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.