to the $80 million. In your testimony, it says if more than 80 million is needed, the teams have agreed to cap their claims at that number for the next several seasons. What's the difference between Miss Franklin-Suber's ten years and your several seasons? Is that just that several seasons means 295 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 ten years or does it mean less than ten years? Would you clarify that for me.?
And I said "a few years," and that's what I meant. And, in fact, what the deal specifically says is that it would cover through January 1st, I think, of 2003 and into the fiscal year of 2004, a period of time during which we would agree to not kind of press the issue on any capital repairs that would be needed. So from now through that period of time.
Could I ask the Chair to ask him to please speak into the microphone.
I was interested in that question and answer and couldn't get it.
I appreciate that. No, our view, and what the deal specifically says, is that this 80 million covers 296 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 a period of time and it is not the ten years. It's through January of 2003, leaving there being no need for any authorizations for any possible capital repairs to the Fiscal Year 2004. And that's the timeframe that this is intended. Now, it may cover more than that, but what we're saying is that there's not a commitment from the teams that if further capital repairs are needed or safety issues come up -- at that point, the stadium's almost 35 years old -- that the City is not relieved of the obligations it has in the lease after that period of time.
She's right back there. (Ms. Franklin-Suber returns to the witness table.)
I was referencing your earlier testimony that talked about the 297 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 $80 million in the upgrades of the Vets Stadium, and it said the proposed categories of repairs to the Vets Stadium would extend the useful life for another ten years. And then in Mr. Banner's testimony, his reference to the $80 million, he's now saying, only account for Fiscal Year 2004. And I was trying to get a sense for what the difference, you know, not only in years, 'cause I can kind of see what that is, but is there some disagreement between the Administration and the Eagles as it relates to the $80 million?
Yes. I mean, as I started my testimony earlier today, the City and the teams have a different view as to the scope of the repairs and rehabilitation and so forth that is required of Vets Stadium. I stated that publicly. But what you have here in the proposed agreement is a compromise. I mean, it was an attempt on the part of the City and the teams to come together in good faith, and instead of continuing to argue about it and potentially end up in litigation, we reached a compromise and said, These are the categories of repairs that we 298 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 can agree need to be made, and the City is willing to invest up to $80 million. The Eagles took the position specifically, and I think it was in Joe Banner's testimony and we're aware of that position, that it could be more than $100 million.
But the compromise means that we don't have to address that issue. It means we've agreed to categories, we're going to go through a process where the scope of work becomes more detailed, but it's by agreement and it's by cooperation, as compared to acrimony. So the 80 million is a cap. And it may very well be that as we go through the process and we flesh out the details of the scope of work, that it could be less than $80 million.
Okay. When you made reference to your earlier testimony, at that time, I wasn't aware of Mr. Banner's testimony and I wasn't aware that there was that wide a gap, as it relates to the fiscal years, what you're talking, 2000 -- I mean, sorry, 2011 and he's saying 2004. And that's a substantial gap. 299 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 And I'm just wondering in all reality, would we at some point come to a compromise as it relates to what we think should be done with the Vet? I'm just a little concerned about that gap. I didn't realize it was that broad.
Councilman Clarke, can I take a shot at this? Because I think I can get this --
-- having listened to this whole string. I'm David L. Cohen, I'm counsel to the Phillies. I think that the difference of opinion between the Phillies and the City the Chief of Staff has just referred to totally accurately. And that's what I think what both Mr. Montgomery and Mr. Banner meant when they said that the teams have given up something in a significant way in the up to $80 million deal that has been brought to City Council. I think your question has focused on some timing issues. That is the notion that the Phillies and Eagles have said that this up to $80 million is to be expended at Fiscal Years '01 300 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 and '02. And Mr. Banner's statement that under the amended lease that's in front of Council, that the teams can't ask for anything more until January of '03, to be payable starting in Fiscal Year '04. And the Chief of Staff's testimony which seemed to imply that the $80 million was going to take us till 2010 or 2011, not just to 2004. I think the answer to that is that Mr. Banner has accurately characterized the lease terms in the sense that the teams do have the right and would expect, and I believe that the City administration believes and the Council should expect that there would be additional capital repairs, starting in Fiscal Year '04 through the end of the life of the stadium. The Chief of Staff's testimony was an accurate characterization of the types of repairs that are going to be made at the stadium. That is, the type of repairs to extend the useful life until 2010 or 2011, the end of the lease. For example -- I'll give you a couple of examples. A comprehensive waterproofing of the stadium -- 301 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
But before you -- you said the types of repairs, but you attached a dollar-figure to it. That's why I'm a little --
And included in that, if you look at Exhibit A, would be, for example, waterproofing, which would have an eight- or nine-year warranty associated with it. So it is a repair that would extend the useful life of the stadium till 2010 or 2011. Replacement of sewage pumps would extend the life of the stadium to 2010 or 2011. So they are the kinds of repairs that would extend the life of the stadium till 2010 or 2011, but that's not to say that there wouldn't be other repairs that might be necessary in 2004, 2005, 2006 beyond the $80 million that was being expended in 2001 and 2002.
So would I be right in assuming that the $80 million in Miss Franklin-Suber's testimony speak to the big-ticket items, and hopefully, we wouldn't be in a position where in 2004, we're looking at an additional 80 or $100 million. When you say "extended life" traditionally when you do these capital repairs, 302 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 you do things that are of necessity, the major tickets -- the heating system, you know, those things like that.
I think you could you say that the things expended in 2001 and 2002, you would not have to return to them in 2004 and 2005. But I don't think that anybody knows what the capital needs in what will then be a 34-, 35-, 36-year-old multipurpose stadium would be in terms of the cost of them. There may be other significant capital improvements that need to be made in the later years of the lease term that are not included in Exhibit A that's attached to the lease amendment in front of you.
So what does "useful life" mean? I guess that's the question I'm asking. "Useful life," that term, what does that mean?
I think in this context, useful life would mean the ability of the system -- of whatever the system is being replaced. A system -- when you replace a system or make a repair, it has a useful life. That is the number of years that it is expected to last. 303 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
So you're only talking about the useful life of the system that you put in there, not the useful life of the Vet.
It says "its useful life," okay. I think that's a tricky way of saying that.
All right, okay. I think I'm in the ballpark. I think all the testimony is roughly in the ballpark, but I think what I'm saying is basically accurate.
All right. That statement is misleading. I mean, we're talking about the Vet. I mean, it talks about it's useful life.
In referencing the Vet, one would think that we're talking about the Vet and the useful life of the Vet. 304 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
I don't -- I think we may be splitting hairs at this point, but I think the type of --
That's right. The types of repairs being made with the $80 million are the types of repairs necessary to extend the useful life of the Vet to 2010 or 2011. They may not be all of the repairs that have to made over the rest of the life of the stadium for the useful life of the Vet to be extended to that period of time.
All right. I guess, you know, Miss Franklin-Suber and any references to that, it would be helpful to me if there was a little more clarity in the definition of the useful life and the useful life of the systems as opposed to the useful life of the Vet. That's all. All right, thank you. Thank you, Madam Chair. I've got a better sense of what they mean now.
You're 305 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 welcome. Is Councilman Mariano in the room?
Mr. Banner, I was going -- there's two questions that I wanted to ask you. I'm not trying to be facetious here. I bet you thought you had a deal when Rendell was mayor, huh? Did you? When you went home for Christmas, did you think this deal is done, I could see it happening?
When you had the ground-breaking ceremony the other day, what was there, six or eight Councilpeople there?
And that would be every indication that you're within three of getting at least a practice since they show -- I mean, I didn't show up to see the new free agent 'cause I didn't know he was going to be there. 306 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 And when I sit on the stage, he was still taller than me and Councilman DiCicco together.
I think so too. The question I want to ask you, you know, Philadelphia Eagles is a business, correct?
I mean, you have a fiduciary responsibility. Is there shareholders in the Eagles?
Two limited partners. Your responsibility to those limited partners is to get the best deal you can, and you're doing that by dealing with the one main force in City government. I mean, everyone around here has egos, and we're Councilpeople, and that and 50 cents gets you a cup of coffee at the stop-and-go in my neighborhood. But you deal with the executive branch basically?
Right. And understand, from our business's perspective, although we understand there are entities within the government, we view the City government as one thing with parts.
Right. And I mean, I don't want to speak for you and you can correct me if you're wrong, but I would think you don't want to disrespect the legislative branch but it's easier to deal with one Indian, one chief than little medieval Indian chiefs basically. 15
We not only respect you, we understand that nothing can happen without having both something that the Mayor is comfortable and his staff and City Council is comfortable with.
You may have noticed that very many of these members' last 308 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 names end in a vowel. Therefore, we are Italian, and respect's very big with us. So don't think that, you know, it's something we're just doing to you and Mr. Montgomery been getting off pretty easy 'cause, frankly, I really don't have any idea what the Phillies are doing. I personally think the Eagles -- and by the way, the thought that you may want me to be a field goal kicker is not true so I have no angle here. But I think you guys have been good corporate citizens. And this guy sitting here told me one time and he called me, David L. Cohen. I was in Council for about three weeks, and he said, Rick, there's something going on in your district that you need to know about. And some people are punishing a business, and I won't mention their name 'cause it's not important or germane to the conversation. He said, These people are good corporate citizens. He said, You will learn in your short time or your long time, and I hope you're here for a long time, that people that are good corporate citizens deserve sort of to be rewarded. 309 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Now I don't want to give you the whole bank. And it's obvious what I'm doing. These are my union brothers sitting up here, the guys standing out in the hallway. I would like if you built ten stadiums, but I know that's not something we can do. I personally -- this is my personal opinion. I think you have done nothing wrong. You may have been confused by signals that other administrations and current administrations are sending, and actually who's the boss. It's like having seventeen 14-year-olds in a room and they're all trying to side on who's -- I'm trying to say this not vulgarly, I know what I want to say, but I'm not going to say it -- who's the toughest person in the room. " And that distresses me and it distresses these people. Tommy's not sitting up there because he's wants to sit here and hear me oratate (sic) all day 'cause I know him, right, Tom? You're here because you want to see the Eagles have a 10-and-6 season next year, correct? If you could, right? I mean, that would be nice. 310 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 But we're a first-class city. I mean, we go to conventions. I went to Chicago, to the Democratic Convention. A. and there'll be a convention. You know, I want to brag about the Phillies and the Eagles. You know, I love when Thacher Longstreth tells me stories about how good the Phillies were and the Eagles were. I remember the '80s, and I understand all this. And, again, I want Tommy to work. I don't want him sitting around up there in Lawncrest 'cause then he gets in trouble. When he's working, it's good, and when they're working, they pay taxes. When them football players are working, they're going to pay taxes -- they pat a lot more taxes than Tommy pays up there in Lawncrest, and they should. Do I wish they would move to Lawncrest? Sure, don't you, Tom? Don't you wish Donovan McNab lived in Lawncrest? You got a house for him, $35,000, correct? That's it, and that's what we're trying to do here. I can't speak for any of my other colleagues, but I will tell you, I will bet that the majority of City Council, and it only takes 311 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 nine votes to get something through Council, regardless of the egos and people that don't like it, and signs and threats and -- believe me, I understand other Councilmen's agendas, especially District Councilpeople. The Council President herself, she has to be concerned about, she's a District Councilperson. She's got to be concerned about where the stadiums are going. But the Eagles have never changed. When I met Jeffrey Lurie four years ago, the story was the same. When I met Todd Bishop and the people from LoJack, the story was the same. I just don't understand. Councilman Nutter spoke about it before.
He said, you know, we talked about parity and we couldn't split it up. I went out on a limb in December and said, Let's do the stadium for the Eagles, they know where they want to be. You know, it may not be that simple. I feel for you. I mean, there's no 22 angle here. To come down here and sit through this dental surgery without anesthesia, you should get a medal for this, but I understand -- what did you tell Nutter you were getting, $17 million a 312 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 year for doing this? Or something like that, right?
But that's where we're at here. We're going to be here all night 'cause certain people here are going to want to take this process out til it annoys us. But I'm going to tell you, I'm going to stay here until the cows come home if we have to, 'cause we're going to have to find out today, today that we could build a stadium for the Eagles and the Phillies. Hopefully the Phillies, through David Cohen's help, will come up with some sites and we'll get that, but that's another thing. We're only here today, like Stephanie said, talking about a practice facility. But I'll tell you, if I owned the Philadelphia Eagles and I saw six City Councilpeople standing there with hard hats and silver shovels, I would think that's a really good sign that this practice facility is on its way. I don't know how much more you people can take, I really don't. I mean, there's always backroom 313 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 negotiations and there's things that's going to happen but, you know, I commend you. And that's really the only thing I wanted to say. Just hang in there 'cause this will get through. And you know, we could hang around as long as anybody else can. Good luck, Mr. Banner.
Thank you, Madam Chair. Mr. Banner and David, we will stipulate that you guys are good corporate citizens.
But what we're trying to ascertain here in essence is, what is going to be the liability or the risk that the taxpayers are assuming in terms of any agreement? Because we have to establish a record. And, David, you were -- David Cohen was very clear, as usual, in terms of really defining 314 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 what we mean by $80 million and what that covers in terms of the current agreement that we have in front of us. So I thank David for the explanation to Councilman Clarke, because I think he put it into great perspective and a clear one. But what we have here, and Mr. Banner, you stated in essence that you have a difficult situation, let's say, because the issue is, we have a problem with these datelines that we're putting in front of us in which to achieve a stadium agreement.
Excuse me, Councilman Ortiz, we have a point of order on the floor.
We sit here all day and we talk about datelines. I'm sorry, if you would yield for me. 315 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 When's that game, that first game you want to be in that new stadium? So we can get this over with, so everybody doesn't ask the same question. And who's it against, by the way? Is it in August, is it an exhibition game in 2003? Who are we playing? Do you know who's going to be the starting quarterback, Mr. Banner? Can you tell me the defensive backs? 'Cause I want to know. Will Troy Vincent be playing? Come on, Councilman, come on, you're wasting all our time. It's the same question your allies asked for the last six hours here, you know?
But, Councilman, you know that answer, you know that answer. So why ask the question that you know an answer for? You're insulting our intelligence. You're insulting this executive from an NFL team's intelligence, asking the same questions, okay? 316 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Give us a break, will you? (Applause.)
Point of information, Councilman. I want to know when that game is.
When's that game? You might want to go with me. When's that game? In August?
Do we know the starting lineup for the Eagles? It's been dealt with. 317 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
I'm not done asking, Councilman. I got a couple of other points I need to know. I need to know everything. I need to know who the starting lineup is. And you know?
Thank you, Councilman. Maybe I'll catch up with you some day. (Applause.)
I need the Phillies too. Who will the Phillies be playing in August 2003? (Applause.)
How can you come here and not -- you know, I mean, it's amazing. We're going to ask these same questions and keep 318 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 asking them. And you know what? Every minute we waste, construction costs goes up. The guy that owns this team is starting to look somewhere else. Now you may be willing, Councilman Ortiz, to play chicken with the Philadelphia Eagles. I'm not, I'm not. Because Councilman DiCicco said they could be the Delaware Devils some day.
Please direct your comments to the Chair, Councilman.
Can I question Councilman Ortiz, Madam Chairwoman? Your expertise is professional football. 319 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Are you willing to be interrogated by Councilman Mariano?
How many downs or professional football did you play? I didn't play any, okay? How many professional football teams did you own? I never owned any. I don't even own a car that the City don't let me have, okay? Come on now. You guys do this and do this and do this. And you know what, Councilman, it gets real old for those of us that want to come here every day and get something accomplished. These people are here because they want to be here for their work. (President Verna taps gavel.)
Councilman, are 320 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 you asking questions of the --
Yeah, I'm interrogating Councilman Ortiz who asks the same stupid questions that everybody else has been asking. (Applause.)
Like he's an expert on owning an NFL football team. I wanted to know, since he never played a down in the NFL, I never did. Since he doesn't own a professional sports franchise, how can he sit here and ask Mr. Banner questions, the same questions. (Audience members address Councilman Mariano.)
You're right, you're right, you're right. That's what this is about.
Oh, go 321 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 ahead.
Councilman Ortiz never answered my question about his expertise in owning a professional sports franchise.
I don't think we interrogate each other. If you have a point of order and you want to ask a question of the people at the witness table.
Yeah, I have a point. My point is, they're wasting our time, Council President. They're wasting the time of these people. These guys are getting paid, I'm getting paid, they're not.
No, they need to be here, this is their livelihood. We need to build these stadiums. (Applause.)
While everybody's jockeying around, while everybody's playing 322 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 around.
You know, it's amazing. All of the people. (President Verna taps gavel.)
Excuse me, Council President. You can expel me from the building, please do. But what happens is, all the people that are for everybody's rights play games with the working people, the people that want to build the stadium. Listen, see this guy over here, Huey, my new legislative guy? Huey did studies on all of this, and we got every professional sports stadium that was built in the last ten years. You know what the norm is? Eighty-five percent public contribution. You know what these guys are giving? Sixty-six percent. One stadium was done without any public contribution. And that's for the record, down somewhere in South Carolina, where they have no unions, no city wage taxes, and no state taxes. 323 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 But if that's how we want to live, Councilman, move to South Carolina and root for the Panthers or something. Come on, you're wasting our -- you're -- you're -- that's what they wonder. They wonder here why we do these things 'cause we're going to waste this guy's time. It's a waste of time. Thank you, Madam President. (Applause.)
Councilman Ortiz, do you still want to be recognized?
Oh, yes, yes. I have more stupid questions to ask. Mr. Banner, the NFL has a TV contract, and it's shared among the teams. What is the size of the current contract that it has with the different TV stations?
Point of information. Didn't somebody else ask that question? Can't the stenographer read that back?
Mr. Mariano, 324 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 please.
It's "Councilman Mariano," Madam President. Thank you.
Mr. Banner, that question has not been asked. But go ahead, could you tell me --
It has not been asked, Mr. Banner. (President Verna taps gavel.)
Okay. Mr. Banner, the current contract with the TV stations -- CBS, ABC, Fox, is it ESPN or TNT? One of those.
ESPN. How much money does that give to the NFL and how much money does each team in the NFL receive from that contract? 325 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
I do not know the number. I mean, we get at this point one-thirty-first of whatever that amount is, and we have a labor agreement where 64 percent of that money has to go to players' salaries.
So you don't know, you don't have an idea how much money you get from the TV contract? When does this contract expire?
It has, I believe, four seasons remaining on it, plus a three-year option.
I mean, I'm sure there's some escalators in there. I don't really know the details of the deal.
Because we should be able to have at least some idea of the financial stability and capacity of the Eagles since taxpayers' monies are going to be spent in part in giving the Eagles, one, a practice facility, and building the stadium. 326 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Well, you know, I would characterize what you said, you know, differently. If there's a stadium deal, then all we've asked the public to contribute to the practice facility is the cost necessary for there to be a site on which we could build, and we've done everything else.
I know it's not happened, but the stadium deal we proposed was the same scenario. We asked to be provided a site ready to build a stadium and an up-front -- asked for nothing more than that, and then asked for a contribution of only the new taxes we created to help with the ongoing operation and maintenance expenses.
And in this agreement that we have, to the questioning of Councilman Nutter, you expressed that you wanted at least the flexibility that if the deal was not consummated by November the 3rd and we had to build this facility, you still would not commit yourself, even though part of the reason for building the facility within Philadelphia is 327 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 because of the wage tax that we would be receiving, that you would not commit yourself to staying in that facility, practice facility until the year 2010, 2011. Meanwhile, the City would not have any flexibility, according to the agreement on whether we have to buy back the stadium or not.
And plus put the $80 million amount of time that David Cohen put forward.
I think you have to refer back to the Chief of Staff's testimony. There was a series of things that the City wanted to achieve in the deal and there was a series of things that the team wanted to achieve in order to agree to the deal. And I think you have to put it into some context. We made this deal with NovaCare to build this complex now a little over 20 months ago.
And we wanted to have the same freedom that every business we're aware of 328 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 have, which was to review all of the sites that were available to us to build this facility at the best location and considering to try to put the other best economic deal we could.
But that's not the case, because the City came to us and said, If you do that, we will not talk to you about a stadium deal. And we did not say that site would be in the City or outside the City, we just said that we wanted the flexibility to consider all of our options, including what was the best economic scenario for us. The City said, If you do that, don't even come and talk to us about stadiums, it's out of the question. So at the City's request, we have sat and waited a very long time at this point to build this facility, to try to retain the flexibility of accommodating what we would call "demand."
But, excuse me, you have to understand that the City is two different bodies. You were speaking with one part of the 329 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 City in terms of the executive that told you that. Nothing was ever presented to this City Council for us to consider.
Yeah, that's true, but with all due respect, I met with many City Councilpeople, some who reached out to me and some who I reached out to, who were very insistent upon the importance of the practice facility being built in the City, and in some instances, reiterated the Administration's position at the time, that if we did not do that, it was not reasonable for us to then come and ask the City government to participate in the stadium project. And by the way, we don't have a problem with that. We think that in the context of doing the stadium, that is a perfectly reasonable demand to be put on us. And we have, as a result, waited to build this project. All we believe is, there is some point at which, based on that demand, we've kind of waited long enough, and we have to be allowed to go forward on some basis. Either go ahead, build it wherever you want and we'll negotiate a stadium deal in good faith.
Mm-hmm. 330 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
Or keep it in the City. And if we still don't get a deal done, we'll make sure you're not hurt by trying to accommodate us in that manner. That was just the thinking behind the deal. I'm not here to tell you it's right. That feeling was that after having waited that long, it was reasonable to not put us in a position where if we further accommodated the request by actually building the building and we don't get a stadium, we should not be hurt by that.
But the City's flexibility is curtailed because we are -- this legislation commits us to begin building the facility and it commits us to, one, $80 million in three years' time, plus buying back the facility if we don't meet this arbitrary deadline. So in essence, you're asking the taxpayers of this city to take some risk that you're not willing to take at the same time.
Look, I think that the -- and it was hard earlier to hear this and not respond. Somebody testified and made reference to the fact that there needed to be some 331 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 give-or-take. Now, the City came to us with this request twenty months ago, and we said yes, without asking for anything. Then they came to us six months later, and we said yes, without asking for anything. And all the way to last June, which was about fourteen months into this process, we said, Fine, we'll wait, we'll make that sacrifice, we'll do our give, and we're not asking you for anything. At that point, we said, Look, there has to be some point at which we need to know we're going to be able to go forward with this project. So at that point, we worked out a deal where we were going to be able to begin the project with the $7 million stimulus money, and by another six months, to try to get a stadium deal done. Now, that period of time has passed and we're now up to twenty months, almost all of which we proceeded and followed the requests of the City, without asking for anything in return, kept all of these revenues within the City, and are still prepared to make every possible effort we can to continue to do that. 332 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 I think it's only fair, though, at some point we need to say we just can't -- and I'm saying "we," I'm kind of as if I was in City Council, we just can't just indefinitely ask the Eagles to not build this, without having any kind of a sense as to when are we actually going to commit to them that it be done by this date.
And we're not saying that you should, but we are putting forward a whole series of packages that says that a package, a stadium package has to be before this Council by such-and-such period of time. We're not saying that this is not going to be done, we're not saying that we're not going to build a stadium or the practice facility. But as a legislative body and a City Council, we have to be very careful because our -- we don't have stockholders, we have the City taxpayers. The fiduciary agents that we represent are the people of the City of Philadelphia. And if people are saying to us, You're committing to a series of monies and the teams says, If you're not there by a certain point, we reserve the right to move, then we're saying, 333 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 we're saying, If we don't get to that point, we build this facility, we own it, we rent it back to you for a dollar, and you still say that you want more flexibility to move somewhere else.
If there were no stadium deals done today, and we knew there were not going to be any stadium deals done, we would have the right to locate the practice facility anywhere we wanted. And what we believe is a return for other concessions we've made in the deal, it's reasonable for us to continue to have that right only in the event that there were no stadium deals done. And in return for that, we're proceeding with the project now, we've kept these revenues in the City for years, and we believe we've made other concessions. We also believe that you can say to people practically that we're investing $1.9 million in the worst-case scenario. And there is a -- I think you could say reasonably, reasonably a very small risk that we could invest that $1.9 million and not have anything to show for it. On the other hand, it's extremely 334 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 likely that we've invested that $1.9 million and we've retained these tax revenues, which are far greater than the investment that we've made. And we have preserved the rationale for the City to invest in stadiums without having to tap into resources that we're comfortable sitting here and telling you are needed for more important issues.
Thank you. The Chair recognizes Councilman Cohen.
Thank you, Madam President. I asked Mr. Montgomery a question on behalf of the Phillies but did not ask it of you. Let's assume that nothing happens because that's what brings us here -- not the building of the stadium, 'cause we don't have time for that, we only have time to talk about failure, not about success. Apparently, you know, I begin to question if people really want to build the stadium when they have all this free time to talk about a plan in the event that this is all going to fail. So I'm a little troubled by the whole 335 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 concept. But let's assume that everything fails and the trigger of the $80 million comes about. What is the position of the Eagles? Are they still going to be interested in building a stadium, or are they going to say to us, Well, that was the deal about the stadium, it didn't work, therefore we're forgetting all about a stadium? Would your answer be the same as Mr. Montgomery's.
Well, my answer is the same as Dave's, but I would add a kind of a practical comment. We recognize that if the City invests $80 million in renovating and making capital repairs at Veterans Stadium, it's not realistic to think that they're going to turn around in some time closely associated to that expenditure and have a serious dialogue about investing in a new stadium. And we also believe, from the Administration, that this administration believes it has a lot to achieve over the next four years 336 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 and doesn't want to spend four years on stadiums, wants to take one honest run at it, see if we can't get something done, and then be in a position to move on to the other challenges that face the City. So we would continue to have the need, and we would continue to have the request, but we realize realistically that the City is not going to invest $80 million in capital repairs in Veterans Stadium and turn around a week later and want to talk to us about a new stadium. But we will still have the need.
What's -- you know, on the -- I think the very day that you signed the player -- I don't remember his name -- for $30 million a couple of weeks ago, something happened about the stadium deal on that occasion, and I had to say to myself -- I admit I was prodded by some constituents' questions -- what is this $23 million involved in the stadium? That's what we're going to pay you to buy back if certain things happen. What is this great risk, when you can afford, as a team -- and I'm not using the most expensive player in these days, maybe I'm 337 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 using only an average paid player. You sign a player for $30 million over a number of years. If he gets hurt, say he goes out the first day of practice and he gets hurt and is unable to play, are you bound to pay him that full $30 million?
The good news in football, unlike the other sports, is if that player got hurt, we do not owe him the $30 million. He has to play full the length of that contract or he does not get paid.
He gets paid for the season in which he got hurt, and then -- now, if he recovers and you want to bring him back, sure he gets paid. But if a player got hurt and couldn't play, we do not have to pay him.
Well, I guess I'll volunteer to be the attorney for the union to guarantee his pay during the five years, but in 338 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 baseball, they get paid the full time, don't they?
That's an interesting change. But you take it -- that's a $6 million risk, 30 million over 5 years?
So you have at least the 6 million risk. Then what is this great risk of $23 million? Your team -- you know, didn't you -- wasn't there a contract a couple of years ago for some billions -- I don't know how many billions of dollars for a four-year TV contract. Didn't all the teams share in that?
Could you tell me how much money was that involved on a yearly basis? What did the Eagles get?
The honest answer is, I don't know, but I'm certainly willing to concede 339 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 that it's many, many millions of dollars.
Because it's not just 80 million, as I think David -- the other David at the table pointed out, David Cohen, that you're going to have a right, beginning with January 2003, to claim additional capital improvements. But what you're doing is, you're asking us to tell the taxpayers that we exercise our good, sound legislative judgment by causing our taxpayers to be subject to having an empty stadium when we buy back because we didn't arrange to even have a tenant. All we did is bought back the stadium, which is kind of useless for most parts by other than a sports team. And then on top of that, you're saying that we're subjecting ourselves to an $80 million repair schedule for capital improvements. And then a couple years later, you will also have the right to request whatever you feel is needed, and you have a right to demand that of us. And so it's going to be 340 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 much more than 80 million in capital improvements. You have not committed to staying in Philadelphia on the practice field. You know, you present us, and then you say and then we're going to have some kind of a contract with PAID, and you want us now to agree in advance, sight unseen, to agree that whatever the Mayor agrees, just like eliminate City Council, City Council doesn't exist under this scheme. It all is just that you're going to deal with just the Mayor. And you ask that of legislators. Now, I would say that would make sense if there were no City Council, but it makes -- it seems to make no sense to me at all, and I just don't understand why you're doing it all in the name the not pursuing a stadium at all, but preparing for bad faith? What are you preparing for? Who's going to stop you from succeeding in getting a stadium? Do you get nightmares at night and imagine things? I haven't heard anybody here today testify that they're going to fight a stadium. 341 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Sure, there are going to be questions, we're not going to sign a blank check and say we subject the City to untold liability, do whatever you want to do. We've got a legislative duty to perform. Why do you approach the City Council and tell us that we've got to guarantee that we're dealing with you in good faith, when we don't know anything we've ever done other than to deal with both sports teams in good faith. You tell us about the problem you had with the Mayor, whichever mayor it may have been -- current, previous, maybe three or four mayors down the road, but you've never had those kinds of problems with us.
I don't think you've heard anybody at this table talk about being concerned with the good faith of City Council. I think that you're looking at this deal in terms of what you're giving, which there are clearly things, and not thinking in terms of 342 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 what you're getting in return. And I think that if you list both of those categories, that not everybody would agree, but one could certainly make the case for the rationale of this deal and why there needs to be a deal at this time as opposed to just going on as things have been.
But you haven't gone on with us? This is the first opportunity this body has ever had, still facts unknown, nothing of significance in the way of facts presented to us. We create a public hearing, we're learning about certain plans, we've got a list of proposed capital improvements for the first time today, we know nothing about site selection. We've been clamoring, we want to know what sites have been discussed for the stadiums, and nobody gives us anything. You come to us on the first day and say to us, You've got to prove your good faith by adopting this legislation -- just in case later on, we think you exhibit bad faith by not approving some kind of deal by November 3rd. We won't even tell you when we're going to give you any material. We refuse to put any date in this 343 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 contract. Wasn't that what the Chief of Staff said? What you call "the City" is the Mayor's Office. You say that even the if the Mayor's Office -- she said the Mayor's Office won't put in any date, but you've got to agree by November the 3rd. Now, what kind of -- you know, the men that are here from the building trades union would be insulted if they were given a blank contract by their employer, and they should be, they'd walk out if they were given a blank contract and told to sign it to prove their good faith to the employer. That's -- you would do that in a business transaction. But that's what you're asking us to do. And that's a mighty, mighty difficult thing for us to do because to do it means that we violate the oath of office we took. So we came up with other bills. We came up with bills which we try to accept the basic structure, to give you a comfort level. And we say, Give us time to study it, examine it, and make a decision, a decision which we've all said we hope is going to be a successful one. 344 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 I think we've -- you know, I don't know why we would have to show good faith in the first place, 'cause I think we've always exhibited it, and I think it's kind of an insult to this legislative body to say to us before you deal with us and when you've never had a bad experience with us over many years, to say you've got to prove your good faith by signing things in blank. And that's a mighty tough pill 'cause we think we've been very fair with the sports stadiums. I can't remember a thing that we ever denied that came to us, because we try to work with you. We think you're good for the City. We have lots of priorities to worry about, we've got a big constituency that's got to understand why we're investing, if we do in fact invest public monies. And you put us in this very terrible position to begin with. If anybody chose to set off something on the wrong foot, this would be the way I would move. We really hope you give full consideration to that. We don't know about your experiences with the Mayor, any mayor, because it's never been shared with us. The Mayor has mayoral rights. 345 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 We're not responsible for what he does and he's not responsible for what the Council does, but please don't act with us on the assumption that we're thieves or scoundrels and can't be trusted an inch to perform our duty. And that's how this comes through to us. Thank you, Madam Chair.
Thank you. Certain, certainly. We have another question now from Councilwoman Reynolds-Brown. Is she there? Or Councilman Nutter? I assume you're not Councilwoman Brown? Do you have questions from that side of the room?
Are there any other questions from members of the committee? (No further questions.)
Gentlemen, 346 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 thank you very much, thank you.
Our next witness is Charles Pizzi, and I believe Daniel Whelan wanted to come up with him to testify. Is he still here? (Witnesses come forward.)
Good evening, gentlemen. Thank you for your patience.
Kindly identify yourself for the record and proceed with your testimony.
My name is Charlie Pizzi. I'm President of the Greater Philadelphia Chamber of Commerce. And I will not follow my comments 'cause it starts out, "Madam President, good morning." 347 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Good evening, Council President Verna and Members of City Council. Today I'm before you representing 6200 businesses in the region to voice our support for Bills 80, 82, and 83. We believe the passage of this legislation is a critical first step in creating an attractive image for our city. I have enormous respect for the Members of this Council and for the responsibilities you have to your constituents. I understand the importance of your role in this process. Today, I'm here to support the new practice facilities for the Philadelphia Eagles, which the legislation will ensure the facility is built. Building a practice facility for the Eagles helps solidify their position in this market. For the City, it means the retention of some $4.3. million annually in wage tax alone. The City has looked to successfully retain and attract numerous businesses, and we should approach sports similarly. This is about retaining a vital component of our economic base and our City's image. As elected officials, you are entrusted 348 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 by the public to oversee the investment of City funds. I know that you take this responsibility seriously. With it comes a need for complete information and a reasonable timeframe in which to review the information. I know of the great concern that it is to all of you. In fact, I have the same concern and I fully sympathize with you as a citizen of Philadelphia. However, we've witnessed serious delays in this project for various reasons. And while Pittsburgh is moving ahead with construction of its facilities, we have been left far behind. These bills offer a reasonable window of time for the Administration to negotiate with the teams and Council to deliberate and act to ensure the process in Philadelphia is not further delayed. As you know, the Pennsylvania legislature acted last year to raise the capital and redevelopment assistance funds, freeing up additional money for funding for important projects statewide, like arts, cultural institutions, and sports facilities. The City must acknowledge the Commonwealth's willingness to move forward with 349 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 this agenda and accept responsibility of fulfilling its end of the bargain. If not, we risk losing credibility with our leaders in Harrisburg, which could jeopardize State support for other local initiatives. Simply put, if we are serious about elevating Philadelphia to a world-class status, we cannot afford to let this opportunity pass. As a city competing nationally and internationally for hospitality-driven dollars, we must move forward. Bills No. 80, 82, and 83 get us in the game. I know decisions will need to be made down the road, and these bills keep the door open for the dialogue on those discussions. Today, I urge your favorable consideration of these bills and offer the Chamber's assistance in whatever role you see fit.
Good evening, Madam President and Members of City Council. Thank you for the opportunity to submit the testimony today. My name is Dan Whelan, and I am 350 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 President and CEO of Bell Atlantic-Pennsylvania. I'm here today in my capacity as Vice Chairman of the Greater Philadelphia First, a regional organization led by the chief executives of 30 of the larger corporations here in Philadelphia and in the region. Our mission at GPF is to make this region, and especially the City of Philadelphia, a better place, to live work, and to do business. Our message to you is a simple one. Greater Philadelphia First urges you to vote in support of the ordinances that were submitted to City Council on Mayor Street's behalf on Thursday, February 17th. We support the Administration's ordinances for the following reasons: First, we recognize that these ordinances do not commit the City to decide the stadium issue one way or the other. However, they do make it possible for the City and for the teams to continue working towards the goal of new stadiums. We believe strongly that new world- class stadiums for the Eagles and for the Phillies are vital to maintaining and enhancing the region's competitiveness. Let me just recite some of the names 351 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 that have been spoken here: Atlanta, Baltimore, Cleveland, Chicago, Cincinnati, Denver, Hartford, Nashville, Phoenix, Seattle San Francisco, St. Louis, Tampa Bay, Toronto, and of course, Pittsburgh. New stadiums have been constructed, or are under construction, in each of these cities. From the standpoint of competitiveness alone, we need to do the same in Philadelphia. Second, the ordinances would set a target date for deciding the stadium issues one way or the other -- November 3, 2000. This makes fundamental sense from a purely planning prospectus. As businesses facing the prospect of huge capital outlays, the teams need some measure of assurance that the issue will not drag on indefinitely. The ordinances provide the framework for negotiations that is fair to both the teams and the City. Third, this is an opportunity for the new administration and City Council to send a positive and reassuring message to the business community and to the world at large. In recent years, Philadelphia has justifiably earned a 352 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 national reputation as a revitalized city, with a renewed sense of pride. Further delays or missteps in completing the new-stadium deals could tarnish this hard-won reputation, at a great cost to the City, its residents, and it's businesses. In today's ultra-conservative global economy, Philadelphia's future depends upon convincing others that it is a can-do place where major projects can move forward to completion and on a timely basis. Fourth, the requirement that the City commit to a schedule of completing up to $80 million in necessary capital improvements to Veterans Stadium, if there is no stadium deal by November 3rd, is reasonable for two counts. First, the City is already obligated, under existing leases, to pay the necessary capital improvements. But more importantly, none of the parties to this agreement actually want to pour $80 million into an outdated stadium. The proposed agreements thus constitute a strong incentive for the teams and the City to complete the new-stadium deals. In fairness to both the teams and to the fans, it also commits the City to 353 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 make repairs that will be necessary if Veterans Stadium remains the home of the Phillies and the East through the 2010 season. 7 million in wage taxes alone. The City's potential exposure of $23 million if it must by the facilities back from the Eagles would be more than covered by either the retained wage taxes or by the projected annual receipts from the proposed new rental car tax.
And it's worth emphasizing that this new tax, as we heard this morning, is spread over many shoulders, not soley Philadelphia residents, and indeed, the majority on nonresidents. Finally, it is essential that the new stadiums be financed in ways that are reasonable to the interest of the region's taxpayers, and the proposed arrangement is consistent with that goal. No one wants the new stadiums more than Eagles and the Phillies. The package does nothing to lessen the pressure on the teams, who intensely want and need to play in new stadiums by 2003. We 354 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 are confident that a negotiated reasonable deal on behalf of the taxpayers will be found in the timeframe allotted under the bills. In closing, I think it's important to know that the members of the GPF board were polled to see whether they supported the Administration's proposals. Twenty-seven members responded to that poll, and all did so affirmatively. There were no 10 no-vote. Collectively and individually, therefore, we believe in this course of action. I would add that the GPF has taken no position at this point on the location of the new stadiums. Again, thank you for the opportunity to weigh in on this very important measure.
Thank you, Mr. Whelan. I appreciate your patience in waiting to testify, and I know that you have said that you do not want to see further delays regarding anything to do with either the practice facility or the stadiums. We Councilmembers feel precisely as you. We received the bills that are before us today on February 16th. They were introduced on the 17th. Despite the fact that we have had 355 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 budget hearings for the last two weeks, we felt very strongly that we wanted to hear these bills as promptly as possible. Therefore, they were listed today. I will tell you that I am the District Councilperson in the area of the proposed site for the practice facility. I know that my constituents want the facility at that location, and that's what we're striving for. I think we all have the same interest. However, it's the way that we get there. And, again, I thank you. Councilman Goode?
I have a few quick questions. For the record, you are former Commerce Director for the City?
And you are a current or a former board member of PIDC.
That's true. 356 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85
You are a current or former board member of Philadelphia Workforce Development Corporation?
What are your responsibilities as vice chair for Philadelphia Workforce Development Corporation?
Well, supporting our chairman, Charlie Conley, from First Union Bank. But more importantly, to ensure that we get as many people off of the welfare rolls and into the workforce as possible, and that is in providing companies to take give opportunities to, frankly, family heads, usually mothers.
Okay. In any of those capacities, Mr. Pizzi, if you were directly involved in negotiating an agreement with the Eagles related to the financing of sports 357 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 facilities with significant public investment, what public benefit criteria would you employ? A, would you guarantee a percentage of jobs for Philadelphia residents?
If you were negotiating the agreement, would you guarantee a percentage of jobs for Philadelphia residents?
In the past, we've always had difficulty in doing that, but we would ask businesses to give residents a first opportunity.
I'm speaking specifically of a sports facility agreement, a major multimillion-dollar public investment. Would you guarantee a percentage of jobs for Philadelphia residents?
But would you specifically negotiate for welfare-to-work 358 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 opportunities?
I wouldn't negotiate. I would really seek the teams, give them opportunities to do that, yes. But not make it part of a formal negotiating package.
It was a hypothetical question. You named a number of different capacities you've served in regarding economic development. I'm saying, if you were directly involved in negotiation regarding a sports facility, would you guarantee a percentage of jobs for Philadelphia residents, would you ensure welfare-to-work opportunities, and would you require an affirmative action plan?
Thank you very much. The Chair recognizes Councilman Nutter.
Thank you. Good evening, Mr. Pizzi, Mr. Whelan, 359 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 and Miss Ashley Andrus over there. I just wanted to get a clear understanding of one of the comments in the -- I received a letter from Greater Philadelphia First, and it talked about further delays or missteps in completing new-stadium deals could tarnish the City's hard-won reputation for revitalization and a sense of pride. And I guess I just wanted to get a little better understanding of what your either belief or perspective was with respect to either delays, further delays, or missteps, and specifically as they relate to City Council? Are you aware of any delays created by this body?
The delays referred to in my testimony and in the letter -- and I speak for Mr. Adrien (ph.) on that behalf, who signed the letter, I believe -- is the general delay that has 360 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 occurred that the teams referenced, that this has been a 30-month process. We're now well into the 20th -- beyond the 20th month of that process. And it's that's kind of delay, with no assurance that further delays are not going to be envisioned. I am not in any way chastising any particular -- any party for that matter, either the teams or the City as a whole or any element of the City, either the City Council or the Administration, either this one or the previous one. It's -- the fact is that we've been at this as a group, as a city, for a very long period of time. And our suggestion, our strong recommendation is, let's define a date and effectively fish or cut bait.
All right. Well, I can certainly agree with that. I mean, again, as the Chair said, as soon as received something, it got introduced and it's been scheduled. We never received anything before, nor were we a part of any of what was really happening in the past. So I mean, there's kind of a -- there seems to be a general misperception that somehow, 361 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 we've been holding up the works, if you will. And all we've ever done is ask for either a bill or more information, or let's get the process started. I'm just trying to make sure that everybody's clear about what has happened and who's done what or who hasn't done what or who hasn't even been a part of any of these delays or missteps.
Mr. Councilman, I agree with that statement. Please don't interpret my comments or the comments in the letter as pointing the finger at anybody. As I stated earlier, all we're saying is, it seems to us that this matter has been in the works for sometime.
Let's get on with it. And frankly, we're -- I would comment that you -- commenting on the President's comment, that indeed you have moved quickly once the ordinances were put in front of you. "Let's keep the ball rolling" is essentially the essence of my message.
I think we will. 362 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 Okay, thank you. I appreciate your clarification. Thank you. Thank you, Madam Chair.
Thank you. Are there any other questions from members of the committee? (No further questions.)
Good evening. Please identify yourself for the record and proceed with your testimony.
I'm John H. Morley, Jr., M-O-R-L-E-Y. I'm a citizen of Philadelphia. I live in South Philly. In March of 1989, I signed a contract with the Philadelphia Eagles football team. I could tell you that my only motivation was to play football. The professional football players that I've met and talked to, they have one motivation, 363 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 and that's money. And I mention that because there's been a few allusions and references to the fact that there's people that feel that a brand-new practice facility is a requisite to attracting new players, and I don't agree with that notion. I'm -- I oppose creating another tax for the purpose of a practice facility, and I oppose the City of Philadelphia becoming a partner with pro-sports teams. This is contract creates the possibility that the City will have paid for the facility and the Eagles will leave town. That possibility exists, and I say that that is not a good contract. Of the money that Americans spend for entertainment, only 1 percent of that money is spent to purchase a ticket to a sporting event, only 1 percent. I got that information from the 1996 Standard & Poor's industry report. I'd like to let Council know that there are organizations being formed all over the country that oppose new tax for stadium financing. There is Voters Against Stadium Taxes, the acronym VAST. There's Citizens Opposed to Stadium Taxes, 364 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 acronym COST. There's People Opposing Stadium Subsidies, acronym PASS. Grassroots Against Mandated Entertainment, my favorite acronym, GAG ME. I wanted to also let Council know that I conducted two polls regarding use of taxpayer money to fund stadium construction. One of my polls was an Internet poll on my Website, and the other was an oral poll. In both polls, approximately 200 people took part. In both polls, 98 percent of the people who took part opposed the use of taxpayer money to fund stadiums. I'm asking Council to also construe that fact to be that the people who took part would oppose the car rental tax to fund the practice facility and opposition to that partnership with the Eagles in that practice facility. That's the end of my testimony.
Thank you very much, Mr. Morley. Are there any questions from members of the committee? 365 3/1/00 WHOLE COMM. - BILLS 79, 80, 82, 83, 84, 85 (No questions.)
Thank you again for your patience. Mr. Banner, I hate doing this to you 'cause I know you don't feel well, but Council will stand in recess until 6 o'clock. Do we have anyone else that wants to testify that was not on the list? (No response.)
Thank you. Now Council will stand in recess until 6 o'clock. (Council stands in recess.) (Proceedings resume.) - - -
This committee will stand in recess until Friday, March 3rd, at 10 a.m. Thank you. Thank you, everyone. (Adjourned at 6:40 p.m.) - - - 366 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, March 3, 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 79, 80, 82, 83, 84, 85 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter