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.