Committee Hearing, November 30, 2007

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Friday, November 30, 2007, 10:43 a.m. - - - Resolutions re Center City District Board of Directors appointees. Resolutions re South Street/Headhouse District Board of Directors appointees. Resolutions re Old City Special Services District Board of Directors appointees. Bill 070994 - Re Convention Center Expansion. (Full text of all legislation contained herein.) Council Members Present: Anna C. Verna, President Jack Kelly Jannie L. Blackwell James A. Kenney Blondell Reynolds Brown Donna Reed-Miller Carol Ann Campbell Brian J. O'Neill Darrell L. Clarke Juan F. Ramos Frank DiCicco Frank Rizzo W. Wilson Goode, Jr. Marian B. Tasco William K. Greenlee - - - V A R A L L O Incorporated Litigation Support Specialists 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 11/30/07 COMMITTEE OF THE WHOLE WITNESS (Resolutions re Board Appointments) Paul Levy, Center City District.......... David Hammond, South Street/HHS District 6 Cynthia Filo, Old City District.......... 7 BILL 070994 (Convention Center Expansion) Mayor-Elect Michael A. Nutter............ 13 Stephanie Naidoff, Commerce Director..... 18 Romulo Diaz, Jr., City Solicitor......... 30 Buck Riley, Conv. Center Authority Chair 37 Amina Young, Convention Center Authority 81 Bob Archie, Esquire, Duane Morris........ 124 Counsel, Convention Center Authority Joe Frick, Chairman...................... 142 Philadelphia Chamber of Commerce Thomas Muldoon, President................ 144 Philadelphia Convention and Visitors Bureau Valerie Ferguson, Loews Hotel............ 145 Delilah Winder........................... 152 African-American Chamber of Commerce Noel Eisenstat, Consultant............... 167 Commonwealth of Pennsylvania * * * 3 11/30/07/COMMITTEE OF THE WHOLE/BOARD NOMINEES

Good morning, everyone. This is a public hearing of the Committee of the Whole. I would ask Mr. McPherson to please read the resolutions that are before us, please. MR. McPHERSON: Resolutions appointing members to the Board of the Center City District: Edward Goldberg Allan Domb Joseph Zuritzky Robert Lane Alan Kalish Barbara Potts, Esquire Larry Steinberg Ron Bowlan Natalye Paquin Judith Eden John J. Connors Terry D'Alesandro George Burell Appointments to the Board of Directors of the South Street/Headhouse 4 11/30/07/COMMITTEE OF THE WHOLE/BOARD NOMINEES District of Philadelphia: Kali Morgan Joette Adams William Barton Dona Pancoast Tim Krug Michael Untermeyer, Esquire Noah Webster Jose Pumarada Nigel Richards John Finley Ann Verber Howard Lander Daniel Doyle Michael Samschick Abner Silver Marolyn Bailey And resolutions appointing members to the Board of Directors of the Old City Special Services District: A.J. Williams David Neff Laurie Townsend-Rapp Harvey Spear 5 11/30/07/COMMITTEE OF THE WHOLE/BOARD NOMINEES Sebastian McCall Michael Mattioni James A. Egan Ken Foster Daniel Dumoff Patricia Lavelle William Moore Cheryl Ann Wadlington Honorable Frank DiCicco Allan Greenberger Lynn Martin Haskin Ellen Yin Sheryl Bar Fran Smith And I would ask that the representatives from those three districts --

Davi d Hammond, Cynthia Filo, and Paul Levy from the Center City District. (Witnesses come forward.)

Good morning. Good morning, Mr. Levy. Please identify yourself for the 6 11/30/07/COMMITTEE OF THE WHOLE/BOARD NOMINEES record and proceed with your testimony.

My name is Paul Levy, I'm president of the Center City District. I have copies of my testimony here; I understand you're looking for us just to submit it, or are you asking us to proceed with our testimony.

Please submit it, and it will be made a part of the record. Thank you.

Five of our board members are in attendance today as well today, who are a part of our nominees. Thank you.

Than k you. Good morning.

Good morning. David Hammond, from the South Street/Headhouse District, and I have 7 11/30/07/COMMITTEE OF THE WHOLE/BOARD NOMINEES the testimony for you here as well.

Thank you. And as I said, your testimony will be made part of the record.

Good morning. I'm Cynthia Filo, the executive director of the Old City District. My executive board is here in attendance: Harvey Spear, Michael Mattioni, Lynn Martin- Haskin, as well as Patricia Lavelle. They are here to support us today. And I do not have testimony to submit to Council today, but I just wanted to thank Council President, Councilman Frank DiCicco as well as the rest of City Council here today for reappointing our board. We've been in existence since 1998. We are coming up to our 10th-year anniversary in 2008 and, we have been working very hard to make sure that Old City has remained clean, safe, and a wonderful 8 11/30/07/COMMITTEE OF THE WHOLE/BOARD NOMINEES economic generator for the City of Philadelphia, and we look forward to continuing to do so. Thank you very much.

Thank you. Councilman DiCicco, is there anything you would like to say on these appointments?

Other than the fact that, as Cynthia just pointed out, Madam President, they've been in existence for not quite 12 years now, and we've seen a marked improvement in the business community in Old City. And Old City as you know, is one of the -- probably one of the most popular nightlife entertainment revenues. We've got some growing pains to deal with, but without the help of the Special Services District and the business association folks, we would not be able to -- we wouldn't be in the 9 11/30/07/COMMITTEE OF THE WHOLE/BOARD NOMINEES position we are today. And so I just want to thank all of them for doing a great job. Thank you.

Thank you very much. Do any members of the committee have any questions of the witnesses before us? (No questions.)

Thank you very much. PANEL MEMBERS: Thank you very much.

Happy holidays.

Thank you. Do we have anyone that would like to testify on these resolutions? (No response.)

Seeing no one, I would ask Mr. McPherson to please read the title of Bill No. 070994. 10 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 MR. McPHERSON: An ordinance 3 authorizing the Director of Finance, the Commissioner of Public Property, and other officials of the City to execute either directly or through the Philadelphia Authority for Industrial Development various agreements, instruments of conveyance, and other transactional documents by and among the City, the Commonwealth of Pennsylvania, and the Pennsylvania Convention Center Authority related to the development, construction, financing. operations, and management of an expanded Pennsylvania Convention Center and including the defeasance of outstanding Pennsylvania Convention Center Authority bonds, the release of the lien of the trust indenture dated as of December 15, 1989, as amended and supplemented relating to such bonds, the termination of the existing lease and service agreement, the sale of the existing Convention Center 11 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 building and improvements to the Philadelphia Authority for Industrial Development for further conveyance to the Commonwealth of Pennsylvania, or its designee, and the execution of a long-term ground lease of the land under the existing Convention Center to the Commonwealth of Pennsylvania; all under certain terms and conditions.

Thank you. I understand that Mayor-elect Michael Nutter is here and would like to testify if he's in the room. Great. And I know that he has a very heavy schedule so we will call upon him first. Thank you. Councilman Kenney, you wanted to be recognized?

Thank you, Madam President. I wanted to disclose that the 12 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 firm that I am associated with is part of the design team designing the expanded center; therefore, I will not be taking part in any deliberations on this bill or will be voting on the bill at all; I will abstain. I wanted to disclose that for the public's sake, and I will stay to listen to the testimony 'cause I think it's important, but I will not be participating in any way.

Thank you.

Thank you.

Mr. Nutter. (Witness comes forward.)

Good morning and welcome. How does it feel being back home? ) MAYOR-ELECT NUTTER: It's a new day. It feels good. Thank you very much, Madam President and members 13 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 of Council and the Committee of the Whole. My name is Michael A. Nutter, N-U-T-T-E-R, currently unemployed but hopefully will be gainfully employed on January 7th. It's a pleasure to be back here in City Council. Madam President and members of the committee, I'm here to testify in support of Bill 070994. This bill, of course, is related to the expansion of the Pennsylvania Convention Center. The president and members may recall I was chair of the board of the Pennsylvania Convention Center Authority from February 2003 until April of 2007. There are many other people here who have to testify. I'll be tremendously brief. The expansion of the Pennsylvania Convention Center, of course, is the largest economic development project in the history of 14 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 the Commonwealth of Pennsylvania -- $700 million being invested right here in Philadelphia, but the ripple effect of those dollars goes throughout the entire five-county region, and so Philadelphia along with Bucks, Chester, Delaware, and Montgomery Counties are beneficiaries; and, of course, the Commonwealth of Pennsylvania as well. I'd like to just raise a couple points. This expansion project is incredibly important to the future of the City, both from an economic development standpoint as well as, equally important, our ability as a city and a region to host large conventions, larger than we presently can hold at our center. There are numerous convention and hospital opportunities and conventioneers who would like to be in Philadelphia; they've outgrown the present center, want to come back because of the 15 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 incredible package that the PCC and the Greater Philadelphia Hotel Association and our PCVB are able to offer here in the City. Second, this proposal in front of Council represents a tremendous opportunity for the City to stabilize our financial obligations to the Pennsylvania Convention Center, capping our financial commitment to the center into the future because of the transfer of responsibility for budgetary responsibilities to the Commonwealth of Pennsylvania. Of course, the economic opportunity, both in the construction realm as well as future permanent jobs at the Convention Center, again represents a great opportunity for the City and a unique situation where this construction activity, as well as other construction activity, also presents a new opportunity for greater diversification in the workforce in 16 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 the construction trades and many other entries. That should be fully explored and those opportunities taken advantage of because of this construction opportunity. The challenge, of course, is, as with any project, there is a construction schedule. And unlike some other development projects, where opening date may or may not have a significant impact on the end-users, in this particular situation, there is business already booked at the center because people, again, want to come to Philadelphia, recognize that we're a unique hospitality and tourism destination, and getting this project underway can only takes place subsequent to this bill being passed. And so there are real impacts to the passage of this bill, the ability to put bids out on the street, and start a construction project that allows us, then, to commit and 17 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 reaffirm to many of our customers across the region and the country that the new center will be open in a timely fashion.

Lastly, that credibility with our customers, we have to be able to maintenance a relationship with customers now and into the future that if we tell them that we're going to be doing something -- and we have been talking about the expansion of the center for many, many years; we are right on the edge of getting the project done. And the passage of this bill 17 will allow the Commonwealth to complete its work, establish a relationship with the City, and reassure the entire hospitality world that we are, in fact, open for business and ready to open a new front door on North Broad Street, which will also help with economic activity in the North Broad Street corridor. 18 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 So for all of those reasons, Madam President and members of this committee, I am in full support of this bill and the expansion of the Pennsylvania Convention Center. Thank you very much.

Thank you. Thank you for coming in to testify. We are appreciate your sharing your thoughts with us. Thank you very much. MAYOR-ELECT NUTTER: Thank you, Madam President. MR. McPHERSON: The next witness is Stephanie Naidoff. (Witness comes forward.)

Good morning, Council President Verna and members of the Committee of the Whole. My name is Stephanie Naidoff, and I'm the City Representative and the Director of Commerce for the City of Philadelphia. I am pleased to be here today to testify in support of Bill 070994, 19 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 an ordinance authorizing the Director of Finance, Commissioner of Public Property, and other officials of the City to execute either directly or through the Philadelphia Authority for Industrial Development various agreements, instruments of conveyance. And other transactional documents by and among the City, the Commonwealth of Pennsylvania, and the Pennsylvania Convention Center Authority related to the development, construction, financing, operation, and management of an expanded Pennsylvania Convention Center. And I might add that I am joined here today -- should have done this up front, sorry about that. I'm joined here today by my colleagues: Romy Diaz, the City Solicitor; and Vince Jann Etti, the Director of Finance. And we are privileged to have with us today as well: the secretary of the 20 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 budget, Mike Masch; and the chair of the Pennsylvania Convention Center Authority, Buck Riley. Mr. Masch and Mr. Riley will testify after I do.

Thank you.

Specific actions authorized by the legislation include the defeasance of outstanding Pennsylvania Convention Center Authority bonds, the termination of the existing lease and service agreement, the sale of the existing Convention Center building and improvements to the Philadelphia Authority for Industrial Development for further conveyance to the Commonwealth of Pennsylvania, or its designee, and the execution of a long-term ground lease of the land under the existing Convention Center to the Commonwealth of Pennsylvania, all under certain terms and conditions. 21 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Reaching this point has been the result of much good-faith collaboration between the City, the Commonwealth of Pennsylvania, and the Authority for over months. While 7 our negotiations have been lengthy, we 8 have always understood and agreed upon 9 the importance of the Convention 10 Center expansion project. 11 Since 2005, when Governor 12 Rendell announced the Commonwealth 13 would fund the expansion of the 14 existing Pennsylvania Convention 15 Center, extending it from 13th Street 16 west to Broad Street, Mayor Street and 17 this Council have taken actions to 18 support this major development project. But at the same time the Mayor has stood firm in seeking a reduction of the City's current financial exposure, which includes covering the existing center's operating deficit and all debt service on the 22 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Authority's bonds. The annual cost to the City has been as high as $22 million in past years. It is to that end that we have negotiated these agreements and believe that we have reached conclusions fair to all parties. The Commonwealth of Pennsylvania has approved funding the expansion at $700 million. When complete, the Convention Center will expand over 1 million square feet, from 11th Street to Broad Street, and catapult Philadelphia from 23rd largest center in the nation to 13th. The City's contribution to the expansion project thus far includes: the waiver of all permitting fees, licensing fees, assessments, and other charges imposed by the City and associated with the review and approval of plans, granting of permits, utility shutoffs and relocations, inspections and 23 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 certificates of occupancy relative to the project and to the reimbursement to the Authority for the relocation of certain water systems in and around the project; and, three, as previously approved by this Council, the striking of certain streets, the transfer of the former fire station located at 1328 Race Street, the granting of air rights over Street and encroachment 12 rights over North Broad Street, and 13 the creating of a zoning overlay. With this legislation enacted, the Commonwealth, through a cooperation agreement with the RDA, has acquired all of the land in the build path, relocated all businesses and tenants, and has begun demolition. The Convention Center Authority has completed the design for the expansion project. Now, in order to move ahead all other aspects of this $700 million state-funded project, we're seeking 24 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Council authorization to enter into and execute several agreements that will be required to carry out this process. Two major agreements are attached to this ordinance. Both agreements will be entered into by all three parties -- the City, the Commonwealth of Pennsylvania, and the Authority. The first is the Convention Center agreement acknowledging the various parties and responsibilities relative to ongoing management of the Convention Center and the expansion project. This agreement would be signed upon City Council approval and will terminate when the Authority's City-backed bonds on the existing center are defeased by the Commonwealth.

That action could be taken as early as March 1, 2008, but no later than June 30, 2008, and will trigger the termination of the lease 25 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 and service agreement. Upon termination of the lease and service agreement, the City will no longer be obligated to pay the operating deficit or debt service on the existing center. These obligations will be transferred to the Commonwealth under the new operating agreement. The operating agreement will define the rights and responsibilities of the three parties with regard to the management and operation of the center and will detail the City's financial obligations to the center going forward. This agreement will, in effect, take the place of the lease and service agreement and will continue through the life of the bonds to be issued through the Commonwealth, a term that is projected to be no 24 longer than years. In addition to agreeing to 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 fund the expanded center's operating deficit and debt service on all new bonds issued, the Commonwealth has also agreed to continue covering costs for the education and training fund over the next years. 5 million to the 11 Authority in Fiscal Year 2009, in 12 accordance with our Five-Year Plan, 13 and to provide $15 million a year 14 thereafter for 24 years, which, again, 15 represents the projected life of the 16 Commonwealth's bond issue for the 17 expansion. 18 As part of the Commonwealth's 19 issuance of new tax-exempt bonds to 20 defease the existing Authority's City-backed bonds, the City will be asked to enter into additional agreements. These agreements include the agreement of sale, the agreement of lease between the City and the 27 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Commonwealth, and the agreement of lease between the Commonwealth and the Authority. For the agreement of sale, the City, through PAID, will convey the existing center's improvements to the Commonwealth. Upon termination of the operating agreement, these improvements revert back to the City. The lease between the City and the Commonwealth is for underlying land beneath the existing center. Consistent with the agreement of sale, this land will revert back to the City upon termination of the operating agreement. Finally, the lease between the Commonwealth and the Authority will lease the existing land and improvements as well as the expansion land from the Commonwealth to the Authority, and this agreement will terminate upon termination of the operating agreement. 28 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 While this transaction has considerable complexity, it will allow the City, Commonwealth, and Authority to benefit enormously. In just a moment,I'll ask representatives from the Commonwealth and the Authority to talk about their benefits, but first I'd like to mention the City benefits resulting from the expansion project. According to a study completed on behalf of the Authority by TXP, the project is expected to produce an additional 1,438 City jobs on average for each year of construction. The employment benefits of the expanded center will reach far beyond the facility itself. Based on estimated events, attendees, and exhibitors, permanent jobs in the region will total 11,505 relating directly and indirectly to the expanded center. This will generate a total of $55 million per 29 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 year in taxes, including an estimated $12 million in wage tax. Our hotel, restaurant, supply, and manufacturing industries are projected to grow too, and this will result in an estimated $376 million in annual economic impact in Philadelphia. The center -- the current center accounts for more than 40 percent of our total tourism business. The opportunity to expand this critical piece of our hospitality infrastructure provides a number of tangible benefits to the City, including: First, the Commonwealth will fund the entire expansion.

Secondly, Philadelphia will have the 13th largest Convention Center in the nation and the second-largest exhibit space on the East Coast, behind only New York City. 5 million in FY 2009 and $15 million each year thereafter for years with no 5 further obligations. 6 There will be 1,438 7 construction jobs, there will be 8 11,505 jobs benefitting from the 9 completed expansion, $55 million in 10 taxes per year, and approximately $376 11 million in annual economic impact in 12 Philadelphia. 13 I thank you for allowing me to 14 testify on this very important matter. 15 There is one legal matter 16 concerning the indemnification 17 provision that City Solicitor Diaz 18 will address at this time, and I'd 19 kindly request the suspension of rules 20 for Bill No. 070994 to allow for first 21 reading at the next meeting of City 22 Council. 23 SOLICITOR DIAZ: Good morning, 24 Madam Chair.

Good 31 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 morning. SOLICITOR DIAZ: I'm Romulo Diaz, Jr., City Solicitor of Philadelphia. Following the bill that has been introduced, the drafting of that, we continued collaboratively, the City, with representatives of the Commonwealth and the Authority to refine the indemnification provisions. There were no changes to the business terms. I don't believe these are substantive changes and probably within the Authority of the City Solicitor to implement. But given the importance of the legislation, I thought it would be helpful to make sure that we proposed for your consideration these changes as an amendment. These have been circulated to members of the Committee of the Whole, and we appreciate the assistance that we've gotten from Council staff in preparing the 32 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 amendments for your consideration. You will see them listed not with respect to the page numbers of the document involved, but these are proposed as an amendment to Bill No. 7 070994, and you will see in each of the documents, it's referenced -- a provision referenced to the pertinent section. Again, these are strictly related to the liability and indemnification provisions. I see them as a refinement and not a change in the business terms. Thank you, Madam Chair.

Thank you. I believe everyone has received a copy of the proposed amendments? Does everyone have it? Councilmembers, do you have them? Thank you.

Madam Chair, if I may now ask that Secretary Masch and 33 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Mr. Riley be allowed to testify briefly.

Thank you.

Thank you.

Good morning, Madam President and members of Council. I have provided written testimony to Council; I'm not sure if that's been distributed to members. If it's not been, I would request that it be distributed at this time, and I will just offer very brief summary remarks. I want to say first on behalf of Governor Rendell that we are delighted to enter into this new partnership. Madam President, you know that I worked with you and other members of Council more years ago than I want to acknowledge on the original Convention Center negotiation. And at that time, we authorized a 34 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 $523 million project, with the State of Pennsylvania providing $185 million out of that $523 million. At the time, there were those on Council and in the Mayor's Office and elsewhere that thought that the balance of financial responsibility between the City and the Commonwealth perhaps should have been different than it was. Governor Rendell, when he was both a private citizen and the Mayor, took that view. And when it was our opportunity to work on the funding for the expansion, we and, I want to say, the members of the Philadelphia delegation in the Pennsylvania General Assembly were supportive and united and effective in securing a hundred percent of the funding for the expansion from the Commonwealth as well as an agreement to assume the net operating losses of the center going forward, which had been -- has been 35 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 until now a responsibility of the City. I'm pleased to report that the funding from the Commonwealth for the acquisition of the site, the clearance of the site, and the construction of the facility, as well as funding for future Convention Center Authority operating losses has all been appropriated by the Commonwealth. In 2004 and in 2006, we secured the capital project authorization; that was the authority to spend the 700 million. Act 53 of 2007 provided the funding to support that spending both for the construction and for the operating losses. Our estimate is that once the center is -- the expansion is constructed and we assume the State responsibility for operating losses, the annual cost to the Commonwealth will be about $64 million a year. So 36 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 that's a new cost for the Commonwealth budget that we have not had to bear. And it is worth doing from the point of view of the Governor and clearly from the point of view of the General Assembly because of the economic benefits that the City and the region will realize. And I have to say -- it's not in my written remarks, but I just want to add that as someone who has lived in the City for many years and has seen an attitude sometimes in our state capital that economic development in the City and the rest of the State was a zero sum gain -- either the City would benefit or the rest of the state would benefit -- I think -- I don't want to be too optimistic about this, but I think we're moving to an era in which an increasing number of our state leaders are coming to understand that economic growth in this region is a win/win 37 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 proposition. It is good for the State of Pennsylvania for us to see a more robust economy and greater economic opportunity here in the City of Philadelphia. This project goes a long way towards realizing that that kind of goal for the City, for the region, and for the Commonwealth. So I'm delighted to be here in support of the City and urge the passage of this legislation. And I would like to thank the City administration and City Council for your exemplary cooperation in this very complex, but ultimately very worthwhile, transaction. Thank you.

Thank you very much.

Madam President?

I think we ought to have the panel 38 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 complete their presentation.

Okay. I'll wait.

And then we'll open it up for questions.

Thank you.

Good morning.

Good morning, Madam President.

And welcome.

Madam President and members of Council, I know sometimes these words sound trite, but it's a real honor for me to be here. It's the first time I've ever been in the City Council chambers of the City Philadelphia. I'm from a neighboring county of Chester County. For four years, I sat next to Michael Nutter when Michael was chairman of this 39 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Convention Center and I was vice chairman. And when Michael resigned to finish off his run for mayor, the board elected me as chairman, and it's an honor for me to be here in front of this Council and make this presentation on behalf of Bill No. 9 070994. I had said to Michael yesterday, Michael Masch, and Stephanie Naidoff, after reading their remarks, that there was virtually nothing left for me to say, but being an Irishman, there's always an opportunity for an Irishman to find something to say. I think it's important for the Council to note that we are at a competitive disadvantage at the Convention Center and have been for a number of years now. Our competition in the northeastern United States is Boston, Washington, and New York City. We are now fourth in terms of size out 40 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 of the four convention centers who are our competition. There's a widely held misperception that there is a lot of competition in the Convention Center business. It is a misconception from the standpoint that when someone decides that they're going to hold a convention in the Southeast, we're not in competition for that convention; they're going to go to Orlando, they're going to go to Atlanta, they're going to go someplace in the Southeast. But when they decide that they're going to make a decision to come to the Northeast, it's a whole different story: Then we're in competition with Boston, New York, and Washington. Boston and Washington have both built brand-new centers. They're magnificent centers; they've done a wonderful job. 41 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 New York is the largest on the East Coast, the Javits Center, but it has a great deal of difficulty; it's having great structural difficulty. And there are opportunities for us that we've never had before. There are trade shows that go to New York City, and they're some of the largest trade shows in the United States; they want to come to Philadelphia. I've met with them in New York City. They want to come here in the worst way. They have all kind of transportation and other issues in New York City. Their Javits Center is trying to expand. The mayor and the governor aren't on the same page as to expansion, and the opportunity is there for us. If this expansion -- when this expansion takes place, we will be the second-largest Convention Center in the Northeast, behind only the Javits Center. And I don't want to sound as 42 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 if I'm knocking New York, but there are a lot of people who are in the business who would much rather come to Philadelphia than be in New York City, for a whole variety of reasons including transportation costs and other reasons. So it's very, very important that we do this -- for the City and the recently. And it's a win/win situation for all of the parties involved -- the City, the Commonwealth of Pennsylvania. This is actually a project into which money is going to go and money is going to get paid back -- both in the City both from the City's standpoint and the State's standpoint, and the Convention Center is going to get a brand-new building. So it's win/win/win all the way around the board. I think it's very important to note that during this process, which 43 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 has been a long process in getting here, we've received unbelievable cooperation from the City, the City administration, the City staff, and the Commonwealth of Pennsylvania and the Governor's Office.

And in particular, I'd like to mention Stephanie Naidoff who's become my friend and as Commerce Director, Vince Jannetti, whose on our board of directors, and Romy Diaz, who's the City Solicitor, who have all worked together to make this come together. And, in particular, I'd like to mention Mayor Street as well. He has issued orders from the top to clear every path to make sure that we're able to move forward with this. And we have not run into one obstacle that he hasn't given an order to make sure that it's overcome, and he's been just a wonderful ally in getting to the place where we are now. And, of course, we're very 44 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 thrilled with the fact that the Mayor-elect is our former chairman, so we have essentially a friend in the Mayor's Office as well. I think that it's also important to point out that not only are we going to build a building, but we're going to create an economic opportunity plan. And you may say -- may ask a legitimate question, and that is: What does somebody from the suburbs coming in here to Philadelphia know about or have the ability to construct and implement an economic opportunity plan, an anti- discrimination plan? And I want to say to you that I think we have probably put together the best plan that has ever been put together in the City of Philadelphia. And it's headed up by -- and I can only be a manager as chairman. It's like any other team: The manager can't go out on the field and play the 45 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 game. But I think we've got the best team that has ever been assembled in the City of Philadelphia, headed by Amina Young. Our consultants have been, and continue to be, Bob Archie and Nolan Atkinson. And we have set up a program in which we're going to have the opportunity to -- for the, I believe, the first time be in a position of choosing and having a job apprentice -- training -- a job-training apprentice program where 50 percent of all apprentices on the site are going to be referred by us and by our team. We're going to have a situation under which people are going to have an opportunity not only to learn a trade but to be in a position where they'll be able to learn enough, where hopefully they'll be able to have the opportunity to start their own businesses in the trade. 46 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 We're not only going to have this program, but it's going to be monitored, and the program's going to be monitored by the Greater Philadelphia Urban Greater Coalition; we've already entered into a contract with them to monitor that program. It's not only enough to monitor the program, but once the program's been monitored, then there has to be enforcement of the program. Our board has put together a committee of the board, an oversight committee of the board, to implement the anti- discrimination policy, and that board is chaired by Carl Singley, and there are a number of members of the Philadelphia community who have been active in these programs and who have been successful in these programs on that committee, who have actually enforcement teeth. And, as you know, we've started demolition on the site; you've 47 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 seen it out there. We've actually had a situation so far and a situation out there where we have been able to achieve some pretty good results. We've also been in a situation where we've had to enforce the plan we've put in place, and we have enforce the plan that's been put in place and held back money from a contractor until compliance with the program was accomplished, and it has been. So we think that not only is this a win/win situation for the Commonwealth and the City of Philadelphia and the Convention Center, but it's also going to be a win/win situation for economic opportunities for other folks in the City and the region who may not in the past have had those opportunities.

And with that, Madam Chairman, I would like to thank you for the opportunity to be here, and I would like to ask the indulgence of the 48 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 various Councilmembers to support our bill.

Thank you very much. I know that all of you have worked very, very hard, I guess, to see this come to the conclusion that you have come to. However, I think that there are some minor questions that should be asked for the record. And I will start with those questions, if I may. Has PICA approved the financing plan for the expansion as is required by the State?

Madam Chair, Vince Jannetti. We have not yet submitted this to PICA.

Can you tell me why?

The economics of it is in the Five-Year Plan, the City's contribution each year is in 49 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 the approved Five-Year Plan, but the documents have not yet been submitted to PICA.

Well, doesn't the statute require that from the State?

Yes, there was -- before we can proceed with the implementation of these agreements, if you approve them, we will require PICA approval, so our in -- we have briefed the PICA Board and staff in the past, but until we had a final approved plan, our view in the Governor's Office was that we ought to wait until we have a final approved plan and submit that for the Authority's approval. Obviously we don't anticipate a problem with securing that approval because all of the funding that the State's committed has been appropriated already, and the financial commitments required of the 50 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 City are, in fact, in the City's current approved -- PICA- approved Five-Year Plan. But, Madam Chair, you are absolutely right that that is another step that we will have to go through before we can successfully move to bid and construction.

Thank you, Mr. Masch. In Paragraph A in the second "whereas" clause states, it states that the property known as the Liberty Title Building will not be acquired for Convention Center expansion purposes. Why isn't this property being acquired? And is there a proposed new use for it?

It was determined by the Convention Center Authority that, A, the property was not necessary in order to build the scope of improvement required for the expansion; B, that it did not appear 51 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 that the Convention Center Authority could acquire the property at a reasonable price. And in terms of the -- of what renovation or other use will be made of the property, that will be up to the owner, because it is, and will continue to be, in private ownership.

Thank you again. Yes, the Chair recognizes Councilman DiCicco.

Mr. Masch -- Thank you, Madam President. -- was not in the original plan the money to acquire that building a part of the original package?

Well, I wouldn't say money to acquire that -- we'd never had a budget that had dollars allocated to particular buildings. I mean, we had a total site acquisition 52 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 budget. Councilman, as you know, 'cause we both serve on the board of the Convention Center Authority, earlier plans for the expansion envisioned an expansion footprint that would include that property. And we -- and then we had a budget for acquisition of property and for demolition and site clearance, but that was not a property-specific budget. And as you know, over time, the Convention Center Authority Board had to increase that budget, and now we're up to a $700 million total expansion budget. A couple of years ago, the board was hoping that we could do this project for 560, then 600, then 625. So we have made adjustments upwards. And the 700 million includes sufficient funding to acquire and clear all of the property that we 53 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 currently require, so the budget that we have now, does not have money in it to acquire that additional building.

Well, isn't accurate that one of the reasons the money is not there to acquire that building is because it has taken so long to get here from the original 400 or $450 million projection. I mean, originally, when we started out with this several years ago, the budget, which would have included that building, was somewhere in the $400 million range; isn't that --

There's no 18 question that the time that it has taken us to secure the funding and do the design has -- it has caused us several times to revise the been budget upwards. And, as you know, the Convention Center Authority Board and its staff and consultants have, in 54 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 fact, struggled several times over with cost estimates, even in the past year, that were higher than the $700 million budget, and we have had to push the designers and the engineers to do value engineering to keep us within the budget that we have. And, Councilman, you're simply right too that time is always of the essence on a construction project, so each delay that we've had has caused us to have to revise the construction budget upwards.

Delays that were not caused on behalf of the Convention Center Authority Board.

No. And I --

For the record. For the record.

I don't mean to suggest that.

Yeah. I mean, there was money that was not 55 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 coming out of Harrisburg. The Governor didn't release the money, the money he said he would; I mean, that all caused this delay, and it's cost the project a few hundred million dollars more than it would have.

Councilman, I guess I -- the way I would view it is that our challenges were to secure all of the funding to be able to do the expansion. And you're right that Governor Rendell and the General Assembly were unwilling to release funding until they knew that we had agreement on the entire passage. The first thing that we had to do, because the funding is coming out of the funds that the Gaming Act provides, was to pass that act. Then we needed to establish the Gaming Control Board and bring those funds in. But as, you know, the Commonwealth, in order to move the 56 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 process forward, also executed a design delegation agreement with the Convention Center Authority that permitted the Authority to have the funding to design the building while we were waiting to get the final approval for the construction funding.

Not to belabor my point of order, but you raise Gaming Act. What portion of the funding that will support the debt for the Convention Center expansion is relied on from gaming?

Well, all of the funding for the -- for the -- that the Commonwealth is going to provide comes from something called the "Gaming. Economic Development and Tourism Fund," and the support from that fund comes from 5 percent of gross terminal revenues from all of the gaming venues that are open in the Commonwealth of Pennsylvania.

Not just 57 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Philadelphia.

Not just Philadelphia. And thank you for pointing that out, because it is important to understand that it is -- all of the projects that are funded out of that fund are funded with gaming revenues from whatever venues are open. And I do want to say on the record that our calculations are that, based on the venues that are already opened, the projects that have been approved by the General Assembly can all be funded based on gaming revenues generated by those venues that are already open the -- one in the Northeast, Central Pennsylvania, the Erie facility. We still have several venues that have not yet open that the Gaming Control Board has authorized licenses for. As the members of this body are well aware, there is some controversy 58 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 about some of those potential license recipients. If no other gaming venue is open in the Commonwealth, or if there is a delay in opening any of those venues, there are sufficient funds available to the Commonwealth to fund this project right now.

Well, nice to know. Thank you. I'll get back to my questions later. Thank you.

Excluding the FY 2008-2009 payment, does the City have any financial obligations in addition to the annual payment of $15 million per year in Fiscal Year 2009, 2010, and thereafter?

Well, I just want to make it clear the in FY 2009, the obligation is 17.5 million, which is in the approved Five-Year Plan. It is $15 million thereafter every year, 59 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 and that is the total extent of the City's financial contribution.

Section 7 of the bill authorizes the City Solicitor to approve all instruments and documents to effectuate the ordinance, which shall include terms and conditions as the City Solicitor shall deem necessary and proper to protect the interests of the City. At this time, do we know what additional obligations the City Solicitor would be authorized to commit the City to? SOLICITOR DIAZ: Madam Chair, as I had testified earlier, I thought the indemnification matter was one that was probably within the scope of this authority, but I thought it was sufficiently important to bring it to Council's attention today as a formal amendment. But with respect to other terms and conditions, there are none 60 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 now that have been identified. I talked to Council earlier, before this hearing, and there will be some drafting issues to make sure that the references are accurate, but there are no change in terms or conditions that have come to my attention.

Thank you. I see that there are a number of Councilmembers that would like to be recognized, so I don't want to -- I have a couple other questions, but I'll relinquish my time. Councilman DiCicco.

Thank you again, Madam President. Mr. Masch, in your testimony, you speak of certain acts that provide and/or authorize the monies that will be needed for this capital improvement. What guarantees do we have that the Governor will release these funds? 61 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994

Councilman, Governor Rendell is strongly in support of this project, and it is fully in our intent to proceed with the execution of agreements and indeed to move the bid and construction as quickly as we possibly can in order that we don't lose any more time on the project. We have devoted an enormous amount of effort to securing this funding from the General Assembly in what has been mostly a cooperative process. But, as you know, we were in Harrisburg until July 17th, and this was the second -- the bill authorizing the funding for this project was the second from the last, so I won't pretend that it was a walk in the park to get the funding. But we expend in hours energy to do this, and we are fully committed to proceeding with the project and the 62 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 execution of these agreements and are most desirous of seeing the completion of Council's action so that we can then conclude the remaining steps that we need to take in order to go to bid. There are other things that we need to do in order to finish the bid process, and we're trying to get ourselves to a point where all of these things basically converge at the same time and we can move forward if the schedule gets substantial completion by the end of 2010 and be able to honor the bookings through 2011 that the Convention Visitors Bureau has already secured.

These other actions that you say takes place once this legislation, should it be passed by Council, you still -- could you still move forward without PICA approval?

No. As I said before, we will require -- one of the 63 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 steps that we will require, just as we require certain things to be done in order to move forward with the bid process, we will also require PICA's approval for the financing plan. But as you know, I also serve on the PICA Board and have worked closely with the Authority. They -- the Intergovernmental Cooperation Authority is well aware of the agreement that we have negotiated, and they are prepared to take it up once we know that this is, in fact, an agreement that's been approved by all three parties. We have the Commonwealth approval, we have the Convention Center Authority approval -- their board acted last week, as you know; and now we require the City approval. Then we can present to the Intergovernmental Cooperation Authority an agreement that all three parties are prepared to support, 64 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 secure their approval as well, and then move to both to the bid process and also to the actual financing process that's described in this ordinance and the supporting the documents.

So if you had all of the approvals that you just referred to, including this legislation and PICA, you're saying for the record that the Governor is committed to releasing the funds. Could you think of any reasons why the Governor would not release funds?

The only concern that I can see at this point is, if we were ready to go to bid and we were still concerned that we did not have a set of design documents that were within budget, that could result in some delay. As you know, since we're both on the Convention Center Authority 65 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Board, we were working with the design and the engineering team to do everything that's within our power to produce a set of design and construction documents that are going to comply with the budget. But it is fully our intention to proceed with the expansion, and that's why we've put as much effort into it over the past, well, four-and-a-half years as we have.

So, again, I'll just say: With all of the approvals in place and the design comes in within budget, is the Governor then committed to release the funds? Could you speak on behalf of the Governor?

I see --

On the record, if you say yes, does that mean the Governor does it, or will the Governor figure out another excuse to 66 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 delay this project any further than he has for the last three years?

All right. Well, Councilman, obviously, I don't agree with the proposition that the Governor has delayed the project. It is a matter of fact that we were not prepared to proceed with the bid for the construction until we secured the funding; I think that is a reasonable position for the Commonwealth and, indeed, for the City to take, that we don't do a construction project until we have the funding. It has taken us far longer than we would have liked to secure the funding. However, I have to note, too, that it really was only this fall that we finished -- substantially completed the design work. So both the design and the securing of funding have taken longer than the Convention Center Authority's 67 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 original schedules anticipated and --

I would respectfully disagree with that comment about the design just getting finished. They were done a while back, and they keep getting, for some reason, sent back. And without getting into airing the dirty laundry that we have to go through sometimes when we sit as a board, there have been delays created by the Governor; some had to do with personalities of the makeup either of the board or people that are employed at the Convention Center and other issues. But I'm not going to go and mention names, but we all know what has happened. My question is: Is the Governor, is he willing -- and I'm not an attorney here, but is he willing to put something in writing that if all the approvals are met and the design comes within budget, is he willing to 68 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 put something in writing to suggest that he -- to tell us that he will release those funds? 'Cause I'm not convinced that he's willing to release those funds. And that's my opinion, Mike. That's my opinion.

Councilman, it makes no sense for us to have put in as much effort as we all have not to proceed with the implementation of this project, and I am not aware of any obstacle to our moving forward other than our completing the design, completing the bid documents, and completing this process here in terms of the approval of this ordinance.

Well, as a sponsor of the bills in whose district this center is to be built within, I would appreciate if, by next Tuesday, I get something in writing or a call from the Governor, who hasn't returned my calls in over a year. I'd 69 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 like to have a conversation about that between now and next Tuesday. Thank you.

Okay. I will be happy to convey that request.

Thank you. Thank you, Madam President.

You're welcome. The Chair recognizes Councilman Clarke.

Thank you, Madam President. Good morning.

Good morning.

A couple questions. Let me give you the softball first. You indicated in your testimony -- and I'll just ask Miss Naidoff on this -- one about the size of the existing Convention Center and upon the expansion, we will 70 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 dramatically move up the ladder in terms of size. Are there any other projected convention centers that are either in the planning phase or in the construction phase that will change that number, or is this based on the existing facilities? 'Cause I know these things are popping up everyday when we're talking about an expansion.

Councilman, I think that's a good question. As you know, it's always a changing situation. And, as Mr. Riley mentioned, the New York situation is particularly fluid, but I don't know of any specific projects and I don't know if Mr. Riley knows of any, but as we understand it, it will take us from 23rd in the country to 13th.

We don't anticipate -- well, certainly not in the Northeast. Boston's finished and 71 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Washington's finished, and Javits is this way and that way, and there are no other centers that would come close to ours if we expand. We'd be --

But are any other cities that are looking to expand?

Not that we know of.

Not that we know of?

Not that we know of.

So there's nothing currently under construction?

Las Vegas is the only one, but we're not competing with Las Vegas. They already have 2 million square feet and really are competing for a different business than the business that we are booking at our Philadelphia center.

All right.

They're the 72 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 second-largest in the country now, Las Vegas.

All right. I'm just responding to the testimony. You're talking about these numbers, but I know it's an ever-changing environment.

Yes.

And I just want to make sure that --

That's correct.

All right.

Fortunately for us, New York has had some real issues to deal with up there, and they don't look like they're going to be underway anytime soon. They're thinking about adding the same amount of space that we are, and it might be interesting to know that they're projecting double the amount of money to add the same amount of space that we'd be adding here in Philadelphia. But they're not 73 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 anywhere close to getting --

Not close, okay. I want to go down these numbers; I just want to be clear. Currently, the debt service on the Convention Center is what?

It's been a maximum of million, and it will be 11 capped going forward at 17.5 million 12 in FY '09 and 15 million thereafter. 13 Oh, I'm sorry. You -- debt 14 service, you said? 15

Currently. 16 So when is that maxed out? What is 17 the debt service at the current 18 Convention Center? Right now, we're 19 currently paying debt service on the 20 existing facility. 21

I'll let 22 Mr. Jannetti answer that. When does it max out?

Councilman, the debt service is around $22 million a 74 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 year. We did a refunding in '05 that we saved debt service for three years, brought it down to about million, 5 and then it will go back up to about 6 $22 million. 7

22 million? 8

So under this 9 new agreement, we will be at 15. 10

What's 11 our -- 12

The City's 13 contribution will be at 15 -- 14

Let me -- 15 I just want to. Let's deal with the 16 current situation. 17

Okay.

And what is the average of the current operating deficit?

Oh, um... About 18, 19 million.

Per year?

Yes.

All right, 75 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 so -- okay. And the current debt service will be taken out by the agreed -- well, assuming that this deal is agreed upon, the debt service on the current facility debt is --

The agreement calls for the State to take out those bonds somewhere between March and June of '08, so our commitment -- you know, our guarantee on those bonds will go away.

Okay. And that comes out of where? That funding comes from where?

That will be from the State.

I mean, what category is it? Out of the 700 million or --

No, that would be in addition to that. Basically, what we have now is, the Convention Center Authority 76 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 has bonds outstanding in the amount of about 227 million, which were a part of the construction costs. As I said, about 185 were state bonds and we're paying the debt service in the state budget for those state bonds. They're almost all defeased. The Convention Center Authority bonds will go away, the State will issue a new set of bonds. The current debt service and the current operating loses are the costs of running the current center. You set against that the hotel tax that's provided to the Convention Center, and then whatever difference there is between the two, the City has had to pay for in the General Fund budget of the City, and that amount has fluctuated, depending on how much business the Convention Center does. The debt service is always fixed; it doesn't change. 77 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994

Right.

But the operating losses fluctuate and the hotel tax fluctuates, and that's why the amount that's been in the City budget has fluctuated. In the new deal, there will be the new replacement bonds the State will issue to replace that 227 million of Convention Center Authority bonds. There will be another --

What portion of the 227 is the City's debt service? Or is that the State's --

Well, it's the Convention Center Authority's debt service; that's what I'm saying. It --

Yeah, but I'm saying we're paying a portion of that debt service, correct, we, the City?

The math of it is: Convention Service debt service plus 78 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Convention Center operating loss minus hotel tax equals City service fee. So what you need to pay for whatever debt service and operating loss are not provided for by the hotel tax; that's the current deal. The new deal will be the new replacement bonds to replace those old Convention Center Authority, which will be State bonds, another 700 million borrowed by the State, and the operating loss of the center, which will grow, we think, from about million in operating loss now to 16 probably about 23 million 'cause the 17 center will be bigger, minus the hotel 18 tax, minus the City's 15 million contribution. And then whatever is left at the end of that is then the State's obligation. That's the new math.

Okay. And the cap, the 17.5 and subsequently the 15 million, when we talk about a cap, 79 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 does it mean up to 17.5 or 15, or does it mean that's the number?

That's the number we have committed to provide.

All right. So why do we say "cap"?

Well, because it limits our exposure going forward.

It can't go up.

All right. I just want to -- 'cause sometimes -- it could be construed as being, Well, we're not going to pay any more, but we pay less. But that's the number.

Right.

All right. And those numbers go to pay the debt on the 700 million?

Councilman, I would say our goal in this was to eliminate the variable number that the City has had to pay, which, in the past, you know, has been as low as -- 80 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 well, when the bonds were refinanced for a brief period, it was as low as million, which was great, and 5 18 million, 22 million in other 6 periods. 7 But remember, with an expanded 8 center, if the State wasn't taking on the additional operating loss, our estimates are that that Annual City contribution would go to about at 12 the 24 million a year. 13

Mm-hmm. 14

So by fixing it at 15 15, the difference on the operating 16 subsidy plus all of the costs of the 17 expanded construction is the 18 Commonwealth's obligation. 19 And if our projects are wrong, 20 if, for instance, the convention 21 business goes down, hotel tax goes down, operating costs of the Convention Center turn out to be higher, none of that risk is on the City of Philadelphia; all of that risk 81 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 is on the Commonwealth.

Right, right, okay. With respects to the participation goals program, do you have a more detailed strategy or plan as it relates to that on presentation?

If I may, I'm going to ask Amina if she would answer that question. (Witness comes forward.)

Madam Chair, I would like to introduce Amina Young, if I may.

Thank you. Amina, just recognize yourself for the record, please.

Certainly. I am Amina Young, Y-O-U-N-G, and I am the Executive Vice President/General Manager for the Pennsylvania Convention Center Authority. Good morning. 82 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Councilman, would you repeat your question, for me, again, please. More details.

I heard a broad overview of the participation plan/goals. I was wondering, was there more detail to them? And for purposes of disclosure, we had a sidebar conversation earlier with Mr. Archie, and one of the concerns that we have had in this Council, particularly when we deal with extremely large-scale projects that have some levels of specialized services, as we call them, the issue comes up about the inability to find qualified contractors or professional-service people that could perform this work. And if we keep accepting that as a base for not meeting what we perceive to be reasonable goals, we will never get there. So at some point, we have to 83 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 think out of the box and say, Well, we don't have 'em we, and we looked all over the tristate area. We got to figure out, if can't finds 'em, maybe we have to make 'em. In the NTI Program, particularly around the demolition phases, we created a substantial amount of demolition companies, both MBE and DBE. And, unfortunately, now, we pretty much knocked down all of the building so there's not as much work going around. But we did, in fact, create a lot of opportunities for businesses, new business starts. We created the emergent contractors program, and that actually created businesses, so they now have the ability to go wherever. And my question is: On these specialized services, given the fact that this is probably the most significant public-works project, what is the plan to create businesses that 84 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 perform those earlier-mentioned -- or inability to find these specialized services?

I believe Councilman Goode has a point of view information.

Excuse me, Councilman. If I could just add point to that question. Is the economic opportunity plan in writing? Is it an attachment to the bill, and can we have a copy of it? SOLICITOR DIAZ: If I may, Councilman, just interject. There is an Exhibit J to the bill which requires adherence by the Authority to not only the City policy in connection with the use of disadvantaged businesses, but there also is a commitment to particular participation ranges, information which has to be made available to the City in connection with payments to 85 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 subcontractors and others and a requirement for MBEC approval of the participation ranges which are ultimately used by the Authority pursuant to this bill's authorization. So I didn't want to interrupt, but I think the framework is important to set out here that, in fact, it is a legally binding obligation of the Authority. And then I think Ms. Young can describe with greater particularity what is being done pursuant to these obligations.

Is Exhibit J the economic opportunity plan? SOLICITOR DIAZ: It is not as we normally would provide that to Council, but I thought it was important to point out that there is the obligation and there is a document that, I think, will be described and is available.

Good morning, Councilman. 86 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Let me -- and I'm feeling a little awkward here with my back to you.

That's okay. I know it's not personal.

You know it's not personal.

We're good friends.

That's exactly right. But in terms of your question relative to what information we have, we are absolutely prepared to send this to any Councilman or to every Councilman; it's our anti- discrimination policy. And let me go on to answer the --

That's not my question. My question is real simple. Is an economic opportunity plan, is it attached to the bill? And 87 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 can we have a copy of it? If an economic opportunity plan is not in writing and attached to the bill, I don't -- I'm not really interested in a discussion of it.

We don't have it attached to the bill, but you can definitely have a copy of it.

It has to be attached to the bill.

Yeah. SOLICITOR DIAZ: Councilman, I'm sorry to have to jump in here again, if I may. The Commerce Director reminds me that this is a Commonwealth project. On the other hand, what we have attempted to do in good faith, consistent with a clear policy, not only the Administration but clearly Council, is to legally obligate that. We do have the participation ranges. Some Councilmembers and their staffs have previously been briefed on 88 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 those. I would be happy to work as quickly as possible with Ms. Young and the Authority to make the written participation information available to Council. But, again, I want to underscore that it is an obligation, it has to be acceptable to MBEC, and it is imposed -- even though this is a Commonwealth construction project, it is imposed through this bill and Exhibit J on the Authority.

Whatever is attached to the bill on this subject, can we have a copy of it now?

Yes, you certainly may, Councilman Goode. And we also suggestion that we have no objection to making the plan a part of the bill as well.

Whatever you're attaching to the bill, can we have a copy of it now? 89 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994

Yes. We have it, it's here.

We can get copies made.

We can have copies made and we can have delivered to the Chair. Mr. Ortiz is removing his shopping list from the folder. (Laughter.)

I just want to say for the record, at a recent hearing approximately two weeks ago, when the Executive Director, Mr. Mezzaroba, was here testifying on another matter related to the Convention Center, we asked, would the equal opportunity plan be a part of the legislation that was coming as a result of the lease agreements? and he indicated yes, it would. So that's why the assumption is that it's going to be a part of the legislation. 90 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994

I didn't know that. And that may have gone an oversight, and we are willing and, of course, agreeable to make it a part of the legislation.

Thank you.

Okay. We have been very deliberate and aggressive in our plan for inclusion. The Authority had attached to its lease and service agreement an affirmative-action program. And it also had, as a part of that, an implementation program. We enlisted the services of attorneys so that we can ensure that, legally, we were following down a path that would not cause our project to be stopped judicially. We also wanted to make sure that we enlisted experts in the field so that our outreach would go into those areas, Councilman, that you spoke about. That is, the question continues to come up in some 91 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 instances, where are the contractors? Where are people for the program? What we are doing on this project -- and we didn't do it the first time and we are pretty excited about it -- for the first time, we have an apprentice project where we are committing 50 percent of the hours of the job beginning, once the documents go out, to have all apprentices be on the Convention Center project. What has happened in the past is that there have been jobs programs where people become apprentice, and once they get that apprentice status, there was no place for them to go to become a journeyman. This time, we are saying, from the beginning of the project, we are getting referrals from about five or six different organizations who will pull in people who have apprentice status currently, and they will earn 92 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 their journeyman hours on this project. And so by the end of this project, we will have, for the first time, a group of people who are now journeyman and prepared to start their own subcontracting construction projects. We have enlisted again Duane Morris, who is working with us legally with this program. The outreach is going to be done and administered by Jim Roundtree, who has been around the minority participation for years and years, in addition to our current staff. So we will, at the end of this project, on that end, have specific journeyman who can begin their own businesses in construction.

I'm not sure I understand what you're talking about. You started out by saying 93 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 there will 50 percent of the apprentices will be -- are you saying that of the apprentices on the job, 50 percent will be DBEs, minorities?

No. I'm saying, on every job, there are apprentice hours. So an apprentice comes onto the job, the various unions bring in apprentices to work the jobs.

Right. Some 4 to 1, some 3 to 1.

Right. Fifty percent of the apprentices that are going to be placed on the job are going to come from our program. We have an apprentice program. So it's not arbitrary, it is not random; it is specific.

So 50 percent of the apprentice --

Fifty percent of the apprentice hours that will be on that job will be done by apprentices that come through our apprentice 94 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 program.

Okay. Are you requiring a certain ratio of apprentices on the job?

Absolutely. There is a requirement of that ratio that is set not by us, just by the construction union. They have a number that they put on. And we're saying of that number, we are going to get 50 percent of those hours. So some jobs are given 500 hours, some are 600 hours. We're getting 50 percent of whatever those apprentice hours are.

The Chair recognizes Councilman Goode.

Thank you, Madam President. Ms. Young and anyone at the table who wants to respond to this, the instrumentations policy that I just reviewed, I believe, refers to contracts, and my discussion was 95 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 mostly about contracts, and you're responding by talking about jobs. I'm not sure that there's even a mention of jobs within that discrimination policy. And so, this is becoming a very strange discussion because I'm talking -- we can get to the discussion about jobs, but first, I'm talking about contracts, and you're not discussing contracts, and I don't believe there's a mention of even jobs within that document you just gave me.

For a point of clarification, I think Councilman Clarke began asking about how we were developing contractors and businesses on the job, and I responded to his question.

Okay.

And so that's why I was there. It was not that I was trying to confuse anybody or not answer your question; I was just 96 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 responding to Councilman Clarke's question.

Okay.

In terms of our minority participation and WBE participation, what you read was our antidiscrimination policy. That is the policy that is going to guide our participation goals for the project. That is the policy that will be attached to all of the documents, construction documents, that will go out, and all contractors who do any work on this project have to commit to this.

And, for the record, the goals are...?

For the record, the --

I've read the --

Got it. The goals are 12 and 13 percent WBE and minority participation. We arrived at those 97 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 goals by hiring a company to do a disparity study for us because we -- as you well know, you cannot arbitrarily put numbers in project as a goal. And we went out -- the State had already enlisted the services of Mason Tillman to do a statewide project. We don't have a history of doing construction.

Miss Young, slow up a bit. What's the MBE goal?

The MBE goal is 13 percent.

And what's the DBE goal?

The DBE goal is 12 percent.

And how does that compare to the original construction of the Convention Center?

The original goals on the Convention Center were 20 percent, 20, 25 percent. 98 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994

No, I'm actually referring to -- I shouldn't use the word "goals." How does that compare to the actual participation by MBEs and WBEs in the original construction of the Convention Center?

In the original construction of the Convention Center, we reached about 28 percent. We had about 28 to 30 percent of participation.

I want you to break it down, I want you to break it down. What was MBE participation on the original construction of the Convention Center?

MBE participation was about 18 or 19 percent, and DBE participation was the remainder of that that got us to 28 or 30 percent.

So MBE participation on the original construction of the Convention Center 99 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 was or percent, but your goal for the Convention Center expansion is 12 percent? 5

Yes. 6

12 or 13 7 percent. 8 SOLICITOR DIAZ: Councilman, 9 could I perhaps anticipate your 10 question, sir. 11 One of the things that 12 Ms. Young alluded to was the fact that 13 the disparity study was done as a 14 consequence of new legal requirements. 15 One of the changes that 16 post-dated the original construction 17 was the U.S. Supreme Court Case in 18 Crozen versus City of Richmond, and it 19 was that case which established the legal guidelines by how the ranges are now developed. I'm not saying that the ranges are going to be any less --

I understand that, and I understand you did a disparity study, but you can 100 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 utilize the disparity study to explain to me why there was to percent 4 MBE participation on the original 5 construction of the Convention Center, 6 and you're proposing 13 percent for 7 the Convention Center expansion. 8 SOLICITOR DIAZ: I think what 9 I was trying to point out, if I may -- 10 then I'll turn it over to Amina -- is 11 that the disparity study was not a 12 requirement by law at the time the 13 original Convention Center was 14 constructed, so the discipline that is 15 required to develop the -- 16

I 17 originally asked you about the goals 18 for the original construction, then I 19 asked about the actual participation. SOLICITOR DIAZ: Right.

And so I want you to compare the actual participation of the original construction and why it has dropped from 18 to 19 percent MBE 101 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 participation to a proposed 13 percent for the expansion. SOLICITOR DIAZ: But those are goals, sir.

Again, Councilperson, the last time around when we built the Convention Center, disparity studies were not required.

That has not nothing to do with what I'm asking.

It does, sir. It does.

No, no, it does not, it does not. I asked about actual participation on the original construction. You -- there's no -- I don't need to discuss whether there was a disparity study for the original construction, I don't need to discuss whether there was goals set for the original discussion; I asked about the actual participating on the original 102 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 construction. So -- and what I believe actual participation means is that MBEs got to percent of the 6 contract dollars; is that what it 7 means? 8

That's right, 9 that's right. The last time -- 10

On the 11 original construction. 12

Right. 13

Okay. But 14 the goal now is 13 percent. 15

That's right. 16

Why? 17 SOLICITOR DIAZ: I think the 18 difficulty, sir, is that you're 19 comparing participation to goals, and I think what I tried to explain was how the goals are now required by law to be set. The result --

Are you serious? SOLICITOR DIAZ: -- are the 103 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 participation by --

Are you serious? Are you serious? SOLICITOR DIAZ: I am very serious, sir, in connection with what the U.S. Supreme Court requirement is in connection with the establishment of participation goals.

Let me ask you the question a different way: Did the disparity study suggest that you could only achieve 13 percent MBE participation?

The disparity study is -- we're viewing it as the floor, not the ceiling. We plan to be as aggressive as we were the first time around. On the first time around --

Did the disparity study suggest that you could only achieve 13 percent MBE participation? That's a yes or no 25 question. Either the disparity said 104 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 that or it didn't.

It did, yes.

Okay. So -- and we could have gotten here a lot quicker. What I believe it actually means, based upon the court decision but also based upon the lack of aggressiveness by the City since the original construction of the Convention Center, you probably put a lot of people out of business since then. So capacity may have actually dropped during that time period, and I'm almost willing to accept that.

Okay.

But let's be honest about the goals are and why they are what they are if we want to talk about how we build for the future. So if you're saying that there is less capacity than there was twenty years ago, that sort of leads to the 105 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 discussion that we had before this hearing, the part of the discussion that Councilman Clarke wants to engage in and I'm sure several other members want to engage in terms of what is actually possible in terms of participation.

That is exactly what I'm saying. That is exactly what I said. I didn't call them anything else; those are the numbers. I thought I was answering the question, sir.

Yeah, but the follow-up question was: What was the participation twenty years ago and why are the goals lower? If the goals are lower because the disparity study says there's less capacity, you could have just answered it that way absolutely. Is there less capacity than there was at the time of the --

Yes, yes, yes. 106 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994

Okay. And for the record, the goal is percent 4 MBE? 5

Yes, sir. 6

Thank you. 7

The 8 Chair recognizes Councilman Rizzo. 9

I wasn't 10 finished. 11

I'm 12 sorry. 13

I was enjoying the debate.

I'm sorry, Councilman Rizzo. The Chair recognizes Councilman Clarke.

Thank you. I actually have more questions after that debate than I did before, and I don't quite understand. Let me start with Mr. Diaz, first of all, with respects to the legal issue. And it sounds like to me 107 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 that you're saying that as a result of the recent Supreme Court ruling that the current requirement for City Council to ask for an equal opportunity plan that talks about goals attached to any legislation that we pass, it sounds like you're saying that we're not able to do that unless it's consistent with a disparity study? And the reason I asked that is because we just had the Fox Chase, and they committed to percent minority 15 participation in their EOP plan, and 16 I'm wondering why we're not able to do 17 something similar with the Convention 18 Center. Is it a legal issue? 19 SOLICITOR DIAZ: Let me see if 20 I can express it this way, Councilman. 21 The Supreme Court has 22 basically said that you have to look 23 at the underutilization of the 24 minority and women contractors, 25 workers, et cetera, in the community 108 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 to determine what is the under- representation of those skills in the workforce or the contractor force that you employ. And what we have here, I believe, is that empirically-based study that Ms. Young talked about earlier led to the development of these particular goals, but what I also heard is that the results that are expected will be higher than that. That's the floor. And --

So let me just cut you off. So you're suggesting that the fact that we didn't have a disparity study with the Fox Chase and actually the Cira, 'cause they actually committed 50 percent, we didn't have the disparity study with that, and they submitted the equal opportunity plan that had much more significant goals than what we're hearing today. We probably shouldn't have had 109 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 a disparity study here 'cause that would have allowed you to have a more significant goal attached to your equal opportunity plan. I mean, are we required by law to do that, have the disparity study to have an equal opportunity plan? SOLICITOR DIAZ: Well, one of the things we try to do, Councilman, to anticipate these legal requirements is to have the Minority Business Enterprise Council review these proposed participation plans, the each the EOPs, the economic opportunity plans, in advance of Council hearings. And the requirement that I alluded to in Exhibit J of the bill 19 before you today requires an MBEC (inaudible). I think what we've tried to do in trying to achieve the changes that have been suggested by Council is that we've tried to be as flexible as possible to reflect those desired outcomes. 110 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 But as a strictly legal matter, it has to be based in terms of what the empirical evidence would suggest is the under-representation and the utilization of skills.

In order to submit an equal opportunity plan for any developer or whatever that comes in here, are you saying -- I'm going to ask it very -- are they required to have a disparity study before they can set these goals in their equal opportunity plan? SOLICITOR DIAZ: Well, we have conducted -- the answer is yes, but we have conducted on a recurring basis in the City a disparity --

So you're saying yes. SOLICITOR DIAZ: That is a requirement but the City has conducted disparity studies and has updated them in order to --

I'm not 111 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 asking what about what the City did. I'm asking you, if a developer comes in here and wants to submit an equal opportunity plan, as required by the law of Council, an ordinance passed by Council and signed by the Mayor, are you saying that they have to have a disparity plan before they can submit their equal opportunity plan? SOLICITOR DIAZ: What I'm suggesting is -- the answer is yes, but the City has already done that, and we continue to update.

I don't understand that. You just said they have to have a disparity plan. SOLICITOR DIAZ: The answer is: Yes, there has to be a disparity analysis to support the imposition of these economic opportunity plans. The City has done that because we have the information relating to this particular metropolitan area. So whether it's Fox Chase 112 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 that's seeking approval --

I hate to keep cutting you off 'cause I like you, Mr. Diaz, but you get on a roll when you start talking in legal terms and you kind of go off the -- a little off the very precise subject matter. So are you saying that the equal opportunity plans that have been submitted to this Council since the passing of that law are challengeable 'cause if a person out of the -- SOLICITOR DIAZ: No, no. 15

-- willingness and the need to be fair, as it relates to this crucial issue, says, I'm going to do this, then you're going to say that the Supreme Court is going to step in and say you can't do percent; you can only 22 do -- if they agree that they want to 23 do 25 percent, you're telling me that 24 the federal government is going to 25 step in and say you got to go back to 113 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 12 percent? SOLICITOR DIAZ: No. What I'm trying to say, Councilman, is that the City has undertaken the responsibility to provide the empirical basis for your approval of economic opportunity plans. That's the responsibility of MBEC. They have updated the disparity plans. Any particular employer or anyone who might contract with contractors to do work as part of a City-related project doesn't have to conduct its own individual disparity study. It's still the same Philadelphia workforce. We have that problem.

But we're the problem -- MBEC is the problem because MBEC is established through whatever disparity plan that they've conducted an extremely low number. And the fact that you're saying that the disparity plan shows -- not that 114 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 you actually got one done somewhere else, Miss Young, it showed that there's a similar disparity between minorities and WBEs?

That's quite true, and (inaudible).

Excuse me. You're going to have to speak into the microphone.

Actually, they had a -- what they call the methodology of doing. And, yes, that's what the numbers were. They went out for us, for instance, because we were -- we didn't do a lot of contracting, they actually went in and they asked to give us the areas of subcontracting and contracting that would be on the site, and then they went out to find minority and females in those areas who were willing and able to do the work. And those were the numbers.

See, 115 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 that's where we get to the earlier issue about capable or able, however you want to characterize it. So if you're saying that because there are only a certain number of people who currently are qualified to do that work, then you'll never get to a reasonable goal, and that's why in the earlier statements, I said that sometimes there's not these contractors out here that could perform these services, and you have to figure out a way to make 'em. So if a study was done based on that, then, I mean, how do you get a higher number?

They gave us a number that we take as the floor, and they have a way of, if we have to go to court, they will say, Here's the information that we've used in terms of coming up with that number.

That there only a certain of number of -- 116 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994

But we do not have to stay at that number. If we get more --

So then why can't you set a higher goal?

Because we've contracted with the experts in the field to go out and do the work to give us the numbers.

But if they're only doing an analysis of who's available, then how are you going to get to a higher number? I don't understand. SOLICITOR DIAZ: Madam Chair --

Particular ly when you understand that the reason why there's the lower numbers is because the --

I'm sorry.

-- unwillingness of individuals to give 117 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 more opportunities. I mean --

Sorry. Councilman Goode has a point of information.

I'll be quick as I can be. One, do you have a copy of the disparity study here?

We don't have it here, but we have a copy of it here that we certainly will share with you.

The second question is: When you refer to "they set a goal," who are you referring to as "they"?

I'm referring to the consultants, Mason & Tillman --

That did the disparity study.

-- who did the disparity study.

And the last question about the disparity study: When they determined capacity and dealt with utilization or 118 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 under-utilization, was it based on the City of Philadelphia, was it based on the region, was it based nationally? Do you know the methodology in terms of how to determine capacity?

It was based on the state and the region.

And so there may actually be MBE firms, say, for example, in Atlanta that could come into Philadelphia, possibly serve as not just a subcontractor, but a general contractor, that would take that participation up greatly.

Yes.

Okay, thank you. SOLICITOR DIAZ: Madam Chair? I'm sorry, Madam Chair, if I could request that the document that's been previously testified to, the antidiscrimination policy for the Pennsylvania Convention Center Authority's expansion project, be an 119 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 amendment to the bill to meet the request of Councilman Goode.

The Chair recognizes Councilman Goode.

I asked for an economic opportunity plan to be attached to the bill, and I would like it to be done. That doesn't mean we want that plan to be attached to the bill.

Okay. Councilman Clarke, do you still want to be recognized?

(inaudible - off mic.)

Madam President, because of a prior commitment, I'm going to have to leave. I will leave my vote on this bill and the other bills as a yes. But I do have a follow-up question to this discussion I'd like to ask Ms. Young, and Councilman Clarke's allowing me to do that. 120 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994

Thank you.

You talked about the apprenticeship program and the hours. How do you give -- have you identified that there is a diverse pool of apprentices in the City of Philadelphia that will be utilized? And how do you -- will that be a racially diverse pool, given the fact that you're going to -- some of the unions or training programs, have you looked at the diversity of those organizations so that your pool of apprentice will be diverse?

Yes, we have. And, in fact, we are going to the programs that have focused on minorities in women for training, so there's like the DAP Program, there's a program in the Hispanic Latino community, there's a program out of the University of Pennsylvania. We have about six programs that all have 121 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 a diversity of gender -- pre-apprentice program that have a diversity in them. And we are funneling through -- we are not going to start another training program. What we want to do is move these folks who have been trained in the past but there was no jobs for them to be placed on.

As Charlie Solomon said, they're sitting home, waiting for the phone call?

We hope so, yes.

Okay. That was about three years ago when we had our discussion about this whole business upstairs on the sixth floor. I certainly thank you for your testimony, but I have to leave, but I do leave my vote as yes on all of the bills that have been introduced today. Thank you. (Councilwoman Blackwell takes 122 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 over as committee chair.)

Thank you. Councilman Clarke, have you completed your questions?

No. 8

All right. Then we call on Councilman Clarke.

Wow. Every response requires an additional question. All right. I'll go back to this disparity -- this disparity issue. I set a goal, 30 percent. The contractor says -- you select the contractor and he says okay and I can't make the 30 percent, the contractor can't make it, and he ends up and he dips down to 20, 15, and then he goes below your what disparity calls for 13 percent. Does that then disqualify the contractor? Because the disparity 123 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 says you have to -- based on the analysis of the disparity study, you have to meet at least percent. 5

If a contractor 6 signs on at 30 percent and that is the 7 goal that he says that he says that 8 he's going to meet, that's the goal 9 that we are holding him to. 10

Yeah, but 11 you can't legally require makes -- 12 see, I think you're -- 13

He.

I don't think you're trying --

We're not legally requiring it. If the contractor says he's going to do 30 percent --

But you can't --

-- what we require is the floor.

Right, that's what I'm saying. If the contractor says I'm going to do 30 124 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 percent based on your goal, that contractor can't meet 30 percent and that contractor comes in at 20, you can't withhold that contractor's pay or throw that contractor off the job legally. Am I correct, Mr. Diaz? Mr. Solicitor, am I correct?

Madam Chair, I didn't mean to interrupt the Councilman, but I would like to introduce Bob Archie, Esquire, who's counsel for this program, and ask if he could also participate and answer questions as well.

Absolutely.

Thank you.

My name is Robert Archie. I'm a partner at Duane Morris. We were engaged by the Pennsylvania Convention Center Authority to look at the -- the current antidiscrimination program. 125 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 What we did was to survey across the country all of the cases which have dealt with particularly challenges to goals and aspirations in construction contract, major construction contract, and then we looked at what the State was offering, or at least what the State had undertaken to do in conducting, Councilman Clarke, a disparity study. We then asked the same consultant, which had been engaged by the Commonwealth, to conduct a disparity study, or we called it a goal-setting study, here in the City of Philadelphia based upon the disparity study or the methodology they had utilized for the Commonwealth of Pennsylvania. And that's how we -- based on those goals setting requests, that's how we arrived at the numbers which have now been adapted by the Pennsylvania Convention Center 126 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Authority. All of the cases say that you cannot take an arbitrary number, 30 percent, percent, and mandate in 6 your bid documents that your 7 contractors and subcontractors adhere 8 to this arbitrary number that you pull 9 out of mid air. 10 The simplistic approach to 11 this was to look at the number of 12 racial minorities here in the City of 13 Philadelphia. If that's 46 percent, 14 most operations would say to the 15 contractors, on major projects of this 16 size, you have to meet that goal. 17 The Supreme Court has said, 18 since 1998, an arbitrary setting of 19 those goals are unconstitutional. You 20 must, in, fact engage a consultant to 21 conduct the disparity study. Then 22 once you conduct the disparity study 23 and arrive at an underutilization of 24 MBEs and WBEs, those are the goals 25 that you can set and mandate your 127 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 contractors and subcontractors to meet. If you exceed those goals arbitrarily --

Mr. Archie, Mr. Archie, can I cut you off. One quick question. In part of your explanation you say "mandate," and in a part of you explanation you say "setting of goals." I understand that you can't mandate anything below the 13 percent. The question is: Can you set a goal without a requirement? And I believe you can do that. What I'm trying to find out is why you are setting the goals so low if you can, in fact, set the goal at a much higher number, understanding that you can only require 13 percent based on your disparity study and the Supreme Court ruling.

Right. The problem is, Councilman Clarke, if you 128 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 set a goal higher than a mandated goal, higher than the disparity --

I'm not asking you to set a mandated goal; I'm asking you to set a goal.

If you set a goal, then that goal is challengeable, it's challengeable.

Accountable towards what?

It's challengeable.

How?

Because a contractor who says I bidded on the project, you had a goal of 30 percent, your disparity studies show that you had 15 percent, that's all that's available in this area, your goal is unrealistic. Therefore, I'm an unsuccessful bidder and I only bidded -- I can reach percent. He 24 could challenge that goal on the 25 concept that it's a violation of the 129 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Constitution.

So if you set -- SOLICITOR DIAZ: Councilman, could I jump in here if I may. You know, I believe that Bob Archie knows this backwards and forwards and is saying what the law is, but I think what I heard you asking is: If there is an aspirational goal, let's say, not a mandatory goal --

Right. SOLICITOR DIAZ: -- but an aspirational goal, this is what aspire to --

Right. SOLICITOR DIAZ: And if you have someone as a contractor voluntarily accepting that voluntary goal that we have not mandated on them but they have offered to achieve that goals, that is something that I believe legally can be imposed on that 130 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 contractor through the contract but it cannot be mandated. But I understand your point to really say, if we really want to tell people this is what we would like them to achieve but we can't force them to achieve it and have punitive measures to make it possible through the contract, is that legal? If that's the question, the answer, in my opinion, is yes.

That's what I asked a half hour ago.

You're setting a goal which is not mandated.

You can't set a goal that's mandated.

You can set a disparity goal that's mandated.

Unless it's consistent with the --

Mr. Archie, talk into the mic; we can't hear you. 131 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994

I don't differ with you, Councilman Clarke. You can set a goal which is not mandated, but you cannot set a mandated goal not based upon a disparity study. You're correct.

Councilman, I think it's important for us to get on the record -- and Chairman Riley alluded to this before. We succeeded in getting bids for the demolition work through the Redevelopment Authority that were hired. And then the numbers we've been citing here, those were voluntary obligations of the demolition contractors, and the RDA has held the contractor -- and, in fact, we do monitor. And when we saw in one quarter that they were not meeting the goal that they had voluntarily taken on, we withheld payment until they corrected that. 132 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 And that is the -- as I understand it, as a board member, that is the policy and intention of the Convention Center Authority in terms of how we will carry out the expansion project.

So -- okay. So why don't we set a higher goal?

One of the things -- I think that this -- I'm not sure that this is going to be a satisfactory answer, but I think that this is something that we should all take into consideration. This is the biggest project that the State has ever funded, and so there are reasons why we should be interested in the things that you're talking about, Councilman Clarke, and we are. We've made a commitment to the Governor, we've made a commitment to the current mayor, and we've made a commitment to the incoming mayor that 133 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 this is not only going to be a structure edifice, but this is going to be an edifice for economic opportunity. The last time this was done, the Convention Center was sued and -- because it is a very highly visible project. We've come to the conclusion that we want to take as conservative position as we can --

For the record, sued because of what?

Because of contractors suggesting that they were deprived of the ability --

Just want to put on the record.

And Amina was the principal witness during the course of that suit. We want to provide -- and we've committed, I've personally committed to Michael Nutter, committed to the current mayor, and on behalf of 134 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 the board committed to the Governor, who is adamant that this program be a model program. We don't want to get ourselves in a position where we're exposed to somebody filing a lawsuit and maybe creating a situation where the very people we want to include become subject to being not included. And so it's like the coach at the beginning of the year, where the general manager and the press comes to him and says, What are you going to do this year? Oh, we're going to go to the playoffs, we're for sure going to be in the playoffs. Nobody's going to say we're going to win two games. But here, we have taken what we think are the legal steps to give us as solid a groundwork as we possibly can. This team has produced before, headed by Amina and the other folks who were involved, and this team can produce again, and we think that this team can produce really good 135 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 result. We don't want to take a chance on having those result destroyed through some kind of a lawsuit, because we put out a goal and say, We'll go to the playoffs, what number do you want? What number do you want us to put on the table? You know, we'll accept that number.

Point of information.

Excuse me. We have a point of information.

Mr. Chairman, you're saying that you don't want to be sued. How, in fact, can you keep from being sued?

Well, we can never -- obviously, Councilman Goode, we can never keep from being sued, but if we are sued, we want to have a basis that we can say that we have followed the precept of the law all 136 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 the way through. That doesn't prevent us from achieving higher goals --

Mr. Chairman, Mr. Chairman, the precept of the law is that a disparity study be conducted. There are several different ways to conduct that disparity study. I've already illustrated one. You said that you're pulling from a pool of minority-owned businesses from within the State. If you are pulling from a pool of minority-owned businesses from around the country, you will find that other places around this country are not as backwards as Philadelphia. There are places where African-Americans actually serve as general contractors on major construction projects. Therefore, if we want to move forward on minority participation goals, my thought would be, on the 137 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 largest state project in the history of the Commonwealth, that you would look to pull from around the country and do a disparity based upon the availability there. So I'm challenging your disparity study and saying it's a bunch of crap. I'm telling you outright you could say that you're following every legal course you have to follow in doing the disparity study; that doesn't mean your disparity study is right.

I understand. And I'm sure that -- I'm sure that there can be differences of opinion as to how the disparity study is approached, and I think that the important thing to note is that the organization that was chosen has a track record which was chosen by the State, has a track record, and --

Well, the State has a bad track record as well 138 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 as the City in the area of minority participation. So, I mean, doesn't make a difference who's the best in the State. The question is: If there are people doing a better job of economic opportunity around the country, then we should look to what can be done based upon what's being done in other places. We recently did a disparity study locally --

I -- I --

Excuse me. We recently did a disparity study locally regarding City contracting, and they used utilization numbers that was based upon the region. I asked our consultant, which is a solid consultant, e-consult, had they used numbers simply based upon the city where those numbers would be different. They conceded that they would. 139 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 For the purposes of City contracting, it would probably raise our numbers and raise our goals. And so we've asked them to go back and change their disparity study because it was wrong. And this disparity studies is wrong. And that's the simple truth.

Councilman Goode, I don't think that you will find any point of disagreement from us from the standpoint that there may be differences of opinion as to how the study was done and whether it could be different if different factors were taken into consideration. But I think the important thing is, we don't mix apples with oranges. This study was done to form a basis to make sure that we were okay in a lawsuit. This study wasn't done to form a basis that this is all we want to achieve. I mean --

That's 140 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 irrelevant to me. What's relevant to me is what you're basing your number upon. If you're basing it upon a disparity study and the disparity study is wrong, then that's a problem. What you're asking me to do is to vote for percent MBE 10 participation, and I won't do that. 11

No, we're not 12 asking you to vote for 13 percent; 13 we're asking you to vote for confidence in a group that has achieved more than that in the past and will achieve more than that on this job, maybe the best group that's ever been put together in the City of Philadelphia.

That means nothing to me. The best group in the City of Philadelphia or the best group in the Commonwealth of Pennsylvania, when you're talking about the issue of economic opportunity, that means 141 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 absolutely nothing to me. And so I -- Madam President, I asked to be excused on Council business, and I'd like to leave my vote as no. 7

Thank you. At this point, if I have no 10 objection from members of the committee, we will get back to the people who are sitting at the table at the present time, but we do have other witnesses that have been patiently waiting to provide us with their testimony. So if no one has objection, we will -- they will be very brief, I'm told. So if you don't mind, I would ask Mr. McPherson, then, to please call the name of the next witness. MR. McPHERSON: Mr. Frick, CEO of Independence Blue Cross and Tom Muldoon. And then after them will be Delilah Winder and Valerie Ferguson. 142 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994

Thank you. (Witnesses come forward.)

Thank you very much for your patience. Kindly identify yourself for the record and proceed with your testimony.

Madam President, thank you. I'm here in my capacity as Chairman of the Greater Philadelphia Chamber of Commerce, and has been noted throughout the proceedings today, the Convention Center expansion is a very important economic development project for our city and our region. The Chamber of Commerce, on behalf of its member companies and organizations, recognizes the importance of the growth of the hospitality and tourism industry to our continued economic vitality. It also recognizes the transformational 143 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 impact that this will continue to have on keeping our city and region viewed as a world-class destination for tourism. And, most importantly, as the Chamber continues to work with the leadership here at Council in city government and in state government, to continue to grow and attract companies and employment to the City and to this region, the opportunity to create new jobs and to continue to sustain growth within our existing companies within this region, the Chamber is wholeheartedly in support of this exciting project for the region. Thank you.

Thank you very much. Good morning.

Good morning, Madam President and members of Council.

Or 144 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 good afternoon.

I'm Tom Muldoon, I'm President of the Philadelphia Convention and Visitors Bureau, and I'm here representing thousand members of the bureau, paid members, who are a part of the hospitality industry. And in particular, and everybody has a set of documents here, but representing the -- besides the Philadelphia Convention and Visitors Bureau, the Greater Philadelphia Hotel Association -- and Ed Gross is here; and Bill Welsh from the Marriott Hotel; and Valerie, who will speak in a moment, representing Loews; Paul Stancke with the Reading Terminal Market; the Shops at Liberty, Jack Fazio had to go book to work; Bob Nelson with OIC; Greg DeShields, with Temple's Hospitality School; and Delilah Winder, representing both the market, the restaurants, and the African-American Chamber of Commerce. 145 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 So we strongly urge the passing of this. And there are one-page documents from all of those groups that are in this, and I would like to turn it over to the vice chair of the Philadelphia Convention and Visitors Business Bureau and the general manager of the Lowe's Hotel.

Thank you.

Good afternoon, Madam President and City Council. I'm delighted and honored to be here today. Just to tell you a little bit of the story of Loews Philadelphia hotel and the impact that this property has made not only on the community but what the community has done for our economy also, when we decided to come to Philadelphia in 1998, we decided to come to Philadelphia because there was a beautiful convention center that had 146 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 half a million square feet of beautiful space that was being copied all over the United States. People were flocking here to see exactly what had happened. At that time, Philadelphia was one of the top highest demanded market without enough hotel rooms, so we felt it was a great opportunity for us to expand our brand and our company. We found a building that was an icon, an architectural icon, the PSFS Building. It had been boarded up for 12 years, and we were very elated and delighted to be able to reopen and revitalize that building as a 583-room 18 hotel with 45,000 square feet of space. More importantly when, we opened the hotel, we opened its doors to 350 employees initially. Over 20 percent of that opening team were people that were formerly on public assistance, on welfare. And I am 147 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 delighted to say that today, many of those individuals are managers in our hotels, managers and chefs in other hotels, and some even have moved on to other cities in very highly regarded positions. We worked with various agencies. We went to 10 community-based agencies, looking for 11 candidates. We primarily worked with 12 the Greater Urban Philadelphia 13 Coalition, we worked with OIC and we 14 continue to work with them, Congreso, 15 the (indiscernible) Center and the 16 Lighthouse. 17 When you look at how we 18 solicit for employees today, we are 19 soliciting opportunities, we are 20 giving individuals opportunities that 21 heretofore didn't have them. 16 an-hour, which is not a living wage. People were going from making nothing or $300 a month on public assistance to making to $30,000 a year. 8 We are in a region that has a 9 tremendous amount of people that don't 10 have a formal education, that we have, 11 unfortunately, 49 percent public high 12 school dropout rate. 13 We are able to create jobs 14 that get people back in the system, 15 that -- we no longer are just running 16 a business; we're educating people, 17 and we're giving them an opportunity 18 to really have an economic independent 19 opportunity for the rest of their life 20 and for their children. 21 In addition to that, we 22 followed a very strict -- it was 23 imposed as well as something that is 24 self-imposed right now in our company, 25 but a minority procurement plan that 149 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 30 percent of every dollar that was spent on the development of this hotel, $115 million went to minorities and women operators and owners. Many of those people who were given those chances are now really realizing huge benefits from those opportunities. Kia Dickerson, who is now a major designer nationally, who's on a national show, "Trading Spaces," her very first contract was Loews Philadelphia, and it was doing the draperies. James Brown, who owns Alpha Printing and Office Supplies, we started with him in this community as well as the Marriott, when they opened. He now has every Loews Hotel, and his company has grown. We believe in minority procurement. Our bonuses are based upon it, our bonuses are based upon promoting women and minorities. Forty percent of our management staff are 150 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 women and minorities. So we're very proud of what we have been able to do for this city and what this city has been able to do for us and for our employees.

We now employ over 500 people, and it is just -- it's a blessing to watch people come in at very humbling starts and be able to grow and continue their growth and ultimately become executive committees and general managers of other small properties. As an industry, we provide over $90 million in taxes. We employ over 50,000 employees in this hotel-within this city in the hospitality industry. With this expansion, we will be able to sustain those jobs as well as enhance and grow them. I just want to remind everybody that the hospitality industry, you know, is not an industry made up of minimum-wage jobs. These 151 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 jobs pay and $12 an hour. And they give people the second and third chance that they so sorely need to continue to grow and make up for whatever happened in their past. I thank you for giving me the this opportunity to speak to you today, and I urge you to please pass this bill.

Than k you very much.

If I just could add, as part of Convention Center expansion, we project it will conservatively be 2500 new hotel rooms. On a rule, being very conservative, for every 100 hotel rooms, you get 70 permanent jobs. That's 17 to 1800 jobs, and none of those are really mixed into those numbers that you've heard earlier; they were basically on the center. And I'd maybe ask Delilah to speak from the restaurant and the 152 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 market end and the chamber.

Good afternoon.

Good afternoon, Madam President. I'm Delilah Winder Chairwoman of the African-American Chamber of Commerce, also a small- business owner in restaurant and hospitality in the City of Philadelphia in the Reading Terminal Market since 1984. So I'm here today basically to speak on -- from the African-American Chamber perspective, the expansion of the Convention Center we look at as being an opportunity for additional business for our businesses. There is growth potential and business available from all facets as well as the starting and the design process and going all the way through to servicing the building. As a small-business person in the Reading Terminal Market, being 153 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 there since 1984, I've gone through the building of the current convention center, the transformation of the Reading Terminal Market, which I could say, if it were not for the current convention center, the Reading Terminal Market today probably would not be in existence. The building at that time was deplorable and probably would have been closed down. So what that convention center -- the current convention center has done for our businesses in the Reading Terminal Market, which is a makeup of probably 80 different small businesses all from the Philadelphia area and surrounding area, is gave us the opportunity to have businesses today and to grow to where we are today. The expansion of the Convention Center would actually be an additional shot for our businesses to continue to grow because each time 154 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 that a convention comes into the City, our sales go up, we have to bring a little more staff. There have been times where we've had conventions that my business directly was affected with probably a 300 percent growth in sales over the period that that particular -- or those conventions were in the City. And it may not seem like a lot, but it is -- really makes a big difference when these tourists come in and when these conventions come in that it does help to grow our businesses. So I thank you today. And I am here in support of the Pennsylvania Convention and Visitors Bureau, which I also serve on the board of.

Thank you very much. Are there any questions from members of the committee of the witnesses of the table? 155 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Councilwoman Brown.

Thank you, Madam President. Good afternoon, everyone. To the leadership of the chambers, could you please speak to the nature of any discussion that has been had with the leadership of the Convention Center, either at the board level or the staff level, that addresses a role for the chambers in the ultimate construction, design, and rollout of the next convention center.

We, of course, want to see the highest participation. We want a commitment of the highest participation that we could possibly see because we do represent African- American businesses. There has been -- in the current convention center, there has been participation, and we think that they have done an admirable job as to where it sits today. 156 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Of course, with the expansion, we want to see more. Sitting here as chairperson for the African-American Chamber of Commerce, our businesses want inclusion at all levels. And I would say I believe that the team that you have here today is working to see that that happens.

Mm-hmm.

So if that answers your question...

Partly. More specifically, has there been discussion that will say in the body of the legislation, in the actual text of the document, that there will be a formal relationship with the African-American Chamber, the Hispanic Chamber, and the role that those chambers will play in meeting the goals that have been articulated by Councilman Clarke and Councilman Goode? 157 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994

To date, I have not had that conversation.

Thank you very much.

Councilwoman, in response to your current question, I don't believe there has been any formal documentation, but I will tell you, in the whole planning for the Convention Center expanding, the Philadelphia Greater Philadelphia Chamber of Commerce, in that a large portion of our membership is small business, we continue to recruit minority and small-business owners into the chamber. And as you also know, one of the priorities of this chamber today is to continue to provide opportunities for at-risk youth to work in our companies, small and large, and there has been ongoing dialogue about how this convention center expansion will promote 158 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 opportunities for employment. And our continued linkages with the workforce development professionals in this city and this region and our linkages with the employers and the folks at the Convention Center will continue to cultivate opportunities for more and more of our young people to find employment within this region. But we have not documented that formally, but there has been active, ongoing conversation about employment, mentoring, development of youth, and networking of our membership with the Convention Center.

Well, we're looking in the same crystal ball because my next question was going to be just that: Has there been discussion about how we can get young people in the pipeline, if you will, on a career path for the hospitality industry as a whole what? 159 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 And what I know in the seven years I've been here is, if you don't raise it at this level, then it doesn't happen. My best example is: With the stadiums, we made it with clear that in some way, shape, form or fashion, you needed to be a part of the -- one of the beneficiaries. It's in the language, it's actually in the text of the document, so that hold everyone accountable, if you will. So for the administration, Madam President, there will be the request and expectation that there be formal actual language in the legislation that stipulates the roles of the chambers in meeting the equal opportunity plan goals.

Right. Let me just say that I don't think any of us here could -- 'cause we don't represent the Convention Center Authority, we represent the hospitality industry, could officially 160 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 address that. I will just say, if you look at the testimony, you have representatives here from OIC who have had a great success in the hospitality industry. The academy schools, both public and Mercy Catholic, which, I think, come under Lisa Nutter's responsibility, have also been very -- we work with our multicultural affairs congress on that. We've recently done a study working with the hotel that's showing, I think -- I could be corrected, but about 40 percent of the management of all hotels are minorities. And if you put in women, it would be that much higher because it's a business that's obviously now dominated by women, and there are just a couple of old guys that are left in the middle. So your education and your training component, your hospitality industry in general, I think, is a 161 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 tremendous success story and just gets better every year. But we do not officially represent the Pennsylvania Convention Center Authority to address your question.

Thank you for your testimony.

Thank you all very much. Councilman Rizzo, do you have questions of this group or the next group?

The one from before.

Thank you, thank you. MR. McPHERSON: Valerie Ferguson and Dan Fitzpatrick. And then we'll get back to the Commerce Department.

Valerie just spoke. MR. McPHERSON: Oh, I'm sorry. 162 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994

Dan put his name in and had to go off to get his physical so he could work for Citizens Bank. MR. McPHERSON: Okay. Then if the Commerce Department could come back to the table.

The Commerce Department and the City Solicitor in a group testifying earlier, please come back to the table so that we could continue the discussion.

I'll go get them. They're outside the Council room.

Okay. (Previous panel of witnesses return to table.)

Madam Chair, our apologies. We were having a decision with Councilman Clarke.

That's fine. I understand. Thank 163 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 you.

Thank you for your patience with us.

Councilman Rizzo, you are now being recognized.

Thank you, Madam President. I'm not sure who will answer this question, but I'd like to go back to the Liberty Trust Building. Initially, I understand that that property was a very desirable acquisition for the Convention Center expansion. I would like to know why it was so desirable early on and why now -- I think I heard today that it was no longer needed for the expansion. Well, I've been around long enough to know that probably five years from now, we're going to be hearing that you've paid five times as 164 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 much for the property because five years from now, you'll need it. Could somebody explain to me how we could let this go. Is it just about money? You don't have the money to acquire it? What exactly is the reason for our record her of why we're not going to acquire the Liberty Trust Building? which, again, I understand would be a valuable asset to this probably expansion.

Councilman, I think that I can answer that hopefully satisfactorily for you. When we originally looked at that building, the thought was that there were going to be -- the current offices of the Convention Center are pretty sparse and may not be adequate for the expansion. The original thought was that the Liberty Trust Building would be a viable building in which to put the executive offices of the Convention 165 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Center. When it was further expanded, because of the makeup of the floors -- and I'm not a contractor, but because of the makeup of the floors, where the elevators shafts were and that type of thing, the utilization of the building would have been not even close to being adequate to turn into being offices. That was the purpose the buildings was looked at in the beginning. And so at that point, on -- there was a decision that it didn't make any sense to acquire the building because it didn't fit in to the -- it wasn't going to be usable for anything else.

Wouldn't you think, though, based on the expansion, that any near properties would be a valuable asset even if to control that area? Again, I've been around this 166 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 long enough now to look down the road and say that I can envision that you're going to need to grow those executive offices. And even if this property won't work -- allegedly won't work -- that there's a way to make it work, and I don't mean just by throwing a ton of money at it. But anything near the expanded Convention Center, to let it go at this point, someone's going to hold us hostage five, eight years from now and triple and quadruple the price, and we're probably going to buy it.

Can I just take one second. Mr. Eisenstat really more had to do with the decision-making process, but this was also wrapped into the agreement from the folks from the Historic Commission as well, and I'd like him to answer the question if I may, Councilman. Madam Chairwoman, Noel 167 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Eisenstat was a consultant with the Commonwealth who's been working with us on this, and if I may ask that they participate as well. (Witness comes forward.)

Is he in the room? Is he in the room? That can't be Noel Eisenstat. (Laughter.)

He's a shadow of his former self.

Oh my.

Yes. This is what the project has done to me. My name is Noel Eisenstat, for the record. A little bit of background to address Councilman Rizzo's question. When the Convention Center, as we know it today, was originally acquired, it was acquired by the City under a new redevelopment agreement. And as a redevelopment agreement, the ability 168 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 of the City to direct an area to be acquired could be acquired because a property was blighted. This acquisition was not undertaken as a blight. The acquisition here is being done by the Commonwealth through the Department of General Services and is being undertaken through the powers of the Commonwealth to achieve the public purpose of a convention center. As Chairman Riley discussed earlier, the Convention Center included that the floor plates of the buildings would not provide a use for the Convention Center that was practical or economically feasible. Therefore, once that decision was made by the Authority and communicated to the Commonwealth, the Commonwealth did not have the legal authority to acquire the property. While it might be a good redevelopment strategy and it might be 169 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 a good business strategy, the Commonwealth could not acquire the property once the Convention Center Authority said it had -- could not utilize the property for the expansion project.

Could you please provide the document that you just described from the Convention Center to the committee, to the Chair?

We will do so --

For our review.

-- no later than Monday.

Great. Thank you. Thank you, Madam Chair.

Councilwoman Brown, did you want to be recognized?

I do, Madam President. 170 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 I have related follow-up questions to the line of questioning that was posed by my colleagues Councilman Clarke and Councilman Goode. And just to put this in context and to put this in context and to put it on the record, we now have a -- it is a matter of practice for us that we have what I might call an informal SOP, standard operating procedure, where we really do have an expectation that those coming before us seeking support have an equal opportunity plan, have specifics of the plan, and are prepared to submit the plan to the Chair so that we have a chance to review it prior to the hearing. That said, I too look forward to the written equal opportunity plan that would be a part of this bill. I have a few questions. One, what provisions, protections, or 171 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 clawbacks do you have in the body of the legislation to protect MBEs and WBEs who many times ultimately get jammed by contractors who do not honor the tenet of the contract they engaged in? SOLICITOR DIAZ: Well, as I said earlier, Councilwoman, there is a legal requirement, which is part of Exhibit J of the bill, which requires these protections to be implemented, including, among other things, the requirement for payment.

Okay. SOLICITOR DIAZ: Now, we've been talking about having a formal amendment of the bill to address the EOP issue, and I'll come back to that. But I think that the policy that Ms. Young was addressing and describing earlier is essentially the implementation of the legal requirement that's reflected currently 172 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 in Exhibit J to the bill.

Okay, all right. One question. The witnesses prior to you I posed a question regarding any discussions around strategy or potential roles for the Hispanic Chamber of Commerce and the African-American Chamber of Commerce. Have there been any discussions at any level and what are they? Or better yet, what's the bottom line?

What we have for them in particular is, we have an oversight committee. The oversight committee reports directly to the board, chaired by the vice chairman of the board, and that oversight committee does just what it says. Everything that has been done the month before and the month previous, they review. Administratively, as you raise 173 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 the issue of ensuring that people are being paid on the job, small contractors, everything will come through this committee. Currently on that committee, we have representatives from the Hispanic Chamber of Commerce and the African-American Chamber of Commerce. Both the chairs of those committees are on that group. And it's about ten or eleven prominent folks in Philadelphia who have an understanding of the process and a mandate to ensure in an advocacy capacity that we have and we are paying, first of all, those who are participating in our project and, of course, outreach to ensure that we are getting as many minority and women into the mix as we possibly can.

Okay. And that's preconstruction. What will be their role, formal role, once the project is underway and once 174 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 the project is completed?

No, that's for construction. That oversight committee is for construction.

Okay. And once the project is completed, when you still have X-number of contractors waiting for their final payment?

That oversight committee does not give -- if I can use the American Friends Service group -- lay down until our board requires such. So they stay on because we do know that a lot of the action happens after the project is completed.

Indeed.

So that oversight committee continues.

Indeed. It was two years after the stadiums were built and finished when 175 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 we were beginning to hear awful stories about MBE and WBEs. So will that -- that's a formal agreement outside of the legislation, or is that actually written in the body and in the text of the legislation?

It is in the body and the text of the legislation. And, in fact, it's in the lease and service agreement. There has always been an oversight committee of the Convention Center, and it will be working through construction and after.

Excellent. The final question is, I clearly remember being a citizen during the discussions and debate of the first convention center and the interest to ensure that women and people of color get in the pipeline for a career path in the hospitality industry. And at that time 176 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 Philadelphia OIC, became one of the institutions in our city that became a part of the text of the legislation to ensure that there would be a pipeline for training. Speak to, if you will, what the plans are for the second convention center, what will be different from the construction of the first as it relates to getting young people in the pipeline so that they can start a career in this industry.

Councilwoman, I'll start with that, and then Amina Young can finish and talk about some of the implementation of it. But right from the beginning, when we began our discussions with the Commonwealth and the Authority, we were insistent. Mayor Street indicated in the very first meeting that he was insistent that there be a provision for continuing the education and training fund, which would expire 177 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 under its currents term next year.

I see.

And we did negotiate a provision that provides for twenty years further funding --

Very good.

-- of the education and training fund.

And that's all it says, for the funding of the education fund; it doesn't discuss specifics like the academies or any other training, institutional? Does it provide flexibility, if you will, in who those partnerships might be?

I think under such a long period, there has got to be some flexibility about who can carry it out, but I'll turn it over to Ms. Young, and she can talk a little bit about what their thoughts about 178 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 the program.

Actually, Councilwoman, you know, one of the things I hate to do is be a person who says, "Look at the past" to talk about the future.

Well, sometimes the best predictors of future behavior is past behavior, unfortunately.

But, in fact -- and that is, in fact, true with both these areas that we are doing to train people for the industry. These programs have been so successful in this city that they have been a adopted by other cities who are constructing various portions of convention centers, et cetera. What we have enjoyed and delighted in, that not only had in our academies program one school that we could point to but five schools that we could point to, and that included a 179 11/30/07 COMMITTEE OF THE WHOLE - BILL 070994 parochial school.